June 2014

Gas and Electric CompanyEconomic Impact of Baltimore

Prepared for:

Baltimore Gas and Electric Company110 W Fayette StreetBaltimore, MD 21202www.bge.com

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 2

Introduction 3Key Terms and Concepts 4Study Area 1: BGE Service Area 5Study Area 2: Counties Within theBaltimore Metropolitan Statistical Area 6Study Area 3: State of Maryland 7

Key Findings 8

General Operations Economic Impacts 9Baltimore Gas and Electric Service Area 9Baltimore Metropolitan Statistical Area andState of Maryland 12Baltimore Metropolitan Statistical Area 13

Energy Management ProgramsEconomic Impacts 14Baltimore Gas and Electric Service Area 14Baltimore Metropolitan Statistical Area andState of Maryland 17Baltimore Metropolitan Statistical Area 18

Charitable Giving ProgramEconomic Impacts 19Baltimore Gas and Electric Service Area 19Baltimore Metropolitan Statistical Area andState of Maryland 20Baltimore Metropolitan Statistical Area 22

Concluding Remarks 23

Technical Notes 24

Contents

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Introduction

Baltimore Gas and Electric Company (BGE) services over 1.2 million electricity customers and 655,000 natural gas customers across an economically and geographically diverse 2,300-square-mile area in Central Maryland. Residents of Baltimore City and all or part of ten Central Maryland counties receive utility service from BGE.

BGE engaged the Economic Alliance of Greater Baltimore Foundation (EAGB) to estimate the econom-ic contributions of BGE in 2013, accounting for both its direct economic activities as well as the indirect and induced economic benefit, in which additional activities were supported by the company’s demand for goods and services and BGE employee expenditures in the economy. EAGB utilized the IMPLAN model to estimate the aggregate economic impacts of the following study areas:

› BGE Service Area

› Counties Within the Baltimore Metropolitan Statistical Area

› The State of Maryland

BGE directly provided background information used to construct the model. Information provided by BGE is recorded on auditable documents reported to utility regulators. The economic contributions of three distinct BGE activities were measured to estimate the full economic impact associated with the utility provider:

1. General Operations: all activities, including capital investment and operations and maintenance expenses, associated with BGE’s energy supply, electric and natural gas transmission and dis-tribution, customer care, and corporate and administrative services

2. Energy Management Programs: activities related to administering BGE’s customer energy management programs, providing incentives for both residential and commercial customers’ en-ergy efficiency projects, steps taken to improve demand side management, offering energy au-dits and other technical support, as well as customer bill savings directly resulting from energy efficiency and demand side management measures

3. Charitable Giving Program: activities related to BGE’s community investment programs, which consists of contributions to charitable organizations located within the study areas

This report summarizes the results of the economic impact analysis for each of the three BGE activi-ties. The discussions of economic impacts throughout this report are separated by activity and by geographic study area.

Figure 1 details the number of workers employed by BGE based on location of residence.

BGE Employees by Location of ResidenceLocation Total EmployeesUS 3,352Maryland 3,100BGE Service Area 3,035

Figure 1

Source: BGE

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IntroductionKey Terms and ConceptsThere are three key effects that together make up the aggregate economic impact of BGE employment, all of which are covered by this report. They include:

1. Direct Effect: Economic activities directly associated with BGE’s general operations, customer energy management programs, and charitable giving program. For BGE’s general operations, the direct impact consists of the market value of goods and services provided by BGE, measured by revenue. Direct impacts also include the BGE workforce and the associated wages of full- and part-time workers.

2. Indirect Effect: Second-order economic activities of industries that respond to BGE demand gen-erated by the direct economic activities. These industries supply goods and services to BGE. For BGE’s general operations, the indirect impact includes the company’s capital investments and operations and maintenance expenditures. Examples of industries that experience indirect impact of BGE activities include construction, engineering, and legal services.

3. Induced Effect: Refers to the economic activities generated by spending from workers supported by the direct and indirect effects of BGE activities. As full- and part-time workers employed by BGE or a BGE-supported industry use their income on typical household consumption, they create additional economic activity. Workers that use their income to purchase retail, housing, banking, and food services support the employment and wages of workers in those industries.

The sum of direct, indirect, and induced effects represents the total gross economic impact.

The direct, indirect, and induced effects can be measured in several different ways. The following eco-nomic factors are used in this report and, as distinct measures, should not be combined to estimate total economic impact:

› Employment: the number of jobs supported

› Labor Income: the dollars paid as wages and benefits to workers

› Output: the market value of goods produced or serviced provided, frequently reflected as total revenue or sales in businesses

› Tax Generation: the state and local taxes and fees generated including sales, property, income, and several other categories

This analysis was conducted based on BGE’s commuter shed, or where BGE employees reside, be-cause place of residence determines expenditures on local industries. Because of this distinction, the induced impacts that 252 BGE employees that reside outside the state of Maryland have on their com-munities is not included in this report. Note that BGE generates additional induced impacts on the states of Pennsylvania, Delaware, and Virginia.

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IntroductionStudy Area 1: BGE Service Area

Source: IMPLAN, BGEBGE Employees represents the number of BGE employees residing within the BGE Service Area.

Region Population BGE Employees BGE Service Area 3,441,598 3,035

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Figure 2 - BGE Service Area Map

Source: BGE

Natural Gas Service BoundaryElectric Service Boundary

Currently Served by Both Natural Gas Service Only

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Introduction

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Figure 3 - Baltimore Metropolitan Statistical Area Map

Source: EAGB

County Population BGE EmployeesBaltimore MSA 2,753,149 2,989Anne Arundel 550,448 401Baltimore 817,455 1,200Carroll 167,217 267Harford 248,622 504Howard 299,430 145Queen Anne’s 48,595 27Baltimore City 621,342 445

Source: IMPLAN, BGEBGE Employees represents the number of BGE employees residing within the Baltimore MSA or counties within the Baltimore MSA

Study Area 2: Counties Within the Baltimore Metropolitan Statistical Area

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Introduction

Figure 4 - State of Maryland and Key Energy Facilities Map

Source: EAGB

State Population BGE EmployeesMaryland 5,884,563 3,100

Source: IMPLAN, BGE

Study Area 3: State of Maryland

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Key FindingsService Area ImpactsGeneral Operations

› BGE provides customers with reliable electric and gas utility service across the Central Maryland region. The company is one of the 15 largest private employers in the region and has a direct output similar to entire industries in its Service Area. Approximately 1,000 residents of Central Maryland are served utility service by each BGE employee.

› The total annual economic contributions resulting from BGE’s 2013 general operations in its service area amounted to approximately 8,686 jobs, $624.34 million of labor income, and $3.81 billion of output.

› BGE’s general operations supported over 2% of the Service Area’s $191 billion of total economic output.

Energy Management Programs

› BGE offers residential and commercial customers the opportunity to reduce energy consump-tion and monthly expenditures on energy use through a wide variety of energy management programs. These energy management programs are supported by customers and EmPOWER Maryland legislation and facilitated by BGE.

› BGE generated a direct output of $110.30 million in the Service Area to support operations and consumer investment in energy management measures. The total impacts of BGE’s dedication to customer energy management in the Service Area equal 764 jobs, $40.13 million in labor in-come, and $209.11 million in output.

› For every dollar that BGE spent in energy management within the Service Area, 89 cents of ad-ditional output were generated via multiplier effects in the Service Area economy. BGE’s direct investment in energy management was nearly doubled in economic output.

Charitable Giving

› Through BGE’s shareholder-funded charitable giving program, the company supports education, environmentalism, community development, and arts and culture programs. In addition to assis-tance to maintain existing programs or launch new programs, these funds support the internal operations of the recipient organizations, which generates economic benefit.

› Donations from BGE’s charitable giving program to recipient organizations within the Service Area support $1.17 million in labor income and $5.46 million of output.

› BGE employees elect to volunteer their time outside the office to support organizations operat-ing in the arts, community development, construction, education, emergency response, environ-ment, food service, and relief efforts industries. BGE employee volunteer hours help to sustain important programs or creating new ones to fill key community needs, and the output created by their activities generates additional economic benefits. BGE employees donated 25,000 hours of labor in 2013.

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General Operations Economic ImpactsBaltimore Gas and Electric Service AreaThe primary role and first responsibility of BGE is the transmission and distribution of electricity and natural gas to residents and businesses located in Central Maryland. BGE’s general operations activities include those related to the company’s electric and natural gas transmission and distribution, customer care, and corporate and administra-tive services. In 2013, general operations activities generat-ed $3.05 billion of revenue, which supported 3,035 direct employees in the BGE Service Area and paid wages to those employees totaling $323.29 million. Figure 5 below depicts the manner by which BGE’s general operations create economic ripple effects throughout the region.

Considering only BGE’s direct economic activity places the utility among the largest companies in the State of Maryland. The company’s direct output in the Service Area is similar to that of industry sectors like Computer Systems and Design Services, Scientific Research and Development Services, Legal Services, and Construc-tion of New Commercial and Health Care Facilities.

Figure 5 - General Operations Impact Diagram

wages to employees$323,294,648

payment for goods and services

wages$173,809,528

$1,045,554,526

$342,147,675payment for

household goods and services

$342,147,675payment for

household goods and services

payment for goods and services

DIRECT

INDIRECT

INDUCED

INDUCED

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output$3.05 billion

BGE 2013 General OperationsTotal Service Area Economic ImpactsEmployment: 8,686Labor Income: $624.34 millionOutput: $3.81 billionState & Local Taxes: $371.17 million

BGE 2013 General OperationsTotal Service Area Output Comparison

Construction of New Commercial &Health Care Facilities Output

Legal Services Output

Scientific R&D Services Output

BGE Total Output

Computer Systems & Design Services Output $3.91 billion

$3.81 billion

$3.54 billion

$3.22 billion

$3.05 billion

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General Operations Economic ImpactsBaltimore Gas and Electric Service AreaThe economic activity created by BGE’s demand for goods and services from local suppliers and BGE employees’ demand for household goods is multiplied throughout the regional economy. As shown in Figure 6, the total economic contribu-tions resulting from BGE’s 2013 general operations within the company’s Service Area totaled approxi-mately 8,686 jobs, $624.34 million of labor income, and $3.81 billion of output. Nearly $371.17 million of direct, indirect, and induced state and local tax-es were generated within the BGE Service Area. Actual taxes paid by BGE in the State of Maryland and counties within the Baltimore MSA are shown in Figure 7 on the following page.

The economic impacts of BGE on its Service Area reflect fairly robust multipliers that show an increase of 1.86 jobs for every direct job supported by BGE’s general operations and an additional 25 cents of output for every dollar of revenue directly generated by the company. BGE’s economic impacts were distributed through nearly every industry in the service area, with Food Service, Nonresidential Main-tenance and Repair Construction, and Retail establishments seeing the largest employment benefit. Nonresidential Maintenance and Repair Construction, Wholesale Trade Businesses, and Real Estate Establishments saw the largest impact in output. The affected industries are influenced by the fact that BGE is a utility company with considerable operating expenses, capital investment, and labor income that circulates through the Service Area economy.

BGE General Operations Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

BGE Service Area

Employment 3,035.0 3,048.1 2,602.5 8,685.6

Labor Income $323,294,648 $173,809,528 $127,232,408 $624,336,584

Output $3,050,000,000 $418,774,834 $342,147,675 $3,810,922,509

Maryland

Employment 3,100.0 3,383.7 2,668.8 9,152.5

Labor Income $330,218,586 $186,814,331 $130,663,644 $647,696,561

Output $3,050,000,000 $454,722,629 $351,273,601 $3,855,996,230

Figure 6

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information

BGE 2013 General OperationsDirect and Total Service Area Output Impacts

Total Output(millions)

Direct Output(millions)

Multiplier = 1.25

$3,050

$3,811

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BGE is highly regarded among its customers for the com-pany’s reliability and fast response during outages, and customer satisfaction favorability with BGE has steadily increased since 2008 to an all-time high in 2013. To mea-sure reliability, BGE’s parent company, Exelon, maintains a benchmark group of approximately 24 external utilities, including BGE, which is similar in size and scope to its own utilities. Due to lag, data from the benchmark group is cir-ca 2011 but is considered the most recent available and is used by BGE to measure performance.

In 2013, BGE placed in the first quartile in outage frequency, indicating that BGE customers experience power outages less often than customers of peer utilities around the coun-try. BGE outages lasted an average of 96 minutes in 2013, placing the utility in the second quartile of the benchmark and narrowly missing the first quartile threshold of 94 minutes.

Reliability of power and a rapid response to outages is important and does have significant effect on the residential and commercial customers within the BGE Service Area. However, the impact of BGE’s commitment to reliability is not included in this study, as it is best represented by the absence of lost revenue among its commercial customers and is therefore considered a direct effect of the companies that rely on BGE to maintain operations. It is important to remember that businesses and homeowners located in BGE’s Service Area benefit economically and create new impacts due to BGE reliability and rapid response to outages such that BGE’s influence on the regional economy is greater than what is outlined in this report.

General Operations Economic ImpactsBaltimore Gas and Electric Service Area

Actual BGE State & Local Taxes Paid2013

JurisdictionAmount Paid in

State & Local TaxesMaryland $309,267,050Anne Arundel $22,068,373Baltimore $40,884,604Carroll $4,472,570Harford $9,145,924Howard $10,247,451Baltimore City $77,777,406

Source: BGE

Figure 7

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General Operations Economic ImpactsBaltimore Metropolitan Statistical Area and State of MarylandAs the effects of BGE’s general operations are followed through the State of Maryland, the company’s economic impacts grow slightly. A portion of what is considered leakage - purchases made from sup-pliers and producers located outside the region, which tend to happen more often with each round of spending - is captured as the whole of Maryland is measured as the study area. Including the eastern and western portions of the state captures more spending and support for incremental supplier activity.

At the statewide level, the economic impacts of BGE’s general operations grow to support 9,153 total jobs, $647.70 million in labor income, and $3.86 billion of output. BGE generated an estimated $384.39 million in state and local taxes in 2013 alone through direct, indirect, and induced impacts of its general operations activities. Each job that BGE’s general operations supported directly created 2 additional jobs in the Maryland economy, and each dollar of revenue that BGE generated led to an additional 26 cents of output in the state.

Economic contributions to counties within the Baltimore MSA varied based on the level of BGE employ-ment and activity within each county, as well as the size and structure of the local economy. BGE sup-ported the greatest number of jobs and output in Baltimore County, Anne Arundel County, and Baltimore City due to more of its employees residing within those municipalities. The economic impacts of BGE on each of the counties within the Baltimore MSA are shown in Figure 8 on the following page.

Due to the use of an alternative method to determine regional purchasing coefficients, Service Area impacts should not be compared to State of Maryland impacts.

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General Operations Economic ImpactsBaltimore Metropolitan Statistical Area

Figure 8

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE informationEstimates are influenced by employment location and are subject to change as BGE employees relocate and commute or travel within the Baltimore MSA. No part of Queen Anne’s County receives electric or natural gas service from BGE, and therefore gener-ates no revenue for BGE and receives no capital or operations investment from BGE.

BGE General Operations Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

Anne Arundel CountyEmployment 401.0 741.5 303.1 1,445.6Labor Income $42,715,372 $34,266,398 $13,669,493 $90,651,263 Output $610,632,245 $89,624,104 $37,023,040 $737,279,389

Baltimore CountyEmployment 1,200.0 752.2 771.2 2,723.4Labor Income $127,826,549 $36,506,666 $33,409,180 $197,742,395 Output $824,290,920 $79,511,272 $89,669,063 $993,471,255

Carroll CountyEmployment 267.0 123.0 141.0 531.0Labor Income $28,441,407 $4,873,186 $4,840,223 $38,154,816 Output $132,181,756 $12,587,460 $15,465,103 $160,234,319

Harford CountyEmployment 504.0 200.6 236.3 940.9Labor Income $53,687,151 $7,967,257 $8,455,741 $70,110,149 Output $241,104,943 $19,727,661 $25,803,835 $286,636,439

Howard CountyEmployment 145.0 318.2 107.0 570.2Labor Income $15,445,708 $18,995,994 $5,216,730 $39,658,432 Output $338,642,599 $41,319,034 $14,058,766 $394,020,399

Queen Anne’s CountyEmployment 27.0 9.0 36.0Labor Income $2,876,097 $287,986 $3,164,083 Output $1,030,947 $1,030,947

Baltimore CityEmployment 445.0 383.5 208.7 1,037.2Labor Income $47,402,345 $24,506,338 $11,886,239 $83,794,922 Output $672,241,538 $52,087,384 $29,417,157 $753,746,079

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Energy Management Programs Economic ImpactsBaltimore Gas and Electric Service AreaBGE offers a range of energy management incentive programs aimed at helping residential, com-mercial, and industrial customers reduce energy consumption and demand. These programs include demand-side management programs like PeakRewardsSM targeted at reducing customer demand dur-ing peak hours, and energy efficiency programs that aid in customer investment in fixtures and appli-ances that use less energy. In 2013 alone, residential and commercial BGE customers saved a net total of $79 million through reduced energy consumpton and incentive, re-bate, and bill credit programs offered by the company. BGE administers its Energy Management programs as a part-nership between utility customers, BGE, and EmPOWER Maryland legislation that permits surcharges and higher rebates aimed at reducing state energy consumption. The benefits of such programs are threefold:

› Energy cost savings realized through imple-menting energy efficiency measures reduce operating costs and increase industry out-put for commercial customers and make available additional disposable income for residential customers that can be used for regular household consumption activities; and

› Residences and commercial and industrial customers that elect to take advantage of BGE’s energy management programs spur additional economic activity themselves through the purchase of equipment up-grades, hiring contracting services, and various other expenditures to industries that produce goods and services that sell products associated with energy consumption; and

› Reduced energy consumption is beneficial to the regional environment by reducing greenhouse gas emissions and energy demand.

The direct economic activities resulting from BGE’s customer energy management programs begin a new round of ripple effects in the regional and state economies through indirect and induced activities.

BGE 2013 Customer EnergyManagement ProgramsTotal Service Area Economic ImpactsEmployment: 764Labor Income: $40.13 millionOutput: $209.11 millionState & Local Taxes: $6.01 million

BGE 2013 Customer EnergyManagement ProgramsDirect and Total Service Area Output Impacts

0

50000000

100000000

150000000

200000000

250000000

Total Output(millions)

Direct Output(millions)

Multiplier = 1.9

$110.30

$209.11

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Energy Management Programs Economic ImpactsBaltimore Gas and Electric Service AreaBGE offers customers a variety of ways to save money, energy, and benefit the environment that fall under the BGE Smart Energy Savers Program® umbrella, including, but not limited to, the following:

› The PeakRewardsSM program, which requires customers to install a smart thermostat or air con-ditioning device, cycles participants’ air conditioners to during periods of high demand in order to reduce the likelihood of power outages and provides bill credits to customers participating in the program. BGE residential customers saved nearly $23 million in 2013 alone through its PeakRe-wards program.

› The BGE Smart Energy Rewards® program awards bill credits to customers who reduce their us-age during periods of high energy use during the summer and requires only that customers have a smart meter installed. This program was limited to customers with smart meters, which in 2013 was only a portion of the utility’s Service Area.

› Rebates on high-efficiency heating and cooling equipment and services, lighting, and energy ef-ficient home and building improvements.

› Retrocommissioning, or adjusting and troubleshooting, electrical, mechanical, and control sys-tems in existing commercial and industrial buildings to optimize energy performance.

While the company’s Smart Grid investments were localized to portions of the Service Area, thus limit-ing access to some BGE demand side management programs, more than 330,000 customers chose to participate in BGE’s customer energy management programs in 2013. BGE continues to install smart meters, which has allowed the company to reduce operations and maintenance expenditures and pass savings along to its customers in the form of rates lower than what they otherwise would be in the absence of such programs on monthly utility bills. A natural lag between lowered costs for BGE and customer savings is to be expected such that consumer benefit will be fully realized as rate schedules are revised. Two such rate revisions occurred in 2013, directly affecting the monthly utility bills of residen-tial and small general service commercial customers: BGE transferred an annual savings of $8.64 per customer to residential consumers and $5.90 per customer to small commercial customers as a direct result of the utility’s investment in Smart Grid technologies.

The following analysis accounts for BGE’s role as the administrator of energy management programs that rely on a partnership between customers, BGE, and EmPOWER Maryland and the direct, indirect, and induced effects of the company’s Energy Management activities. For example, it does not take into account the economic impact of an industrial customer that takes advantage of a BGE energy efficiency program and hires a third-party contractor to install new equipment to do so. However, it is important to know that this separate, distinct wave of economic impact exists, and that BGE and utility customers

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Energy Management Programs Economic ImpactsBaltimore Gas and Electric Service Areacan be considered prime movers in its inception.

An additional caveat exists when estimating the economic impact of savings of commercial customers caused by introducing energy management measures. Each commercial and industrial customer oper-ating within the BGE Service area may, and likely will, utilize these cost savings differently: one organi-zation may pass its savings on to employees through increased compensation, another may dedicate savings to an expanded marketing budget, while a third may make a capital purchase with its savings. While each organization has benefitted from BGE’s demand side management and energy efficiency programs, the impact of each on the local economy is quite different.

As such, the total economic impacts of BGE’s Customer Energy Management activities shown in Fig-ure 9 include estimates for employment, labor income, and output that recognize a significant variance in the way commercial customers elect to use the funds saved through BGE’s programs that promote demand side management and energy efficiency.

BGE’s Energy Management activities, which include program administration, labor costs, and customer savings as a result of avoided energy use, represent a significant economic multiplier. Every dollar of direct output related to BGE’s Energy Management programs within the Service Area creates an addi-tional 89 cents of indirect and induced output. Providers of household goods and services see the great-est benefit of BGE’s Energy Management activities by far: the annual increase in household income that these programs represent has led to significant expenditures in the food service, health care, and retail industries.

Despite only staffing 22 people to facilitate the entire company’s Energy Management activities, 21 of whom live in the BGE Service Area and State of Maryland, BGE supports a total of 764 jobs in the Ser-

BGE Energy Management Programs Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

BGE Service Area

Employment 21.0 194.7 548.0 763.7

Labor Income $2,167,490 $10,960,832 $27,002,654 $40,130,976

Output $110,299,107 $25,855,414 $72,956,298 $209,110,819

Maryland

Employment 21.0 215.4 561.2 797.6

Labor Income $2,167,490 $12,681,125 $28,387,276 $43,235,891

Output $110,299,107 $30,048,137 $75,726,216 $216,073,460

Figure 9

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information

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vice Area economy and over $40.13 million in labor income. BGE’s Energy Management activities also generated roughly $6.01 million worth of state and local tax revenue.

Expanding the study area to the entire state shows an even greater economic impact generated by BGE’s Energy Management activites. Across the State of Maryland, BGE’s demand side management and energy efficiency programs support over $105.77 million of indirect and induced output. Again, the greatest beneficiary of these activities are suppliers of household goods and services.

Because it benefits from Smart Grid and Advanced Meter Infrastructure, Anne Arundel County realized the greatest benefit of BGE’s Energy Management activities. Anne Arundel County residents saved $9 million through BGE’s PeakRewards bill credit and Smart Energy Rewards rebate programs alone. BGE output in Anne Arundel county of $18.73 million generated indirect and induced impact output of $13.41 million, and supported 107 indirect and induced jobs.

Figure 10 on the following page shows the economic impact of BGE’s Energy Management on each of the counties within the Baltimore MSA that are served by BGE. Note that the total impact of the counties does not equal the total impact of the MSA, as the larger geography is able to capture supplier relation-ships that exist across county lines.

Energy Management Programs Economic ImpactsBaltimore Metropolitan Statistical Area and State of Maryland

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Energy Management Programs Economic ImpactsBaltimore Metropolitan Statistical Area

BGE Energy Management Programs Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

Anne Arundel CountyEmployment 2.0 35.1 72.2 109.3Labor Income $5,324,525 Output $18,727,585 $4,423,925 $8,987,249 $32,138,759

Baltimore CountyEmployment 8.0 42.7 92.1 142.8Labor Income $6,817,015 Output $20,613,385 $4,977,947 $10,835,435 $36,426,767

Carroll CountyEmployment 7.5 11.4 18.9 Labor Income $645,382 Output $3,299,484 $780,100 $1,280,243 $5,359,827

Harford CountyEmployment 2.0 12.1 16.5 30.6Labor Income $1,212,210 Output $5,211,098 $1,232,843 $1,852,677 $8,296,618

Howard CountyEmployment 3.0 20.2 49.4 72.6Labor Income $3,988,049 Output $15,564,074 $2,810,988 $6,605,835 $24,980,897

Baltimore CityEmployment 5.0 42.1 40.5 87.6Labor Income $5,510,822 Output $14,198,848 $5,376,259 $5,709,952 $25,285,059

Figure 10

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE informationEstimates are influenced by location of residence and are subject to change as BGE employees relocate or travel. No part of Queen Anne’s County receives electric or natural gas service from BGE, and therefore generates receives no incentive funds or operations or capital investment from BGE’s energy management programs. Queen Anne’s County likely sees nominal fiscal induced benefits as a result of BGE’s Energy Management activities, as well as environmental benefits as-sociated with the programs.Labor income is reported in total impacts only to ensure the privacy of BGE employees.

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Charitable Giving Program Economic ImpactsBaltimore Gas and Electric Service AreaBGE supports the community in which its employees live and work through contributions to a variety of philanthropic causes, including education, the environment, community development, and arts and culture. In 2013, through its charitable giving programs, BGE provided $3.57 million to nonprofits in its Service Area to advance efforts in improving education, the environment, community development, and arts and culture. Reflecting the company’s focus on diversity and inclusion, 48% of BGE’s charitable contribu-tions aided initiatives organized or operated by diversity suppliers.

Funding provided by BGE’s charitable giving helped to create and sustain valuable programs and services in the community provided by nonprofits, educational institutions, and local government entities as well as contribut-ing to the regional economy through the jobs and spending associated with the funded organizations themselves. For the purposes of this analysis, it is assumed that all of BGE’s charitable giving was provided to the Grantmaking, Giving, and Social Advocacy industry. Other industries, such as Civic and Professional Organizations, may have been minor recipients. The effects of charitable giving to these distinct but similar industries is comparable.

The funds allocated by BGE provided varying lev-els of support for internal programs and operations across an array of recipient organizations, which generated direct economic effects within the State of Maryland and the BGE Service Area. While rela-tive to BGE, the direct economic impacts of BGE’s charitable giving are associated with recipient orga-nizations, not BGE. The direct impacts shown here include the workers that BGE employees to manage its Charitable Giving activities.

The economic impacts of BGE’s Charitable Giving programs did not end with a transfer of funds and direct effects related to other organizations. A multiplier effect was created as a result of links between funded activities, suppliers of goods and services, and employee spending. BGE’s role in the aggregate impact of charitable giving is understated as only a portion of the economic ripple effect can be attrib-uted solely to BGE activity.

BGE 2013 Charitable GivingTotal Service Area Economic ImpactsLabor Income: $1.17 millionOutput: $5.46 millionState & Local Taxes: $107,000

BGE 2013 Charitable GivingDirect and Total Service Area Output Impacts

Total Output(millions)

Direct Output(millions)

Multiplier = 1.5

$3.57

$5.46

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 20

Charitable Giving Program Economic ImpactsBaltimore Metropolitan Statistical Area and State of MarylandBGE employees are personally committed to improving the community where they work and where they live through volunteering. In 2013, BGE employees provided 25,000 volunteer hours to local causes.

Figure 11 shows how BGE employees volunteered their time, with community development, education, food service, and en-vironmental areas of activism being the most common ways for BGE employees to donate labor.

The time that BGE employees donate to myriad causes cre-ates significant positive effects such as improved education outcomes, healthy and thriving communities, support for the arts, and relief efforts

The direct, indirect, and induced effects of BGE’s charitable giving within the Service Area generated an economic impact totaling nearly $1.17 in labor income, nearly $5.46 million of output, and $107,000 of state and local tax revenue. For every dollar BGE invested in grants, giving, and social advocacy, the Service Area economy received another 53 cents of output derived from indirect and induced effects.

Figure 12 shows the impact of BGE’s Charitable Giving Programs on employment, labor income, and output in the BGE Service Area and the State of Maryland study areas.

BGE Charitable Giving Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

BGE Service AreaLabor Income $1,170,308 Output $3,566,308 $1,247,067 $641,744 $5,455,119

MarylandLabor Income $1,339,257 Output $3,571,000 $1,617,909 $731,686 $5,920,595

Figure 12

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE informationLabor income is reported in total impacts only to ensure the privacy of BGE employees.

Figure 11 - Areas of Volunteering by BGE EmployeesRelief E�orts

Food Service

Environment

Emergency Response

Education

Construction

Community Development

Arts

25,000HOURS

Arts

CommunityDevelopment

Construction

Education

EmergencyResponse

Environment

Food Service

Relief Efforts

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 21

Effects of BGE’s Charitable Giving Program grow with larger geographic areas as the MSA and State of Maryland have the ability to capture indirect and induced activities. Economic activities that occur out-side of the BGE Service Area are considered leakage when the impact of BGE on its service territory is measured, but still occurs within the MSA and the State of Maryland, and some portion of that leakage is captured by analysis of these larger affected geographies.

The impacts of BGE’s Charitable Giving activities on individual counties within the Baltimore MSA are shown in Figure 13 on the following page. The impact of charitable giving on the BGE Service Area was estimated using a different method than the impacts on the State of Maryland, and as such, the two should not be compared.

Charitable Giving Program Economic ImpactsBaltimore Metropolitan Statistical Area and State of Maryland

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 22

Charitable Giving Program Economic ImpactsBaltimore Metropolitan Statistical Area

BGE Charitable Giving Economic Impacts, 2013Study Area & Impact Direct Indirect Induced Total

Anne Arundel CountyLabor Income $44,224 Output $277,382 $92,833 $18,060 $388,275

Baltimore CountyLabor Income $210,000 $63,533 $55,609 $329,142 Output $512,314 $150,063 $149,252 $811,629

Carroll CountyLabor Income $8,654 Output $65,736 $25,880 $3,528 $95,144

Harford CountyLabor Income $25,511 Output $193,083 $62,065 $9,425 $264,573

Howard CountyLabor Income $15,959 Output $86,785 $31,892 $5,660 $124,337

Queen Anne’s CountyLabor Income $173 Output $1,922 $489 $57 $2,468

Baltimore CityLabor Income $336,463 Output $2,312,990 $525,094 $121,421 $2,959,505

Figure 13

Economic Alliance of Greater Baltimore Foundation, May 2014Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE informationEstimates are influenced by location of residence and are subject to change as BGE employees relocate or travel.Labor income is reported in total impacts only to ensure the privacy of BGE employees.

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 23

Concluding Remarks

General OperationsBGE’s General Operations activities are efficient: an average of 1,000 residents are served by every BGE employee. This major employer also supports, through direct, indirect, and induced impacts, 2% of the output generated by the businesses and residences that rely on its services. In total, BGE supports 8,686 jobs, $624.34 million in labor income, and $3.81 billion in output within its Service Area. Additional unquantified benefits resulting from a history of reliability and short outages are captured by residential and commercial customers who are able to maintain production throughout events that might otherwise cause power failure.

Energy ManagementConsumers of electric and natural gas service within the BGE territory are aided by BGE’s administra-tion of a variety of demand side management and energy efficiency programs. These programs rely on a partnership between customers and BGE, as well as EmPOWER Maryland legislation. Residential consumers saved a total of $68.52 million through bill credits, reduced energy usage, and BGE technol-ogy investment that resulted in lower rates. Commercial consumers saved $10.45 million through similar programs. BGE’s Energy Management activities supported a total of 764 jobs, $40.13 million in labor income, and $209.11 million of output in the Service Area economy. Over 330,000 BGE customers par-ticipate in the company’s Energy Management programs.

Charitable GivingBGE directly supports organizations that work to improve education, the environment, communities, and arts and culture in the Service Area and across the State of Maryland. BGE’s Charitable Giving activities support $1.17 million in labor income and $5.46 million of output in the Service Area alone. For every dollar BGE gives to nonprofits, an additional 53 cents of output is generated in the Service Area economy. BGE’s Charitable Giving program is run efficiently by only 3 direct employees.

Employees of BGE volunteered 25,000 hours of free labor in 2013 to organizations that operate in the arts, community development, construction, education, emergency response, the environment, food service, and relief efforts industries.

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 24

Technical Notes

EAGB utilized the IMPLAN input-output model with 2012 coefficients to conduct the economic impact analysis. The model was built to reflect the BGE Service Area, individual counties within the Baltimore MSA, and the State of Maryland economies as well as specific BGE activities based on information provided directly by BGE for the year 2013. This analysis accounted for direct spending leakages out of the geographic areas as well as captured indirect and induced effects.

EAGB also used the model-derived tax impact analysis to estimate the aggregated state and local fiscal impacts associated with the direct, indirect, and induced economic effects. BGE was asked to use tax records as a reference check for model calculations and confirmed the accuracy of the model.

BGE-provided background data and analysis parameters for the Service Area are shown in Figure 14 below and Figure 15 on the following page. Figure 14 groups the information into the separate general operations, customer energy management, community investment, and corporate volunteering compo-nents. Figure 14 delineates the exact geographic boundaries of the BGE Service Area as determined by ZIP code. Due to some overlap in the background data, the four segments of this report should not be added together to estimate total economic impact.

The BGE Service Area was estimated using ZIP codes of BGE-serviced areas and is regarded as accurate. While Trade Flows Regional Purchasing Coefficients (RPCs) at the county and state levels, IMPLAN utilizes the older Econometric RPCs at the ZIP code level, where Trade Flows are unavailable. Econometric RPCs do not consider geography and as such provide a different estimate of economic impact than Trade Flow RPCs. As noted throughout this report, the effects of Trade Flow RPCs and Econometrics RPCs should not be compared. Additionally, Econometric RPCs do not support multi-region analysis, and the effects of a BGE activity on the State of Maryland are estimated from the coun-ties relevant to the given activity.

Customer satisfaction metrics were determined through a third party that supplied findings to BGE.Figure 14

BGE Background DataFactor Service Area

Headcount Employment 3,350

Labor Income $356,955,606

Revenue $3,050,000,000

Operations & Maintenance Expenditures $474,172,578.62

Capital Expenses $571,381,948

Customer Energy Management Project Administration & Incentives $96,273,025

Customer Energy Management Residential Cost Savings $36,416,172

Customer Energy Management Commercial Cost Savings $10,789,900

Charitable Giving Program Funding $3,571,000

Volunteer Hours 25,000

Source: BGE

110 W Fayette Street, Baltimore, MD 21202 | www.bge.com 25

Technical Notes

Figure 15

ZIP Codes Within the BGE Service AreaZIP ZIP ZIP ZIP ZIP ZIP ZIP ZIP20639 20765 21009 21045 21093 21154 21218 2140220678 20769 21010 21046 21102 21155 21219 2140320689 20770 21012 21047 21104 21156 21220 2140420701 20772 21013 21048 21105 21157 21221 2140520705 20774 21014 21050 21106 21158 21222 2140920706 20776 21015 21051 21108 21160 21223 2170120707 20777 21017 21052 21111 21161 21224 2171020708 20778 21018 21053 21113 21162 21225 2172320711 20779 21020 21054 21114 21163 21226 2173720714 20782 21022 21056 21117 21201 21227 2173820715 20784 21023 21057 21120 21202 21228 2176520716 20785 21027 21060 21122 21203 21229 2177020720 20794 21028 21061 21123 21204 21230 2177120721 20832 21029 21071 21128 21205 21231 2177620723 20833 21030 21074 21130 21206 21234 2178420724 20860 21031 21075 21131 21207 21236 2178720732 20861 21032 21076 21132 21208 21237 2179020733 20862 21034 21077 21133 21209 21239 2179120736 20866 21035 21078 21136 21210 21240 2179420751 20868 21036 21082 21139 21211 21244 2179720754 20879 21037 21084 21140 21212 21250 2190220755 20882 21040 21085 21144 21213 21251 2190320758 20904 21041 21087 21146 21214 21252 2190420759 20905 21042 21088 21150 21215 21286 2191720763 21001 21043 21090 21152 21216 2128720764 21005 21044 21092 21153 21217 21401

Source: BGE

1 E Pratt StreetSuite 200Baltimore, MD 21202410.637.4100www.greaterbaltimore.org

Prepared by:Prepared for:

110 W Fayette StreetBaltimore, MD 21202www.bge.com

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