Economic Impact of Baltimore Gas and Electric Company

Transcription

1 Economic Impact of Baltimore Gas and Electric Company June 2014 Prepared for: Baltimore Gas and Electric Company 110 W Fayette Street Baltimore, MD

2 Contents Introduction 3 Key Terms and Concepts 4 Study Area 1: BGE Service Area 5 Study Area 2: Counties Within the Baltimore Metropolitan Statistical Area 6 Study Area 3: State of Maryland 7 Key Findings 8 General Operations Economic Impacts 9 Baltimore Gas and Electric Service Area 9 Baltimore Metropolitan Statistical Area and State of Maryland 12 Baltimore Metropolitan Statistical Area 13 Energy Management Programs Economic Impacts 14 Baltimore Gas and Electric Service Area 14 Baltimore Metropolitan Statistical Area and State of Maryland 17 Baltimore Metropolitan Statistical Area 18 Charitable Giving Program Economic Impacts 19 Baltimore Gas and Electric Service Area 19 Baltimore Metropolitan Statistical Area and State of Maryland 20 Baltimore Metropolitan Statistical Area 22 Concluding Remarks 23 Technical Notes W Fayette Street, Baltimore, MD

3 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 economic 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 distribution, 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 energy efficiency projects, steps taken to improve demand side management, offering energy audits 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 activities. The discussions of economic impacts throughout Figure 1 this report are separated by activity and by geographic BGE Employees by Location of Residence study area. Location Total Employees Figure 1 details the number of workers employed by US 3,352 BGE based on location of residence. Maryland 3,100 BGE Service Area 3,035 Source: BGE 110 W Fayette Street, Baltimore, MD

4 Introduction Key Terms and Concepts There 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 generated 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 economic 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, because 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 communities is not included in this report. Note that BGE generates additional induced impacts on the states of Pennsylvania, Delaware, and Virginia. 110 W Fayette Street, Baltimore, MD

5 Introduction Study Area 1: BGE Service Area Figure 2 - BGE Service Area Map BGE SERVICE AREA ec il ty C Co Harford un C MANC CHES ESTEER WALKERSVILLE Carro lll Cou nty Bal m ore C ount y HAMPST STEA STEAD EA AD D WESTM STMINS NSTTER PERR ERRYVI RRY ILLE R BEL EL AIR ABEERDEEN ER EN FREDERICK DER K SYKESVILL SYKESVILLE E Bal more City nty ou ty un kc c i Co er y r d e Fre om ntg o M H dc ar ow n ou ty G THERSB GA GAI BURG Anne Ar Prin ce G RO R O OC C CK KV VILLE ILLEE County BOWIE WIE ANNAP AN P POLIS W WASHINGTON WA NGTON D.C. D W E ElectricELECTRIC Service Boundary SERVICE FRANCHISE BOUNDARY NaturalNATURAL Gas Service Boundary GAS SERVICE FRANCHISE BOUNDARY Currently Served by Both CURRENTLY SERVED BY BOTH NATURAL GAS AND ELECTRIC NaturalNATURAL Gas Service Only GAS SERVICE ONLY Source: BGE Region BGE Service Area Population 3,441,598 BGE Employees 3,035 Source: IMPLAN, BGE BGE Employees represents the number of BGE employees residing within the BGE Service Area. 110 W Fayette Street, Baltimore, MD

6 Introduction Study Area 2: Counties Within the Baltimore Metropolitan Statistical Area Figure 3 ADAMS - Baltimore Metropolitan Statistical YORK Area Map PENNSYLVANIA LANCASTER CHESTER CECIL HARFORD FREDERICK CARROLL BALTIMORE COUNTY BALTIMORE CITY KENT HOWARD MONTGOMERY Patapsco River QUEEN ANNE'S LOUDOUN PRINCE WILLIAM FAIRFAX VIRGINIA DISTRICT OF COLUMBIA CHARLES PRINCE GEORGE S ANNE ARUNDEL CALVERT Chesapeake Bay TALBOT CAROLINE DORCHESTER STAFFORD Source: EAGB ST. MARY'S County Population BGE Employees KING GEORGE Baltimore MSA 2,753,149 2,989 Anne Arundel 550, Baltimore 817,455 1,200 WESTMORELAND Carroll 167, Harford 248, Howard 299, Queen Anne s 48, Baltimore City 621, Source: IMPLAN, BGE BGE Employees represents the number of BGE employees residing within the Baltimore MSA or counties within the Baltimore MSA SOMERSET 110 W Fayette Street, Baltimore, MD

7 Introduction Study Area 3: State of Maryland Figure 4 - State of Maryland and Key Energy Facilities Map Source: EAGB State Population BGE Employees Maryland 5,884,563 3,100 Source: IMPLAN, BGE 110 W Fayette Street, Baltimore, MD

8 Key Findings Service Area Impacts General 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, $ 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 consumption 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 $ 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 income, and $ million in output. For every dollar that BGE spent in energy management within the Service Area, 89 cents of additional 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 assistance 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 operating in the arts, community development, construction, education, emergency response, environment, 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 W Fayette Street, Baltimore, MD

9 General Operations Economic Impacts Baltimore Gas and Electric Service Area The 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 administrative services. In 2013, general operations activities generated $3.05 billion of revenue, which supported 3,035 direct employees in the BGE Service Area and paid wages to those employees totaling $ 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 Construction of New Commercial and Health Care Facilities. Figure 5 - General Operations Impact Diagram BGE 2013 General Operations Total Service Area Economic Impacts Employment: 8,686 Labor Income: $ million Output: $3.81 billion State & Local Taxes: $ million BGE 2013 General Operations Total Service Area Output Comparison Computer Systems & Design Services Output $3.91 billion BGE Total Output Scientific R&D Services Output Legal Services Output Construction of New Commercial & Health Care Facilities Output $3.81 billion $3.54 billion $3.22 billion $3.05 billion DIRECT $323,294,648 wages to employees INDUCED $342,147,675 payment for household goods and services DIRECT $3.05 billion output INDIRECT $173,809,528 wages INDIRECT INDUCED $342,147,675 payment for household goods and services $1,045,554,526 payment for goods and services INDIRECT payment for goods and services 110 W Fayette Street, Baltimore, MD

10 General Operations Economic Impacts Baltimore Gas and Electric Service Area The 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 contributions resulting from BGE s 2013 general operations within the company s Service Area totaled approximately 8,686 jobs, $ million of labor income, and $3.81 billion of output. Nearly $ million of direct, indirect, and induced state and local taxes 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 Maintenance 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. Figure 6 BGE General Operations Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total BGE Service Area Employment 3, , , ,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, , , ,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 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information BGE 2013 General Operations Direct and Total Service Area Output Impacts $3,811 $3,050 Direct Output (millions) Multiplier = 1.25 Total Output (millions) 110 W Fayette Street, Baltimore, MD

11 General Operations Economic Impacts Baltimore Gas and Electric Service Area BGE is highly regarded among its customers for the company s reliability and fast response during outages, and customer satisfaction favorability with BGE has steadily increased since 2008 to an all-time high in To measure 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 circa 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 country. 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. Figure 7 Actual BGE State & Local Taxes Paid 2013 Amount Paid in Jurisdiction State & Local Taxes Maryland $309,267,050 Anne Arundel $22,068,373 Baltimore $40,884,604 Carroll $4,472,570 Harford $9,145,924 Howard $10,247,451 Baltimore City $77,777,406 Source: BGE 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. 110 W Fayette Street, Baltimore, MD

12 General Operations Economic Impacts Baltimore Metropolitan Statistical Area and State of Maryland As 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 suppliers 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, $ million in labor income, and $3.86 billion of output. BGE generated an estimated $ 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 employment and activity within each county, as well as the size and structure of the local economy. BGE supported 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. 110 W Fayette Street, Baltimore, MD

13 General Operations Economic Impacts Baltimore Metropolitan Statistical Area Figure 8 BGE General Operations Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total Anne Arundel County Employment ,445.6 Labor 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 County Employment 1, ,723.4 Labor 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 County Employment Labor 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 County Employment Labor 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 County Employment Labor 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 County Employment Labor Income $2,876,097 $287,986 $3,164,083 Output $1,030,947 $1,030,947 Baltimore City Employment ,037.2 Labor 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 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information Estimates 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 generates no revenue for BGE and receives no capital or operations investment from BGE. 110 W Fayette Street, Baltimore, MD

14 Energy Management Programs Economic Impacts Baltimore Gas and Electric Service Area BGE offers a range of energy management incentive programs aimed at helping residential, commercial, and industrial customers reduce energy consumption and demand. These programs include demand-side management programs like PeakRewards SM targeted at reducing customer demand during peak hours, and energy efficiency programs that aid in customer investment in fixtures and appliances 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, rebate, and bill credit programs offered by the company. BGE administers its Energy Management programs as a partnership 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 implementing energy efficiency measures reduce Management Programs BGE 2013 Customer Energy operating costs and increase industry output for commercial customers and make $ Direct and Total Service Area Output Impacts available additional disposable income for residential customers that can be used for regular household consumption activities; $ and Multiplier = 1.9 BGE 2013 Customer Energy Management Programs Total Service Area Economic Impacts Employment: 764 Labor Income: $40.13 million Output: $ million State & Local Taxes: $6.01 million Direct Output (millions) Total Output (millions) Residences and commercial and industrial customers that elect to take advantage of BGE s energy management programs spur 0 additional economic activity themselves through the purchase of equipment upgrades, 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. 110 W Fayette Street, Baltimore, MD

15 Energy Management Programs Economic Impacts Baltimore Gas and Electric Service Area BGE 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 PeakRewards SM program, which requires customers to install a smart thermostat or air conditioning 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 PeakRewards program. The BGE Smart Energy Rewards program awards bill credits to customers who reduce their usage 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 efficient home and building improvements. Retrocommissioning, or adjusting and troubleshooting, electrical, mechanical, and control systems 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 limiting access to some BGE demand side management programs, more than 330,000 customers chose to participate in BGE s customer energy management programs in 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 residential 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 110 W Fayette Street, Baltimore, MD

16 Energy Management Programs Economic Impacts Baltimore Gas and Electric Service Area can 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 operating within the BGE Service area may, and likely will, utilize these cost savings differently: one organization 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 Figure 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 additional 89 cents of indirect and induced output. Providers of household goods and services see the greatest 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- Figure 9 BGE Energy Management Programs Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total BGE Service Area Employment 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 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 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information 110 W Fayette Street, Baltimore, MD

17 Energy Management Programs Economic Impacts Baltimore Metropolitan Statistical Area and State of Maryland 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 $ 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 relationships that exist across county lines. 110 W Fayette Street, Baltimore, MD

18 Energy Management Programs Economic Impacts Baltimore Metropolitan Statistical Area Figure 10 BGE Energy Management Programs Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total Anne Arundel County Employment Labor Income $5,324,525 Output $18,727,585 $4,423,925 $8,987,249 $32,138,759 Baltimore County Employment Labor Income $6,817,015 Output $20,613,385 $4,977,947 $10,835,435 $36,426,767 Carroll County Employment Labor Income $645,382 Output $3,299,484 $780,100 $1,280,243 $5,359,827 Harford County Employment Labor Income $1,212,210 Output $5,211,098 $1,232,843 $1,852,677 $8,296,618 Howard County Employment Labor Income $3,988,049 Output $15,564,074 $2,810,988 $6,605,835 $24,980,897 Baltimore City Employment Labor Income $5,510,822 Output $14,198,848 $5,376,259 $5,709,952 $25,285,059 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information Estimates 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 associated with the programs. Labor income is reported in total impacts only to ensure the privacy of BGE employees. 110 W Fayette Street, Baltimore, MD

19 Charitable Giving Program Economic Impacts Baltimore Gas and Electric Service Area BGE 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 contributions 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 contributing 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 levels of support for internal programs and operations across an array of recipient organizations, which BGE 2013 Charitable Giving Total Service Area Economic Impacts Labor Income: $1.17 million Output: $5.46 million State & Local Taxes: $107,000 BGE 2013 Charitable Giving Direct and Total Service Area Output Impacts $5.46 Total Output (millions) Multiplier = 1.5 Direct Output (millions) generated direct economic effects within the State of Maryland and the BGE Service Area. While relative to BGE, the direct economic impacts of BGE s charitable giving are associated with recipient organizations, 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 attributed solely to BGE activity. $ W Fayette Street, Baltimore, MD

20 Charitable Giving Program Economic Impacts Baltimore Metropolitan Statistical Area and State of Maryland BGE 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 environmental areas of activism being the most common ways for BGE employees to donate labor. The time that BGE employees donate to myriad causes creates significant positive effects such as improved education outcomes, healthy and thriving communities, support for the arts, and relief efforts Figure 11 - Areas of Volunteering by BGE Employees 25,000 HOURS Arts Community Development Construction Education Emergency Response Environment The direct, indirect, and induced effects of BGE s charitable Food Service giving within the Service Area generated an economic impact Relief Efforts 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. Relief E Food Se Environ Emerge Educati Constru Commu Arts Figure 12 BGE Charitable Giving Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total BGE Service Area Labor Income $1,170,308 Output $3,566,308 $1,247,067 $641,744 $5,455,119 Maryland Labor Income $1,339,257 Output $3,571,000 $1,617,909 $731,686 $5,920,595 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information Labor income is reported in total impacts only to ensure the privacy of BGE employees. 110 W Fayette Street, Baltimore, MD

21 Charitable Giving Program Economic Impacts Baltimore Metropolitan Statistical Area and State of Maryland 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 outside 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. 110 W Fayette Street, Baltimore, MD

22 Charitable Giving Program Economic Impacts Baltimore Metropolitan Statistical Area Figure 13 BGE Charitable Giving Economic Impacts, 2013 Study Area & Impact Direct Indirect Induced Total Anne Arundel County Labor Income $44,224 Output $277,382 $92,833 $18,060 $388,275 Baltimore County Labor Income $210,000 $63,533 $55,609 $329,142 Output $512,314 $150,063 $149,252 $811,629 Carroll County Labor Income $8,654 Output $65,736 $25,880 $3,528 $95,144 Harford County Labor Income $25,511 Output $193,083 $62,065 $9,425 $264,573 Howard County Labor Income $15,959 Output $86,785 $31,892 $5,660 $124,337 Queen Anne s County Labor Income $173 Output $1,922 $489 $57 $2,468 Baltimore City Labor Income $336,463 Output $2,312,990 $525,094 $121,421 $2,959,505 Economic Alliance of Greater Baltimore Foundation, May 2014 Data Source: IMPLAN 2012 Coefficients based on EAGB analysis of BGE information Estimates 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

23 Concluding Remarks General Operations BGE 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, $ 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 Management Consumers of electric and natural gas service within the BGE territory are aided by BGE s administration 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 technology 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 $ million of output in the Service Area economy. Over 330,000 BGE customers participate in the company s Energy Management programs. Charitable Giving BGE 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

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 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 components. 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 multiregion analysis, and the effects of a BGE activity on the State of Maryland are estimated from the counties relevant to the given activity. Customer satisfaction metrics were determined through a third party that supplied findings to BGE. Figure 14 BGE Background Data Factor Service Area Headcount Employment 3,350 Labor Income $356,955,606 Revenue $3,050,000,000 Operations & Maintenance Expenditures $474,172, 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

25 Technical Notes Figure 15 ZIP Codes Within the BGE Service Area ZIP ZIP ZIP ZIP ZIP ZIP ZIP ZIP Source: BGE 110 W Fayette Street, Baltimore, MD

26 2014 Prepared for: Prepared by: 110 W Fayette Street Baltimore, MD E Pratt Street Suite 200 Baltimore, MD