Faced with growing competition and industry deregulation, the Baltimore Gas and Electric Co. pledged yesterday at its annual shareholders meeting to continue to trim costs and diversify into nonutility businesses to increase revenue.
"We know the market will reward those companies that best control the expense side of their business," BGE Chairman and Chief Executive Christian H. Poindexter told stockholders. "That's because competition is pushing pricing down and because all utilities will have revenues at risk when customers can choose among energy service providers."
Eventually, BGE and utility analysts expect federal and state regulatory bodies to open up both gas and electric generation and distribution, in much the same way that telecommunications firms compete to attract long-distance telephone customers.
To counter the changes, the $8.1 billion utility serving 2.6 million Maryland residents reduced operating and maintenance expenses by $45 million in 1994 and expects to approach that 7 percent reduction in expenses this year.
But BGE also is working the revenue side: On Friday, the company plans to file a request with the state's Public Service Commission to raise natural gas rates for residential customers by 7.6 percent. If approved, the measure would generate $30 million to BGE annually and raise a typical residential gas bill by $4.74 a month.
The energy concern said the increase is justified, despite relatively low prices from gas suppliers, because of $116 million in capital expenditures and improvements to its gas system since 1992. The company also noted that while the PSC allows BGE a 9.4 percent return, its existing gas yield is just over 6 percent.
BGE, which now serves 540,000 customers with gas, plans to
augment that figure with 16,000 new customers in 1995.
If approved, the gas rate increase, which would be BGE's first since 1992, would take effect late this year or early next year.
"We have enormous room for growth in our gas business," Mr. Poindexter said. "Our gas territory is about one-fourth the size of our electric territory, and gas is quickly becoming the fuel of choice for many customers."
The request for the rate increase comes at the same time BGE's common stock earnings for the first quarter of 1995 dipped by 16 percent from the comparable period in 1994, a result of the unusually mild winter.
For the three months that ended March 31, BGE reported common stock earnings of $60.9 million, or 41 cents per share, compared with $72.1 million, or 49 cents per share.
Revenue was $715.3 million, off 6.8 percent from the previous quarter's $767.7 million. The lowered earnings figure was partially offset by cost containment measures and increased earnings from subsidiaries.
Total net income, including earnings paid out as dividends to preferred stockholders, was $70.9 million, off 14 percent from the previous quarter's $82.1 million.
Mr. Poindexter said BGE's nonutility subsidiaries under its Constellation Holdings Inc. umbrella will continue to be enhanced, as competition increases and growth from its core power generation continues to be limited.