1004440--2/27/2009--CONSTELLATION_ENERGY_GROUP

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{operation, natural, condition}

{cost, contract, operation}

{cost, regulation, environmental}

{capital, credit, financial}

{investment, property, distribution}

{gas, price, oil}

{competitive, industry, competition}

{acquisition, growth, future}

{condition, economic, financial}

{system, service, information}

{cost, operation, labor}

{customer, product, revenue}

{debt, indebtedness, cash}

{financial, litigation, operation}

Economic conditions and instability in the financial markets could negatively impact our business. We may be unable to execute our strategies to improve liquidity and reduce invested capital. A downgrade in our credit ratings could negatively affect our ability to access capital and/or operate our wholesale and retail competitive supply businesses. Changes in the prices of commodities and initial margin requirements impact our liquidity requirements. Our merchant energy business may incur substantial costs and liabilities and be exposed to price volatility and counterparty performance risk as a result of its participation in the wholesale energy markets. Reduced liquidity in the markets in which we operate could impair our ability to appropriately manage the risks of our operations. We often rely on single suppliers and at times on single customers, exposing us to significant financial risks if either should fail to perform their obligations. We may not fully hedge our generation assets, customer supply activities, or other market positions against changes in commodity prices, and our hedging procedures may not work as planned. The use of derivative contracts in the normal course of business could result in financial losses that negatively impact our financial results. Poor market performance will affect our benefit plan and nuclear decommissioning trust asset values, which may adversely affect our liquidity and financial results. The operation of power generation facilities, including nuclear facilities, involves significant risks that could adversely affect our financial results. Our generation business may incur substantial costs and liabilities due to its ownership and operation of nuclear generating facilities. Our generation investment plans may not achieve the desired financial results. We are subject to numerous environmental laws and regulations that require capital expenditures, increase our cost of operations and may expose us to environmental liabilities. We, and BGE in particular, are subject to extensive local, state and federal regulation that could affect our operations and costs. We operate in deregulated segments of the electric and gas industries created by federal and state restructuring initiatives. If competitive restructuring of the electric or gas industries is reversed, discontinued, restricted, or delayed, our business prospects and financial results could be materially adversely affected. Our financial results may be harmed if transportation and transmission availability is limited or unreliable. Our merchant energy business has contractual obligations to certain customers to provide full requirements service, which makes it difficult to predict and plan for load requirements and may result in increased operating costs to our business. Our financial results may fluctuate on a seasonal and quarterly basis or as a result of severe weather. A failure in our operational systems or infrastructure, or those of third parties, may adversely affect our financial results. Our ability to successfully identify, complete and integrate acquisitions is subject to significant risks, including the effect of increased competition. War and threats of terrorism and catastrophic events that could result from terrorism may impact our results of operations in unpredictable ways. We are subject to employee workforce factors that could affect our businesses and financial results. Our transaction with EDF is subject to closing conditions, including regulatory approvals, that, if not satisfied or waived by the appropriate party, will result in the transaction not being completed, which may result in material adverse consequences to our business and operations. If the investment agreement with EDF is terminated we will be required to issue senior notes to EDF. If the investment agreement with EDF is terminated and the 10% Senior Notes are issued by us upon redemption of the Series B Preferred Stock, the 10% Senior Notes will contain restrictions on the operation of our business. The sale of non-nuclear generation plants pursuant to the put arrangement with EDF may have an adverse effect on our financial results.

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1004440--2/27/2009--CONSTELLATION_ENERGY_GROUP_INC