Business Digest

BUSINESS DIGEST

March 27, 2004

In The Region

Constellation hit with downgrade of credit rating

Constellation Energy Group Inc., the Baltimore-based energy utility, had its long-term corporate credit rating downgraded yesterday by Standard & Poor's from A- to BBB+. Subsidiary Baltimore Gas and Electric Co.'s corporate credit rating was lowered to BBB+ from A-.

The rating agency called the company's outlook stable. Constellation has about $5.3 billion of debt outstanding.

Standard & Poors said the rating actions reflected "the growing scope of Constellation's unregulated operations." Energy sales by Maryland utilities are scheduled to be deregulated beginning in the summer.

"Constellation Energy is a much stronger company today than when S&P issued the prior ratings over two years ago," Mayo A. Shattuck III, the company's chairman, president and chief executive officer, said in response to the downgrades.

Altered malpractice bill cleared by 2 committees

Two House of Delegates committees approved a watered-down version of a medical malpractice bill yesterday, shunning the Ehrlich administration's approach in favor of cautious reforms and a study.

The bill approved by the Judiciary and Economic Matters committees would create a task force to study the issue of controlling malpractice insurance costs. It also makes mediation mandatory before malpractice cases can go to trial. Delegates said the bill was the best they can do in view of the fact the Senate has already killed a stronger bill.

"The lawyers will be very happy with the bill that passed today," said Del. Herbert McMillan, an Anne Arundel County Republican. "The doctors will not be."

Elsewhere

Spending expected to triple on prepaid health care cards

Spending on prepaid health care cards is expected to triple to more than $855 million this year, according to a newsletter that tracks the consumer payments industry.

The cards, which work much like debit cards, are linked to employees' flexible spending accounts, where pretax money is set aside from their salary to pay for medical expenses that their insurance doesn't cover. They can also be tied to employer-funded health reimbursement arrangements.

There are about 1.2 million prepaid health care card accounts, up from 425,000 last year, according The Nilson Report.

Continental's fuel tab prompts new fare boost

Continental Airlines Inc. raised fares yesterday for the second time in a month to help cover rising fuel costs after saying higher fuel prices will wipe out profit this year.

The fifth-largest airline increased one-way ticket prices by $5 for flights within the United States and between the United States and Canada. United Airlines, the world's second-largest airline, matched the increase, a spokeswoman said.

Continental is renewing efforts to boost revenue after Northwest Airlines Corp.'s refusal last month to go along with a price increase prompted Continental to abandon it. Rising fuel prices are coming at a bad time for network airlines, many of which are slashing labor and food costs to compete with discounters such as Southwest Airlines Co.

MCI to cut 4,000 jobs, close three call centers

MCI Corp., which is undergoing bankruptcy reorganization, said yesterday it is cutting 4,000 jobs and closing call centers in Denver, Phoenix and Niles, Ohio, because of cost-cutting pressures and fallout from the national "do-not-call" registry.

Jobs also are being reduced at MCI facilities in Alpharetta, Ga., Colorado Springs, Colo., and Springfield, Mo. The company aims to reduce overall costs 15 percent to 20 percent.

This column was compiled from reports by Sun staff writers, the Associated Press and Bloomberg News.

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