2010 year-end earnings presentation - supporting materials

8/7/2019 2010 Year-End Earnings Presentation - SUPPORTING MATERIALS

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February 4, 2011

1

Constellation Energy

2010 Year-End Earnings Presentation



2

Forward Looking Statements Disclosure

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 anduncertainties that could cause actual results to be materially different from projected results. These risks include, but are not limited to: thetiming 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 andcompetitiveness of wholesale and retail markets for energy commodities; the conditions of the capital markets, interest rates, foreign exchangerates, availability of credit facilities to support business requirements, liquidity and general economic conditions, as well as ConstellationEnergy‘s and BGE‘s ability to maintain their current credit ratings; the effectiveness of Constellation Energy‘s and BGE‘s risk managementpolicies and procedures and the ability and willingness of our counterparties to satisfy their financial and performance commitments; losses onthe sale or write-down of assets due to impairment events or changes in management intent with regard to either holding or selling certainassets; the ability to successfully identify, finance and complete acquisitions and sales of businesses and assets, including generatingfacilities, and new nuclear generation development projects; the effect of weather and general economic and business conditions on energysupply, demand, and prices, and customers' and counterparties' ability to perform their obligations or make payments; the ability to attract andretain customers in our NewEnergy activities and to adequately forecast their energy usage; the timing and extent of deregulation of, andcompetition in, the energy markets, and the rules and regulations adopted in those markets; regulatory or legislative developments federally, inMaryland, 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 costsassociated with providing customers service; operational factors affecting, our generating facilities, BGE‘s transmission and distributionfacilities or our other commercial operations, including weather-related damages, unscheduled outages or repairs, unanticipated changes infuel costs or availability, unavailability of coal or gas transportation or electric transmission services, workforce issues, terrorism, acts of war,

catastrophic events, and other events beyond our control; the impact of industry consolidation; the impact of increased energy conservationand use of renewable energy; the actual outcome of uncertainties associated with assumptions and estimates requiring judgment whenmanaging our business, applying critical accounting policies and preparing financial statements, including factors that are estimated indetermining the fair value of energy contracts, such as the ability to obtain market prices and in the absence of verifiable market prices, theappropriateness of models and model inputs (including, but not limited to estimated contractual load obligations, unit availability, forwardcommodity prices, interest rates, correlation and volatility factors); changes in accounting principles or practices; and cost and other effects of legal and administrative proceedings and other events that may not be covered by insurance, including environmental liabilities and liabilitiesassociated with catastrophic events. 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 representestimates 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.



33

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 generallyaccepted 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 arenot 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 inaccordance 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 bymanagement (in particular, judgment as to what is classified as a special item to be excluded from adjusted earnings). This non-GAAP measure is also usedto 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 earningsper 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 beenmaterial 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 informationis 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 thepresentation, along with additional information on why and how Constellation Energy uses this information. Please see the Summary of Non-GAAPMeasures to find the appropriate GAAP reconciliation and related slide(s). These slides are only intended to be reviewed in conjunction with the oralpresentation to which they relate.



2010 Highlights

• Reported adjusted 2010 earnings of $3.06 per share, which

included a non-cash mark-to-market loss of $0.23 per share

• Developed and sold innovative retail energy products andservices

• Increased generation capacity in strategically attractive regions,adding approximately 4,300MWs

• Significant investment in system reliability and energy efficiencyat BGE

• Improved financial transparency

4See Appendix

Constellation is growing its customer facing businesses and

adding generation, while delivering solid financial results



Baltimore Gas & Electric Overview

5

• Industry leader in operating efficiency

• Leveraging technology to reduce customer usage and bills

• Investment-led earnings growth

Source: 2009 FERC data



Generation Overview

6

In 2010, Constellation grew its environmentally-advantaged generation footprint

(1) Includes oil, biomass, hydro, wind and other output which comprises less than 3% of the total



NewEnergy Overview

• Customer-centric model focused on best in class experiences

– Leverage technology to offer a broad range of products and services

• Expand customer relationship beyond pure commodity sale

– Provide customers opportunities to manage and optimize electricity usage in real-time

• Scalable platform positioned for growth

– Opportunities to enter into new markets and businesses

– Focused on further improving efficiency and reducing operating costs

– Further growth in mass market business

• Unified sales force leveraging product experts

• Leading physical risk and portfolio management capability

7

NewEnergy offers a range of innovative products and services

providing customer solutions across the country



Customer Focused Energy Solutions

8

NewEnergy is helping our customers succeed by delivering a portfolio of

energy solutions

Buy Energy

Gas, Power & Renewable Energy Supply

‗Smart‘ procurement programs

Manage Energy

Energy Risk Management

Demand Response Programs

Online Energy Management

Greenhouse Gas (GHG) Reduction

Automated Load Control

Use Energy

Building & Plant Energy EfficiencyCentral Plant Outsourcing

Water Conservation Projects

Lighting & HVAC Projects



Progress on Energy Policy

9

Constellation supports open, transparent and competitive marketplaces

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

07 / 08 08 / 09 09 / 10 10 / 11 11 / 12 12 / 13 13 / 14

0%

10%

20%

30%

40%

50%

60%

70%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Residential Non-Residential

Net Increase in Installed Capacity (1)

(1) Source: PJM DOCS #540109. Includes Generation, Demand Resource and Energy Efficiency.(2) Source: KEMA Retail Energy Outlook Q4 2010

Residential and Non-ResidentialSwitch Rates (2)

MW

Planning Year



2010 Adjusted Earnings Per Share

($ per share) FY 2010 FY 2009

Adjusted Earnings Per Share (1) $3.06 $3.36

JV PPA (0.56)

Other Special Items (7.40) 18.83

GAAP Earnings Per Share ($4.90) $22.19

(1) Excludes special itemsNote: Amounts subject to change pending filing of 2010 Form 10-K and numbers may not sum due to roundingSee Appendix

($ per share) FY 2010 FY 2009

BGE $0.69 $0.80

Generation 1.25 2.11

NewEnergy 0.54 0.46

JV PPA 0.56

Other 0.02 (0.01)

Adjusted Earnings Per Share (1) $3.06 $3.36



BGE Estimated Rate Base

Increasing average rate base and more frequent rate case filings are expected toimprove earnings and cash flows

Note: Average rate base includes electric and gas distribution and electric transmission



Generation Earnings Outlook

(1) Includes $30M related to generation procured from CENG(2) Includes CENG PPA

Note: All forward curves as of 12/15/10. Numbers may not sum due to rounding

Growing capacity revenues underpin the operating income recovery of the fleet

($ in millions) 2011E 2012E 2013E 2014E

Unhedged GM

Non-Nuclear Plants

Capacity Revenue

Collateral Benefit (1)

External Tolls

Other Contracted Generation (2)

$316

383

54

(91)

(40)

$310

329

54

(119)

(16)

$282

428

54

(114)

26

$329

443

54

(113)

40

Subtotal $622 $557 $676 $753

Total Expenses

Direct O&MOther Generation Expense (3)

(369)(142)

(339)(128)

(365)(127)

(368)(125)

Unhedged EBITDA $112 $90 $184 $259

Hedges 330 163 102 46

Total EBITDA $441 $253 $286 $305

D&A

Equity Earnings

CENG(4)

Other (Incl. IPP/QFs)

(202)

16822

(201)

16311

(201)

2011

(205)

202(0)

Total EBIT $429 $226 $287 $302

Total Generation Hedged % 100% 59% 28% 12%

(3) Includes allocated headquarters costs, property taxes and other costs(4) Pre-tax earnings from Constellation‘s ownership share in CENG



NewEnergy Earnings Outlook

(1) Excludes timing of unrealized non-cash earnings associated with Mark-to-Market transactions

(2) Includes gas and oil output

(3) Includes energy efficiency, on-site customer generation, behind-the-meter solar projects, demand response and other energy services and solutionsSee Appendix

Note: Numbers may not sum due to rounding

($ in millions) 2010A 2011E 2012E 2013E

Load Served – Power (TWhs) 119 136 149 160

Load Served – Gas (Bcf) 334 365 395 425

Gross Margin (1)

Customer Power and Gas

Upstream Gas (2)

Customer Services and Solutions (3)

$ 755

110

101

$ 856

95

124

$ 947

99

162

$ 1,037

132

192

Total Gross Margin $ 966 $ 1,075 $ 1,207 $ 1,361

Operating Expenses (excl. UpstreamGas)

Operating Expenses - Upstream Gas

$ 581

29

$ 655

27

$ 653

26

$ 668

31

Total EBITDA $ 356 $ 393 $ 528 $ 661

Depreciation & Amortization 82 84 85 89

Total EBIT $ 274 $ 309 $ 443 $ 572

Growing customer-driven business supported by scalable platform



$0

$100

$200

$300

$400

$500

$600

$700

2011 2016 2021 2026 2031 2036 2041 2046 2051 2056 2061

($ in millions)

Total CEG (excluding BGE) Total BGE

$550M CEG 4.55%Notes due 2015 $700M CEG 7.60%

Notes due 2032

Newly Issued$550M CEG5.15% Notes due2020

Call of $213.5MCEG 7.0% Notesdue 2012

14

Debt Maturity Profile

Constellation took steps during the fourth quarter to further strengthen

its balance sheet and maturity profile(1) Numbers may not add due to rounding; totals include the repayment of $214 million of bonds that occurred in January 2011

Constellation Energy Group Total Debt (1)

$ in billions

CEG 12/31/10

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 0.2

Total CEG excluding BGE 2.4$

BGE 2.1

Total Long-term Debt 4.5$



2011 & Beyond EPS Forecast

($ per share)

(1) 2011 reflects interest income earnings on cash using 1-month forward LIBOR rates as of December 2010

(2) Data excludes Special Items, including the amortization of CENG basis differential and UniStar earnings(3) Assumed MWhs exposed to Dark Spread movements equals the forecasted MWhs for the coal burning fleetSee Appendix

2011 2012 2013 2014 2015

BGE $0.60 – $0.80 $0.85 – $1.05

Generation $0.80 – $1.00 $0.15 – $0.35 EPS Impact of $1.00 Power Price Exposure

NewEnergy $0.90 – $1.10 $1.25 – $1.45 $0.04 $0.05 $0.05

Other (1) $0.01 – $0.02 $0.02 – $0.04

EPS Impact of $1.00 Dark Spread Exposure (3)

Pre-Allocation EPS (2) $2.50 – $2.80 $2.40 – $2.70 $0.04 $0.04 $0.04

JV PPA $0.60 - EPS Impact of 0.1x Heat Rate Exposure

$0.02 $0.03 $0.03

Total Adjusted EPS (2) $3.10 – $3.40 $2.40 – $2.70



Investment Thesis

• Further opportunities to acquire physical generation assets at attractive prices

– Low commodity price environment and depressed asset values– Ability and willingness to access capital markets to fund acquisitions

• Leading retail and wholesale customer supply platforms

– The leading supplier of electric and gas to Retail and Wholesale customers

– Expand retail customer base– Leverage technology and structuring capabilities to market value added products and

services

• Opportunities for increased earnings at BGE

– Investments to improve system reliability and efficiency

– Expect additional capital spending at BGE to increase regulated rate base

• Cost management culture focused on streamlining business and improving efficiency

16

Constellation continues to focus on serving customers with an asset-backed

investment strategy and further reducing operating costs across all of its businesses



Additional Modeling

17



2010 Adjusted Earnings Recap

(1) Excludes special itemsNote: Numbers may not sum due to roundingSee Appendix

Q1 2010 Q2 2010 Q3 2010 Q4 2010 FY 2010

BGE $0.32 $0.07 $0.14 $0.15 $0.69

Generation 0.44 0.29 0.27 0.25 1.25

NewEnergy 0.54 0.21 (0.07) (0.15) 0.54

JV PPA 0.13 0.14 0.14 0.15 0.56

Other - - - 0.02 0.02

Total Adjusted EPS (1) $1.43 $0.71 $0.48 $0.42 $3.06



Q4 & FY 2010 Special Items

19

Item Gain/(Loss) per Share Gain/(Loss) per Share Description

Q4 2010 FY 2010

CENG JV:

Transaction Related $ (0.02) $ (0.07)

Basis Difference (0.12) (0.59)

Sub-Total CENG JV: (0.14) (0.66)

Early Retirement of 2012 Notes - (0.15) Losses related to the early retirement of long-term debt

Impact of Medicare Part D Tax - (0.04) A one-time charge to record deferred income taxes associated with

federal subsidies for providing post-employment prescription drug

benefits which become taxable after 2012 as a result of recentlyenacted healthcare reform legislation

UniStar - (0.03) UniStar equity earnings which are excluded from adjusted earnings as

the business remains in the development stage

Mammoth Lakes Gain - 0.12 In August, we completed the sale of our 50% equity interest in the

Mammoth Lakes geothermal generating facility in California

International Coal ContractDispute Settlement

0.17 0.17 Gain recorded in connection with the 4Q10 favorable settlement of a

contractual dispute relating to our international coal activities that were

divested in 2009

Gain on ComprehensiveAgreement with EDF 0.60 0.60 Represents gain recorded in connection with October 26, 2010agreement with EDF eliminating the asset put arrangement,

establishing the full ownership of UniStar by EDF, and otherwise

restructuring the relationship between our two companies

Asset Impairments (0.11) (7.41) Other-than-temporary declines in fair value of our CENG, UniStar,

Poso, ACE, Malacha, and Jasmin equity method investments below

their carrying value primarily due to significantly declines in power

prices, and in the case of UniStar, our decision to not move forward

with loan guaranty conditions from the DOE

Total Special Items 0.52$ (7.40)$

Includes the non-cash expense associated with the basis difference

between book value and fair value of the JV net assets and fees

associated with amendment/termination of certain credit facilities



Q4 2010 Income Statement – BGE

(1) Adjusted earnings exclude special itemsNote: Numbers may not sum due to rounding

See Appendix

($ in millions except per share data) Change

Q4 2010 (1) Q4 2009 (1) $ %Electric Gross Margin $264 $260 4 2%

Gas Gross Margin 93 90 3 4%

Gross Margin $358 $350 8 2%

O & M (161) (144) (16) (11%)

D & A (68) (68) (1) (1%)

Other Expenses (42) (39) (3) (7%)

EBIT $87 $99 (12) (12%)

Net Interest Expense (30) (31) 1 3%

Income Tax (23) (29) 6 21%

Preferred Dividends (3) (3) 0 0%

Net Income $31 $36 (5) (13%)

Adjusted EPS $0.15 $0.18 ($0.03) (16%)

Special Items 0.00 (0.34) 0.34 NM

GAAP EPS $0.15 ($0.16) $0.32 200%



FY 2010 Income Statement – BGE


See Appendix


FY 2010 (1) FY 2009 (1) $ %Electric Gross Margin $1,071 $1,075 (4) (0)%

Gas Gross Margin 322 326 (4) (1%)

Gross Margin $1,393 $1,401 (7) (1%)

O & M (612) (563) (49) (9%)

D & A (249) (262) 13 5%

Other Expenses (167) (166) (2) (1%)

EBIT $365 $410 (45) (11%)


Income Tax (94) (113) 19 17%

Preferred Dividends (13) (13) 0 0%

Net Income $138 $158 (21) (13%)

Adjusted EPS $0.69 $0.80 ($0.11) (13%)

Special Items (0.02) (0.34) 0.32 94%

GAAP EPS $0.67 $0.46 $0.21 46%




Q4 2010 (1) Q4 2009 (1) $ %

Revenue 527 437 90 21%

PF&E (349) (124) (225) (182%)

Gross Margin 178 313 (135) (43%)

O & M (102) (198) 96 48%

D & A (39) (35) (4) (11%)

Accretion of ARO 0 (8) 7 95%Taxes Other than Income Taxes (6) (12) 6 50%

Other Expenses (2) 62 48 15 31%

EBIT 93 109 (16) (14%)


Income Tax (14) (13) (2) (13%)

Net Income 51 62 (11) (18%)

Adjusted EPS $0.25 (3) $0.32 ($0.07) (21%)

Special Items 0.35 22.07 (21.72) (98%)

GAAP EPS $0.60 $22.39 ($21.79) (97%)

(1) Adjusted earnings exclude special items

(2) Includes Equity Earnings

(3) Including $0.15 per share benefit from the PPA with CENG, Adjusted Earnings would total $0.40 per shareNote: Numbers may not sum due to rounding

See Appendix

Q4 2010 Income Statement – Generation




FY 2010 (1) FY 2009 (1) $ %

Revenue 2,244 2,774 (530) (19%)

PF&E (1,476) (697) (779) (112%)

Gross Margin 768 2,078 (1,310) (63%)

O & M (349) (1,004) 655 65%

D & A (136) (177) 41 23%

Accretion of ARO (2) (62) 60 97%Taxes Other than Income Taxes (24) (67) 43 65%

Other Expenses (2) 217 54 163 302%

EBIT 476 821 (345) (42%)


Income Tax (130) (249) 119 48%

Net Income 250 423 (173) (41%)

Adjusted EPS $1.25 (3) $2.11 ($0.87) (41%)

Special Items (7.51) 21.68 (29.19) (135%)

GAAP EPS ($6.26) $23.79 ($30.06) (126%)

(1) Adjusted earnings exclude special items

(2) Includes Equity Earnings

(3) Including $0.56 per share benefit from the PPA with CENG, Adjusted Earnings would total $1.81 per shareNote: Numbers may not sum due to rounding

See Appendix

FY 2010 Income Statement – Generation




See Appendix

Q4 2010 Income Statement – NewEnergy


Q4 2010(1)

Q4 2009(1)

$ %Revenue 2,403 2,611 (208) (8%)

PF&E (2,194) (2,411) 217 9%

Gross Margin 209 200 9 5%

O & M (172) (141) (31) (22%)

D & A (20) (25) 5 19%

Taxes Other than Income Taxes (3) (4) 1 13%

Other Expenses (26) (65) 39 60%

EBIT (14) (35) 21 61%


Income Tax (16) 1 (17) NM

Net Income (31) (39) 8 21%

Adjusted EPS ($0.15) ($0.20) $0.05 25%

Special Items 0.17 (0.04) 0.21 NM

GAAP EPS $0.02 ($0.24) $0.26 107%




See Appendix

FY 2010 Income Statement – NewEnergy


FY 2010(1)

FY 2009(1)

$ %Revenue 10,065 11,607 (1,542) (13%)

PF&E (9,068) (10,599) 1,531 14%

Gross Margin 997 1,008 (11) (1%)

O & M (610) (592) (18) (3%)

D & A (83) (83) 0 NM

Taxes Other than Income Taxes (11) (10) (1) (10%)

Other Expenses (97) (83) (14) (16%)

EBIT 196 240 (44) (18%)

Net Interest Expense 0 (33) 33 101%

Income Tax (88) (116) 28 24%

Net Income 108 92 16 17%

Adjusted EPS $0.54 $0.46 $0.08 16%

Special Items 0.15 (2.46) 2.61 106%

GAAP EPS $0.69 ($2.00) $2.69 135%



26

2010 Cash Flow($ in millions) Q4 2010 FY 2010

Operating Activities

Net income (loss) $168 ($932)

Derivative contracts classified as financing activities 57 186

Gain on divestitures (246) (246)Impairment losses and other costs 9 2,477

Other non-cash adjustments to net income (loss) 490 156

Changes in working capital:

Derivative assets and liabilities, excluding collateral 198 450

Net collateral and margin 245 44

Accrued taxes 10 (810)

Other changes (263) (591)

Defined benefit obligations (215) (225)

Other 80 2

Net cash provided by operating activities 533 511

Investing Activities

Investments in property, plant and equipment (287) (996)

Assets and business acquisitions, net of cash acquired (73) (446)

Proceeds from sale of investments and other assets 151 244

17 57

Contract and portfolio acquisitions 1 (208)

Decrease (increase) in restricted funds 19 (60)

Other investments (5) (36)

Net cash used in investing activities (177) (1,445)

Cash flows from operating activities plus cash flows from investing activities $356 ($934)

Financing Activities

513 (128)

Debt issuance costs (32) (33)

Proceeds from issuance of common stock 1 14

Common stock dividends paid (44) (183)

BGE preference stock dividends paid (3) (13)

Proceeds from contract and portfolio acquisitions (1) 52

Derivative contracts classified as financing activities (57) (186)

Other - (1)

Net cash provided by (used in) financing activities377 (478)Net increase (decrease) in cash and cash equivalents $733 ($1,412)

Note: Numbers are subject to change pending filing of Form 10-K.

Proceeds from investement tax credits and grants related to renewable energy investments

Net issuance (repayment) of debt



Capital Spending – Regulated Business (BGE)

27

($ in millions) FY 2011E FY 2012E FY 2013E

Electric / Gas Distribution $ 387 $ 392 $ 346

Electric Transmission 112 114 217

Smart Energy SaversSM Initiatives 111 169 279

Utility Total $ 609 $ 675 $ 842

Key drivers of capital expenditures:

– Electric and gas infrastructure spending for reliability

– Electric transmission investments for reliability

– Smart Energy SaversSM initiatives including energy efficiency, PeakRewardsSM, and Smart Grid



2010 BGE Rate Base

28

($ in millions)

ElectricDistribution

GasDistribution

ElectricTransmission Total Utility

Utility Plant $ 4,631 $ 1,456 $ 900 $ 6,987

Additions to Rate Base 267 89 6 363

Deductions from Rate Base (2,454) (720) (419) (3,594)

Total Rate Base $ 2,444 $ 825 $ 487 $ 3,756



Capital Spending – Competitive Businesses

($ in millions)FY

2011E

FY2012E

FY2013E

Generation & Other (1)

Major Environmental $ 36 $ 17 $ 24

Maintenance Capital 124 124 128

Growth (2) 14 - -

Generation & Other Total $ 174 $ 141 $ 152

Memo: Total CENG capital spend 432 456 489

(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

2011EFY

2012EFY

2013E

NewEnergy

Maintenance Capital 22 16 18

Growth (2) 184 174 190

NewEnergy Total $ 206 $ 190 $ 208

29



30

Net Available Liquidity

December 31, 2010

$ in billions Competitive BGECredit facilities $ 3.7 $ 0.6

Less: Letters of credit issued(1)

(1.2) -

Net available facilities 2.5 0.6

Add: Cash(2)

2.0 0.0

Less: Reserved cash(3)

(1.2) -

Total Net Available Liquidity $ 3.3 $ 0.6

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 (4)

$ 0.5

(1) Excludes availability and postings under the unregulated business' price contingent knock-in facility

(2) BGE 12/31 cash balance was $50M

(3) Reserved cash comprised of earmarks for the January close of Boston Gen ($1.0B) and the January call of the 2012 Notes ($0.2B)

(4) The agreement was amended in September 2010 to allow an option to draw cash in addition to LCs



($ in millions) 2011E 2012E 2013E 2014E

Total Output (MM MWhs) 32 32 33 33

Unhedged GM $1,276 $1,321 $1,469 $1,530

Total Expenses

Direct O&M

Other Generation Expense (1)

($697)

(97)

($705)

(104)

($689)

(105)

($716)

(105)

Unhedged EBITDA

Hedges

$482 $511 $675 $709

PPA/RSA

Other

(6)

60

(2)

31

(32)

(11)

(44)

(18)

Total EBITDA

D&A/ARO

$537

(201)

$540

(213)

$632

(230)

$647

(244)

Total EBIT

CEG Portion of EBIT (2)

$336

$168

$326

$163

$402

$201

$404

$202

31

CEG Earnings Impact from CENG

(1) Includes support costs, property taxes and other costs

(2) Represents Constellation‘s 50% ownership stake in nuclear joint venture with EDF

Note: All forward curves as of 12/15/10. Numbers may not sum due to rounding. Values shown reflect Constellation‘s market views and JV accountingtreatment; EDF views may differ



32

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(3) Reflects clearing price of 2013 / 2014 only

Market Curves (as of 12/15/2010) 2011 2012 2013 2014

NYMEX Gas ($/MMBtu)

NYMEX Coal ($/Ton)

PJM WHUB ($/MWh) (7 x 24) (1)

NY WHUB ($/MWh) (7 x 24) (1)

ERCOT Houston Zone ($/MWh) (7 x 24) (1)

NEPOOL HUB ($/MWh) (7x24)

PJM Capacity Pricing ($/MWd) (3)

NEPOOL Capacity Pricing ($/MWh)

NY Capacity Pricing ($/MWh) (2)

RGGI Emissions Expense ($/ton of CO2)

4.4

75.1

44.3

37.8

36.3

47.3

136.8

5.5

0.9

1.9

4.9

80.2

45.6

39.0

40.5

48.8

123.8

4.4

NA

1.9

5.3

84.0

47.4

40.3

43.6

51.1

187.6

4.0

NA

2.0

5.5

86.7

49.7

42.2

46.1

53.2

226.2

4.0

NA

2.0



33

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

2011 2012 2013 2014

Average Hedged Energy PricesPower – Non-Nuclear Plants ($/MWh)

% Hedged Fossil

55.4

100%

59.5

51%

68.0

16%

68.6

10%

Power – PJM Nuclear Plants ($/MWh) (1)

% Hedged PJM Nuclear

Power – NY Nuclear Plants ($/MWh) (1)

% Hedged NY Nuclear

52.2

100%

39.9

100%

52.7

64%

41.9

77%

51.1

32%

40.6

68%

52.1

0%

40.0

44%

Average Hedged Fuel Prices

Coal ($/ton) (2)

% Hedged

63.0

100%

64.8

43%

72.4

9%

NA

0%

Gas ($/MMBTU)

% Hedged

4.0

100%

4.4

44%

4.5

16%

4.9

0%



34

Generation Statistics

(MWh in thousands, unless otherwise stated) 2011E 2012E 2013E 2014E

Nuclear Plants (CEG Ownership Only)

Calvert Cliffs 7,263 7,025 7,205 7,299

NMP 1 2,403 2,668 2,471 2,660

NMP 2 4,003 3,851 4,377 4,044

Ginna 2,227 2,345 2,490 2,261

Total Nuclear 15,896 15,889 16,543 16,264

Coal Plants (1)

SW MAAC Coal Plants 11,621 10,816 9,672 9,817

Other PJM Coal Plants 3,894 3,917 3,971 3,717

Total Coal 15,515 14,733 13,643 13,534

Coal burn (MMtons) (2) 6.8 6.5 6.0 6.0

CO2 Emissions (MMtons) 25.1 24.1 22.7 22.8

(1) Excludes QFs(2) Includes Keystone and Conemaugh



35

Generation Statistics

(MWh in thousands, unless otherwise stated) 2011E 2012E 2013E 2014E

Gas / Oil Plants

PJM Gas/Oil Plants 101 103 136 204

NEPOOL Gas Plants 12,736 12,261 12,289 12,673

ERCOT Gas Plants 2,600 2,647 2,676 2,686

Hillabee (Alabama) 2,174 2,035 2,194 2,712

West Valley (Utah) 145 195 224 233

Grande Prairie (Alberta, Canada) 294 260 242 264

Total Gas/Oil 18,050 17,501 17,761 18,772

Total QFs/Other (1) 2,507 2,469 2,183 2,191

Toll Agreement Statistics

External Tolls 6,159 6,070 5,485 5,791

Other Contracted Generation (2) 9,251 5,166 2,574 26

Total Toll Output 15,410 11,236 8,059 5,817

(1) Includes Safe Harbor (~700k MWH per year); Criter ion; 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



36

Generation Assets



37

Regional Load and Physical Generation Positions

Constellation‘s physical generation to load alignment is expected to be

approximately 67% in 2011

0

2

4

6

8

10

12

14

PJM ERCOT MISO NEPOOL West

TWhs

Net Load (Load less Physical Generation)



38

Upstream Gas Assets

Woodford shale (OK)Fayetteville shale (AR)

Fractured Carbonate (OK)

North Louisiana CBM (LA)

Floyd shale (AL)

Ohio shale

Hunton dewatering (OK)

Shallow GOM

Current Portfolio of Investments

Estimated Net

Proved Reserves(as of 12/31/10)

Average Net Daily

Production(Q4 2010)

Forecasted Production Mix

2011 2012 2013

Dry Gas

(MMcfe / day)30 - 35 30 - 35 35 - 45

266 Bcfe 51.1 MMcfe WTI / Liquids(MBOE / day)

1.3 – 1.5 1.6 – 1.9 2.0 – 2.4

% of total gasobligation

6 6 7

Note 1: Oil conversion to gas is 6:1Note 2: Constellation does not operate any of its properties



Collateral Requirements

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

$MM

Market Data as of 12/15/2010

ISO Initial Margin OTC Extreme Price Stress Downgrade Reserve

39



Non-GAAP Appendix

40



Adjusted EPS 2010, 2009 and Quarterly – Consolidated

RECONCILIATION:

CEG Consolidated 2009 2010

($ per share) Total Q1 10 Q2 10 Q3 10 Q4 10 Total

ACTUAL RESULTS:

Reported GAAP EPS 22.19$ 0.95$ 0.36$ (6.99)$ 0.79$ (4.90)$ GAAP MEASURE

Special Items Included in Operations:

CEG Credi t Faci li ty Amendment Fees (0.11 ) (0.02) (0.01) (0.01) (0.02) (0.07)

A morti za ti on o f JV Ba si s Di ffer ence ( 0.09 ) (0.13) (0.18) (0.15) (0.12) (0.59)

Subtotal: CENG JV (0.20) (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)

UniS tar Nuclear Energ y R es ults ( 0. 08) (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

Loss on Extinguishment of CENG Associated Debt (0.05) - - - - -

BGE Customer Credit Accrual (0.34) - - - - -

Gain on CENG JV 22.25 - - - - -

Workforce Reduction Costs (0.05) - - - - -

Divested Operations (1.86) - - - - -

Impai rm ent Los se s a nd O ther Cos ts ( 0.69 ) - - (7.29) (0.11) (7.41)

Merger Termination & Strategic Alternative Costs (0.15) - - - - -

Earnings Excluding Special Items 3.36 1.30 0.57 0.34 0.27 2.50

PPA Amortization - (0.13) (0.14) (0.14) (0.15) (0.56)

Adjusted EPS 3.36$ 1.43$ 0.71$ 0.48$ 0.42$ 3.06$ NON-GAAP MEASURE

EARNINGS GUIDANCE

NOTE

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.

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 toour results in accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since itexcludes 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 compensationpurposes.

42



Adjusted EPS 2010, 2009 and Quarterly – BGE

RECONCILIATION:

BGE 2009 2010


ACTUAL RESULTS:

Reported GAAP EPS 0.46$ 0.30$ 0.07$ 0.14$ 0.15$ 0.67$ GAAP MEASURE



BGE Customer Credit Accrual (0.34) - - - - -



EARNINGS GUIDANCE

NOTE





shares.



43



Adjusted EPS 2010, 2009 and Quarterly – Generation

RECONCILIATION:

Generation 2009 2010


ACTUAL RESULTS:

Reported GAAP EPS 23.79$ 0.14$ 0.08$ (7.06)$ 0.60$ (6.26)$ GAAP MEASURE


CEG Credi t Faci li ty Amendment Fees (0.07) (0.01) (0.01) (0.01) (0.02) (0.05)

Amortizati on of JV Bas is Di fference ( 0.09) (0.13) (0.18) (0.15) (0.12) (0.59)

Subtotal: CENG JV (0.16) (0.14) (0.19) (0.16) (0.14) (0.64)

Early Retirement of 2012 Notes - (0.15) - - - (0.15)

UniStar Nuclear Energy Res ults (0.08) (0.01) (0.02) - - (0.03)

Mammoth Lakes Gain - - - 0.12 - 0.12

Gain on Comprehensive Agreement with EDF - - - - 0.60 0.60

Loss on Extinguishment of CENG Associated Debt (0.05) - - - - -

Gain on CENG JV 22.25 - - - - -

Impai rment L os ses and Other Cos ts ( 0.23) - - (7.29) (0.11) (7.41)



PPA Amortization - (0.13) (0.14) (0.14) (0.15) (0.56)


EARNINGS GUIDANCE

NOTE


impact of special items such as the cumulative effect of changes in accounting principles and the disposition of assets. S ee above reconciliation for



shares.



44



Adjusted EPS 2010, 2009 and Quarterly – NewEnergy

RECONCILIATION:

NewEnergy 2009 2010


ACTUAL RESULTS:

Reported GAAP EPS (2.00)$ 0.53$ 0.21$ (0.07)$ 0.02$ 0.69$ GAAP MEASURE


CEG Credit Facility Amendment Fees (0.04) (0.01) - - - (0.02)

Subtotal: CENG JV (0.04) (0.01) - - - (0.02)

International Coal Contract Dispute Settlement - - - - 0.17 0.17

Workforce Reduction Costs (0.05) - - - - -

Divested Operations (1.86) - - - - -

Impairment Losses and Other Costs (0.41) - - - - -


Earnings Excluding Special Items 0.46 0.54 0.21 (0.07) (0.15) 0.54

Adjusted EPS 0.46$ 0.54$ 0.21$ (0.07)$ (0.15)$ 0.54$ NON-GAAP MEASURE

EARNINGS GUIDANCE

NOTE


impact of special items such as the cumulative effect of changes in accounting principles and the disposi tion of assets. See above reconciliation for


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 dilutionshares.



45



Adjusted EPS 2010, 2009 and Quarterly – Other Nonregulated

RECONCILIATION:

Other Nonregulated 2009 2010


ACTUAL RESULTS:

Reported GAAP EPS (0.06)$ (0.02)$ -$ -$ 0.02$ -$ GAAP MEASURE



Impairment Loss es and Other Costs (0.05) - - - - -

Earnings Excluding Special Items (0.01) - - - 0.02 0.02

Adjusted EPS (0.01)$ -$ -$ -$ 0.02$ 0.02$ NON-GAAP MEASURE

EARNINGS GUIDANCE

NOTE





shares.



46



Q4 2010 BGE Income Statement Summary

We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy and to highlight the primarydriver of earnings at our Regulated Utility. We also make certain adjustments to items below gross margin through net income including EBIT. We believe thesenon-GAAP measures help investors to better understand the changes in the level of our BGE operating results from period to period.

RECONCILIATION: Quarter-to-Date as of December 31, 2010

BGE Income State ment Summa ry Electric Ga s

Other

Adjustments

Below GM

Other

Notes Non-GAAP

Electric 264$ -$ 264$

Gas - 93 93

Regulated Gross Margin 264$ 93$ -$ 358$

Operating & Maintenance (115) (43) (3) a (161)$

Depreciation & Amortization (57) (11) (68)

Taxes Other than Income Taxes (37) (9) 46 b

Income from Operations 56 30

Other Revenue and Expense 4 (0) (46) a,b,c (42)

EBIT N/A N/A 87

Fixed Charges (26) (6) 3 c (30)

Income Before Income Tax es 34 24

Income Tax expense (9) (14) (23)

Income from Continuing Operations 24 10 Preference Stock Dividends (3) (1) (3)

Noncontrolling Interest - -

Net Income 22$ 9$ -$ 31$

a Adjustment to reflect that management views allocated corporate expense as Operating & Maintenance Expense

b Adjustment to reflect that management views Taxes Other Than Income Taxes as Other Income and Expense

c Adjustment to reclassify Interest Income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount)

Amounts may not foot due to the effects of rounding

($ million)

GAAP

47



Q4 2009 BGE Income Statement Summary



a

BGE Income Statement Summary Electric Gas

BGE

Customer

Credit

Other

Adjustments

Below GM

Other

Notes

Non-

GAAP

Electric 165$ -$ 95$ 260$

Gas - 73 17 90

Regulated Gross Margin 165$ 73$ 112$ -$ 350$

Operating & Maintenance (101) (40) (3) b (144)$


Taxes Other than Income Taxes (33) (8) 42 c

Income from Operations (26) 13

Other Revenue and Expense 4 (1) (43) b,c,d (39)

EBIT N/A N/A 99

Fixed Charges (28) (6) 4 d (31)

Income Before Income Taxes (50) 6

Income Tax expense 19 (3) (45) (29)

Income from Continuing Operations (31) 3 Preference Stock Dividends (3) (1) (3)

Net Income (33)$ 2$ 67$ -$ 36$

b Adjustment to reflect that management views allocated corporate expense as Operating & Maintenance Expense

c Adjustment to reflect that management views Taxes Other Than Income Taxes as Other Income and Expense

d Adjustment to move Interest Income recorded in Other Income and Expense to Fixed Charges (to show a fixed charge amount net of interest income)


a Adjustment to remove the BGE Customer Credit and related income and tax effects that management views as a special item.

($ million)

GAAP

48



FY 2010 BGE Income Statement Summary


RECONCILIATION: Year-to-Date as of December 31, 2010

a

BGE Income Sta tement Summary Electric Gas

Medicare

Part D

Other

Adjustments

Below GM

Other

Notes

Non-

GAAP

Electric 1,071$ -$ 1,071$

Gas - 322 322

Regulated Gross Margin 1,071$ 322$ -$ -$ 1,393$

Operating & Maintenance (449) (157) (5) b (612)$


Taxes Other than Income Taxes (149) (35) 184 c


Other Revenue and Expense 21 (0) (190) b,c,d (167)

EBIT N/A N/A 365

Fixed Charges (106) (24) 10 d (120)

Income Before Income Taxes 183 62

Income Tax expense (73) (25) 3 (94)

Income from Continuing Operations 110 38 Preference Stock Dividends (10) (3) (13)

Noncontrolling Interest - -

Net Income 100$ 35$ 3$ -$ 138$

a Adjustment to remove Special Items (Medicare Part D) which is not included in determining BGE Adjusted Earnings

b Adjustment to reflect that management views allocated corporate expense as Operating & Maintenance Expense

c Adjustment to reflect that management views Taxes Other Than Income Taxes as Other Income and Expense

d Adjustment to reclassify interest income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount)


($ million)

GAAP

49



FY 2009 BGE Income Statement Summary



a

BGE Income Statement Summary Electric Gas

BGE

Customer

Credit

Other

Adjustments

Below GM

Other

Notes

Non-

GAAP

Electric 980$ -$ 95$ 1,075$

Gas - 308 18 326

Regulated Gross Margin: 980$ 308$ 113$ -$ 1,401$

Operating & Maintenance (399) (161) (3) (563)$


Taxes Other than Income Taxes (143) (35) 178 b


Other Revenue and Expense 25 - (192) b, c (166)

EBIT N/A N/A 410

Fixed Charges (113) (26) 14 c (125)

Income Before Income Taxes 132 43

Income Tax expense (51) (17) (45) (113)

Income from Continuing Operations 81 26

Preference Stock Dividends (10) (3) (13) Noncontrolling Interest - -

Net Income 71$ 23$ 65$ -$ 158$


c Adjustment to reclassify: (1) $1.4 million of cash pool interest income from Other Income to Fixed Charges,

(2) $17.5 million of rate stabilization income from Other Income to Fixed Charges, and (3) $(4.3) million of

capitalized AFUDC from Fixed Charges to Other Income

a Adjustment to remove the BGE Customer Credit and related income and tax effects that management views as a special item.

b Adjustment to reflect the fact that management views Taxes Other Than Income Taxes as Other Expense.

($ million)

GAAP

50



Q4 2010 Generation Income Statement Summary

We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy in our Generation business. Wealso make certain adjustments to items below gross margin through net income including EBIT. We believe these non-GAAP measures help investors to better understand the changes in the level of our Generation operating results from period to period.


a b c d e

Genera tion Income Sta tement Summary GAAP

Certain

Operating

Expenses

UniStar

Activity

CENG Sale

and Basis

Difference

Impairment

Losses

Net Gain on

Divestiture

Other

Adjustments

Below GM Other Notes Non-GAAP

($ million)

Nonregulated Revenues 527$ 527$

Fuel and Purchased Energy Expenses (341) (8) (349)

Gross Margin 185$ (8)$ -$ -$ -$ -$ -$ 178$

Operating Expenses (110)$ 8 (102)$

Impairment Losses and Other Costs (8) 8

Deprec iat ion, Deplet ion, and Amort izat ion (39) (39)

Ac cret ion of As set Ret irement Obligation (0) (0)

Taxes Other than Income Taxes (6) (6)

Net Gain on Divestitures 202 (202)

Equity Investment Earnings 26 1 39 (66) f

Income from Operations 250

Other Income and Expense (9) 71 f, g 62

EBIT N/A 93

Fixed Charges (29) (28)

Income Before Income Tax es 212

Income Tax Expense (91) (0) (15) 13 81 (2) g (14)

Income from Continuing Operations 122 Income from Discontinued Operations -

Noncontrolling Interest -

Net Income 122$ -$ 1$ 23$ 22$ (121)$ 3$ 51$

a Adjustment to reclassify certain operating expenses to Non-GAAP Gross Margin

b Adjustment to remove Special Items (UniStar activity) and related tax benefit, which is not included in determining Generation Non-GAAP Gross Margin and Adjusted Earnings

c Adjustment to remove Special Items (Amortization of CENG basis difference) and related tax benefit, which is not included in determining Generation Adjusted Earnings

d Adjustment to remove Special Items (Impairment losses and tax expense adjustments to equity method investments) and related tax benefit, which is not included in determining Generation Adjusted Earnings

e Adjustment to remove Special Items (Gain on Comprehensive Agreement with EDF) and related tax expense, which is not included in determining Generation Adjusted Earnings

f Adjustment to reflect that management views Equity Earnings as Other Income and Expense

g Adjustment to remove Special Items (Credit facility amendment fees of $5m) and related tax benefit, which is not included in determining Generation Adjusted Earnings


51



Q4 2009 Generation Income Statement Summary



a b c d

Generation Income Statement Summary GAAP

Certain

Operating

Expenses Fly Ash

CENG Sale

and Basis

Difference

UniStar

Equity

Earnings

Other

Adjustments


($ million)

Nonregulated Revenues 452$ (15)$ 437$

Fuel and Purchased Energy Expenses (123) (8) 7 (124)

Gross Margin 329$ (8)$ 7$ -$ (15)$ -$ 313$

Operating Expenses (199)$ 8 (7) (198)$

Merger Termination and Strategic Alternatives Costs (69) 69 e

Deprec iat ion, Deplet ion, and A mort iz at ion (35) (35) Accretion of Asset Retirement Obligation (8) (8)


Gain on Sale of Interest in CENG 7,446 (7,446)


Income from Operations 7,453

Other Income and Expense (6) 54 f,g,h,j 48

EBIT N/A 109

Fixed Charges (51) 16 i (34)

Income Before Income Taxes 7,396

Income Tax Expense (2,889) 2,978 - (101) e,g,h,i,j (13)

Income from Continuing Operations 4,507

Income from Discontinued Operations -


Net Income 4,507$ -$ -$ (4,438)$ 6$ (13)$ 62$

a Adjustment to reclassify operating expenses to Non-GAAP gross margin

b Adjustment t o reclassify fly ash expense to Non-GAAP operating and maintenance expense

c Adjustment to remove Special Items (Gain on sale of interest in CENG and Amortization of basis difference in CENG) and related tax expense,

which are not included in determining Generation Adjusted Earnings

d Adjustment t o remove Special Items (UniStar net loss of $6m) and related tax benefit ($0m), which is not included in determining Generation Adjusted Earnings

e Adjustment t o remove Special Items (Merger termination and strategic alternatives costs) and related tax benefit ($92),


f Adjustment to reclassify equity earnings ($51m) to Other Income and Expense

g Adjustment to remove Special Items (Nuclear Decommissioning Trust Fund Impairments of $0m) and related tax benefit ($3m),

which is not included in determining Generation Adjusted Earnings

h Adjustment t o remove Special Items (Credit facility amendment fees of $6m) and related tax benefit ($2m), which is not included in determining Generation Adjusted Earnings

i Adjustment to remove Special Items (Loss on retirement of bond of $16m) and related tax benefit ($6m), which is not included in determining Generation Adjusted Earnings

j Adjustment to reclassify certain tax expense ($2m) that management views as Other Expense

Amounts may not foot due to the effects of rounding 52



FY 2010 Generation Income Statement Summary



a b c d e

Generation Income Statement Summary GAAP

Certain

Operating

Expenses

UniStar

Activity

CENG Basis

Difference

Impairment

Losses

Net Gains on

Divestitures

Other

Adjustments


($ million)

Nonregulated Revenues 2,244$ 2,244$

Fuel and Purchased Energy Expenses (1,445) (31) (1,476)

Gross Margin 800$ (31)$ -$ -$ -$ -$ -$ 768$


Impairment Losses and Other Costs (2,477) 2,477 Deprec iat ion, Deplet ion, and Amort iz ation (136) (136)

Accretion of Asset Retirement Obligation (2) (2)


Net Gain on Divestitures 243 (240) (3) f


Income from Operations (1,950)

Other Income and Expense (36) 255 f, g 217

EBIT N/A 476

Fixed Charges (142) (7) 52 h (97)

Income Before Income Taxe s (2,128)

Income Tax Expense 873 (4) (78) (990) 94 (26) g, h. i (130)

Income from Continuing Operations (1,255)



Net Income (1,255)$ -$ 6$ 118$ 1,487$ (146)$ 40$ 250$

a Adjustment to reclass ify certain operating expenses to Non-GAAP Gross Margin

b Adjustment to remove Special Items (UniStar activity) and related tax benefit, which is not included in determining Generation Adjusted Earnings

c Adjustment to remove Special Items (Amortization of CENG basis difference) and related tax benefit, which is not included in determining Generation Adjusted Earnings

d Adjustment to remove Special Items (Impairments of CENG, UNE, and IPP investments) and related tax benefit, which is not included in determining Generation Adjusted Earnings

e Adjustment to remove Special Items (Gains on Comprehensive Agreement with EDF and sale of Mammoth Lakes) and related tax ex pense,


f Adjustment to reflect that management views Equity Earnings as Other Income and Expense

g Adjustment to remove Special Items (Credit facility amendment fees of $15m) and related tax benefit ($6m), which is not included in determining Generation Adjusted Earnings

h Adjustment to remove Special Items (Loss on early retirement of debt) and related tax benefit ($21m), which is not included in determining Generation Adjusted Earnings

i Adjustment to remove special item (Medicare Part D tax expense of $1m), which is not inc luded in determining Generation Adjusted Earnings

Amounts may not foot due to the effects of rounding53



FY 2009 Generation Income Statement Summary



a b c

Genera tion Income Sta tement Summary GAAP

Certain

Operating

Expenses Fly Ash

CENG Sale

and Basis

Difference

Other

Adjustments


($ million)

Nonregulated Revenues 2,774$ 2,774$

Fuel and Purchased Energy Expenses (692) (30) 25 (697)

Gross Margin 2,082$ (30)$ 25$ -$ -$ 2,078$

Operating Expenses (1,008)$ 30 (25) (1,004)$

Merger Termination and Strategic Alternatives Costs (102) 102 d


Ac cret ion of Ass et Ret irement Obligat ion (62) (62) Taxes Other than Income Taxes (67) (67)

Gain on Sale of Interest in CENG 7,446 (7,446)

Equity Investment Earnings 0 30 (30) h,k

Income from Operations 8,112

Other Income and Expense (71) 125 e,f,i,j,k 54

EBIT N/A 821

Fixed Charges (167) 18 g,i (149)

Income Before Income Taxe s 7,874

Income Tax Expense (3,107) 2,978 (120) d,e,f,g,h,j (249)

Income from Continuing Operations 4,767



Net Income 4,767$ -$ -$ (4,438)$ 95$ 423$

a Adjustment to reclassify operating expenses to Non-GAAP gross margin

b Adjustment to reclassify fly ash expense to Non-GAAP operating and maintenance expense

c Adjustment to remove Special Items (Gain on sale of interest in CENG and Amortization of basis difference in CENG) and related tax expense,


d Adjustment to remove Special Items (Merger termination and strategic alternatives costs) and related tax benefit ($92),


e Adjustment to remove Special Items (Nuclear Decommissioning Trust Fund Impairments of $61m) and related tax benefit ($15m),


f Adjustment to remove Special Items (Credit facility amendment fees of $23m) and related tax benefit ($9m), which is not included in determining Generation Adjusted Earnings

g Adjustment to remove Special Items (Loss on retirement of bond of $16m) and related tax benefit ($6m), which is not included in determining Generation Adjusted Earnings

h Adjustment to remove Special Items (UniStar loss of $21m) and related tax benefit ($6m), which is not included in determining Generation Adjusted Earnings

i Adjustment to reclassify Interest Income ($1m) recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount net of interest income)

j Adjustment to reclassify certain tax expense ($8m) that management views as Other Expense

k Adjustment to reclassify Equity Earnings ($51m) to Other Income and Expense


54



Q4 2010 NewEnergy Income Statement Summary

We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy in our NewEnergy business. Wealso make certain adjustments to items below gross margin through net income including EBIT. We believe these non-GAAP measures help investors to better understand the changes in the level of our New Energy operating results from period to period.


a b c

NewEnergy Income Statement Summary GAAP

Gross

Receipts Tax

Certain

Operating

Expenses

Coal

Contract

Settlement

Other

Adjustments


($ million)

Nonregulated Revenues 2,459$ (57) 2,403$

Fuel and Purc hased Energy Ex penses (2,149) (9) (36) (2,194)

Gross Margin 311$ (9)$ (36)$ (57)$ -$ 209$



Taxes Other than Income Taxes (13) 9 (3)

Net Gain on Divestitures -


Other Income and Expense (24) (3) d,e,f (26)

EBIT N/A (14)

Fixed Charges (2) 1 f (1)

Income Before Income Taxes 44

Income Tax Expense (36) 21 (1) e (16)

Income from Continuing Operations 8


Noncontrolling Interest (5) 5 d

Net Income 3$ -$ -$ (35)$ 2$ (31)$

a Adjustment to reclassify gross receipts tax from operating expenses to Non-GAAP Gross Margin

b Adjustment to reclassify certain operating expenses to Non-GAAP Gross Margin

c Adjustment to remove Special Items (International Coal Contract Dispute Settlement) and related tax benefit, which is not included in determining NewEnergy Adjusted Earnings

d Adjustment to reflect that management views Noncontrolling Interests as Other Income and Expense

e Adjustment to remove Special Items (Credit facility amendment fees of $3m) and related tax benefit, which is not included in determining NewEnergy Adjusted Earnings

f Adjustment to reclassify Interest Income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount net of interest income)




Q4 2009 NewEnergy Income Statement Summary



a b c d


Divestiture of

International

Commodities

Operations

Divestiture of

Downstream Gas

Trading

Operations

Gross

Receipts Tax

Certain

Operating

Expenses

Other

Adjustments


($ million)

Nonregulated Revenues 2,624$ (14) 1 2,611$

Fuel and P urchased E nergy E xpenses (2, 371) (6) (34) (2,411)

Gross Margin 253$ (14)$ 1$ (6)$ (34)$ -$ 200$

Operating Expenses (180)$ (3) 4 (1) 34 5 l (141)$

Merger Termination and Strategic Alternatives Costs (26) 26 e

Impairment Losses and Other Costs (2) 2 f Workforce Reduction Costs (1) 1 g

Depreciation, Deplet ion, and Amort izat ion (20) (5) l (25)


Net Loss on Divestitures (4) 4 k

Equity Investment Earnings (6) 6 m


Other Income and Expense (73) 3 5 h,i,j,k,m (65)

EBIT N/A (35)

Fixed Charges (7) 2 j (5)

Income Before Income Taxes (76)

Income Tax Expense 38 10 (0) (48) e,f,g,i 1

Income from Continuing Operations (38)


Noncontrolling Interest (11) 11 h

Net Income (49)$ (4)$ 5$ -$ -$ 8$ (39)$

a Adjustment to remove the effect of the divestiture of our international commodities operations and uranium market participant from Non-GAAP gross margin and below gross margin.

The vast majorit y of the gross margin adjustment is on revenue vs. fuel and purchased expense. For purposes of Non-GAAP presentati on, the entire adjustment has been attributed to revenue.

b Adjustment to remove the effect of the divestiture of our Houston-based downstream gas trading operations from Non-GAAP gross margin and below gross margin.

The vast majorit y of the gross margin adjustment is on revenue vs. fuel and purchased expense. For purposes of Non-GAAP presentati on, the entire adjustment has been attributed to revenue.

c Adjustment to reclass ify gross receipts tax from operating expenses to Non-GAAP gross margin

d Adjustment to reclassify operating expenses to Non-GAAP gross margin

e Adjustment to remove Special Items (Merger termination costs) and related tax benefit ($40m), which are not included in determining NewEnergy Below Gross Margin

f Adjustment to remove Special Items (Impairment losses and other) and related tax expense ($1m), which are not included i n determining NewEnergy Below Gross Margin

g Adjustment to remove Special Items (Workforce reduction costs) and related tax expense ($1m), which are not included in determining NewEnergy Below Gross Margin

h Adjustment to reflect the fact that management views Noncontrolling Interests as Other Expense

i Adjust ment to remove Special Items (Credit facility amendment and termination fees of $28m) and related tax benefit ($10m), which is not included in determining NewEnergy Below Gross Margin

j Adjustment to reclassify Interest Income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount net of interest income)

k Adjustment to reclass ify loss on divestiture to Other Income and Expense

l Adjustment to reclass ify certain allocated costs from Depreciation and Amortization to O&M

m Adjustment to reclassi fy Equity Earnings to Other Income and Expense




FY 2010 NewEnergy Income Statement Summary



a b c


Gross

Receipts Tax

Certain

Operating

Expenses

Coal

Contract

Settlement

Other

Adjustments


($ million)

Nonregulated Revenues 10,121$ (57) 10,065$

Fuel and Purchased Energy Expenses (8,878) (42) (148) (9,068)

Gross Margin 1,244$ (42)$ (148)$ (57)$ -$ 997$


Deprec iation, Deplet ion, and Amort izat ion (84) (83)


Net Gain on Divestitures 2 (2) d


Other Income and Expense (65) (31) d,e,f (97)

EBIT N/A 196

Fixed Charges (3) 3 f 0

Income Before Income Taxes 283

Income Tax Expense (107) 21 (3) e (88)

Income from Continuing Operations 176 Income from Discontinued Operations -

Noncontrolling Interest (38) 38 d

Net Income 139$ -$ -$ (35)$ 5$ 108$

a Adjustment to reclassify gross receipts tax from operating expenses to Non-GAAP Gross Margin

b Adjustment to reclassify certain operating expenses to Non-GAAP Gross Margin

c Adjustment to remove Special Items (International Coal Contract Dispute Settlement) and related tax benefit, which is not included in determining NewEnergy Adjusted Earnings

d Adjustment to reflect that management views Net Gain on Divestiture and Noncontrolling Interests as Other Income and Expense

e Adjustment to remove Special Items (Credit facility amendment fees of $8m) and related tax benefit, which is not included in determining NewEnergy Adjusted Earnings

f Adjustment to reclassify Interest Income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount net of interest income)




FY 2009 NewEnergy Income Statement Summary



a b c d e

New Energy Incom e Sta tement Sum mary GAAP

Divestiture of

International

Commodities

Operations

Divestiture of

Downstream Gas

Trading

Operations

Upstream

Asset Sale

Gross

Receipts Tax

Certain

Operating

Expenses

Other

Adjustments


($ million)

Nonregulated Revenues 11,509$ 71 21 6 11,607$

Fuel and Purchased Energy Expenses (10,430) (31) (138) (10,599)

Gross Margin 1,079$ 71$ 21$ 6$ (31)$ (138)$ -$ 1,008$

Operating Expenses (764)$ 17 16 138 (592)$

Merger Termination and Strategic Alternatives Costs (44) 44 f

Impairment Losses and Other Costs (98) 98 gWorkforce Reduction Costs (13) 13 h

Depreciat ion, Deplet ion, and Amortizat ion (83) (83)

Acc ret ion of Ass et Ret irement Obl igat ion (0) 0


Net Loss on Divestitures (469) 359 111 (6) 5 l

Equity Investment Earnings (6) 6 m

Income from Operations (438)

Other Income and Expense (50) (34) i,j,k,l,m (83)

EBIT N/A 240

Fixed Charges (40) 7 k (33)

Income Before Income Taxes (527)

Income Tax Expense 179 (169) (55) (71) f,g,h,j (116)

Income from Continuing Operations (348)

Inc ome from Dis cont inued Operat ions -

Noncontrolling Interest (54) 54 i

Net Income (402)$ 278$ 93$ -$ -$ -$ 122$ 92$

a Adjustment to remove the effect of the divestiture of our international commodities operations and uranium market participant from Non-GAAP gross margin and below gross margin.

The vast majorit y of the gross margin adjustment is on revenue vs. fuel and purchased expense. For purposes of Non-GAAP presentat ion, the entire adjustment has been attributed to revenue.

b Adjustment to remove the effect of the divestiture of our Houston-based downstream gas trading operations from Non-GAAP gross margin and below gross margin.


c Adjustment t o reclassify gain on sale of Upstream Gas properties to Non-GAAP gross margin.


d Adjustment to reclassify gross receipts tax from operating expenses to Non-GAAP gross margin

e Adjustment to reclassify operating expenses to Non-GAAP gross margin

f Adjustment to remove Special Items (Merger termination costs) and related tax benefit ($40m), which are not included in determining NewEnergy Below Gross Margin

g Adjustment to remove Special Items (Impairment losses and other) and related tax benefit ($13m), which are not included in determining NewEnergy Below Gross Margin

h Adjustment to remove Special Items (Workforce reduction costs) and related tax benefit ($3m), which are not included in determining NewEnergy Below Gross Margin

i Adjustment t o reflect the fact that management views Noncontrolling Interests as Other Expense

j Adjustment to remove Special Items (Credit facility amendment and termination fees of $38m) and related tax benefit ($15m), which is not included in determining NewEnergy Below Gross Margin

k Adjustment to reclassify Interest Income recorded in Other Income and Expense to Fixed Charges (to show a net fixed charge amount net of interest income)

2010 year-end earnings presentation - supporting materials

Documents