SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 2002
Commission Exact name of registrant IRS Employer
File Number as specified in its charter Identification No.
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1-12869 CONSTELLATION ENERGY GROUP, INC. 52-1964611
1-1910 BALTIMORE GAS AND ELECTRIC COMPANY 52-0280210
Maryland
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(State or other jurisdiction of incorporation for each registrant)
250 W. Pratt Street, Baltimore, Maryland 21201
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(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (410) 234-5000
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. Other Events
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Attached to this Current Report on Form 8-K are the Computation of the Ratio of
Earnings to Fixed Charges (Exhibit No. 12), consent of the Independent
Accountants (Exhibit No. 23), and the audited Consolidated Financial Statements
and Notes to Consolidated Financial Statements (Exhibit No. 99) of Constellation
Energy for the year ended December 31, 2001.
Recent Events
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Sale of Orion Power Holdings, Inc. (Orion)
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In February 2002, Reliant Resources, Inc. acquired all of the outstanding shares
of Orion for $26.80 per share, including the shares we owned of Orion. We
received cash proceeds of $454.1 million and recognized a pre-tax gain of $255.5
million on the sale of our investment.
Sale of Investment in Corporate Office Properties Trust (COPT)
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In March 2002, we sold all of our COPT equity-method investment, approximately
8.9 million shares, as part of a public offering. We received cash proceeds of
$101.3 million on the sale, which approximates the book value of our investment.
High Desert Contract
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In February 2002, the California Department of Water Resources (Department)
filed a claim with the Federal Energy Regulatory Commission (FERC) that all
long-term contracts for power supply that the Department entered into in the
first quarter of 2001, which includes the contracts related to our High Desert
project, were not just and reasonable. The Department is requesting the FERC to
terminate the contracts entirely or, at least, modify the prices to terms that
the FERC considers just and reasonable. Currently, we are discussing the
renegotiations of our contracts with the Department. We cannot estimate the
timing or impact of the FERC proceedings or the renegotiations of our contracts.
Credit Ratings
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All three rating agencies recently completed reviews of Constellation Energy's
and Baltimore Gas and Electric Company's (BGE) ratings. FitchRatings affirmed
its ratings of Constellation Energy. Standard & Poors Rating Group downgraded
Constellation Energy's commercial paper from A-1 to A-2 and senior unsecured
debt from A- to BBB+. In addition, Moody's Investors Service downgraded
Constellation Energy's commercial paper from P-1 to P-2 and senior unsecured
debt from A3 to Baa1. All Constellation Energy ratings have stable outlooks.
Moody's Investors Service and FitchRatings recently affirmed the ratings of
BGE. Standard & Poors Rating Group downgraded BGE commercial paper from A-1 to
A-2, senior unsecured debt from A to BBB+, mortgage bonds from AA- to A, and
Trust Originated Preferred Securities and Preference Stock from A- to BBB. All
BGE ratings have stable outlooks.
At the date of this report, our credit ratings were as follows:
Standard & Moody's
Poors Investors
Rating Group Service FitchRatings
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Constellation Energy
Commercial Paper A-2 P-2 F-2
Senior Unsecured Debt BBB+ Baa1 A-
BGE
Commercial Paper A-2 P-1 F-1
Mortgage Bonds A A1 A+
Senior Unsecured Debt BBB+ A2 A
Trust Originated Preferred
Securities and Preference Stock BBB Baa1 A-
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Forward Looking Statements
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We make statements in this report that are considered forward looking statements
within the meaning of the Securities Exchange Act of 1934. Sometimes these
statements will contain words such as "believes," "expects," "intends," "plans,"
and other similar words. These statements are not guarantees of our future
performance and are subject to risks, uncertainties, and other important factors
that could cause our actual performance or achievements to be materially
different from those we project. These risks, uncertainties, and factors
include, but are not limited to:
o the timing and extent of changes in commodity prices for energy including
coal, natural gas, oil, and electricity,
o the timing and extent of deregulation of, and competition in, the energy
markets in North America, and the rules and regulations adopted on a
transitional basis in those markets,
o the conditions of the capital markets generally, which are affected by
interest rates and general economic conditions, as well as Constellation
Energy and BGE's ability to maintain their current credit ratings,
o the effectiveness of Constellation Energy's risk management policies and
procedures and the ability of our counterparties to satisfy their
financial commitments,
o the liquidity and competitiveness of wholesale markets for energy
commodities,
o operational factors affecting the start-up or ongoing commercial
operations of our generating facilities (including nuclear facilities) and
BGE's transmission and distribution facilities, including catastrophic
weather related damages, unscheduled outages or repairs, unanticipated
changes in fuel costs or availability, unavailability of gas
transportation or electric transmission services, workforce issues,
terrorism, liabilities associated with catastrophic events, and other
events beyond our control, the inability of BGE to recover all its costs
associated with providing electric retail customers service during the
electric rate freeze period,
o the effect of weather and general economic and business conditions on
energy supply, demand, and prices,
o regulatory or legislative developments that affect demand for energy, or
increase costs, including costs related to nuclear power plants, safety,
or environmental compliance,
o the actual outcome of uncertainties associated with assumptions and
estimates using judgment when applying critical accounting policies and
preparing financial statements, including factors that are estimated in
applying mark-to-market accounting, such as, variable contract quantities
and the value of mark-to-market assets and liabilities determined using
models,
o cost and other effects of legal and administrative proceedings that may
not be covered by insurance, including environmental liabilities, or the
outcome of pending appeals regarding the Maryland PSC's orders on
electric deregulation, and the transfer of BGE's generation assets to
affiliates, and
o operation of our generation assets in a deregulated market without the
benefit of a fuel rate adjustment clause.
Given these uncertainties, you should not place undue reliance on these
forward looking statements. Please see our other periodic reports filed with the
SEC for more information on these factors. These forward looking statements
represent our estimates and assumptions only as of the date of this report.
Changes may occur after that date, and we do not assume responsibility to update
these forward looking statements.
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ITEM 7. Financial Statements and Exhibits
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(c) Exhibit No. 12 Constellation Energy Group, Inc. Computation of Ratio of
Earnings to Fixed Charges.
(c) Exhibit No. 23 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
(c) Exhibit No. 99 Consolidated Financial Statements and Notes to
Consolidated Financial Statements of Constellation
Energy Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSTELLATION ENERGY GROUP, INC.
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(Registrant)
BALTIMORE GAS AND ELECTRIC COMPANY
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(Registrant)
Date: March 19, 2002 /s/ E. Follin Smith
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E. Follin Smith, Senior Vice President on behalf
of each Registrant and as Principal Financial
Officer of each Registrant
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