BGE to split itself into three parts State's largest utility reorganizes to cope with deregulation

'All rules are being rewritten'

Separate entities for marketing, generating of power, utilities


March 07, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Baltimore Gas and Electric Co. yesterday announced a major management and organizational restructuring intended to cope with the energy industry's deregulation.

In many respects, BGE's reorganization into three distinct categories -- utility operations, power generation and unregulated subsidiaries -- mirrors the industry's restructuring.

"All the rules under which we operate are being rewritten," said Christian H. Poindexter, BGE's chairman and chief executive. "That's what's driving this."

Most notably, BGE named Edward A. Crooke to be a corporate vice chairman and head of Constellation Enterprises Inc., a new umbrella company the utility created to consolidate its diverse unregulated subsidiaries. That area, which is likely to drive the $8.5 billion utility's future earnings, includes real estate development and the marketing of its power.

"It's where we expect to see all the growth," Poindexter said of Crooke's appointment.

BGE also appointed Frank O. Heintz, formerly head of its natural gas division, to be executive vice president of its utility operations. The promotion caps a meteoric rise for Heintz, a former Public Service Commission chairman who joined BGE in September 1996.

The company also named Robert E. Denton executive vice president of its new power generation division. Denton, who has been with the company since 1970, most recently oversaw BGE's Calvert Cliffs Nuclear Power Plant.

In making the changes, BGE eliminates the chief operating officer post, which Crooke had held. At the same time, Poindexter assumes the title of president, in addition to chairman and CEO.

Michael J. Travieso, who represents the interests of consumers as the state's People's Counsel, said: "Nationwide, there's been tremendous reorganization going on, with unregulated activities taking prominence."

BGE's decision to reorganize stems from internal planning it undertook before the demise in December of its proposed $3 billion merger with the Potomac Electric Power Co.

"Many utilities have done this in an effort to break down into smaller units, gain better control and have a better measure of performance," said Ronald S. Tanner, a utility analyst at Legg Mason Wood Walker Inc.

The company's restructuring also comes as the clock is ticking on consumer choice in Maryland. State regulators recently set a 2002 timetable to introduce competition among electrical suppliers, a move that will force all utility companies to alter the way they operate. A similar competition among natural gas suppliers already is under way.

"This is a smart move, because utilities have to get ready for the new competitive era," said Edward J. Tirello, a BT Alex. Brown Inc. analyst.

Poindexter said additional management and organizational changes may be in the offing as early as April. He declined further comment.

Pub Date: 3/07/98

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