BGE blames profit drop on dispute settlement Earnings plunge 2.1%, as 2 other utilities report healthy gains


October 17, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Baltimore Gas and Electric Co.'s earnings fell slightly in the third quarter despite a hotter-than-usual summer that kept area air conditioners humming.

Common share earnings dropped 2.1 percent, to $161 million or $1.08 per share.

The company blamed the decline largely on the settlement of contract dispute with Peco Energy Co. of Philadelphia.

BGE canceled a power contract with Peco after state regulators refused to allow its cost to be passed on to consumers.

BGE did not reveal details of the settlement or the extent of the impact on earnings.

The drop in earnings also reflected increased losses at its real estate development subsidiary and lower earnings at its investment arm.

In the quarter that ended Sept. 30, BGE's revenue increased 8.5 percent to $934 million as electric sales rose nearly 9 percent because of warmer summer temperatures.

"Even with the impact of the Peco settlement, earnings are only down 3 cents per share from a year ago, which tells me it was a pretty good quarter," said Ron Tanner, a utility industry analyst at Legg Mason Wood Walker Inc.

"Still, I would have expected their results to be better than last year, because of the weather."

Maryland's summer was 18 percent hotter as measured in cooling degree days, which measure the need for air conditioners.

Two other state utilities benefited from the weather and posted higher results for the quarter that ended Sept. 30.

Potomac Electric Power Co., which serves Washington and its Maryland suburbs, reported income of $151.1 million, or $1.27 per share.

The earnings represented a 14.6 percent gain from the same quarter a year ago. Pepco's revenues rose 18.5 percent to $750.7 million.

Allegheny Energy Inc., headquartered in Hagerstown, generated earnings of $82.7 million, or 68 cents per share, for a 10.5 percent increase from the same quarter in 1997. Its revenue rose 22 percent to $726.6 million.

In the first three quarters of this year, BGE generated common share earnings of $292.7 million, or $1.97 per share, a 19.4 percent gain from the comparable period a year ago. Revenue for the first nine months of 1998 totaled $2.56 billion, a 3 percent increase from 1997.

"Utility earnings for the first nine months of 1998 reflect the impact of more favorable weather for the electric business and continued cost control efforts which have reduced BGE's year-to-date operations and maintenance costs compared to the first nine months of 1997," said Frank O. Heintz, BGE's executive vice president of utility operations.

In other developments, the Nuclear Regulatory Commission dismissed a challenge by the National Whistleblowers Center to BGE's plan to extend its operating license on the Calvert Cliffs Nuclear Power Plant in Lusby.

The NRC made the ruling on the grounds that the group failed to meet certain timetables to produce information and failed to demonstrate why it should be allowed to challenge the license renewal plan.

L BGE's stock price fell $1.312 per share to close at $33.437.

Pepco's stock fell 62.5 cents per share to close at $26.312, while Allegheny's stock fell $1 per share to close $30.50 per share.

Pub Date: 10/17/98

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