Witnesses describe BGE as financially strong following Constellation Energy Group separation

BALTIMORE, July 23, 2001 — In testimony filed today with the Maryland Public Service Commission (PSC), witnesses said that Baltimore Gas and Electric Company (BGE) will be financially strong and better suited to serve its customers following a proposed separation later this year by its holding company, Constellation Energy Group.

In his filed testimony Christian H. Poindexter, Chairman and CEO of Constellation Energy Group and Chairman of BGE, said: “Business separation will result in the creation of two premier energy companies in Maryland, one focused on the wholesale merchant energy business and the other focused on retail energy delivery and energy products and service businesses. Both companies will be headquartered in Baltimore. We believe that business separation will produce benefits for our customers, employees and investors.”

Constellation Energy Group announced its intentions last October to separate into two distinct, publicly traded corporations later this year. BGE Corp., with public utility BGE as its largest subsidiary, will focus on regional energy delivery, products, and services. The new CEG, a merchant energy business, will continue to compete in the national wholesale energy market.

Constellation Energy Group Vice Chairman Edward Crooke testified: “It is my personal mission to build and lead a financially strong BGE and BGE Corp.”

Upon separation, Crooke will become Chairman, President and CEO of BGE Corp. At separation BGE Corp. will be a $5.5 billion company whose nonregulated subsidiaries will have assets with a book value of approximately $1.1 billion with a small amount of associated debt.

Crooke told the Commission that, as planned, nonregulated subsidiaries have already reduced BGE’s debt by $366 million in the past year and have funded more than $164 million in dividend payments to Constellation shareholders.

Citing the separation, he said “BGE’s parent, BGE Corp., will have a more focused management team that will be able to concentrate solely on delivering energy and energy products and services to our retail customers.”

“In addition,” he said, “BGE Corp. will have a lower business risk profile as a result of its separation from the higher risk electric generation and power marketing and trading operations.”

BGE currently delivers electricity to 1.1 million customers and serves nearly 600,000 natural gas customers in Central Maryland.

Eugene T. Meehan, Senior Vice President with National Economic Research Associates, Washington, D.C., testified that BGE “should be in a position of greater financial strength following the separation than it was pre-separation.”

Thomas E. Ruszin Jr., CEG and BGE Treasurer, and Richard M. Bange Jr., CEG and BGE Controller, also filed BGE testimony. The PSC hearing in the separation case is scheduled to begin July 31.

Constellation Energy Group is a holding company that has energy-related business focused mostly on power marketing, generation, and portfolio management, plus BGE. The holding company reported combined revenues of $3.9 billion and assets of $12.4 billion in 2000.

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