2. 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 during or after
the period when electric rates are frozen per regulation; 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; cost and other effects of legal and
administrative proceedings that may not be covered by insurance, including environmental liabilities; and the inability to
complete the proposed merger with FPL Group, Inc., to successfully integrate the businesses of Constellation Energy and
FPL Group after the merger or to achieve anticipated synergies. 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
2
presentation, and no duty is undertaken to update them to reflect new information, events or circumstances.
3. 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, and the impact of certain economic,
non-qualifying hedges. This quarter we also provided adjusted EPS excluding synfuel earnings due to the potential for oil-
price volatility to result in a difficult-to-forecast phase-out of tax credits. Adjusted EPS presented in future quarters will
exclude synfuel earnings. Constellation Energy has excluded from adjusted earnings two categories of non-qualifying
hedges: hedges against the Commodities Group New England fuel adjustment clauses and hedges on gas transportation and
storage contracts. The mark-to-market impact of these hedges was significant to reported results, but economically neutral
to the company in that offsetting gains on underlying accrual positions will be recognized in the future. We present
adjusted EPS and adjusted EPS excluding synfuel earnings 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 a business, 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
4. Non-Solicitation
This communication is not a solicitation of a proxy from any security holder of FPL Group or Constellation Energy.
Constellation Energy intends to file with the Securities and Exchange Commission a registration statement that will include a
joint proxy statement/prospectus of Constellation Energy and FPL Group and other relevant documents to be mailed to
security holders in connection with the proposed transaction. WE URGE INVESTORS TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT FPL GROUP, CONSTELLATION ENERGY, AND THE PROPOSED TRANSACTION. A
definitive proxy statement will be sent to security holders of FPL Group and Constellation Energy seeking approval of the
proposed transaction. Investors and security holders will be able to obtain these materials (when they are available) and
other documents filed with the SEC free of charge at the SEC’s website, www.sec.gov. In addition, a copy of the joint proxy
statement/prospectus (when it becomes available) may be obtained free of charge from Constellation Energy, Shareholder
Services, 750 E. Pratt Street, Baltimore, MD 21202, or from FPL Group, Shareholder Services, P.O. Box 14000, 700 Universe
Blvd., Juno Beach, Florida 33408-0420.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
FPL Group, Constellation Energy, and their respective directors and executive officers of FPL Group and Constellation
Energy and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding FPL Group’s directors and executive officers is available in its proxy statement filed with
the SEC by FPL Group on April 5, 2005, and information regarding Constellation Energy’s directors and executive officers is
available in its proxy statement filed with the SEC by Constellation Energy on April 13, 2005. Information regarding J. Brian
Ferguson, a director of FPL Group elected since the date of the filing of the 2005 definitive proxy statement, can be found
in FPL Group’s filing on Form 10-Q dated August 4, 2005. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
4
5. Q1 2006 Earnings Per Share Summary
Q1 2006 Q1 2005
($ per share)
GAAP Earnings $0.63 $0.68
Special Items 0.01 (0.01)
Loss on Economic Non-Qualifying Hedges 0.06 0.04
(1)
Adjusted Earnings 0.70 0.71
(2)
Synfuel Earnings (0.02) (0.07)
Adjusted Earnings (Excluding Synfuels) $0.68 $0.64
(3)
Adjusted Q1 2006 Earnings Guidance (Excluding Synfuel) (4) $0.46 - $0.61
(1) Excludes special items and certain economic, non-qualifying hedges
(2) Represents synfuel earnings of $0.09 per share and expected synfuel phase-out risk of ($0.07) per share in Q1’06 and synfuel earnings of $0.07
per share in Q1’05
(3) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
(4) Excludes estimated synfuel earnings of $0.10 per share and estimated synfuel phase-out risk of ($0.03) per share
See Appendix
5
6. Q1 2006 Operating Highlights
• Strong Commodities Group performance
– Higher backlog going into the quarter
– Strong portfolio management and trading results
– Substantial progress toward achieving 2006 new business goals and adding
certainty to future earnings objectives
• Completed planned nuclear refueling outages
– Record refueling outage at Nine Mile Point Unit 2
– Calvert Cliffs Unit 1 reactor vessel head replacement will result in improved
future reliability and outage performance
• Delivered $10 million of incremental productivity gains
• NewEnergy performing in line with expectation for the year
6
7. Maryland Legislative Session
• 2006 – Election Year for all Maryland officeholders
• End of BGE Price Freeze Service, plus historically high
energy commodity prices, plus merger – created political
intensity
• New Maryland PSC controversy deepened partisan political
dynamics late in the General Assembly session
7
8. Rate Stabilization Plan
• Governor-supported rate stabilization plan filed with Maryland PSC
• Phases in rate increases over an 18-month period to reach market prices on January 1,
2008
July 1, Jan. 1, June 1, Jan. 1,
2006 2007 2007 2008
Customer Rate Increase +19.4% +5.0%* +25.0% Market
* Offset by $60 million per year upon merger closing.
• Deferred balances recovered over two-year period beginning June 1, 2007
– Assuming 50% participation, on June 1, 2007 peak regulatory asset of $259 million and peak
funding requirement of $189 million
• BGE to recover interest at BGE’s actual borrowing cost
• Constellation offered to provide economic benefits of $60 million per year for 10 years
beginning January 1, 2007 contingent on merger closing
– Redirect Nuclear Decommissioning Revenue to reduce residential customer rates (~$19 million)
– Cease collecting residential POLR return ($20 million)
– Share portion of merger synergies (~$21 million)
8
9. Merger Update
• As with any utility merger, some synergy sharing with
customers is expected
– Regulated savings expected to be modest compared to other
mergers of utilities with contiguous service territories
– Rate stabilization plan filed last week with the Maryland PSC
provided economic benefits of $60 million per year, including
synergy sharing, which are contingent upon merger closing
• Procedural schedule for Maryland PSC published April 27
• Uncertainty surrounding closing of merger remains
– If risks to closing the merger or economics become unacceptable,
Constellation and FPL could agree to terminate the merger
9
10. Earnings Outlook
Actual Guidance
($ per share) 2005 2006 2007 2008 CAGR
Adjusted Earnings $3.62 $3.65 - 3.95 $4.75 - 5.00 $5.25 - 5.75 13%- 17%
(1)
Synfuels Earnings
(Included in 1/31/06 $0.34 $0.31 $0.34 -
Guidance)
Adjusted Earnings
$3.28 $3.35 - 3.65 $4.40 - 4.65 $5.25 - 5.75 17% - 21%
Excluding Synfuels (2)
Memo:
Current Projection of $0.34 $0.14 $0.16 -
Synfuel EPS
(1) Excludes special items and certain economic, non-qualifying hedges
(2) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix
10
12. Q1 2006 Adjusted EPS
Q1 2006 Q1 2005
($ per share)
GAAP Earnings $0.63 $0.68
Special Items 0.01 (0.01)
Loss on Economic Non-Qualifying Hedges 0.06 0.04
Synfuel Earnings (0.02) (0.07)
Adjusted Earnings Per Share (1) $0.68 $0.64
Non-Qualifying Hedges:
Power $- $(0.04)
Gas (0.06) -
Total Non-Qualifying Hedges ($0.06) ($0.04)
(1) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix
12
13. Q1 2006 Guidance
($ per share)
Actual Guidance Change
Adjusted Earnings
$0.70 $0.53 – 0.68 $0.02 – 0.17
(Including Synfuels) (1)
(2) (3)
Synfuel Earnings 0.02 0.07 (0.05)
Adjusted Earnings
$0.68 $0.46 – 0.61 $0.07 – 0.22
(Excluding Synfuels) (4)
(1) Excludes special items and certain economic, non-qualifying hedges
(2) Represents Synfuel earnings of $0.09 per share and expected synfuel phase-out risk of ($0.07) per share
(3) Represents estimated synfuel earnings of $0.10 per share and estimated synfuel phase-out risk of ($0.03) per share
(4) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix
13
14. Q1 2006 Segment Earnings Per Share (1)
($ per share)
Change
Q1 2006 Q1 2005 EPS %
BGE $0.38 $0.40 $(0.02) (5%)
Merchant 0.29 0.25 0.04 16%
Other Non-regulated 0.01 (0.01) 0.02 NM
Adjusted Earnings Per Share (1) $0.68 $0.64 $0.04 6%
(2)
Adjusted Q1 2006 Earnings Guidance $0.46 - $0.61
(1) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
(2) Excludes $0.10 per share of expected synfuel earnings and ($0.03) per share of assumed synfuel phase-out risk
See Appendix
14
15. BGE
Adjusted Earnings vs. Guidance
Q1 2006
($ per share)
Actual Guidance
Adjusted Earnings $0.38 $0.38 - $0.43
Adjusted Earnings vs. Prior Year
($ per share)
Q1 2006 Q1 2005 Change
Adjusted Earnings $0.38 $0.40 $(0.02)
See Appendix
15
16. Merchant
Adjusted Earnings vs. Adjusted Guidance
Q1 2006
($ per share)
Actual Guidance
(1)
Adjusted Earnings $0.29 $0.05 - 0.20
Adjusted Earnings vs. Prior Year
Q1 2006 Q1 2005 Change
($ per share)
(1)
Adjusted Earnings $0.29 $0.25 $0.04
Variance Primarily Due to:
+23¢ Wholesale Comp. Supply Backlog -20¢ Mid-Atlantic Fleet
+9¢ Wholesale Comp. Supply New Business -4¢ Competitive Transition Charge
+3¢ Productivity -3¢ Planned Outages
- 4¢ Other
(1) Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix 16
17. Merchant Gross Margin (1)
Change
($ in millions)
Q1 2006 Q1 2005 $ %
Mid-Atlantic Fleet $112 $188 ($76)
Plants with PPAs 171 177 (6)
Wholesale Competitive Supply 214 83 131
NewEnergy 75 63 12
Qualifying Facilities/Other 17 13 4
Total Merchant Gross Margin $589 $524 $65 12%
(1)
Excludes special items, certain economic, non-qualifying hedges and synfuel results
See Appendix
17
18. Merchant – Below Gross Margin
Change
($ in millions, except per share)
Q1 2006 Q1 2005 $ %
(1) (1)
Gross Margin $589 $524 $65 12%
O&M (361) (318) (43) (14%)
D&A (66) (60) (6) (10%)
Other Expenses (39) (29) (10) (34%)
Total Costs Below Gross Margin (466) (407) (59) (14%)
EBIT 123 117 6 5%
Net Interest Expense (38) (46) 8 17%
Pre-tax Income 85 71 14 20%
Income Tax (33) (26) (7) N.M.
Net Income $52 $45 $7 16%
Shares Outstanding 180.5 178.6
Adjusted EPS $0.29 $0.25 $0.04
(1) Excludes special items, certain economic, non-qualifying hedges and synfuel results
18
See Appendix
19. Wholesale Competitive Supply (1)
Change
($ in millions)
Q1 2006 Q1 2005 $ %
(2)
Total Already Originated Business $88 $21 $67
New Business
(2)
Originated & Realized 17 42 (25)
Portfolio Management & Trading 97 19 78
Total New Business Realized (2) 114 61 53
(2)
Total Contribution Margin $202 $82 $120 146%
(1) Excludes special items, certain economic, non-qualifying hedges and synfuel results
(2) Includes power, gas (non-project), and coal gross margin and gas project margin (projected revenue less operating, depreciation, depletion and
interest expenses incurred at the project level)
See Appendix
19
20. Wholesale Competitive Supply: Origination
Total Wholesale Competitive Supply Origination Value to be Realized (1)
Q1 2006 Q1 2005
($ in millions)
To Be Realized In:
Current Year $227 $60
Future Years 171 18
Total Originated $398 $78
Current Year Target $452 $268
% of Current Year Target Achieved 50% 22%
Total Origination Target (including future years) $824 $504
% of Total Origination Target Achieved 48% 15%
(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)
20
21. Wholesale Competitive Supply Backlog
Backlog (1)
$600
(as of 3/31/06)
527
Contracted in
$500
2006
Contracted Prior
227
$400 (2)
to 12/31/05
($ in millions)
324
$300 83
227
33
$200
300
241
$100 194
$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) Reflects backlog value as of 12/15/05 21
22. NewEnergy: Q1 2006 Highlights
Change
Q1 2006 vs. Q1 2005
Electric
Market Volume Served (Peak Megawatts) 15,100 +6%
Market Share 24% +1 point
Volume Delivered (Megawatt Hours) 15.3 million +17%
Q1 Retention Rate 68%
Gas
Market Volume Served (Bcf) 340 +12%
Gas Volume Delivered (Bcf) 91.2 +12%
Total Gross Margin (1) $75 million +19%
(1) Excludes certain economic, non-qualifying hedges
See Appendix 22
23. NewEnergy: Retail MWh Backlog
Contracted Retail MWh
(as of 3/31/06)
100
80
(MWhs in millions)
60
40 44
64
20
24
15 9
0
2005 2006 2007 2008
Delivered Backlog
80% of 2006 plan MWhs delivered or contracted
23
24. Limiting Variability – Portfolio Management
2007 2008
Percent Hedged as of 3/31/06
Power 89% 81%
Fuel 86% 78%
Sensitivity to Price Changes as of 3/31/06 ($ per share)
Power down $1/MWh, Fuel unchanged $(0.03) $(0.05)
Fuel down $0.10/MMBtu, Power unch. 0.05 0.06
(1)
Power down $1/MWh, Fuel down $0.10/MMBtu $0.01 $0.01
MTM portfolio VaR levels remain low at an average $11.7 million for the quarter
(1) Numbersmay not sum due to rounding
Note: Percent hedged includes Mid-Atlantic Fleet, Plants with PPA’s, Power Wholesale Competitive Supply and NewEnergy.
24
25. Synfuel
2005 2006 2007
Actual Estimate Estimate
($ in millions, except per share amounts)
Pre-Phase-out:
Pre-tax Loss of Production ($85) ($99) ($95)
Tax Benefit of Pre-tax Loss 32 38 36
Tax Credits 115 144 147
Net Income (Pre-Phase-out) $62 $83 $88
Synfuel EPS (Pre-Phase-out) $0.34 $0.46 $0.49
Impact of Phase-out (as of 3/31/06)
Tax Credit Phase-out Percentage 46% 46%
Production Expenses, Net of Tax $- $8 $9
Tax Credits - (65) (68)
Net Income $- ($57) ($59)
Synfuel EPS Impact $0.00 ($0.32) ($0.33)
Net Synfuel EPS (Post Phase-out) $0.34 $0.14 $0.16
25
26. Q1 2006 Consolidated Cash Flow
Other
Merchant Utility Non-Reg Total
($ in millions)
Net Income Before Special Items $55 $69 $1 $125
Depreciation & Amortization 93 59 8 160
Capital Expenditures & Investments (214) (82) (1) (297)
Net CapEx (121) (23) 7 (137)
Asset Dispositions & Contract Restructuring 13 - 1 14
Working Capital & Other (879) 133 20 (726)
Pension Adjustment (pre-tax) (32)
Free Cash Flow ($932) $179 $29 (756)
Dividends (60)
Equity Issuances – Benefit Plans 21
Net Cash Flow before Debt Issuances/(Payments) ($795)
26
See Appendix
27. Balance Sheet
Actual
12/31/05 3/31/06
($ in billions)
Debt
Total Debt $4.7 $5.2
Less: Cash (0.8) (0.4)
Net Debt 3.9 4.7
Capital
50% Trust Preferred 0.1 0.1
(1) (2)
Equity 5.1 4.5
Total Capital $9.2 $9.4
Net Debt to Total Capital 42.8% 50.4%
(3)
AOCI Balance $0.3 $1.0
3rd Party Cash Collateral $0.4 $0.2
Adjusted Net Debt to Adjusted Total Capital (4) 43.7% 46.6%
(1) Includes preferred stock and minority interest
(2) Includes FAS 87 Minimum Pension Liability reduction to equity of $77 million in 2005
(3) Related to cash flow hedges of commodity transactions
(4) Excludes AOCI Balance related to cash flow hedges of commodity transactions and 3rd Party Cash Collateral
27
See Appendix
28. Credit Metrics
Actual Projected
12/31/01 12/31/03 12/31/05 12/31/06
Net Debt to Total Capital 54.6% 49.9% 42.8% 45% - 49%
Adjusted Net Debt to
54.8% 50.6% 43.7% 42% - 46%
Adjusted Total Capital (1)
Excess Liquidity ($ billions) $0.6 $1.9 $2.1
• Metrics much stronger than when current credit ratings were established
• 4 years of dependable performance from highly hedged deregulated business model
• Significantly larger company with more powerful liquidity profile
(1) Net debt adjusted to exclude 3rd party collateral. Total capital adjusted to exclude OCI balance related to cash flow hedges of commodity
transactions and 3rd party collateral
See Appendix
28
29. Q2 2006 Earnings Per Share Guidance
Guidance Actual
Q2 2006 Q2 2005
($ per share)
Merchant $0.20 - $0.35 $0.45
BGE 0.08 - 0.13 0.13
Other (0.01) - 0.01 0.01
Adjusted Earnings Per Share [1] $0.30 - $0.45 $0.59
Synfuels $0.06 $0.09
[1]
Excludes special items, certain economic, non-qualifying hedges and synfuel earnings
See Appendix
29
32. Pace Synfuel (1)
2005 Q1 2006 2006 2007
($ in millions, except per share amounts) Actual Actual Estimate Estimate
Pre-Phase-out:
Pre-tax Loss of Production ($28) ($9) ($32) ($32)
Tax Benefit of Pre-tax Loss 10 3 11 11
Tax Credits 45 13 52 53
Net Income (Pre-Phase-out) $26 $7 $32 $32
Synfuel EPS (Pre-Phase-out) $0.15 $0.04 $0.18 $0.18
Impact of Expected Phase-out (as of 3/31/06)
Production Exp., Net of Tax $- $1 $3 $3
Tax Credits - (6) (24) (24)
Net Income $- ($5) ($20) ($21)
Synfuel EPS Impact $0.00 ($0.03) ($0.11) ($0.12)
Net Synfuel EPS (Post Phase-out) $0.15 $0.01 $0.06 $0.06
Expected Tax Credit Phase-out Percentage 46% 46% 46%
Production (tons in millions) 1.5 0.5 1.8 1.8
32
(1)
Numbers may not sum due to rounding
33. South Carolina Synfuel (1)
2005 Q1 2006 2006 2007
($ in millions, except per share amounts) Actual Actual Estimate Estimate
Pre-Phase-out:
Pre-tax Loss of Production ($57) ($18) ($68) ($63)
Tax Benefit of Pre-tax Loss 22 7 26 25
Tax Credits 70 21 92 94
Net Income (Pre-Phase-out) $36 $10 $51 $56
Synfuel EPS (Pre-Phase-out) $0.19 $0.06 $0.28 $0.31
Impact of Expected Phase-out (as of 3/31/06)
Production Exp., Net of Tax $- $1 $5 $5
Tax Credits - (10) (41) (43)
Net Income $- ($9) ($37) ($38)
Synfuel EPS Impact $0.00 ($0.05) ($0.20) ($0.21)
Net Synfuel EPS (Post Phase-out) $0.19 $0.01 $0.08 $0.09
Expected Tax Credit Phase-out Percentage 46% 46% 46%
Production (tons in millions) 2.4 0.8 3.0 3.0
33
(1)
Numbers may not sum due to rounding
35. 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
Q106 Actual 5, 12, 13, 14, 15, 16, 18 36
Q105 Actual 5, 12, 14, 15, 16, 18 36
EPS Guidance 5, 13, 14, 15, 16, 29, 31 36
2005 YTD Actual 10, 31 37
2004 YTD Actual 31 37
2003 YTD Actual 31 37
2002 YTD Actual 31 37
Q205 Actual 29 38
Q106 Merchant Gross Margin 17, 18, 19, 22 Income from Operations / Net Income 39
Q105 Merchant Gross Margin 17, 18, 19, 22 40
Q106 Merchant Below Gross Margin 18 39
Q105 Merchant Below Gross Margin 18 40
Net Cash Flow before Debt Issuances/(Payments) 26 Operating, Investing and Financing Cash Flow 41
Free Cash Flow 26 41
Debt to Total Capital 27, 28 Debt Divided by Total Capitalization 42
Projected Debt to Total Capital 27, 28 42
35
36. Adjusted EPS Q106 and Q105
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 provided adjusted earnings excluding synfuel results due to the potential volatility and phase-out of the tax credits. We believe such
measures provide 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 these 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)
1Q06 ACTUAL RESULTS:
Reported GAAP EPS $ 0.24 $ 0.19 $ 0.19 $ 0.38 $ 0.01 $ 0.63 GAAP MEASURE
Special Items and Non-qualifying Hedges Included in Operations:
Non-qualifying Hedges (0.06) - - - - (0.06)
Merger-related Costs (0.01) - - - - (0.01)
Total Special Items and Non-qualifying Hedges (0.07) - - - - (0.07)
Adjusted EPS 0.31 0.19 0.19 0.38 0.01 0.70 NON-GAAP MEASURE
Synthetic fuel facility results 0.02 - - - - 0.02
Adjusted EPS excluding Synfuel results $ 0.29 $ 0.19 $ 0.19 $ 0.38 $ 0.01 $ 0.68 NON-GAAP MEASURE
1Q05 ACTUAL RESULTS:
Reported GAAP EPS $ 0.28 $ 0.24 $ 0.16 $ 0.40 $ - $ 0.68
Income from Discontinued Operations - - - - 0.01 0.01 GAAP MEASURES
EPS Before Discontinued Operations 0.28 0.24 0.16 0.40 (0.01) 0.67
Special Items and Non-qualifying Hedges Included in Operations:
Non-qualifying Hedges (0.04) - - - - (0.04)
Adjusted EPS 0.32 0.24 0.16 0.40 (0.01) 0.71 NON-GAAP MEASURE
Synthetic fuel facility results 0.07 - - - - 0.07
Adjusted EPS excluding Synfuel results $ 0.25 $ 0.24 $ 0.16 $ 0.40 $ (0.01) $ 0.64 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
36
principles, the disposition of assets, economic, nonqualifying hedges or synfuel results.
37. Adjusted EPS YTD 2005, 2004, 2003, 2002
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 provided adjusted earnings excluding synfuel results due to the potential volatility and phase-out of the tax credits. We believe such
measures provide 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 these 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:
Total Total
2005 ACTUAL RESULTS: 2003 ACTUAL RESULTS:
Reported GAAP EPS $ 3.47 Reported GAAP EPS $ 1.66
Income from Discontinued Operations 0.13 GAAP MEASURES Income from Discontinued Operations 0.11 GAAP MEASURES
Cumulative Effects of Changes in Accounting Principles (0.04) Cumulative Effects of Changes in Accounting Principles (1.19)
EPS Before Discontinued Operations and Cumulative EPS Before Discontinued Operations and Cumulative
Effects of Changes in Accounting Principles Effects of Changes in Accounting Principles
3.38 2.74
Special Items and Non-qualifying Hedges Included in Operations: Special Items and Non-qualifying Hedges Included in Operations:
Non-qualifying Hedges (0.14) Non-qualifying Hedges (0.17)
Merger related transaction costs (0.09) Net Gain on Sales of Investments and Other Assets 0.10
Workforce Reduction Costs (0.01) Workforce Reduction Costs (0.01)
Total Special Items and Non-qualifying Hedges (0.24) Total Special Items and Non-qualifying Hedges (0.08)
Adjusted EPS 3.62 NON-GAAP MEASURE Adjusted EPS $ 2.82 NON-GAAP MEASURE
Synthetic fuel facility results (0.34) Synthetic fuel facility results -
Adjusted EPS excluding Synfuel results $ 3.28 NON-GAAP MEASURE Adjusted EPS excluding Synfuel results $ 2.82 NON-GAAP MEASURE
2004 ACTUAL RESULTS: 2002 ACTUAL RESULTS:
Reported GAAP EPS $ 3.12 Reported GAAP EPS $ 3.20
(Loss) Income from Discontinued Operations (0.16) GAAP MEASURES Income from Discontinued Operations 0.06 GAAP MEASURES
EPS Before Discontinued Operations and Cumulative
EPS Before Discontinued Operations 3.28 3.14
Special Items Included in Operations: Special Items Included in Operations:
Recognition of Prior Year Synthetic Fuel Tax Credits 0.21 Net Gain on Sales of Investments and Other Assets 1.02
Workforce Reduction Costs (0.03) Impairment Losses and Other Costs (0.11)
Impairment Losses and Other Costs (0.01) Workforce Reduction Costs (0.23)
Net Loss on Sales of Investments and Other Assets (0.01) Total Special Items 0.68
Total Special Items 0.16 Adjusted EPS $ 2.46 NON-GAAP MEASURE
Adjusted EPS $ 3.12 NON-GAAP MEASURE Synthetic fuel facility results (0.04)
Synthetic fuel facility results (0.29) Adjusted EPS excluding Synfuel results $ 2.42 NON-GAAP MEASURE
Adjusted EPS excluding Synfuel results $ 2.83 NON-GAAP MEASURE
37
38. Adjusted EPS 2Q05
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 provided adjusted earnings excluding synfuel results due to the potential volatility and phase-out of the tax credits. We believe such
measures provide 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 these 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)
2Q05 ACTUAL RESULTS:
Reported GAAP EPS $ 0.53 $ 0.14 $ (0.01) $ 0.13 $ 0.02 $ 0.68
Income from Discontinued Operations 0.01 - - - 0.01 0.02 GAAP MEASURES
EPS Before Discontinued Operations 0.52 0.14 (0.01) 0.13 0.01 0.66
Special Items, Non-qualifying Hedges, and Synfuel Results Included in Operations:
Non-qualifying Hedges (0.02) - - - - (0.02)
Synthetic fuel facility results 0.09 - - - - 0.09
Total Special Items, Non-qualifying Hedges, and Synfuel Results 0.07 - - - - 0.07
Adjusted EPS $ 0.45 $ 0.14 $ (0.01) $ 0.13 $ 0.01 $ 0.59 NON-GAAP MEASURE
38
39. Q106 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 March 31, 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 $ 465.4 $ 366.1 $ 99.3 $ 13 a, b, c $ 112
Plants with PPAs 190.7 16.8 173.9 (2) a 171
Wholesale Competitive Supply 1,420.5 1,215.3 205.2 8 a , d, e 214 **
NewEnergy 2,024.2 1,950.9 73.3 2 d 75
QFs / Other 20.8 - 20.8 (4) e, f 17
Total Merchant $ 4,121.6 $ 3,549.1 $ 572.5 $ 17 $ 589
Adjustments Merchant Below
Arriving At Merchant Gross Margin
Total Merchant: GAAP Below Gross Margin (Non-GAAP)
Revenues less fuel and purchased energy expenses $ 572.5 $ 589
Operations and maintenance expenses (375.6) 14 g, h, i (361)
Merger related transaction costs (1.3) 1 j -
Workforce reduction costs (2.2) 2 j -
Depreciation, depletion, and amortization (68.2) 3 h, i (66)
Taxes other than income taxes (30.8) 31 k -
Accretion of asset retirement obligations (16.5) 17 k -
Income From Operations 77.9 162
Other income / (expense) 12.7 (53) b, k, l (39)
EBIT N/A 123
Fixed charges (47.3) 9k (38)
Income Before Income Taxes 43.3 85
Income tax expense 0.3 (32) i, m (33)
Net Income $ 43.6 $ 52
Details of Adjustments Made in Arriving at Merchant Gross Margin:
a Adjustment to remove ($14 million) loss from Mid-Atlantic Fleet and $2 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 ($4 million) of other indirect costs have been removed from non-GAAP gross margin as they are more appropriately categorized as operating expenses.
d Adjustment to remove ($14 million) loss in Wholesale Competitive Supply and ($2 million) loss in NewEnergy related to economic, non-qualifying hedges of
fuel adjustment clauses and gas transport contracts
e Adjustment to remove synfuel losses from Wholesale Competitive Supply gross margin of ($6 million) and Other gross margin of ($7 million)
f Adjustment to reflect $11 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 $3 million from O&M to Depreciation and Amortization
i Adjustment to remove Synfuel results, which are not included in determining Merchant Below Gross Margin - $3 million in O&M, $6 million in D&A, ($25 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 $9 million recorded in Other Income / Expense to Fixed Charges (to show a fixed charge amount net of interest income).
m Adjustment to remove tax benefit ($7 million) related to losses on economic, non-qualifying hedges of fuel adjustment clauses and gas transport contracts and special items
** Excludes $12 million of operating expenses, depreciation, depletion and amortization, and interest expense associated with our Upstream Gas properties
PROJECTED GROSS MARGIN AND RESULTS BELOW GROSS MARGIN:
39
Constellation Energy is unable to reconcile its projected gross margin or results below gross margin to GAAP because we do not predict the future impact of
reconciling items or special items such as the cumulative effect of changes in accounting principles and the disposition of assets.
40. Q105 Merchant Gross Margin and Below Gross Margin
We utilize the non-GAAP financial measure of Gross Margin to highlight the relationship between the costs of and prices for energy in our Merchant Energy
business categories (i.e., Mid-Atlantic Fleet, Plants with PPAs, Wholesale Competitive Supply, NewEnergy, and QFs/Other). We believe this non-GAAP measure
helps investors to better understand the changes in the level of our Merchant Energy operating results for these categories from period to period.
RECONCILIATION: Quarter Ended March 31, 2005
GAAP Adjustments Merchant
GAAP Fuel & Purchased In Arriving Gross Margin
Merchant Revenue & Expense Categories Revenues Energy Expenses Difference At Gross Margin Notes (Non-GAAP)
($ millions)
Mid-Atlantic Fleet $ 494.8 $ 313.4 $ 181.4 $ 7 a, b, c $ 188
Plants with PPAs 192.5 15.3 177.2 - 177
Wholesale Competitive Supply 868.5 796.7 71.8 10 a , d, e 83
NewEnergy 1,320.5 1,257.5 63.0 - 63
QFs / Other 16.8 - 16.8 (3) e, f 13
Total Merchant $ 2,893.1 $ 2,382.9 $ 510.2 $ 14 $ 524
Adjustments Merchant Below
Arriving At Merchant Gross Margin
Total Merchant: GAAP Below Gross Margin (Non-GAAP)
Revenues less fuel and purchased energy expenses $ 510.2 $ 524
Operations and maintenance expenses (329.9) 12 g, h, i (318)
Depreciation, depletion, and amortization (62.9) 3 h, i (60)
Taxes other than income taxes (24.5) 25 j -
Accretion of asset retirement obligations (15.1) 15 j -
Income From Operations 77.8 146
Other income / (expense) 8.4 (38) b, j, k (29)
EBIT N/A 117
Fixed charges (48.6) 3k (46)
Income Before Income Taxes 37.6 71
Income tax benefit / (expense) 10.9 (37) i, l (26)
Income from Continuing Operations 48.5 45
Income from discontinued operations 0.4 - m -
Net Income $ 48.9 $ 45
Details of Adjustments Made in Arriving at Merchant Gross Margin:
a Adjustment to remove losses of ($8 million) from Mid-Atlantic Fleet 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 ($4 million) of other indirect costs have been removed from non-GAAP gross margin as they are more appropriately categorized as operating expenses.
d Adjustment to remove ($14 million) loss related to economic, non-qualifying hedges of fuel adjustment clauses and gas transport contracts
e Adjustment to remove synfuel losses from Wholesale Competitive Supply gross margin of ($4 million) and Other gross margin of ($8 million)
f Adjustment to reflect $11 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 $3 million from O&M to Depreciation and Amortization
i 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, ($32 million) from
income tax expense
j Adjustment to reflect management's view of these items as Other Income / Expense.
k Adjustment to move Interest Income of $3 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 ($5 million) related to losses on economic, non-qualifying hedges of fuel adjustment clauses and gas transport contracts
m Adjustment to remove income from discontinued operations which is treated as a special item
PROJECTED GROSS MARGIN AND RESULTS BELOW GROSS MARGIN:
Constellation Energy is unable to reconcile its projected gross margin or results below gross margin to GAAP because we do not predict the future impact of
40
reconciling items or special items such as the cumulative effect of changes in accounting principles and the disposition of assets.
41. Cash Flows
The following is a reconciliation of the non-GAAP financial measures of Cash Flow for Debt Reduction and Free Cash Flow for the quarter
ended March 31, 2006. We utilize this non-GAAP measures because we believe they are helpful in understanding our ability to reduce debt
by existing cash.
RECONCILIATION:
2006
($ millions)
YTD MARCH ACTUAL RESULTS:
Net cash used in operating activities (GAAP measure) (492)
Adjustment for derivative contracts presented as financing activities under SFAS 149 20
Adjusted Net Cash Used in Operating Activities $ (472) NON-GAAP MEASURE
Net cash used in investing activities (GAAP measure) (286)
Net Cash Used in Financing Activities (Excl. Debt-Related Sources & Uses) *
Common stock dividends paid (60)
Proceeds from issuance of common stock 21
Other financing activities, excluding SFAS 149 activities included in operating 2
Adjusted Net Cash Used in Financing Activities (37)
Net Cash Flow before Debt Issuances/(Payments) (795) NON-GAAP MEASURE
Less: Proceeds from issuance of common stock (21)
Add: Common stock dividends paid 60
Free Cash Flow $ (756) NON-GAAP MEASURE
* Total GAAP Cash Provided by Financing Activities (incl. debt-related sources & uses) was $389 million YTD March 06.
PROJECTED CASH FLOWS:
Constellation Energy is unable to provide a reconciliation of these measures for Projected 2006 because it does not prepare a
forecasted statement of cash flows on a GAAP basis.
41
42. Debt to Total Capital
Debt to Total Capital is a non-GAAP ratio that excludes unamortized discounts and premiums, reduces debt by our cash balance, and
includes minority interests in equity. In addition, we reflect a 50 percent equity credit for our trust preferred securities, similar to the
evaluation performed by major credit rating agencies. Management believes this non-GAAP measures provide investors useful information on
our leverage because it is consistent with the evaluation performed by rating agencies, takes into account minority equity interests in our
consolidated affiliates and cash available to reduce debt, and facilitates comparability between periods.
RECONCILIATION:
March 31, 2006 December 31, 2005 December 31, 2003 December 31, 2001
GAAP Balances Non-GAAP Ratio GAAP Balances Non-GAAP Ratio GAAP Balances Non-GAAP Ratio GAAP Balances Non-GAAP Ratio
($ millions)
Total long-term debt (gross of current portion) $ 4,589.5 $ 4,589.5 $ 4,610.9 $ 4,610.9 $ 5,134.9 $ 5,134.9 $ 3,874.4 $ 3,874.4
Fair value decrease in fixed to floating rate swap included in long-term debt 6.5 0.9 - -
6.20% deferrable interest subordinated debentures due
October 15, 2043 to BGE wholly owned BGE Capital Trust II
relating to trust originated preferred securities 257.7 257.7 257.7 257.7 257.7 257.7 250.0 250.0
50% Equity credit to trust preferred securities - (125.0) - (125.0) - (125.0) - (125.0)
Adjustment to include High Desert Lease on Balance Sheet at December 31, 2001 - - - - - - - 221.0
Short-term borrowings 425.0 425.0 0.7 0.7 9.6 9.6 975.0 975.0
Unamortized discount and premium (7.6) - (8.0) - (10.2) - (5.2) -
Subtotal 5,264.6 5,153.7 4,861.3 4,745.2 5,392.0 5,277.2 5,094.2 5,195.4
LESS: Cash - 424.8 - 813.0 - 721.3 - 72.4
Total Net Debt 5,264.6 4,728.9 50.4% 4,861.3 3,932.2 42.8% 5,392.0 4,555.9 49.9% 5,094.2 5,123.0 54.6%
BGE Preference Stock Not Subject To Mandatory Redemption 190.0 190.0 190.0 190.0 190.0 190.0 190.0 190.0
Minority Interests - 22.2 - 22.4 - 113.4 - 101.8
Common shareholders' equity 4,324.0 4,324.0 4,915.5 4,915.5 4,140.5 4,140.5 3,843.6 3,843.6
Subtotal 4,514.0 4,536.2 5,105.5 5,127.9 4,330.5 4,443.9 4,033.6 4,135.4
50% Equity credit to trust preferred securities - 125.0 - 125.0 - 125.0 - 125.0
Total Equity 4,514.0 4,661.2 49.6% 5,105.5 5,252.9 57.2% 4,330.5 4,568.9 50.1% 4,033.6 4,260.4 45.4%
Total Capitalization $ 9,778.6 $ 9,390.1 100.0% $ 9,966.8 $ 9,185.1 100.0% $ 9,722.5 $ 9,124.8 100.0% $ 9,127.8 $ 9,383.4 100.0%
Exclude commodity hedge AOCI Balance from common shareholders' equity 996.6 323.0 (9.6) (30.0)
Counterparty cash collateral held reflected as a reduction of cash balance (216) (388) (120) -
Net Debt to Total Capital Excluding commodity hedge AOCI Balance 46.6% 43.7% 50.6% 54.8%
PROJECTED LEVERAGE RATIOS:
Constellation Energy is unable to provide a reconciliation of this measure for Projected 2006 because it does not prepare a forecasted balance sheet on a GAAP basis.
42
