BGE posts increased earnings First-half numbers better than expected

Utilities

July 20, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Baltimore Gas and Electric Co. posted better than anticipated earnings yesterday, raising its net income 41 percent to $143.5 million in the first half of 1996 despite unexpected costs from its Calvert Cliffs nuclear power plant.

The $8.4 billion utility serving 1.1 million electric customers in Central Maryland also generated a 28 percent gain in its second quarter ended June 30, pushing earnings applicable to common stock up to $52.4 million, or 36 cents per share.

"The results were better than either I or [Wall] Street expected," said Alex Hart, a utility analyst with Ferris, Baker Watts Inc. in Baltimore. "On an operations level, the report was very favorable."

Hart and other analysts had predicted that BGE would report earnings of between 32 cents and 34 cents per share in the second quarter.

BGE attributed much of the gains to harsh winter weather earlier this year, which resulted in a 6.6 percent gain in total electric sales and a 6.5 percent boost to natural gas sales. Sales to residential customers accounted for the bulk of the increases, up 13.1 percent and 17.3 percent, respectively.

Those sales increases were primarily reflected in the company's revenues, which were up 17 percent for the six-month period to )) $1.6 billion and 14 percent to $731.7 million in the second quarter.

The earnings could have been somewhat higher as well, had BGE not been stung by a Maryland Public Service Commission decision that made the utility absorb $6.8 million worth of costs from a 66-day outage at the Calvert Cliffs Nuclear Power Plant in 1987.

Without the $6.8 million, BGE's earnings would have risen by 3 cents per share in the quarter.

The PSC is expected to decide early next year whether BGE will be able to recover more than $450 million in costs associated with extended shutdowns of the plant between 1989 and 1991.

The nuclear plant in Lusby also adversely affected first-half earnings because one of the two reactors has been taken off line. BGE has kept Unit 1 off line since a planned refueling break in March because of a malfunctioning fuel pumping system.

The Unit 1 shutdown resulted in a net increase to operating and maintenance costs of $5 million, said Arthur J. Slusark, a BGE spokesman. He added that BGE hopes to have the unit operational by the end of this month.

As in recent quarters, BGE's Constellation Holdings Inc. subsidiary increased its contribution to the overall corporate pot, more than doubling its earnings to $20.8 million, 14 cents per share, from Jan. 1 to June 30. Much of the growth resulted from alternative energy projects and investment and securities income, BGE said.

"Overall, we felt the earnings were as we had expected, given the weather and the unexpected extension of the outage at Calvert Cliffs," Slusark said.

BGE also declared a regular quarterly cash dividend of 40 cents per share on its common stock payable on Oct. 1, which will cost it $59 million.

Pub Date: 7/20/96

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