Filed by Constellation Energy Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: Constellation Energy Group, Inc.
Commission File No. 333-175162
On November 7, 2011, Constellation Energy began using the following slide presentation during meetings with investors, which includes information regarding Constellation Energy and the proposed merger with Exelon.
 Exelon and
Constellation Energy: Merger and Company Update Edison Electric Institute Financial
Conference November 7-8, 2011 |
 Cautionary
Statements Regarding Forward-Looking Information
2
Except for the historical information contained herein, certain of the matters discussed in
this communication constitute “forward- looking statements” within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by
the Private Securities Litigation Reform Act of 1995. Words such as “may,”
“will,” “anticipate,” “estimate,” “expect,” “project,” “intend,”
“plan,” “believe,” “target,” “forecast,” and words
and terms of similar substance used in connection with any discussion of future plans,
actions, or events identify forward-looking statements. These forward-looking
statements include, but are not limited to, statements regarding benefits of the
proposed merger of Exelon Corporation (Exelon) and Constellation Energy Group, Inc. (Constellation),
integration plans and expected synergies, the expected timing of completion of the
transaction, anticipated future financial and operating performance and results,
including estimates for growth. These statements are based on the current expectations of
management of Exelon and Constellation, as applicable. There are a number of risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements included in this communication regarding the proposed merger. For example,
(1) the companies may be unable to obtain shareholder approvals required for the merger; (2)
the companies may be unable to obtain regulatory approvals required for the merger, or
required regulatory approvals may delay the merger or result in the imposition of
conditions that could have a material adverse effect on the combined company or cause the
companies to abandon the merger; (3) conditions to the closing of the merger may not
be satisfied; (4) an unsolicited offer of another company to acquire assets or capital
stock of Exelon or Constellation could interfere with the merger; (5) problems may arise in
successfully integrating the businesses of the companies, which may result in the
combined company not operating as effectively and efficiently as expected; (6) the combined
company may be unable to achieve cost-cutting synergies or it may take longer than
expected to achieve those synergies; (7) the merger may involve unexpected costs,
unexpected liabilities or unexpected delays, or the effects of purchase accounting may be
different from the companies’ expectations; (8) the credit ratings of the combined
company or its subsidiaries may be different from what the companies expect; (9) the
businesses of the companies may suffer as a result of uncertainty surrounding the merger;
(10) the companies may not realize the values expected to be obtained for properties
expected or required to be divested; (11) the industry may be subject to future
regulatory or legislative actions that could adversely affect the companies; and (12) the companies
may be adversely affected by other economic, business, and/or competitive factors. Other
unknown or unpredictable factors could also have material adverse effects on future
results, performance or achievements of Exelon, Constellation or the combined company. |
 Cautionary
Statements Regarding Forward-Looking Information
(Continued) 3
Discussions of some of these other important factors and assumptions are contained in Exelon’s and
Constellation’s respective filings with the Securities and Exchange Commission (SEC), and
available at the SEC’s website at www.sec.gov, including: (1) Exelon’s 2010
Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note
18; (2) Exelon’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2011 in (a) Part II, Other Information, ITEM 1A. Risk Factors, (b) Part 1,
Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and
(c) Part I, Financial Information, ITEM 1. Financial Statements: Note 13; (3)
Constellation’s 2010 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c)
ITEM 8. Financial Statements and Supplementary Data: Note 12; and (4) Constellation’s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2011 in (a) Part II, Other
Information, ITEM 1A. Risk Factors and ITEM 5. Other Information, (b) Part I, Financial
Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I,
Financial Information, ITEM 1. Financial Statements: Notes to Consolidated Financial Statements,
Commitments and Contingencies. These risks, as well as other risks associated with the proposed
merger, are more fully discussed in the definitive joint proxy statement/prospectus included in
the Registration Statement on Form S-4 that Exelon filed with the SEC and that the SEC declared
effective on October 11, 2011 in connection with the proposed merger. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events discussed in this
communication may not occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this communication. Neither Exelon nor Constellation undertake
any obligation to publicly release any revision to its forward-looking statements to reflect
events or circumstances after the date of this communication.
Additional Information and Where to Find it
In connection with the proposed merger between Exelon and Constellation, Exelon filed with the SEC a
Registration Statement on Form S-4 that included the definitive joint proxy
statement/prospectus. The Registration Statement was declared effective by the SEC on October
11, 2011. Exelon and Constellation mailed the definitive joint proxy statement/prospectus to their respective security
holders on or about October 12, 2011. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE DEFINITIVE
JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE
THEY CONTAIN IMPORTANT INFORMATION about Exelon, Constellation and the proposed merger.
Investors and security holders may obtain copies of all documents filed with the SEC free of
charge at the SEC's website, www.sec.gov. In addition, a copy of the definitive joint proxy
statement/prospectus may be obtained free of charge from Exelon Corporation, Investor Relations, 10 South Dearborn
Street, P.O. Box 805398, Chicago, Illinois 60680-5398, or from Constellation Energy Group, Inc.,
Investor Relations, 100 Constellation Way, Suite 600C, Baltimore, MD 21202. |
 4
Compelling Merger Rationale
Creates the leading competitive energy
provider in the U.S.
Matches Exelon’s clean generation fleet
with Constellation’s customer-facing
leading retail and wholesale platform
Creates economies of scale through
expansion across the value chain
Transaction creates incremental strategic and financial value aligned
with both companies’
existing goals
Strategic Benefits
Financial Benefits
Diversifies generation portfolio across
regions
Adds clean generation to the portfolio
Enhances margins in the competitive
portfolio
Competitive Portfolio
Earnings and cash flow accretive
Dividend uplift for Constellation
shareholders
Continued upside to power market
recovery
Strong balance sheet for combined
company
Utility Benefits
Maintains a regulated earnings profile
with three large urban utilities
Enables operational enhancements
from sharing of best practices across
utilities |
 5
Merger Appeals to Key Stakeholders and Governments
(1) Based on the 30-day average Exelon and Constellation closing stock
prices as of April 26, 2011. |
 6
Enhanced Maryland Proposal
Our additional commitments address a number of key stakeholder concerns
Intervenor Concerns
Key Exelon/Constellation Additional Commitments
Additional Customer
Benefits
Added flexibility for Maryland PSC to determine use of $15 million offered for
programs directly benefiting BGE customers
Ring-Fencing
No corporate reorganization under certain defined circumstances relating to RF
HoldCo, BGE or Exelon Energy Delivery Company without prior Commission
approval Obtain a new non-consolidation opinion to ensure the
effectiveness of BGE ring- fencing
No requests for modification of BGE ring-fencing for 3 years
Financial
Regular reporting on credit ratings and metrics of BGE to Maryland PSC
Specific commitments regarding the level of BGE capital and O&M expenditures
in 2012 and 2013
Report comparative pre-
and post-merger shared services costs to PSC
Corporate Governance
BGE’s CEO will be a member of Exelon Management’s Executive
Committee Executive Committee will meet periodically in Baltimore
Service and Operation
Commitment to meet existing BGE supplier diversity requirements
Provide assessment of BGE CAIDI (outage duration) performance within 12 months
after the merger closes
Market Power
In
addition
to
2,648
MW
of
identified
plant
divestitures,
comply
with
settlement
terms
with PJM Market Monitor restricting buyers of divested plants and imposing other
behavioral commitments |
       Analyzed
market power considerations and proposed mitigation plan to address market
concentration concerns
Proposed comprehensive mitigation plan to address
market concentration in PJM in initial application,
including:
•
Physical sale of 3 baseload generation facilities
totaling 2,648 MW
•
Additional sale of 500 MW via contracts to
mitigate temporary market power issues
Filed with FERC and Maryland PSC on October 11,
2011
No change to assets identified in original proposal
Additional commitment not to sell plants to certain
identified PJM generators
Additional assurances on how we will bid units in PJM
energy and capacity markets
Future retirement of units will be conditioned on meeting
specified requirements
Proactive
divestiture
proposal
Settlement with
PJM
Independent
Market Monitor
(IMM)
The companies have offered a comprehensive, robust mitigation package
Note:
Assets
to
be
divested
–
Brandon
Shores
(Coal),
H.A.
Wagner
(Coal/Oil/Gas)
and
C.P.
Crane
(Oil/Coal).
C.P. Crane
399 MW
Brandon Shores
1,273 MW
H.A. Wagner
976 MW
7
Strong Proposal to Address Market Power |
 Scale, Scope and
Flexibility Across the Value Chain
8
Transaction creates the largest –
and growing –
competitive energy
company in the U.S.
Notable Generation Acquired or
Under Development in 2011
Exelon Additions
720 MW Wolf Hollow CCGT (TX)
230 MW Antelope Valley Solar Ranch
One (CA)
230 MW Michigan Wind Projects (MI)
Constellation Additions
2,950 MW Boston Generating gas fleet
30.4 MW Sacramento Municipal Utility
District Solar (CA)
16.1 MW Maryland Generating Clean
Horizons Solar (MD)
7.8 MW Vineland Municipal Electric
Utility Solar (NJ)
5.4 MW Toys “R”
Us Solar (NJ)
5.2 MW Johnson Matthey, West
Deptford Solar (NJ)
5.0 MW U.S. State Department Solar
(NJ)
Note:
Data
as
of
9/30/11.
Exelon
solar
addition
MW
based
on
alternating
current
(AC);
Constellation
solar
additions
MW
based
on
direct
current (DC).
(1) Generation capacity net of physical market mitigation assumed
to be 2,648 MW consisting of Brandon Shores (1,273 MW), H.A. Wagner (976 MW)
and C.P. Crane (399 MW). (2) Electric load includes all
booked 2011E competitive retail and wholesale sales, including index products. Exelon load does not include the
ComEd swap (~26 TWh). Gas load includes all booked and forecasted 2011E competitive
retail sales as of 9/30/11. Reserves (gas)
266 bcf
Owned Generating
Capacity
35 GWs
(1)
Electric
Transmission
7,350 miles
Electric & Gas Dist.
6.6 million
customers
Retail &
Wholesale Volumes
(2)
(Electric & Gas)
~167 TWh, 372 bcf
Upstream
Downstream |
 Well Positioned
for Evolving Regulatory Requirements (1)
Total owned generation capacity as of 9/30/2011 for Exelon and Constellation, net
of physical market mitigation assumed to be 2,648 MW.
(2)
Coal capacity shown above includes Eddystone 2 (309 MW) to be retired on
6/1/2012. (3)
Oil capacity shown above includes Cromby 2 (201 MW) to be retired on
12/31/2011. (4)
Pending approval of owner group
A clean and diverse portfolio that is well positioned for environmental
upside from EPA regulations
9
Total Generation Capacity
(1)
: 35,327 MW
Cleanest large merchant generation
portfolio in the nation
Less than 5% of combined generation
capacity will require capital expenditures
to comply with Air Toxic rules
•
Approx. $200 million of CapEx, majority of
which
is
at
Conemaugh
(4)
(Exelon
and
Constellation ownership share ~31%)
Low-cost generation capacity provides
unparalleled leverage to rising commodity
prices
Incremental 500 MW
of coal and oil
capacity to be retired by middle of next
year
Combined Company Portfolio
5%
Wind/Solar/Other
3%
Gas
Hydro
Oil
(3)
Nuclear
54%
6%
Coal
(2)
5%
27% |
 10
Texas Generation Portfolio Is Well Suited to Serve Load
ERCOT Generation
Capacity –
MW
(1)
5,311
CEG Intermediate
1,839
EXC Intermediate
2,210
Exelon Peaking
1,262
(1)
Generation and capacity for Exelon and Constellation includes owned and contracted
units, less any PPAs or tolls sold, as of 09/30/2011.
Exelon
wind
assets
in
Texas
(open
or
hedged)
are
not
included
in
the
capacity
shown
above.
Constellation
capacity
includes 517 MWs under a contract that expires in December 2011.
The combined generation portfolio will enhance the hedging capability for
managing load positions in Texas
Hedging
Flexibility
–
Leverage
strong
asset
base and utilize market-based hedging
instruments to effectively manage load-following
obligations
Strong Asset Mix
–
Intermediate and peaking
generation assets are effectively call options at
various heat rates that benefit from price
volatility
Premium
Location
–
A
sizeable
generation
position close to large load pockets in Dallas
and Houston |
 11
We will continue to use a well-defined hedging strategy to carefully
balance risk management and value creation
Wholesale and Retail Businesses
Grow our generation to load strategy in multiple regions of the country by
identifying attractive investments and markets
Expand product offerings to customers in regions we serve
Increase the amount of generation
hedged over time, leaving some open
generation length
Exhibit flexibility in timing and type of
sales executed based on market
expectations
Select products and markets that
optimize the value of the generation
portfolio
Integrate hedging policy with financial
planning process to protect investment-
grade credit rating
Growing the Portfolio
Hedging Program Characteristics
Utilize Multiple
Markets &
Products
Protect
Investment-
Grade Credit
Rating
Manage Risk
on a Ratable
Basis
Incorporate
Fundamental
Market Views |
 12
Transaction Maintains Solid Financial Position
Achievable Synergies
Lower Liquidity Requirements
Annual O&M Expense Savings
(1)
(in $MM)
Annual
run rate
Year 4
$310
Year 3
Year 2
Year 1
$200
5-Year
Total
Synergies
Allocation
(2)
BGE
8%
29%
Unregulated
Businesses
63%
$10.3
(in $B)
$3-$4
-39%
$4.2
Constellation
$6.3
-
$7.3
Pro-Forma
$6.1
Exelon
Existing liquidity
(ex-utilities)
Pro-forma liquidity
Reduction in
existing liquidity
Moody’s Credit
Ratings
S&P Credit
Ratings
Fitch Credit
Ratings
Exelon
Baa1
BBB-
BBB+
ComEd
Baa1
-
BBB+
A
PECO
A1
A-
A
Generation
A3
BBB
BBB+
Constellation
Baa3
BBB-
BBB-
BGE
Baa2
BBB+
BBB+
Maintaining
Strong
Investment
Grade
Ratings
(3)
(1) Before total costs to achieve of ~$650M primarily attributable to employee-related costs
and transaction costs.
(2) Source: DeGregorio testimony filed with Maryland PSC on May 25, 2011. (3)
Ratings as of November 1, 2011. Represents senior unsecured ratings of Exelon, Generation, Constellation and BGE and senior secured ratings for
ComEd and PECO. S&P and Fitch affirmed all Exelon ratings
upon announcement of merger. Moody’s affirmed the ratings of ComEd and PECO
and placed the ratings of Exelon and Generation on review for
downgrade. S&P and Moody’s placed Constellation on credit watch positive and
affirmed BGE ratings. Fitch affirmed Constellation and BGE
ratings upon announcement.
Annual cost
savings of
$35M-$45M
ComEd &
PECO |
 13
Phased Approach to Designing the Future
Our past experience with successful integration and our phased
approach to integrating Exelon and Constellation will enable the
realization of merger benefits
Success is defined by:
Closing the transaction in early 2012
Maintaining consistent and reliable operations
Capturing value and meeting synergy targets
Meeting commitments to stakeholders, regulators and governments
Acting as one to build an integrated enterprise that is positioned for
continued growth
August
–
December
Begins post-close
Completed in August
Begins in November |
 Exelon &
Constellation Energy Appendix |
 15
Merger Approvals Process on Schedule
(as of 11/1/11)
Note: The Department of Public Utilities in Massachusetts concluded on September
26, 2011 that it does not have jurisdiction over the merger.
Stakeholder
Status of Key Milestones
Approved
Texas PUC
(Case No. 39413)
Filed for approval with the Public Utility Commission of Texas on May 17,
2011
Approval received on August 3, 2011
Securities and Exchange Commission
(SEC)
(File No. 333-175162)
Joint proxy statement declared effective on October 11, 2011
Shareholder Approval
Proxies mailed to shareholders of record at October 7, 2011
Shareholder meetings set for November 17, 2011
New York PSC
(Case No. 11–E–0245)
Filed with the New York Public Service Commission on May 17, 2011
seeking a declaratory order confirming that a Commission review is
not required
Decision expected in Q4 2011
Department of Justice (DOJ)
Submitted Hart-Scott
-
Rodino filing on May 31, 2011 for review under U.S.
antitrust laws and certified compliance with second request
Clearance expected by January 2012
Federal Energy Regulatory Commission
(FERC)
(Docket No. EC 11-83)
Filed
merger
approval
application
and
related
filings
on
May
20,
2011,
which
assesses market power-related issues
Settlement agreement filed with PJM Market Monitor on October 11, 2011
Order expected by November 16, 2011 (end of statutory period)
Nuclear Regulatory Commission
(Docket Nos. 50-317, 50-318, 50-220,
50-410, 50-244, 72-8, 72-67)
Filed for indirect transfer of Constellation Energy licenses on May 12, 2011
Order expected by January 2012
Maryland PSC
(Case No. 9271)
Filed for approval with the Maryland Public Service Commission on May 25,
2011
Evidentiary hearings begin October 31, 2011
Order expected by January 5, 2012 |
 16
Maryland PSC Review Schedule (Case No. 9271)
Filing of Application
Significant Events
Prehearing Conference
Intervention Deadline
Filing of Staff, Office of People Counsel and Intervenor Testimony
Filing of Rebuttal Testimony
Filing of Surrebuttal Testimony
Status Conference
Evidentiary Hearings
Public Comment Hearings
Filing of Initial Briefs
Filing of Reply Briefs
Decision Deadline
Date of Event
October 31, 2011 -
November 18, 2011
November 29, December 1 &
December 5, 2011
December 5, 2011
December 19, 2011
January 5, 2012
May 25, 2011
June 24, 2011
June 28, 2011
September 16, 2011
October 12, 2011
October 26, 2011
October 28, 2011
*
Initial
intervenor
testimony
with
respect
to
market
powerwas
due
on
September
23
rd
for
all
parties
except
for
the
Independent
Market
Monitor
and
rebuttal
testimony
with
respect
to
market
power
was
due
on
October
17
th
. |
 Portfolio Matches
Generation with Load in Key Competitive Markets
MISO (TWh)
PJM
(1)
(TWh)
South
(2)
(TWh)
ISO-NE & NY ISO
(3)
(TWh)
West
(4)
(TWh)
The combination establishes an industry-leading platform with regional
diversification of the generation fleet and customer-facing load business
Load
75.1
42.0
33.1
Generation
175.6
29.8
145.8
Constellation
Exelon
5.7
Load
5.1
0.6
Generation
8.6
8.6
18.5
Load
30.3
Generation
26.2
7.7
1.9
Load
Generation
0.6
Load
29.2
Generation
32.1
32.1
29.2
17
Note: Data for Exelon and Constellation represents available expected generation (owned and
contracted) and booked electric sales for 2011 as of 9/30/11. Expected generation is adjusted
for assets that have long term PPAs sold by Exelon or Constellation, including but not limited to wind and South assets. Exelon load doesn’t include
the ComEd swap (~26 TWh). Index load, which is a pass through load product with no price or volumetric
risk to the seller, is not included in the load estimate.
(1) Constellation generation includes output from Brandon Shores, C.P. Crane and H.A. Wagner (total
generation ~8.5 TWh). (2)
Represents load and generation in ERCOT, SERC and SPP.
(3) Constellation load includes ~0.7 TWh of load served in Ontario. (4) Constellation generation
includes ~0.4 TWh of generation in Alberta. |
 Manageable Debt
Maturities Debt
Maturity
Profile
(2012-2020)
(1)
EXC
(1)
Debt maturity schedule and weighted average cost of debt as of 9/30/11.
Amounts do not include fair value swaps at Constellation. BGE debt
balances
include
annual
transition
bond
payments
from
2012
–
2017.
(2)
Weighted
average
cost
of
debt
excludes
any
benefits
for
interest
rate
swaps.
Utilities’
weighted
average
cost
of
debt
includes
debt
amortization costs.
EXC
EXC
Exelon
152
552
74
552
2020
1,652
550
550
2019
602
600
2018
1,342
500
840
2017
1,261
702
516
41
2016
1,117
665
379
2015
260
800
75
2014
1,589
500
250
617
70
2013
1,020
300
252
467
2012
1,001
375
450
173
3
2
2
2
2
ExGen
PECO
ComEd
Exelon
BGE
Constellation
18
Weighted Average Cost of
Debt
(2)
Exelon
5.2%
ComEd
5.4%
PECO
5.5%
ExGen
5.5%
Constellation
6.2%
BGE
6.3%
1,686
~70%
of
2012
–
2016
debt
maturities
consist
of
regulated
utility
debt
(in $M) |
 19
Exelon Dividend
Exelon’s Board of Directors approved a contingent stub dividend for Exelon
shareholders of $0.00571/share
per
day
for
Q1
2012
in
anticipation
of
the
merger
close
($0.525/share
for
the
quarter)
Stub dividend declaration ensures that Exelon shareholders continue to receive all
dividends at the current $2.10 per share annualized rate
Pre-
and post-close stub dividends must be declared separately to account for
Constellation shareholders becoming Exelon shareholders at merger
close Assuming
a
February
1,
2012
close
for
illustrative
purposes
only:
$0.525
Current Exelon shareholders will continue to receive a total dividend of
$0.525 per quarter
Payment Date
Record Date
Pre-close
Stub
Dividend
(1)
Post-close
Stub
Dividend
(1)
Regular Dividend
(2)
Regular Dividend
Per Share
Amount
11/15/2011
1/31/2012
2/15/2012
5/15/2012
12/09/2011
3/1/2012
3/09/2012
6/09/2012
$0.525
$0.440
$0.085
$0.525
(1)
Assuming a 2/1/2012 merger close; for Exelon shareholders, Q1 2012 dividend will be based on a per
diem rate of $0.00571 ($0.525 divided by 92 days).
(2)
Future dividend, following the stub dividend, is subject to approval by the Board of Directors.
|
 20
Constellation Dividend
Record Date
Payment Date
Per Share
Amount
12/12/2011
1/03/2012
Regular CEG Dividend
$0.24
1/31/2012
3/1/2012
Pre-close CEG Stub
Dividend
(1)
$0.132
2/15/2012
3/09/2012
Post-close EXC Stub
Dividend
(1)
$0.085
5/15/2012
6/09/2012
Regular EXC Dividend
(2)
$0.525
Constellation Energy’s Board of Directors approved a contingent stub dividend
for Constellation shareholders of $0.00264/share per day for Q1 2012 in
anticipation of merger close Stub dividend declaration ensures that
Constellation shareholders continue to receive their existing quarterly
dividend rate prior to the merger, and benefit from the Exelon annualized dividend rate
($2.10 per share) beginning on the day the merger closes
Pre-
and post-close stub dividends must be declared separately to account for
Constellation shareholders becoming Exelon shareholders at merger
close Assuming
a
February
1,
2012
close
for
illustrative
purposes
only
:
Constellation shareholders will receive the Exelon dividend rate
upon
merger close
(1)
Assuming a 2/1/2012 merger close, Q1 2012 dividend will be based on a per diem rate of $0.00264 ($0.24 divided by 91 days).
Post-close Exelon Q1 2012 stub dividend will be based on a per diem rate of
$0.00571.
(2)
Assuming a 2/1/2012 merger close, Constellation shareholders will start receiving the full quarterly Exelon dividend of $0.525 per
share in Q2 2012. Future dividend, following the stub dividend, is subject to approval
by the Board of Directors. |
 November 7-8, 2011
EEI Financial Conference
21 |
 Forward
Looking Statements Disclosure 22
Certain statements made in this presentation are forward-looking statements and may contain words
such as “believes,” “anticipates,” “expects,”
“intends,” “plans,” and other similar words. We also disclose non-historical
information that represents management’s expectations, which are based on numerous
assumptions. These statements are not guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to be materially different from projected results. These risks include, but
are not limited to: the timing and extent of changes in commodity prices and volatilities
for energy and energy-related products including coal, natural gas, oil, electricity, nuclear fuel and
emissions allowances and the impact of such changes on our liquidity requirements; the liquidity and
competitiveness of wholesale and retail markets for energy commodities; the conditions of the
capital markets, interest rates, foreign exchange rates, availability of credit facilities to
support business requirements, liquidity and general economic conditions, as well as Constellation
Energy’s and BGE’s ability to maintain their current credit ratings; the
effectiveness of Constellation Energy’s and BGE’s risk management policies and procedures and the ability and
willingness of our counterparties to satisfy their financial and performance commitments; losses on
the sale or write-down of assets due to impairment events or changes in management intent
with regard to either holding or selling certain assets; the ability to successfully identify,
finance and complete acquisitions and sales of businesses and assets, including generating facilities,
and new nuclear generation development projects; the effect of weather and general economic and
business conditions on energy supply, demand, and prices, and customers' and counterparties'
ability to perform their obligations or make payments; the ability to attract and retain customers in our NewEnergy activities and to
adequately forecast their energy usage; the timing and extent of deregulation of, and competition in,
the energy markets, and the rules and regulations adopted in those markets; regulatory or
legislative developments federally, in Maryland, or in other states that affect energy regulation,
the price of energy, transmission or distribution rates and revenues, demand for energy, or that would
increase costs, including costs related to safety or environmental compliance; the ability of
our regulated and non-regulated businesses to comply with complex and/or changing market
rules and regulations; the ability of BGE to recover all its costs associated with providing customers
service; operational factors affecting, our generating facilities, BGE’s transmission and
distribution facilities or our other commercial operations, including weather-related damages,
unscheduled outages or repairs, unanticipated changes in fuel costs or availability, unavailability of
coal or gas transportation or electric transmission services, workforce issues, terrorism,
cybersecurity events, acts of war, catastrophic events, and other events beyond our control;
the impact of industry consolidation; the impact of increased energy conservation and use of renewable
energy; the actual outcome of uncertainties associated with assumptions and estimates requiring
judgment when managing our business, applying critical accounting policies and preparing
financial statements, including factors that are estimated in determining the fair value of energy contracts, such as the ability to
obtain market prices and in the absence of verifiable market prices, the appropriateness of models and
model inputs (including, but not limited to estimated contractual load obligations, unit
availability, forward commodity prices, interest rates, correlation and volatility factors); changes in
accounting principles or practices; cost and other effects of legal and administrative proceedings and
other events that may not be covered by insurance, including environmental liabilities and
liabilities associated with catastrophic events; and the likelihood and timing of the completion of
the pending merger with Exelon Corporation, the terms and conditions of any required approvals of the
pending merger, and potential diversion of management’s time and attention from our
ongoing business during this time period. Given these uncertainties, you should not place undue
reliance on these forward-looking statements. Please see our periodic reports filed
with the SEC for more information on these factors. These forward-looking statements
represent estimates and assumptions only as of the date of this presentation, and no duty is undertaken to update
them to reflect new information, events or circumstances.
|
 Use of
Non-GAAP Financial Measures Constellation Energy presents adjusted
earnings per share (adjusted EPS) in addition to its reported earnings per share in accordance with generally
accepted
accounting
principles
(reported
GAAP
EPS).
Adjusted
EPS
is
a
non-GAAP
financial
measure
that
differs
from
reported
GAAP
EPS
because
it
excludes the cumulative effects of changes in accounting principles, discontinued
operations and special items (which we define as significant items that are
not
related
to
our
ongoing,
underlying
business
or
which
distort
comparability
of
results)
included
in
operations.
We present adjusted EPS because we believe that it is appropriate for investors to
consider results excluding these items in addition to our results in
accordance
with
GAAP.
We
believe
such
a
measure
provides
a
picture
of
our
results
that
is
more
comparable
among
periods
since
it
excludes
the
impact
of
items such as impairment losses, workforce reduction costs or gains and losses on
the sale of assets, which may recur occasionally, but tend to be irregular
as to timing, thereby distorting comparisons between periods. However, investors
should note that this non-GAAP measure involves judgment by management
(in particular, judgment as to what is classified as a special item to be excluded from adjusted earnings). This non-GAAP measure is also used
to evaluate management’s performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms of adjusted EPS.
Constellation Energy is unable to reconcile its guidance to GAAP earnings
per
share
because
we
do
not
predict
the
future
impact
of
special
items
due
to
the
difficulty
of
doing
so.
In
the
past,
the
impact
of
special
items
has
been
material to our operating results computed in accordance with GAAP.
We note that non-GAAP measures should not be viewed as a substitute to
GAAP information. A reconciliation of non-GAAP information to GAAP information
is
included
either
on
the
slide
where
the
information
appears
or
on
one
of
the
slides
in
the
Non-GAAP
Measures
section
provided
at
the
end
of
the
presentation, along with additional information on why and how Constellation Energy
uses this information. Please see the Summary of Non-GAAP
Measures
to
find
the
appropriate
GAAP
reconciliation
and
related
slide(s).
These
slides
are
only
intended
to
be
reviewed
in
conjunction
with
the
oral
presentation to which they relate.
23 |
 Q3 2011
Adjusted Earnings Per Share ($ per share)
Q3 2011
Q3 2010
Adjusted Earnings Per Share
(1)
$0.68
$0.48
JV PPA
(0.15)
(0.14)
Other Special Items
(0.17)
(7.33)
GAAP Earnings Per Share
$0.36
($6.99)
(1)
Excludes special items
Note: Numbers may not sum due to rounding
See Appendix
($ per share)
Q3 2011
Q3 2010
BGE
$0.00
$0.14
Generation
0.29
0.27
NewEnergy
0.23
(0.07)
JV PPA
0.15
0.14
Other
0.01
-
Adjusted Earnings Per Share
(1)
$0.68
$0.48
24 |
 2011 EPS
Forecast ($ per share)
(1)
2011 reflects interest income earnings on cash using 1-month forward LIBOR
rates as of September 2011 (2)
Data excludes mark-to-market timing, Hurricane Irene restoration expense
and Special Items, including the amortization of CENG basis differential See
Appendix 25
2011
BGE
$0.60 –
$0.80
Generation
$0.75 –
$0.95
NewEnergy
$0.90 –
$1.10
Other
(1)
$0.01 –
$0.02
Pre-Allocation EPS
(2)
$2.50
–
$2.80
JV PPA
$0.60
Total Adjusted EPS
(2)
$3.05
–
$3.35 |
 Capital
Spending – Competitive Businesses
($ in millions)
FY
2011E
Generation
&
Other
(1)
Major Environmental
$ 35
Maintenance Capital
111
Growth
(2)
23
Generation & Other Total
$ 169
Memo: Total CENG capital
spend
421
(1)
Other includes corporate headquarters spending in Maintenance Capital
(2)
Generation and NewEnergy growth capital includes offset to reflect related
Investment Tax Credits and Grants ($ in millions)
FY
2011E
NewEnergy
Maintenance Capital
24
Growth
(2)
266
NewEnergy Total
$ 290
26 |
  $0
$100
$200
$300
$400
$500
$600
$700
2011
2016
2021
2026
2031
2036
2041
2046
2051
2056
2061
Total CEG (excluding BGE)
Total BGE
$550M CEG 4.55%
Notes due 2015
$700M CEG 7.60%
Notes due 2032
$550M CEG
5.15% Notes due
2020
Debt Maturity Profile
(1) Numbers may not add due to rounding
Constellation Energy Group Total Debt
(1)
$ in billions
CEG
4.55% Fixed-Rate Notes, due June 15, 2015
0.6
5.15% Fixed-Rate Note, due December 1, 2020
0.6
7.60% Fixed-Rate Notes, due April 1, 2032
0.7
8.625% Series A Jr. Sub Debentures, due June 15, 2063
0.5
Other
0.3
Total CEG excluding BGE
2.6
BGE
2.1
Total Long-term Debt
4.8
9/30/11
27 |
 Net
Available Liquidity September 30, 2011
($ in billions)
Competitive
BGE
Credit facilities
$ 3.7
$ 0.6
Less: Letters of credit issued
(1)
(1.2)
-
Less: Commercial paper outstanding
-
(0.1)
Net available facilities
2.5
0.5
Add: Cash
(2)
1.1
-
Total Net Available Liquidity
$ 3.6
$ 0.5
Memo: Downgrade collateral
$
1.0 Price contingent facility capacity
0.5
Less: LCs issued under facility
(0.4)
Availability under price contingent facility
0.1
Memo: Total Contractual Capacity of Price Contingent Facility
(3)
$
0.5 (1) Excludes availability and postings under the
competitive business' price contingent knock-in facility (2) BGE 9/30
cash balance was $51M (3) The agreement was amended in September 2010 to
allow an option to draw cash in addition to LCs 28
|
 Forward
Market Prices (1)
BGE zone is historically a 10%-20% premium to PJM WHUB pricing; Ginna/NMP zones
are historically a 5%-15% premium to NY WHUB pricing (2)
NY Capacity prices not disclosed in
2012
–
2014
as prices clear through a monthly auction
Market Curves (as of 10/11/11)
2011
2012
2013
2014
NYMEX Gas ($/MMBTU)
3.7
4.1
4.6
4.9
NYMEX Coal ($/Ton)
73.8
75.4
78.2
80.2
PJM WHUB ($/MWh) (7x24)
(1)
42.1
44.0
46.4
49.4
NY WHUB ($/MWh) (7x24)
(1)
37.0
37.9
39.7
42.1
ERCOT Houston Zone ($/MWh) (7x24)
29.0
37.5
41.7
45.0
NEPOOL HUB ($/MWh) (7x24)
49.7
47.2
49.4
50.9
PJM Capacity Pricing ($/MWd)
110.0
123.8
187.6
173.9
NEPOOL Capacity Pricing ($/MWh)
4.9
4.4
4.0
3.7
NY Capacity Pricing ($/MWh)
(2)
0.2
0.6
n/a
n/a
RGGI Emissions Expense ($/ton of CO2)
1.9
1.9
1.9
2.0
29 |
 Average
Hedged Prices (1)
Includes current fixed priced portion of CENG PPA and existing NY PPAs/RSA
(2)
Coal
prices
represent
a
mix
of
coal
types
dependant
on
plant
economics;
does
not
include
transportation
costs
of
approximately
$25
-
$35/ton
for
Eastern
and
$55
-
$70/ton
for
PRB
(3)
Reflects
the
expected
divestiture
of
Brandon
Shores/Wagner/Crane
at
the
end
of
2012
Average Hedged Prices (as of 10/11/11)
2011
2012
2013
2014
Power -
Non-Nuclear Plants ($/MWh)
51.5
55.2
64.8
68.2
% Hedged Fossil
100%
89%
40%
20%
Power -
Non-Nuclear Plants ($/MWh)
(3)
51.5
55.2
72.3
77.8
% Hedged Fossil
100%
89%
51%
26%
Power -
PJM Nuclear
Plants
($/MWh)
(1)
49.9
52.9
52.3
54.2
% Hedged PJM Nuclear
100%
95%
55%
23%
Power -
NY Nuclear ($/MWh)
(1)
37.8
42.3
42.4
43.5
% Hedged NY Nuclear
100%
96%
80%
58%
Average Hedged Fuel Prices
Coal ($/ton)
(2)
57.1
64.9
75.7
n/a
% Hedged
100%
73%
30%
0%
Coal ($/ton)
(2) (3)
57.1
64.9
72.7
n/a
% Hedged
100%
73%
18%
0%
Gas ($/MMBTU)
3.7
4.8
5.4
6.0
% Hedged
100%
98%
45%
18%
30 |
 Generation Statistics
(MWh in thousands, unless otherwise stated)
2011E
2012E
2013E
2014E
Nuclear Plants (CEG Ownership Only)
Calvert Cliffs
7,177
7,025
7,205
7,299
NMP 1
2,288
2,668
2,471
2,660
NMP 2
3,977
3,851
4,377
4,044
Ginna
2,177
2,345
2,490
2,261
Total Nuclear
15,619
15,889
16,543
16,264
Coal Plants
(1)
SW
MAAC
Coal
Plants
(2)
8,493
7,457
7,544
7,706
Other PJM Coal Plants
3,757
3,832
3,824
3,601
Total Coal
12,250
11,289
11,368
11,307
SW
MAAC
Coal
Plants
(2)
3.9
3.2
3.3
3.4
Other PJM Coal Plants
1.5
1.2
1.4
1.3
Total Coal Burn (MMtons)
5.4
4.4
4.7
4.7
CO2 Emissions (MMtons)
21.6
20.4
20.3
20.8
(1) Excludes QF’s
(2) SW MAAC Coal consists of Brandon/Wagner/Crane
Note: MWh’s, Coal Burn & Emissions updated as of 10/11/2011
31 |
 Generation Statistics
(MWh in thousands, unless otherwise stated)
2011E
2012E
2013E
2014E
Gas / Oil Plants
PJM Gas/Oil Plants
197
240
231
256
NEPOOL Gas Plants
13,803
12,027
11,247
11,400
ERCOT Gas Plants
2,629
3,181
3,434
3,648
Hillabee (Alabama)
3,910
3,006
2,819
3,392
West Valley (Utah)
137
133
184
235
Grande Prairie (Alberta, Canada)
234
422
377
382
Total Gas/Oil
20,910
19,009
18,292
19,313
Total QF’s/Other
(1)
2,730
2,367
2,088
2,089
Toll Agreement Statistics
External Tolls
6,536
6,632
5,577
5,835
Other Contracted Generation
(2)
9,097
7,873
4,640
2,108
Total Toll Output
15,633
14,505
10,217
7,943
(1) Includes Safe Harbor (~700k MWH per year); Criterion; Panther Creek;
Colver; Ace Trona; Jasmin; Chinese Station; Fresno; Malacha; Poso; Rocklin; Sunnyside
(2) Includes EDF portion of CENG JV PPA already sold to CEG
Note: MWh’s updated as of 10/11/2011
32 |
 Non-GAAP Appendix
33 |
 Q3 2011
Adjusted EPS We exclude special items because we believe that it is
appropriate for investors to consider our results excluding these items, in addition to
our results in accordance with GAAP. We believe such a measure provides a
picture of our results that is comparable among periods since it excludes
the impact of items, which may recur occasionally, but tend to be irregular as to timing and magnitude, thereby distorting
comparisons between periods. However, investors should note that this
non-GAAP measure involves judgment by management (in particular,
judgments
as
to
what
is
or
is
not
classified
as
a
special
item).
We
also
use
this
measure
to
evaluate
performance
and
for
compensation
purposes.
34
RECONCILIATION:
Elim, Holding
($ per share)
Generation
NewEnergy
BGE
Company,
and Nonreg.
Total
Q3 11 ACTUAL RESULTS:
Reported GAAP EPS
0.15
$
0.21
$
(0.01)
$
0.01
$
0.36
$
GAAP MEASURE
Special Items Included in Operations:
CEG Credit Facility Amendment Fees
-
(0.01)
-
-
(0.01)
Amortization of JV Basis Difference
(0.13)
-
-
-
(0.13)
Subtotal: CENG JV
(0.13)
(0.01)
-
-
(0.14)
Merger Transaction Fees
(0.01)
(0.01)
(0.01)
-
(0.03)
Earnings Excluding Special Items
0.29
0.23
-
0.01
0.53
CENG PPA Amortization
(0.15)
-
-
-
(0.15)
Adjusted EPS
0.44
$
0.23
$
-
$
0.01
$
0.68
$
NON-GAAP MEASURE
EARNINGS GUIDANCE
Constellation Energy is unable to reconcile its earnings guidance excluding special
items to GAAP earnings per share because we do not predict the future impact of
special items such as the cumulative effect of changes in accounting principles and
the disposition of assets. See above reconciliation for actual Special Items. |
 Adjusted
EPS 2010 and Quarterly - Consolidated
RECONCILIATION:
CEG Consolidated
2010
($ per share)
Q1 10
Q2 10
Q3 10
Q4 10
Total
ACTUAL RESULTS:
Reported GAAP EPS
0.95
$
0.36
$
(6.99)
$
0.79
$
(4.90)
$
GAAP MEASURE
Special Items Included in Operations:
CEG Credit Facility Amendment Fees
(0.02)
(0.01)
(0.01)
(0.02)
(0.07)
Amortization of JV Basis Difference
(0.13)
(0.18)
(0.15)
(0.12)
(0.59)
Subtotal: CENG JV
(0.15)
(0.19)
(0.16)
(0.14)
(0.66)
Early Retirement of 2012 Notes
(0.15)
-
-
-
(0.15)
Medicare Part D - Tax
(0.04)
-
-
-
(0.04)
UniStar Nuclear Energy Results
(0.01)
(0.02)
-
-
(0.03)
Mammoth Lakes Gain
-
-
0.12
-
0.12
International Coal Contract Dispute Settlement
-
-
-
0.17
0.17
Gain on Comprehensive Agreement with EDF
-
-
-
0.60
0.60
Impairment Losses and Other Costs
-
-
(7.29)
(0.11)
(7.41)
Earnings Excluding Special Items
1.30
0.57
0.34
0.27
2.50
PPA Amortization
(0.13)
(0.14)
(0.14)
(0.15)
(0.56)
Adjusted EPS
1.43
$
0.71
$
0.48
$
0.42
$
3.06
$
NON-GAAP MEASURE
NOTE
The sum of the quarterly earnings per share amounts may not equal the total for the
year due to the effects of rounding and the effects of dilution shares.
We exclude special items because we believe that it is appropriate for investors to
consider our results excluding these items, in addition to our results in
accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it
excludes the impact of items, which may recur occasionally, but tend to be
irregular as to timing and magnitude, thereby distorting comparisons between
periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular,
judgments as to what is or is not classified as a special item).
We also use this measure to evaluate performance and for compensation
purposes.
35 |
   Adjusted EPS
2010 and Quarterly - BGE
RECONCILIATION:
BGE
2010
($ per share)
Q1 10
Q2 10
Q3 10
Q4 10
Total
ACTUAL RESULTS:
Reported GAAP EPS
0.30
$
0.07
$
0.14
$
0.15
$
0.67
$
GAAP MEASURE
Special Items Included in Operations:
Medicare Part D - Tax
(0.02)
-
-
-
(0.02)
Earnings Excluding Special Items
0.32
0.07
0.14
0.15
0.69
Adjusted EPS
0.32
$
0.07
$
0.14
$
0.15
$
0.69
$
NON-GAAP MEASURE
NOTE
The sum of the quarterly earnings per share amounts may not equal the total for the
year due to the effects of rounding and the effects of dilution shares.
We exclude special items because we believe that it is appropriate for investors to
consider our results excluding these items, in addition to our results in
accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it
excludes the impact of items, which may recur occasionally, but tend to be
irregular as to timing and magnitude, thereby distorting comparisons between
periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular,
judgments as to what is or is not classified as a special item).
We also use this measure to evaluate performance and for compensation
purposes.
36 |
 Adjusted
EPS 2010 and Quarterly - Generation
RECONCILIATION:
Generation
2010
($ per share)
Q1 10
Q2 10
Q3 10
Q4 10
Total
ACTUAL RESULTS:
Reported GAAP EPS
0.14
$
0.08
$
(7.06)
$
0.60
$
(6.26)
$
GAAP MEASURE
Special Items Included in Operations:
CEG Credit Facility Amendment Fees
(0.01)
(0.01)
(0.01)
(0.02)
(0.05)
Amortization of JV Basis Difference
(0.13)
(0.18)
(0.15)
(0.12)
(0.59)
Subtotal: CENG JV
(0.14)
(0.19)
(0.16)
(0.14)
(0.64)
Early Retirement of 2012 Notes
(0.15)
-
-
-
(0.15)
UniStar Nuclear Energy Results
(0.01)
(0.02)
-
-
(0.03)
Mammoth Lakes Gain
-
-
0.12
-
0.12
Gain on Comprehensive Agreement with EDF
-
-
-
0.60
0.60
Impairment Losses and Other Costs
-
-
(7.29)
(0.11)
(7.41)
Earnings Excluding Special Items
0.44
0.29
0.27
0.25
1.25
PPA Amortization
(0.13)
(0.14)
(0.14)
(0.15)
(0.56)
Adjusted EPS
0.57
$
0.43
$
0.41
$
0.40
$
1.81
$
NON-GAAP MEASURE
NOTE
The sum of the quarterly earnings per share amounts may not equal the total for the
year due to the effects of rounding and the effects of dilution shares.
We exclude special items because we believe that it is appropriate for investors to
consider our results excluding these items, in addition to our results in
accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it
excludes the impact of items, which may recur occasionally, but tend to be
irregular as to timing and magnitude, thereby distorting comparisons between
periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular,
judgments as to what is or is not classified as a special item).
We also use this measure to evaluate performance and for compensation
purposes.
37 |
   Adjusted EPS
2010 and Quarterly - NewEnergy
RECONCILIATION:
NewEnergy
2010
($ per share)
Q1 10
Q2 10
Q3 10
Q4 10
Total
ACTUAL RESULTS:
Reported GAAP EPS
0.53
$
0.21
$
(0.07)
$
0.02
$
0.69
$
GAAP MEASURE
Special Items Included in Operations:
CEG Credit Facility Amendment Fees
(0.01)
-
-
-
(0.02)
Subtotal: CENG JV
(0.01)
-
-
-
(0.02)
International Coal Contract Dispute Settlement
-
-
-
0.17
0.17
Earnings Excluding Special Items
0.54
0.21
(0.07)
(0.15)
0.54
Adjusted EPS
0.54
$
0.21
$
(0.07)
$
(0.15)
$
0.54
$
NON-GAAP MEASURE
NOTE
The sum of the quarterly earnings per share amounts may not equal the total for the
year due to the effects of rounding and the effects of dilution shares.
We exclude special items because we believe that it is appropriate for investors to
consider our results excluding these items, in addition to our results in
accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it
excludes the impact of items, which may recur occasionally, but tend to be
irregular as to timing and magnitude, thereby distorting comparisons between
periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular,
judgments as to what is or is not classified as a special item).
We also use this measure to evaluate performance and for compensation
purposes.
38 |
   Adjusted EPS
2010 and Quarterly – Other Nonregulated
RECONCILIATION:
Other Nonregulated
2010
($ per share)
Q1 10
Q2 10
Q3 10
Q4 10
Total
ACTUAL RESULTS:
Reported GAAP EPS
(0.02)
$
-
$
-
$
0.02
$
-
$
GAAP MEASURE
Special Items Included in Operations:
Medicare Part D - Tax
(0.02)
-
-
-
(0.02)
Earnings Excluding Special Items
-
-
-
0.02
0.02
Adjusted EPS
-
$
-
$
-
$
0.02
$
0.02
$
NON-GAAP MEASURE
NOTE
The sum of the quarterly earnings per share amounts may not equal the total for the
year due to the effects of rounding and the effects of dilution shares.
We exclude special items because we believe that it is appropriate for investors to
consider our results excluding these items, in addition to our results in
accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it
excludes the impact of items, which may recur occasionally, but tend to be
irregular as to timing and magnitude, thereby distorting comparisons between
periods. However, investors should note that this non-GAAP measure involves judgment by management (in particular,
judgments as to what is or is not classified as a special item).
We also use this measure to evaluate performance and for compensation
purposes.
39 |
 40 |
 An
Overview Service Territory
Ring-Fencing Conditions
Key Data
(1)
Total # of Customers:
1.2M (Electric); 0.7M (Gas)
Area: 2,300 square miles (Electric)
Peak Load: 7,236 MW
(1)
Data as of 9/30/11. Peak load represents all-time peak load, which occurred on July 21,
2011. Regulatory Update
Electric Distribution Rate Case
•
Rate case filed on 5/7/10
–
Original request of $47M; ROE range request of 10.65% to 12.65%
–
Final revenue increase of $31M with an ROE of 9.86%
Gas Delivery Rate Case
•
Rate case filed on 5/7/10
–
Original request of $30M; ROE range request of 10.65% to 12.65%
–
Final revenue increase of $10M with an ROE of 9.56%
In order to satisfy the ring fencing conditions outlined by
the MD PSC in an order issued in February 2009:
•
Constellation Energy created a new wholly-owned, special
purpose subsidiary, RF HoldCo LLC (HoldCo) which acquired
100% of the common equity interests of BGE from
Constellation Energy
•
HoldCo has one independent director and a golden
shareholder whose consent is necessary to initiate a BGE
bankruptcy
In accordance with the Maryland PSC order, Constellation
and BGE are subject to certain conditions, including:
•
BGE may not pay common dividends to Constellation if:
–
After the dividend payment, BGE’s equity ratio would be
below 48% as calculated pursuant to Maryland PSC’s
ratemaking precedents; or
–
BGE’s senior unsecured credit rating by two of the three
major credit rating agencies is below investment grade
•
BGE can no longer participate in the CEG cash pool or
commingle funds with CEG
•
BGE must operate as a separate entity from CEG, conduct
business in its own name and not assume any of CEG’s
obligations
•
BGE must maintain an arms-length relationship with CEG
41 |
 Estimated Rate
Base Note: Rate base includes electric and gas distribution and electric
transmission and is calculated using a 13-month trailing average.
42
$3,500
$3,700
$3,900
$4,100
$4,300
$4,500
$4,700
$4,900
2010A
2011E
2012E
2013E |
 Capital
Spending ($ in millions)
FY 2011E
FY 2012E
FY 2013E
Electric / Gas Distribution
$ 483
$ 442
$ 446
Electric Transmission
109
81
131
Smart
Energy
Savers
Program
®
91
169
207
Utility Total
$ 683
$ 692
$ 784
Key drivers of capital expenditures:
–
Electric and gas infrastructure spending for reliability
–
Electric transmission investments for reliability
–
43
Smart
Energy
Savers
Program
®
initiatives
including
energy
efficiency,
PeakRewards
SM
,
and
Smart
Grid |
Cautionary Statements Regarding Forward-Looking Information
Except for the historical information contained herein, certain of the matters discussed in this communication constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding benefits of the proposed merger of Exelon Corporation (Exelon) and Constellation Energy Group, Inc. (Constellation), integration plans and expected synergies, the expected timing of completion of the transaction, anticipated future financial and operating performance and results, including estimates for growth. These statements are based on the current expectations of management of Exelon and Constellation, as applicable. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication regarding the proposed merger. For example, (1) the companies may be unable to obtain shareholder approvals required for the merger; (2) the companies may be unable to obtain regulatory approvals required for the merger, or required regulatory approvals may delay the merger or result in the imposition of conditions that could have a material adverse effect on the combined company or cause the companies to abandon the merger; (3) conditions to the closing of the merger may not be satisfied; (4) an unsolicited offer of another company to acquire assets or capital stock of Exelon or Constellation could interfere with the merger; (5) problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; (6) the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; (7) the merger may involve unexpected costs, unexpected liabilities or unexpected delays, or the effects of purchase accounting may be different from the companies’ expectations; (8) the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; (9) the businesses of the companies may suffer as a result of uncertainty surrounding the merger; (10) the companies may not realize the values expected to be obtained for properties expected or required to be divested; (11) the industry may be subject to future regulatory or legislative actions that could adversely affect the companies; and (12) the companies may be adversely affected by other economic, business, and/or competitive factors. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of Exelon, Constellation or the combined company. Discussions of some of these other important factors and assumptions are contained in Exelon’s and Constellation’s respective filings with the Securities and Exchange Commission (SEC), and available at the SEC’s website at www.sec.gov, including: (1) Exelon’s 2010 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; (2) Exelon’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 in (a) Part II, Other Information, ITEM 1A.
Risk Factors, (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 13; (3) Constellation’s 2010 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 12; and (4) Constellation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 in (a) Part II, Other Information, ITEM 1A. Risk Factors and ITEM 5. Other Information, (b) Part I, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Notes to Consolidated Financial Statements, Commitments and Contingencies. These risks, as well as other risks associated with the proposed merger, are more fully discussed in the definitive joint proxy statement/prospectus included in the Registration Statement on Form S-4 that Exelon filed with the SEC and that the SEC declared effective on October 11, 2011 in connection with the proposed merger. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. Neither Exelon nor Constellation undertake any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this communication.
Additional Information and Where to Find it
In connection with the proposed merger between Exelon and Constellation, Exelon filed with the SEC a Registration Statement on Form S-4 that included the definitive joint proxy statement/prospectus. The Registration Statement was declared effective by the SEC on October 11, 2011. Exelon and Constellation mailed the definitive joint proxy statement/prospectus to their respective security holders on or about October 12, 2011. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION about Exelon, Constellation and the proposed merger. Investors and security holders may obtain copies of all documents filed with the SEC free of charge at the SEC’s website, www.sec.gov. In addition, a copy of the definitive joint proxy statement/prospectus may be obtained free of charge from Exelon Corporation, Investor Relations, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398, or from Constellation Energy Group, Inc., Investor Relations, 100 Constellation Way, Suite 600C, Baltimore, MD 21202.