9466--3/3/2006--CONSTELLATION_ENERGY_GROUP

related topics

{operation, natural, condition}

{cost, regulation, environmental}

{cost, operation, labor}

{cost, contract, operation}

{competitive, industry, competition}

{investment, property, distribution}

{capital, credit, financial}

{gas, price, oil}

{customer, product, revenue}

{debt, indebtedness, cash}

{stock, price, operating}

Our merchant energy business may incur substantial costs and liabilities and be exposed to price volatility as a result of its participation in the wholesale energy markets. The operation of power generation facilities, including nuclear facilities, involves significant risks that could adversely affect our 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 are exposed to risks relating to the ownership and operation of nuclear power plants. BGE may not be able to recover costs incurred in satisfying its provider of last resort (POLR) obligations, which may adversely affect our, or BGE's, financial results and liquidity. 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. Reduced liquidity in the markets in which we operate could impair our ability to appropriately manage the risks of our operations. We may not fully hedge our generation assets, competitive supply or other market positions against changes in commodity prices, and our hedging procedures may not work as planned. We operate in deregulated segments of the electric and gas industries created by restructuring initiatives at both state and federal levels. If competitive restructuring of the electric or gas industries is reversed, discontinued 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. A downgrade in our credit ratings could negatively affect our ability to access capital and/or operate our wholesale and retail competitive supply businesses. We, and BGE in particular, are subject to extensive state and federal regulation that could affect our operations and costs. Poor market performance will affect our benefit plan and nuclear decommissioning trust asset values, which may adversely affect our liquidity and financial results. 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. We may be unable to obtain the approvals required to complete our merger with FPL Group Inc. (FPL Group) or, in order to do so, the combined company may be required to comply with material restrictions or conditions. If completed, our merger with FPL Group may not achieve its intended results. We will be subject to business uncertainties and contractual restrictions while the merger with FPL Group is pending that could adversely affect our financial results.

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9466--3/3/2006--CONSTELLATION_ENERGY_GROUP_INC