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                         N E W S     R E L E A S E

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FOR IMMEDIATE RELEASE              Contact:  Art Slusark (BGE) 410-234-7436
May 2, 1997                                Nancy Moses (PEPCO) 202-872-2680

                BGE/PEPCO File Application for Rehearing of
             Maryland Public Service Commission's Merger Order

     Baltimore Gas and Electric Company (BGE) and Potomac Electric Power
Company (PEPCO) today officially filed an Application for Rehearing of
Maryland Public Service Commission Order 73405.  Issued on April 16, the
order approved the merger of the two companies to form Constellation Energy
Corporation, but imposed conditions that eliminated any reasonable
opportunity for shareholders of the new company to share in the merger
benefits.

     In their application the companies detailed areas of the order that
need to be revised for the merger to proceed.  BGE and PEPCO proposed a
modified plan to address these concerns.  The highlights of this modified
plan include:

- -    a $26 million rate reduction for Constellation Energy's Maryland
     customers upon completion of the merger, followed by a four-year
     base-rate freeze;

- -    a comprehensive surcharge that permits full cost recovery of power
     purchase contracts the Commission has previously approved;

- -    a synergy sharing mechanism that splits merger benefits on a 50/50
     basis between customers and investors, allowing further customer rate
     reductions if the new company's operations result in additional
     savings; and

- -    recovery of merger costs over the four-year, base-rate freeze period
     for synergy sharing purposes.

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     "We believe that the fundamental objectives of our merger can be
achieved with this revised regulatory framework, and that the proposed
merger still offers tremendous benefits to customers and shareholders of
BGE and PEPCO," said BGE's Christian H. Poindexter and PEPCO's Edward F.
Mitchell, Chairmen of the Boards and CEOs of the two companies.  "We are
hopeful that the Maryland Public Service Commission will agree this
modified regulatory plan provides an equitable sharing of the savings
arising from the creation of Constellation Energy.  These modifications to
the PSC's order, combined with a similar regulatory approval from the
District of Columbia, will allow us to proceed with the merger on solid
financial ground."


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(To view a copy of BGE and PEPCO's complete Application for Rehearing,
visit the News & Information page on the BGE website at www.bge.com)