BGE's parent warns of loss

Cost of deregulation may require an extra $80 million write-off


November 13, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Constellation Energy Group, the parent of Baltimore Gas and Electric Co., said yesterday that it may report a net loss in the fourth quarter because of an extra $80 million after-tax write-off related to the recent approval of its electric deregulation plan for Central Maryland.

The company had expected to write off a pretax total of $150 million to account for depreciation of its generation assets over the four quarters that began with the third quarter of 1999, which ended Sept. 30, it said in a filing with the U.S. Securities and Exchange Commission yesterday.

But Constellation said it must write off an additional $80 million after taxes in the fourth quarter to account for investments it will not be allowed to recover after the deregulation plan takes effect July 1, said Kevin J. Miller, the company's financial planning manager.

The deregulation plan, approved Wednesday by the Maryland Public Service Commission, allows BGE to collect $528 million in "stranded costs" from its customers over six years, starting in July. The stranded costs are partial repayment for what the utility spent building power plants to furnish electricity to its 1.1 million customers.

Residential customers also will get a fixed, 6.5 percent rate decrease over the same period.

The stranded costs BGE was allowed to collect mainly cover its investment in the Calvert Cliffs Nuclear Power Plant, Miller said.

The utility has 12 other hydroelectric and fossil fuel plants not covered in the stranded costs figure, he said.

The company expects to release its fourth-quarter earnings in late January.

Constellation Energy said Thursday that it plans to transfer its power plants from BGE to two other subsidiaries after July.

Constellation Energy's stock closed yesterday at $31.1875, up 6.25 cents.

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