constellation energy Q3 2006 Earnings Presentation

Constellation Energy
Q3 2006 Earnings

October 27, 2006

Forward-looking Statements Disclaimer
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 for energy including coal, natural gas, oil, electricity, nuclear fuel, and emissions allowances; the timing and extent of
deregulation of, and competition in, the energy markets, and the rules and regulations adopted on a transitional basis in those markets; the
conditions of the capital markets, interest rates, availability of credit, liquidity and general economic conditions, as well as Constellation Energy’s
and BGE’s ability to maintain their current credit ratings; the ability to attract and retain customers in our competitive supply activities and to
adequately forecast their energy usage; 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 other commitments; the liquidity and competitiveness of wholesale
markets for energy commodities; uncertainties associated with estimating natural gas reserves, developing properties and extracting gas;
operational factors affecting the operations of our generating facilities (including nuclear facilities) and BGE’s transmission and distribution
facilities, including catastrophic 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, liabilities associated with catastrophic
events, and other events beyond our control; the inability of BGE to recover all its costs associated with providing electric residential customers
service; the effect of weather and general economic and business conditions on energy supply, demand, and prices; regulatory or legislative
developments that affect deregulation, transmission or distribution rates, demand for energy, or that would increase costs, including costs related
to nuclear power plants, safety, or environmental compliance; the actual outcome of uncertainties associated with assumptions and estimates
using judgment when applying critical accounting policies and preparing financial statements, including factors that are estimated in applying
mark-to-market accounting, such as the ability to obtain market prices and in the absence of verifiable market prices, the appropriateness of
models and model impacts (including, but not limited to, extreme contractual load obligations, unit availability, forward commodity prices,
interest rates, correlation and volatility factors); changes in accounting principles or practices; 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; our ability to successfully identify and
complete acquisitions and sales of businesses and assets; cost and other effects of legal and administrative proceedings that may not be covered by
insurance, including environmental liabilities; 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.

2

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, 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, the impact of certain
economic, non-qualifying hedges, and synfuel earnings. The mark-to-market impact of these hedges is significant to reported results, but
economically neutral to the company in that offsetting gains or losses on underlying accrual positions will be recognized in the future. 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 measures provide a picture of our results that is comparable among periods since it excludes the impact of
items such as 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 these non-GAAP measures involve judgments by
management (in particular, judgments as to what is classified as a special item or an economic, non-qualifying hedge to be excluded from adjusted
earnings). These non-GAAP measures are 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, economic, non-qualifying hedges or synfuel earnings due to the difficulty of doing so.
The impact of special items, economic, non-qualifying hedges, or synfuel earnings could be material to our operating results computed in
accordance with GAAP. We note that such information is not in accordance with GAAP and should not be viewed as an alternative to GAAP
information. A reconciliation of pro-forma 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. Please see the Summary of Non-GAAP Measures
included to find the appropriate GAAP reconciliation and its related slide(s). These slides are only intended to be reviewed in conjunction with the
oral presentation to which they relate.

3

Merger Termination
• Reached joint and amicable agreement with FPL Group to terminate
merger
– Termination request initiated by Constellation
– Tremendous respect for FPL Group
• Risks and uncertainties in Maryland too significant to overcome
– Created potential for protracted and open-ended merger review process
– Company minimized distractions from merger process and focused on
delivering results in the interim
– Imprudent to expose commercial businesses to indefinite uncertainty
• Termination not driven by any single or isolated event
– Recognition that no clear path led to merger completion
– No events on the horizon would create certainty in the near term
• Right decision for shareholders to focus Constellation’s efforts on
growth that the company can control
• Working constructively to balance needs of Maryland and maintaining
a financially healthy utility
4

Q3 2006 Adjusted EPS Summary
Q3 2006 Q3 2005
($ per share)

GAAP Earnings $1.79 $1.03

Special Items 0.08 -

(Gain) / Loss on Economic Non-Qualifying Hedges (0.20) 0.13

Synfuel Earnings (0.11) (0.08)

Adjusted Earnings $1.56 $1.08

Q3 Earnings Guidance $1.10 - $1.25

A proven business model, crisp execution and rigorous risk
management has enabled Constellation to deliver 20 consecutive
quarters of meeting or exceeding management guidance
5
See Appendix

Q3 2006 Operating Highlights
• Merchant business delivered exceptional results in all areas
– Commodities
Delivered strong new business growth via power and portfolio management and
trading
Sustained pattern of adding to backlog of future earnings
– NewEnergy
Continued gross margin improvement driven by improved pricing and lower costs to
serve load
Strong third quarter sales volumes and high retention rates
– Generation
Improving results driven by roll off of below-market sales from the fleet
On target to achieve full-year productivity target for 2006

• BGE performing in line with expectations
• S&P upgraded CEG senior unsecured debt rating to BBB+ from BBB
6

Sale of Gas-fired Merchant Plants
• Announced sale of gas-fired generation plants to Tenaska Power Fund L.P. on
October 11, 2006, for $1.635 billion in cash
– Plants sold on a merchant basis
– After-tax proceeds expected to be approximately $1.5 billion
– Expect closing by end of 2006 or in early 2007
• Continuation of a consistent pattern to evaluate owned and prospective assets
and buy or sell when values are attractive
• If proceeds used to repurchase debt and equity proportional to existing capital
structure, transaction would be neutral in 2007 and accretive thereafter
• Proceeds expected to be applied to debt reduction
– Should reach long-term target net debt to total capital ratio of 40% upon completion of divestiture
– Balance of proceeds and future free cash flow will be available to invest in growth businesses or to
repurchase debt and equity to maintain long-term leverage ratio
• Including effect of de-levering, transaction will be modestly dilutive through
2009 and accretive thereafter
• Continue to evaluate opportunities to grow our asset base

7

Strategic Fundamentals
• Business built on foundation of low-cost baseload fleet
– High quality assets located in high-value markets

• Industry-leading intermediation businesses
– Significantly leveraging the value of our physical asset base
– Provide high-value products and services to customers

• Strong cash flow generation and solid balance sheet
enables deployment of capital to continue growth
– Solid track record of managing capital investment to achieve
above-hurdle rate returns throughout the commodity cycle

8

Long-term Growth
Supportive Long-term Commodity Price Outlook
Expiration of hedges established in 2004 and early 2005
Roll off of Below-Market Fleet Sales for 2006-2007 imply growing 2008 and 2009 margins
Expiration of Nine Mile Point PPA in 2009 and 2011

Fundamental Growth Drivers

Wholesale
Pattern of building backlog
Moderating new business growth
Growing Market Share as Retail (commercial & industrial)
Commodities Intermediary Realistic switched market growth
Modest market share gains
Modestly improving margins

Specific targets, detailed plans
Productivity Pattern of execution
Ginna Uprate

Generate strong cash flow
Invest in above hurdle rate projects
Reinvestment of Cash Flow If none identified – return cash to shareholders as
possible

9

Solid Base of Growing Earnings
3.0

2.5
Commodities New Business
EBITDA ($ billions)

2.0

Commodities Backlog at 9/30
1.5
Retail Businesses

1.0 Generation Fleet

0.5
BGE

0.0
2004 2005 2006 2007 2008

Utility Generation Retail Businesses Commodities - Backlog at 9/30 Commodities - New Business

• Earnings from low-risk sources represent 87% of 2007 EBITDA and 86% of 2008 EBITDA
- Base of utility earnings
- Highly hedged generation output
- Retail businesses (NewEnergy) with high customer retention rates
- Strong Commodities backlog of already-originated transactions
10
Note: Includes gas-fired merchant plants, except High Desert

Long-term Earnings Outlook
Earnings per Share
Earnings per Share
(Including Impact of Plant Sale)
(Excluding Impact of Plant Sale) $6.00
$6.00
5.25 - 5.75
5.25 - 5.75

$5.00
$5.00
4.30 - 4.65
4.40 - 4.65

($ per share)
3.65 - 3.80
$4.00
$4.00
3.30 - 3.45
3.28

2.90
$3.00
$3.00

$2.00
$2.00
2005 2006E 2007E 2008E
2005 2006E 2007E 2008E
(1) (2)
Adjusted EPS EPS Guidance Adjusted EPS EPS Guidance
(1) Adjusted for the effect of special items, certain economic, non-qualifying hedges and synfuel earnings
(2) Adjusted for the effect of special items, certain economic, non-qualifying hedges, synfuel earnings, and impacts of gas-fired generation plant

sales

• Business outlook for Constellation Energy continues to gain momentum
• Raising 2006 earnings guidance to $3.65 - $3.80 per share from $3.35 - $3.65 per share
excluding impact of gas-fired generation sale
• Increasing confidence in ability to deliver on 2007 and 2008 guidance
11
See Appendix

Financial Overview

E. Follin Smith

Q3 2006 Adjusted EPS Summary
Q3 2006 Q3 2005
($ per share)

GAAP Earnings $1.79 $1.03

Special Items 0.08 -

Synfuel Earnings (0.11) (0.08)

(Gain) / Loss on Economic Non-Qualifying Hedges (0.20) 0.13

Adjusted Earnings $1.56 $1.08

Q3 Guidance $1.10 - $1.25

See Appendix
13

Q3 2006 Segment Earnings Per Share (1)

($ per share)
Change

Q3 2006 Q3 2005 EPS %

BGE $0.20 $0.24 ($0.04) (17%)

Merchant 1.34 0.84 0.50 60%

Other Non-regulated 0.02 - 0.02 NM

Adjusted Earnings Per Share $1.56 $1.08 $0.48 44%

Q3 2006 Earnings Guidance $1.10 - $1.25

(1) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings

See Appendix

14

BGE
Adjusted Earnings vs. Guidance
Q3 2006
($ per share)

Actual Guidance

Adjusted Earnings $0.20 $0.17 - $0.22

Adjusted Earnings vs. Prior Year
($ per share)

Q3 2006 Q3 2005 Change

Adjusted Earnings $0.20 $0.24 ($0.04)

See Appendix
15

Merchant
Adjusted Earnings vs. Guidance
Q3 2006
($ per share)

Actual Guidance
(1)

Adjusted Earnings $1.34 $0.90 - $1.05

Adjusted Earnings vs. Prior Year
Q3 2006 Q3 2005 Change
($ per share)

Adjusted Earnings (1) $1.34 $0.84 $0.50

Variance Primarily Due to:
+34¢ Commodities New Business / Backlog / Lower Cost to Serve Load -18¢ Inflation, Interest, Other
+17¢ Mid-Atlantic Price / CTC
+14¢ New Energy
+3¢ Generation and Headquarters Productivity
(1)
Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix

16

Merchant – Income Statement (1)

Change

$
Q3 2006 Q3 2005 B / (W) %
($ in millions)

Mid-Atlantic Fleet $285 $231 $54 23%
Plants with PPAs 227 234 (7) (3%)
Qualifying Facilities/Other 22 21 1 5%
Wholesale Competitive Supply 288 123 165 134%
NewEnergy 109 52 57 110%
Gross Margin 931 661 270 41%
O&M 362 260 (102) (40%)
D&A 75 76 1 1%
Other Expense 39 38 (1) (3%)
Total Costs below Gross Margin 476 374 (102) (28%)
EBIT 455 287 168 59%
Net Interest Expense 52 40 (12) (33%)
Pre-Tax Income 403 247 156 63%
Income Tax 159 95 (64) (67%)
Net Income $244 $152 $ 92 60%

(1)Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
17
See Appendix

Wholesale Competitive Supply (1)

Change
($ in millions)

Q3 2006 Q3 2005 $ %

(2)
Total Already Originated Business $52 $62 ($10)

New Business

(2)
Originated & Realized 100 23 77

Portfolio Management & Trading 123 30 93

Total New Business Realized (2) 223 53 170

(2)
Total Contribution Margin $275 $115 $160 139%

(1) Excludes special items, certain economic, non-qualifying hedges and synfuel results
(2) Includes power, gas (non-project), and coal gross margin and gas project margin (projected revenue less operating, depreciation, depletion and interest expenses
incurred at the project level). Including gas project-level expenses of $14 million in Q3 2006 and $8 million in Q3 2005, total wholesale competitive supply gross
margin in Q3 2006 and Q3 2005 was $288 million and $123 million respectively.

See Appendix
18

Wholesale Competitive Supply: Origination
Total Wholesale Competitive Supply Origination Value to be Realized (1)

($ in millions)
Q3 2006 Q3 2005 Q1 – Q3 2006 Q1 – Q3 2005
To Be Realized In:
Current Year $180 $64 $604 $200
Future Years 142 88 425 322
Total Originated $322 $152 $1,029 $522

Current Year Target $536 $268

% of Revised Current Year Target Achieved 113% 75%

Total Origination Target $908 $504
(2)

% of Revised Total Origination Target Achieved 113% 104%

(1) Includes power, gas (non-project), and coal gross margin and gas project margin (projected revenue less operating, depreciation, depletion and interest
expenses incurred at the project level)
(2) Includes gross margin originated to be realized in the current year and future years 19

Wholesale Competitive Supply Backlog
Backlog (1)
$1,000
(as of 9/30/06)

New Business Since
$750 (2)
12/31/05
(3)
Value as of 12/31/05
$ in millions

604
$500

209
$250 98
300
241 194
$0
2006 2007 2008
(1) Includes power, gas (non-project), and coal gross margin and gas project margin (projected revenue less operating, depreciation, depletion
and interest expenses incurred at the project level)
(2) Includes portfolio value changes for downstream gas and coal
20
(3) Reflects portfolio pricing on 12/15/05

NewEnergy: Improving Performance
Electric Volume Delivered (GWh) Realized Electric Gross Margin (GM / MWh)
75
$5.00

50

$3.00
25

0
$1.00
3rd Quarter YTD
3Q04 1Q05 3Q05 1Q06 3Q06
2005 2006

Retention Rates Market Share (MW)
100% 16,000

12,000

8,000
75%
4,000

0
Q4 2003 Q4 2004 Q4 2005 Q3 2006
50%
New Energy Reliant
3Q05 4Q05 1Q06 2Q06 3Q06 TX U Great Plains
SUEZ Direc t Energy (US Only)
Including Return to Utility Excluding Return to Utility Pepc o Hess Corp.
Sempra
21

NewEnergy: Retail MWh Backlog
Contracted Retail MWh
(as of 9/30/06)
100

80
MWhs in millions

60 16

40
64
51
20 40
19
0
2005 2006 2007 2008
Delivered Backlog

91% of 2006 plan MWhs delivered or contracted
22

Limiting Variability – Portfolio Management
2007 2008 2009

Percent Hedged as of 9/30/06

Power 89% 83% 70%

Fuel 86% 80% 59%

Sensitivity to Price Changes as of 9/30/06 ($ per share)

Power down $1/MWh, Fuel unchanged ($0.03) ($0.05) ($0.08)

Fuel down $0.10/MMBtu, Power unchanged 0.06 0.04 0.06

Power down $1/MWh, Fuel down $0.10/MMBtu $0.03 ($0.01) ($0.02)

• Accrual portfolio managed to reduce exposure of future earnings to changes
• MTM portfolio VaR levels remain low at average of $13.9 million in Q3 2006

Note: Percent hedged includes Mid-Atlantic Fleet, Plants with PPA’s, and wholesale and retail competitive supply power businesses. Does not include gas
businesses or international coal business. 23

Productivity
Cumulative Productivity
200
150
Pre-tax Earnings ($ millions)

150
89 (1)
100
50
50

0

(50)
(40)
(100)
2004 2005 2006 2007

Realized Target

• Year-to-date, realized $39 million, or 98% of our 2006 productivity target
• Since announcing our long-term productivity initiatives, we have added $89
million pre-tax to ongoing annual profits
(1) 2006 Productivity target of $40 million; achieved year-to-date productivity of $39 million 24

Q3 2006 Consolidated Cash Flow
Other
Merchant Utility Non-Reg Total
($ in millions)

Net Income Before Special Items $284 $35 $4 $323

Depreciation & Amortization 79 58 11 148

Capital Expenditures & Investments (147) (78) (10) (235)

Net CapEx (68) (20) 1 (87)

Working Capital & Other 143 (193) 59 9
(1)

Pension Adjustment (pre-tax) 33

Free Cash Flow $359 ($178) $64 $278

Dividends (68)

Equity Issuances – Benefit Plans 15

Net Cash Flow before Debt Issuances/(Payments) $225

(1)
Includes $176m of deferrals related to the BGE Rate Stabilization Plan
25
See Appendix

Significant Excess Liquidity
Historical Excess Liquidity
5.5
5.0
4.5

Excess Liquidity
4.0
3.5
($ billions)

3.0
2.5
2.0
1.5
1.0
0.5
-
(1) (2)
31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 31-Mar-05 30-Jun-05 30-Sep-05 31-Dec-05 31-Mar-06 30-Jun-06 30-Sep-06

Cash & Bank Lines Bank Line Usage

• Excess liquidity of $2 billion at the end of third quarter 2006
• Pro forma for additional $1 billion credit facility, excess liquidity at the end of the
third quarter 2006 of more than $3 billion
(1) Excludes $2.5 billion bridge facility
26
(2) Pro Forma for $1 billion bank line established on 10/24/2006

Balance Sheet
Actual
6/30/06 9/30/06
($ in billions)
Debt
Total Debt $4.9 $4.8
Less: Cash (0.2) (0.3)
Net Debt 4.7 4.4
Capital
50% Trust Preferred $0.1 $0.1
Equity 4.4 4.5
(1)

Add Back: AOCI Balance 1.2 1.3
(2)

Total Capital $10.4 $10.4
3rd Party Cash Collateral 0.2 0.3
Adjusted Net Debt to Adjusted Total Capital 45.9% 44.3%
(3)

(1) Includes preferred stock and minority interest
(2) Related to cash flow hedges of commodity transactions
(3) Excludes AOCI Balance related to cash flow hedges of commodity transactions and 3rd Party Cash Collateral

See Appendix

27

Credit Metrics
Projected (1)
Actual
12/31/01 12/31/03 12/31/05 12/31/06

Adjusted Net Debt
54.8% 50.6% 43.7% 40 %
to Capital (2)

Excess Liquidity
$0.6 $1.9 $2.1 $3.0+
($ billions)

• S&P upgraded CEG senior unsecured debt rating to BBB+
• Credit metrics continue to strengthen
• Additional liquidity provided by $1 billion credit facility activated upon termination
of merger with FPL

(1) Assumes sale of gas-fired merchant plants completed by FYE 2006
(2) Net debt adjusted to exclude 3rd party collateral. Total capital adjusted to exclude AOCI balance related to cash flow hedges of commodity transactions, 3rd
party collateral and AOCI balance related to changes in pension and post-retirement accounting

See Appendix
28

Projected 2007 Merchant Gross Margin & EBITDA
Gross Margin EBITDA
(1) (1)
($ millions)

Mid-Atlantic Fleet $ 1,000 - 1,150 $ 600 - 700

Plants with PPAs 575 - 675 300 - 350

Wholesale Competitive Supply 800 - 1,000 500 - 600

NewEnergy 435 - 505 140 - 165

QFs/Other 40 - 50 15 - 20

Total Merchant 3,050 - 3,250 1,650 - 1,750

Negative Impact of Hedges 900 - 950 900 - 950
(2)

Total Merchant - Unhedged $ 3,950 - 4,200 $2,550 - 2,700

NPV of Hedges (2) (2,600) - (2,650)
NOTE: The Merchant Segment is managed using an integrated portfolio approach. To support investors’ analytical work, Constellation has made
assumptions on the allocation of costs and expenses to the various components of the Merchant Segment in order to support analytics around
valuation. All calculations exclude High Desert Gas Plant.
(1) Includes Nuclear Fuel Amortization for Mid-Atlantic Fleet and Plants with PPAs

(2) Represents hedges on Mid-Atlantic Fleet and Plants with PPAs
29

Long-term Earnings Outlook
Actual Guidance

2007 (1)
($ per share) 2005 2006 2008 GAGR

Prior Adjusted Earnings (2) $3.28 $3.35 - $3.65 $4.40 – $4.65 $5.25 - $5.75 17% - 21%

(2)
Adjusted Earnings 3.28 3.65 – 3.80 4.40 - 4.65 5.25 - 5.75 17% - 21%

High Desert (0.38) (0.34) (0.10) -

Adjusted Earnings
$2.90 $3.30 - $3.45 $4.30 - $4.65 $5.25 - $5.75 22% - 26%
excluding High Desert (3)

(1) Preliminary guidance
(2) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
(3) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings, and High Desert earnings, which will be classified as discontinued
operations
See Appendix

30

Q4 2006 Earnings Per Share Guidance
Guidance Actual
Q4 2006 Q4 2005
($ per share)

Merchant $0.55 - $0.70 $0.62

Merchant including High Desert 0.65 – 0.80 0.72

BGE 0.19 – 0.25 0.25

Other 0.01 – (0.01) -

Adjusted Earnings Per Share $0.75 - $0.90 $0.87
(1)

Adjusted Earnings Per Share including High Desert (2) $0.85 - $1.00 $0.97

Synfuels $0.04 $0.10

(1)Excludes special items, certain economic, non-qualifying hedges and synfuel earnings, and High Desert earnings, which will be classified as discontinued operations
(2)Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix
31

Additional Modeling Information

Gas-fired Plants – Divestiture Accounting
• Financial statement impacts in Q4 2006 – all plants classified as held for sale
– All assets and liabilities to be disposed will be reclassified as current in the balance
sheet
– Depreciation discontinued immediately
– Hedge accounting discontinued immediately, and prior deferred hedge gains or losses
removed from accumulated other comprehensive income (equity) and recognized in
earnings
• Presentation of operations beginning in Q4 2006
– High Desert – discontinued operations (determined to be a component for which cash
flows and operations will be eliminated)
Single income statement line item including both operating results and gain on sale
All prior periods in the income statement will be reclassified to conform
– Other plants not classified as discontinued operations (due to the lack of separately
identifiable cash flows and sales of a commodity in a liquid market)
Operations prior to closing and gain on sale reported in operating results

Divestiture will affect financial statements beginning in Q4 2006
33

Discontinued Operations – High Desert
• High Desert results will be reclassified to discontinued operations for all
periods presented beginning with 2006 Form 10-K

2005 2006
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 YTD
Adjusted EPS
As reported $0.64 $0.59 $1.08 $0.97 $3.28 $0.68 $0.56 $1.56 $2.80
Discontinued
Operations (1) (0.09) (0.09) (0.10) (0.10) (0.38) (0.06) (0.09) (0.09) (0.24)

Revised $0.55 $0.50 $0.98 $0.87 $2.90 $0.62 $0.47 $1.47 $2.56

(1)
Excludes effects of cash flow hedges and gain on sale

• Estimated fourth quarter impact of discontinued operation is ($0.10)
• Estimated total 2006 impact of discontinued operations is ($0.34)
See Appendix 34

Gas Plants – Gain on Sale and Proceeds
• Gain on sale of approximately $258 million pre-tax will be recognized at closing

( $ in millions)

Total estimated proceeds $1,632
Net assets at 9/30/06 1,374
Gain – pre-tax 258
– after-tax 164

Estimated after-tax cash $1,453

• Actual proceeds and net assets sold subject to adjustment prior to closing

35

Collateral Positions
Q3 Change vs.
Change Year-End
12/31/05 6/30/06 9/30/06 B / (W) B / (W)
($ in millions)
Cash Collateral Held $(401) $(167) $(321) $154 $(80)

Collateral Posted
Exchanges $285 $543 $762 ($219) ($477)
3rd Parties 86 166 185 (19) (99)
Subtotal Posted 371 709 947 (238) (576)

Net Cash Posted Subtotal (30) 542 626 (84) (656)

Letters of Credit Posted $2,486 $1,802 $1,835 $(33) 651

Change in Total Collateral Posted ($5)

Shift from letters of credit to cash collateral has had little impact on our liquidity
36

Synfuel Update (1)

YTD 2006 2007
Q3 2006 09/30/06 Estimate Estimate
($ in millions, except per share amounts)
Pre-phase-out:

Pre-tax loss on production ($12) ($67) ($94) ($111)
Tax benefit of pre-tax loss 5 25 35 42
Tax credits before phase-out 15 91 129 142
Net income pre-phase-out $8 $50 $71 $72

Impact of phase-out
Tax credit phase-out percentage 42% 42% 42%
Production expenses, net of tax - $9 $11 $10

Current period credit phase-out (6) (37) (53) (58)
Phase-out catch-up prior quarters 19 - - -
Net income impact of phase-out $13 ($28) ($42) ($48)

$20 $22 $29 $24
Net synfuels income
Net synfuel EPS $0.11 $0.12 $0.16 $0.14

(1) Numbers may not sum due to rounding 37

South Carolina Synfuel (1)

YTD 2006 2007
Pre-phase-out:
Impact of phase-out
Production expenses, net of tax ($1) $3 $4 $4
-
Phase-out catch-up prior quarters 12 - -
($31)
Net income impact of phase-out $6 ($21) ($33)
Net synfuels income $13 $12 $16 $13
Net synfuel EPS $0.07 $0.07 $0.09 $0.07
Production (tons in millions) 0.4 1.9 2.8 3.0

In mid-September, South Carolina increased production from 80,000 tons to full production of 250,000 –
300,000 tons/month
38
(1) Numbers may not sum due to rounding

Pace Synfuel (1)

YTD 2006 2007
Pre-phase-out:
Impact of phase-out
Production expenses, net of tax $1 $6 $7 $6
Phase-out catch-up prior quarters 7 - - -
Net income impact of phase-out $7 ($7) ($11) ($15)
Net synfuels income $8 $10 $13 $11
Net synfuel EPS $0.04 $0.05 $0.07 $0.06
Production (tons in millions) 0.1 1.1 1.5 1.7

In October, Pace synfuel facilities resumed production of approximately 150,000 tons/month
39
(1) Numbers may not sum due to rounding

Summary of Non-GAAP Measures

Slide(s) Where Used Slide Containing
Non-GAAP Measure in Presentation Most Comparable GAAP Measure Reconciliation

Adjusted EPS Reported GAAP EPS
Q306 Actual 5, 13, 14, 15, 16 42
Q305 Actual 5, 13, 14, 15, 16 42
EPS Guidance 5, 11, 13, 14, 15, 16, 30, 31 42
2005 YTD Actual 11, 30 43
Q1, Q2, Q3, and 9 months 06 Actual 34 43
Q1, Q2, Q3, and Q4 05 Actual 34 43
Q405 Actual 31 44

Q306 Merchant Gross Margin 17, 18 Income from Operations / Net Income 45
Q305 Merchant Gross Margin 17, 18 46
Q306 Merchant Below Gross Margin 17 45
Q305 Merchant Below Gross Margin 17 46

Net Cash Flow before Debt Issuances/(Payments) 25 Operating, Investing and Financing Cash Flow 47
Free Cash Flow 25 47

Debt to Total Capital 27, 28 Debt Divided by Total Capitalization 48
Projected Debt to Total Capital 28 48

41

Adjusted EPS Q306 and Q305
We exclude special items and certain economic, non-qualifying fuel adjustment clause and gas transportation and storage hedges 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 have also adjusted earnings to
exclude synfuel results due to the potential volatility and phase-out of the tax credits. 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 involve 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.
RECONCILIATION:
Merchant Regulated Regulated Other
Energy Electric Gas BGE Nonreg. Total
A B C D = (B+C) E F =(A+D+E)
3Q06 ACTUAL RESULTS:
Reported GAAP EPS $ 1.57 $ 0.24 $ (0.04) $ 0.20 $ 0.02 $ 1.79 GAAP MEASURE
Special Items, Non-qualifying Hedges, and Synfuel Results Included in Operations:
Non-qualifying hedges 0.20 - - - - 0.20
Synthetic fuel facility results 0.11 - - - - 0.11
Workforce reduction costs (0.07) - - - - (0.07)
Merger-related costs (0.01) - - - - (0.01)
Total Special Items, Non-qualifying Hedges, and Synfuel Results 0.23 - - - - 0.23
Adjusted EPS $ 1.34 $ 0.24 $ (0.04) $ 0.20 $ 0.02 $ 1.56 NON-GAAP MEASURE

Reported GAAP EPS $ 0.78 $ 0.28 $ (0.04) $ 0.24 $ 0.01 $ 1.03
Income from Discontinued Operations - - - - 0.01 0.01 GAAP MEASURES
EPS Before Discontinued Operations 0.78 0.28 (0.04) 0.24 - 1.02
Non-qualifying hedges (0.13) - - - - (0.13)
Workforce reduction costs (0.01) - - - - (0.01)
Total Special Items, Non-qualifying Hedges, and Synfuel Results (0.06) - - - - (0.06)
Adjusted EPS $ 0.84 $ 0.28 $ (0.04) $ 0.24 $ - $ 1.08 NON-GAAP MEASURE

EARNINGS GUIDANCE
Constellation Energy is unable to reconcile its earnings guidance excluding special items, non-qualifying hedges, and synfuel results 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
42
principles, the disposition of assets, economic, nonqualifying hedges or synfuel results.

Adjusted EPS – Prior Periods
We exclude special items and certain economic, non-qualifying fuel adjustment clause and gas transportation and storage hedges 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 have also adjusted earnings to
exclude synfuel results due to the potential volatility and phase-out of the tax credits. 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 involve 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.

RECONCILIATION:
2005 YTD
Q1 05 Q2 05 Q3 05 Q4 05 Total Q1 06 Q2 06 Q3 06 Sept 06

ACTUAL RESULTS:
Reported GAAP EPS $ 0.68 $ 0.68 $ 1.03 $ 1.09 $ 3.47 $ 0.63 $ 0.52 $ 1.79 $ 2.94
Income from Discontinued Operations - High Desert 0.09 0.09 0.10 0.10 0.38 0.06 0.09 0.09 0.24 GAAP MEASURES
Income from Discontinued Operations - Others 0.01 0.02 0.01 0.09 0.13 - - - 0.01
Cumulative Effects of Changes in Accounting Principles - - - (0.04) (0.04) - - - -
EPS Before Discontinued Operations and
Cumulative Effects of Changes in
Accounting Principles 0.58 0.57 0.92 0.94 3.00 0.57 0.43 1.70 2.69
Special Items and Non-qualifying Hedges Included in Operations:
Non-qualifying hedges (0.04) (0.02) (0.13) 0.06 (0.14) (0.06) - 0.20 0.14
Merger related transaction costs - - - (0.09) (0.09) (0.01) (0.03) (0.01) (0.05)
Workforce reduction costs - - (0.01) - (0.01) - - (0.07) (0.08)
Total Special Items and Non-qualifying Hedges (0.04) (0.02) (0.14) (0.03) (0.24) (0.07) (0.03) 0.12 0.01
Adjusted EPS 0.62 0.59 1.06 0.97 3.24 0.64 0.46 1.58 2.68 NON-GAAP MEASURE
Synthetic fuel facility earnings 0.07 0.09 0.08 0.10 0.34 0.02 (0.01) 0.11 0.12
Adjusted EPS excluding Synfuel results $ 0.55 $ 0.50 $ 0.98 $ 0.87 $ 2.90 $ 0.62 $ 0.47 $ 1.47 $ 2.56 NON-GAAP MEASURE

43

Adjusted EPS 4Q05
We exclude special items and certain economic, non-qualifying fuel adjustment clause and gas transportation hedges 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 have
also adjusted earnings to exclude synfuel results due to the potential volatility and phase-out of the tax credits. 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 measures involve judgment by management (in particular, judgments as to what is or is not classified as a
special item). We also use these measures to evaluate performance and for compensation purposes.

RECONCILIATION:
Merchant Regulated Regulated Other
Energy Electric Gas BGE Nonreg. Total
A B C D = (B+C) E F =(A+D+E)
Reported GAAP EPS $ 0.78 $ 0.17 $ 0.05 $ 0.22 $ 0.09 $ 1.09
Income from Discontinued Operations * 0.10 - - - 0.09 0.19 GAAP MEASURES
Cumulative Effects of Changes in Accounting Principles (0.04) - - - - (0.04)
EPS Before Discontinued Operations and Cumulative 0.72 0.17 0.05 0.22 - 0.94
Non-qualifying hedges 0.06 - - - - 0.06
Merger related transaction costs (0.06) (0.02) (0.01) (0.03) - (0.09)
Total Special Items and Non-qualifying Hedges 0.10 (0.02) (0.01) (0.03) - 0.07
Adjusted EPS $ 0.62 $ 0.19 $ 0.06 $ 0.25 $ - $ 0.87 NON-GAAP MEASURE

* Merchant includes the reclassification of High Desert to Discontinued Operations

44

Q306 Merchant Gross Margin and Below Gross Margin
We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy in our Merchant Energy
business categories (i.e., Mid-Atlantic Fleet, Plants with PPAs, Wholesale Competitive Supply, NewEnergy, and QFs/Other). We believe this non-GAAP measure
helps investors to better understand the changes in the level of our Merchant Energy operating results for these categories from period to period.
RECONCILIATION: Quarter Ended September 30, 2006
GAAP Adjustments Merchant
GAAP Fuel & Purchased In Arriving Gross Margin
Merchant Revenue & Expense Categories Revenues Energy Expenses Difference At Gross Margin Notes (Non-GAAP)
($ millions)
Mid-Atlantic Fleet $ 1,002.2 $ 605.3 $ 396.9 $ (112) a, b, c $ 285
Plants with PPAs 255.0 16.8 238.2 (11) a 227
Wholesale Competitive Supply 1,668.9 1,469.0 199.9 88 a , d, e 288 **
NewEnergy 2,094.8 1,964.9 129.9 (20) d 109
QFs / Other 28.1 - 28.1 (7) e, f 22
Total Merchant $ 5,049.0 $ 4,056.0 $ 993.0 $ (62) $ 931

Adjustments Merchant Below
Arriving At Merchant Gross Margin
Total Merchant: GAAP Below Gross Margin (Non-GAAP)
Revenues less fuel and purchased energy expenses $ 993.0 $ 931
Operations and maintenance expenses (372.6) 11 g, h, i (362)
Workforce reduction costs (21.7) 22 j -
Merger-related costs (2.5) 3 j -
Depreciation, depletion, and amortization (72.9) (2) h, i (75)
Taxes other than income taxes (32.6) 33 k -
Accretion of asset retirement obligations (17.1) 17 k -
Income From Operations 473.6 494
Other income / (expense) 3.8 (43) b, k, l (39)
EBIT N/A 455
Fixed charges (51.1) (0) i, l (52)
Income Before Income Taxes 426.3 403
Income tax expense (141.5) (18) i, j, m (159)
Net Income $ 284.8 $ 244

Details of Adjustments Made in Arriving at Merchant Gross Margin:
a Adjustment to remove ($115 million) gain from Mid-Atlantic Fleet and ($11 million) gain from Plants with PPA's of estimated gross margin created through active portfolio
management more appropriately categorized as a competitive supply activity.
b Adjustment to remove ($5 million) of decommissioning revenues from non-GAAP gross margin measure and included in Other Income. The offsetting decommissioning
expense was recorded in accretion of asset retirement obligations.
c Adjustment to remove $8 million of other indirect costs from non-GAAP gross margin as they are more appropriately categorized as operating expenses.
d Adjustment to remove ($39 million) gain in Wholesale Competitive Supply and ($20 million) gain in NewEnergy related to economic, non-qualifying hedges of
gas transport contracts.
e Adjustment to remove synfuel losses from Wholesale Competitive Supply gross margin of $1 million and Other gross margin of $3 million.
f Adjustment to reflect ($10 million) of direct costs in Other for purposes of non-GAAP gross margin measure.

Details of Adjustments Made in Arriving at Merchant Below Gross Margin:
g Adjustment detailed in quot;cquot; and quot;fquot; above are offset by adjustments made to O&M costs.
h Adjustment to reclassify certain allocated costs totaling $8 million from O&M to Depreciation and Amortization.
i Adjustment to remove Synfuel results, which are not included in determining Merchant Below Gross Margin - $1 million in O&M, $6 million in D&A, $2 million in Fixed Charges,
and ($32 million) from income tax expense.
j Adjustment to remove Special Items and related taxes, which are not included in determining Merchant Below Gross Margin.
k Adjustment to reflect management's view of these items as Other Income / Expense.
l Adjustment to move Interest Income of $2 million recorded in Other Income / Expense to Fixed Charges (to show a fixed charge amount net of interest income).
m Adjustment to remove tax expense of $23 million related to gains on economic, non-qualifying hedges of gas transportation and storage contracts.

** Excludes $13 million of operating expenses, depreciation, depletion and amortization, and interest expense associated with our Upstream Gas properties

PROJECTED GROSS MARGIN AND RESULTS BELOW GROSS MARGIN:
45
Constellation Energy is unable to reconcile its projected gross margin or results below gross margin to GAAP because we do not predict the future impact of
reconciling items or special items such as the cumulative effect of changes in accounting principles and the disposition of assets.

Q305 Merchant Gross Margin and Below Gross Margin
We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy in our Merchant Energy
business categories (i.e., Mid-Atlantic Fleet, Plants with PPAs, Wholesale Competitive Supply, NewEnergy, and QFs/Other). We believe this non-GAAP measure
helps investors to better understand the changes in the level of our Merchant Energy operating results for these categories from period to period.
RECONCILIATION: Quarter Ended September 30, 2005
GAAP Adjustments Merchant
GAAP Fuel & Purchased In Arriving Gross Margin
Merchant Revenue & Expense Categories Revenues Energy Expenses Difference At Gross Margin Notes (Non-GAAP)
($ millions)
Mid-Atlantic Fleet $ 746.7 $ 563.8 $ 182.9 $ 48 a, b $ 231
Plants with PPAs 254.6 23.7 230.9 3 a 234
Wholesale Competitive Supply 1,383.0 1,252.5 130.5 (8) a , c, d, e 123 **
NewEnergy 1,990.1 1,938.0 52.1 - 52
QFs / Other 22.8 - 22.8 (2) d, e 21
Total Merchant $ 4,397.2 $ 3,778.0 $ 619.2 $ 41 $ 661

Adjustments Merchant Below
Arriving At Merchant Gross Margin
Total Merchant: GAAP Below Gross Margin (Non-GAAP)
Revenues less fuel and purchased energy expenses $ 619.2 $ 661
Operations and maintenance expenses (273.4) 13 f, g, h (260)
Workforce reduction costs (3.9) 4 i
Depreciation, depletion, and amortization (74.3) (2) g, h (76)
Taxes other than income taxes (31.3) 31 j -
Accretion of asset retirement obligations (15.8) 16 j -
Income From Operations 220.5 325
Other income / (expense) 9.7 (46) b, j, k (38)
EBIT N/A 287
Fixed charges (43.8) 4k (40)
Income Before Income Taxes 186.4 247
Income tax expense (44.7) (51) h, i, l (95)
Income from Continuing Operations 141.7 152
Loss from discontinued operations (0.2) 0.2 m -
Net Income $ 141.5 $ 152

Details of Adjustments Made in Arriving at Merchant Gross Margin:
a Adjustment to remove losses of $53 million from Mid-Atlantic Fleet and losses of $3 million from PPAs of estimated gross margin created through active
portfolio management more appropriately categorized as a competitive supply activity.
b Adjustment to remove ($5 million) of decommissioning revenues from non-GAAP gross margin measure and included in Other Income. The offsetting
decommissioning expense was recorded in accretion of asset retirement obligations.
c Adjustment to remove $36 million loss related to economic, non-qualifying hedges of fuel adjustment clauses and gas transport contracts.
d Adjustment to remove synfuel losses from Wholesale Competitive Supply gross margin of $5 million and Other gross margin of $8 million.
e Adjustment to remove indirect costs $8 million in Wholesale Competitive Supply and reflect ($10 million) in Other for purposes of non-GAAP gross margin measure.

Details of Adjustments Made in Arriving at Merchant Below Gross Margin:
f Adjustment detailed in quot;equot; above are offset by adjustments made to O&M costs.
g Adjustment to reclassify certain allocated costs totaling $8 million from O&M to Depreciation and Amortization.
h Adjustment to remove Synfuel results, which are not included in determining Merchant Below Gross Margin - $2 million in O&M, $6 million in D&A, and
($34 million) from income tax expense.
i Adjustment to remove Special Items and related taxes, which are not included in determining Merchant Below Gross Margin.
j Adjustment to reflect management's view of these items as Other Income / Expense.
k Adjustment to move Interest Income of $4 million recorded in Other Income / Expense to Fixed Charges (to show a fixed charge amount net of interest income).
l Adjustment to remove tax benefit ($15 million) related to losses on economic, non-qualifying hedges of fuel adjustment clauses and gas transport contracts.
m Adjustment to remove loss from discontinued operations which is treated as a special item.

** Excludes $8 million of operating expenses, depreciation, depletion and amortization, and interest expense associated with our Upstream Gas properties

PROJECTED GROSS MARGIN AND RESULTS BELOW GROSS MARGIN:
46
Constellation Energy is unable to reconcile its projected gross margin or results below gross margin to GAAP because we do not predict the future impact of
reconciling items or special items such as the cumulative effect of changes in accounting principles and the disposition of assets.

Cash Flows
The following is a reconciliation of the non-GAAP financial measures of Net Cash Flow before Debt Issuances/Payments and Free Cash Flow
for the nine months ended September 30, 2006. We utilize these non-GAAP measures because we believe they are helpful in understanding
our ability to reduce debt by existing cash.
RECONCILIATION:
2006
($ millions)
QTD SEPTEMBER ACTUAL RESULTS:
Net cash used in operating activities (GAAP measure) 582
Adjustment for derivative contracts presented as financing activities under SFAS 149 (5)
Adjusted Net Cash Used in Operating Activities $ 577 NON-GAAP MEASURE

Net cash used in investing activities (GAAP measure) (300)

Net Cash Used in Financing Activities (Excl. Debt-Related Sources & Uses) *
Common stock dividends paid (68)
Proceeds from issuance of common stock 15
Net proceeds from acquired contracts -
Other financing activities, excluding SFAS 149 activities included in operating 1
Adjusted Net Cash Used in Financing Activities (52)

Net Cash Flow before Debt Issuances/(Payments) 225 NON-GAAP MEASURE

Less: Proceeds from issuance of common stock (15)
Add: Common stock dividends paid 68

Free Cash Flow $ 278 NON-GAAP MEASURE

* Total GAAP Cash Used in Financing Activities (incl. debt-related sources & uses) was $189 million QTD SEPTEMBER 06.

PROJECTED CASH FLOWS:
Constellation Energy is unable to provide a reconciliation of these measures for Projected 2006 because it does not prepare a
forecasted statement of cash flows on a GAAP basis.

47

constellation energy Q3 2006 Earnings Presentation

constellation energy Q3 2006 Earnings Presentation

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constellation energy Q3 2006 Earnings Presentation