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Investment in Constellation Energy Nuclear Group, LLC (CENG)

6 Months Ended

Jun. 30, 2011

Investment in Constellation Energy Nuclear Group, LLC (CENG)

Investment in Constellation Energy Nuclear Group, LLC (CENG)

Investment in Constellation Energy Nuclear Group, LLC (CENG)

We own a 50.01% interest in CENG, a nuclear generation and operation business. Our total equity in earnings of our investment in CENG is as follows:

	Quarter Ended June 30,						Six Months Ended June 30,

	2011			2010			2011			2010

	(In millions)
CENG	$	14.9		$	40.2		$	27.6		$	63.6
Amortization of basis difference in CENG		(39.9	)		(61.5	)		(69.2	)		(104.2	)

Total equity investment losses—CENG¹	$	(25.0	)	$	(21.3	)	$	(41.6	)	$	(40.6	)

1 For the quarters ended June 30, 2011 and 2010, total equity investment earnings (losses) in CENG include $0.5 million and $0.5 million, respectively, of expense related to the portion of cost of certain share-based awards that we fund on behalf of EDF Group and affiliates (EDF). For the six months ended June 30, 2011 and 2010, total equity investment earnings (losses) in CENG include $0.9 million and $1.6 million, respectively, of expense related to the portion of cost of certain share-based awards that we fund on behalf of EDF.

The basis difference is the difference between the carrying amount of our investment in CENG and our share of the underlying equity in CENG, because the underlying assets of CENG were retained at their historical carrying value. See Note 2 to our 2010 Annual Report on Form 10-K for a more detailed discussion.

Summarized income statement information for CENG for the quarters and six months ended June 30, 2011 and 2010 is as follows:

	Quarter Ended June 30,				Six Months Ended June 30,

	2011		2010		2011		2010

	(In millions)
Revenues	$	354.5	$	376.1	$	713.1	$	737.0
Expenses		333.8		302.9		675.2		626.2
Income from operations		20.7		73.2		37.9		110.8
Net income		30.9		81.3		57.1		130.4

- Definition

Equity investment disclosure, or group of investments for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20% of the voting stock and the investment is accounted for using the equity method, and the reasons why it is. This item also represents the entire disclosure related to Available-for-sale Securities which consist of all investments in certain debt and equity securities neither classified as trading or held-to-maturity securities. A debt security represents a creditor relationship with an enterprise. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities which are categorized as Available-for-sale. Additionally, this disclosure includes variable interest entities (VIE), including, but not limited to the nature, purpose, size, and activities of the VIE, the carrying amount and classification of consolidated assets that are collateral for the VIE's obligations, lack of recourse if creditors (or beneficial interest holders) of a consolidated VIE have no recourse to the general credit of the primary beneficiary. An enterprise that holds a significant variable interest in a VIE but is not the primary beneficiary may disclose the nature of its involvement with the VIE and when that involvement began, the nature, purpose, size, and activities of the VIE and the enterprise's maximum exposure to loss as a result of its involvement with the VIE.

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