Constellation Energy Group Inc
Constellation Energy — FPL Group — Merger or Acquisition (December 2005)
48 slides from Constellation Energy's merger presentation, Dec 19, 2005
Slide 1: Creating the Premier Competitive Energy Company
-*’ Constellation a7 Energy Creating the Premier Competitive Energy Company Investor Presentation December 19, 2005
Slide 2: Safe Harbor Language
Safe Harbor Language This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, for example, statements regarding benefits of the proposed merger, the likelihood and timing of closing o
Slide 3: Use Of Non-GAAP Financial Measures
Use Of Non-GAAP Financial Measures It is important to recognize that in certain instances in this presentation we have adjusted actual financial results, prepared in accordance with generally accepted accounting principles (GAAP), for certain items, including special items (which are defined as item
Slide 4: Non-Solicitation
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 Const
Slide 5: Agenda
Agenda Topic Presenter Introduction and Overview Lew Hay A Unique Growth Platform Mayo Shattuck Financials Follin Smith Conclusion Lew Hay Q&A All
Slide 6: Introduction and Overview
Introduction and Overview
Slide 7: Today We Are Announcing Our Agreement To Merge Our Two Companies
Today We Are Announcing Our Agreement To Merge Our Two Companies FEL mp © sett” fa Osa [Regulated Electric Customers (millions) 43 12 [Generation Owned Capacity (MWs)® 33,333 11,861 Nuclear (Mis) @ 4434 3,794 Fossil (MWVs) 25.412 7610 ‘Wind (MWs) 3211 P Wholesale Competitive Supply (Peak Mv) 2 itiia
Slide 8: Key Transaction Terms
Key Transaction Terms = Structure: = Consideration: = Premium: = Ownershi = Name: = Management: = Board Members: = Headquarters: Modified merger of equals — share of FPL Group converted to 1 share of Constellation Eneray after the merger — share of Constellation Energy converted to 1 44d shares of C
Slide 9: Organizational Structure
Organizational Structure Board of Directors Mayo Shattuck — Chairman LewHay — — Director Non-executive (13) ~ Directors LewHay Mayo Shattuck sim Robo Folin Smith Moray Dewhurst Florida Power & Baltimore Gas and Light Electric ‘Armando Olivera Ken DeFontes Constellation
Slide 10: The New Entity: A Unique And Compelling Combination
The New Entity: A Unique And Compelling Combination Wholesale The premier competitive energy provider offering attractive growth and a balanced, moderate risk posture... + + ere. + eee a solid base of stable, growing Light Electric earnings and cash flow... + + ... built on the strongest balance she
Slide 11: Building The Leading Platform In The Competitive Energy Sector
Building The Leading Platform In The Competitive Energy Sector / \ Dispatch Renewables Purchased Point Power Owned Generation Diverse Supply Base Ey Constellation 41 Energy
Slide 12: Building A Bigger, Stronger, And More Diversified Regulated Utility Business
Building A Bigger, Stronger, And More Diversified Regulated Utility Business FPL's Florida Service Territory AGE's Maryland Service Tersitory Electric customers (milions) 12 - Gas customers (millions) os $11.2 Rate base (billions) $3.0 $788 Net income (millions) @ $168 aR Long-term volume growth re
Slide 13: Benefits To Regulated Utility Customers
Benefits To Regulated Utility Customers = Balance sheet strength = Modest direct cost savings through leveraging utility expertise across a larger platform = Opportunities to improve reliability through best practices sharing 2 8 5 3g 3 eC 2 3 5 a z = 5 = o g 8 3 3 3 2 2 2 5 a = Mutual support Flori
Slide 14: Growth Will Be Further Enhanced By Meaningful Synergies
Growth Will Be Further Enhanced By Meaningful Synergies e ss Ma Balanced footprint and portfolio scale Jointly managed competitive supply organization Jointly managed fleet operation Purchasing leverage Best practice sharing Purchasing leverage Consolidated staff and transaction processing support L
Slide 15: We Will Have The Financial Strength And Flexibility To Support Our Business
We Will Have The Financial Strength And Flexibility To Support Our Business Financial Strength = Balanced Business Mix — Regulated / Deregulated — Generation technologies and fuel — Geography = $57 billion of total assets (") = $4.5 billion to $5.0 billion of cash flow from operations (2) = Combined
Slide 16: Creating A New FORTUNE Company And An Industry Leader
Creating A New FORTUNE 100 Company And An Industry Leader © Nuclear generation capacity as of 125105 plus 419 MWS for Duane Amald, which is expected to close bythe frst quarter 2006 = = Constellation 16 Energy
Slide 17: A Unique Growth Platform
A Unique Growth Platform
Slide 18: Diverse Channels Of Growth Create Value For All New Constellation Energy Shareholders
Diverse Channels Of Growth Create Value For All New Constellation Energy Shareholders Wholesale Competitive Supply New Capital Deployment + Retail Competitive Supply + Florida Power & Light Baltimore Gas and Electric = CROU = EBIT Expansion + + = The building blocks of growth |= Shareholder value-fo
Slide 19: Combination Of Top-Performing Utilities
Combination Of Top-Performing Utilities Baltimore Gas and Elec’ 1.0% - 1.5% Healthy long-term volume growth (customer & usage) Focus on customer satisfaction 103 (2005 J.D. Powers Residential Survey) Top quartile Low-cost operations $249 (Electric O&M $ per customer) (Ranks #8 of 91) () Source: RDI
Slide 20: Growth In Florida
Growth In Florida Net Income ($ mi 900 800 700 600 500 400 300 110 Delivered Sales (Billions kwhs) 93 94 95 96 97 98 99 00 01 02 03 04 —Earnings —Sales ° | A 20
Slide 21: Generation Margin Expansion Before Synergies
Generation Margin Expansion Before Synergies Constellation Energy — Mid-Atlantic Fleet FPL Energy - Merchant Generation 13 12 z 10 3 0 0. @ 10 . % o9 2 £ g : og 08 3 os = os = o7 or 3 8 OT & & 05 os 2005 2008-2007 2008 2005 © 2008 «2007-2008 = Other gross margin expansion opportunities — Productivit
Slide 22: FPL Group Wind Growth
FPL Group Wind Growth Historical Projected 5,000 4,460 - 4,710 H 3,835 - 3,960 4,000 ! 132i t 3,000 2,720 2,758 | ' ES 2,000 1,745 1 1,421 ' ' t 4,000 1 460 578 1 ' o ! 99 «= 00st sisi PL Constellation FPL 22 (+) Energy
Slide 23: Wholesale Competitive Supply Growth
Wholesale Competitive Supply Growth (Constellation Energy Only) 700 650 2 600 550 500 450 387 400 + 350 300 2501 497 200 150 + 271 Gross Margin ($ millions) 2002 2003 2004 2005 2006 ——Historical - + + Projected Attractive growth track record with modest capital requirements See appendix i —) Constel
Slide 24: Retail Competitive Supply Growth
Retail Competitive Supply Growth (Constellation Energy Only) 500 30% i 400 ee = = 2 20% = e = € 300 15% @ 10% 3 200 z oO 5% 100 + 0% 2003 2004 2008 206 — Gross Margin (Historical) —— Market Share (Historical) = = Gross Margin (Projected) — — Market Share (Projected) Relative market share > 2x See ap
Slide 25: Complementary Merchant Business Strengths
Complementary Merchant Business Strengths Highest load serving Generation assets in market share NEPOOL / ERCOT Constellation lem) Leading risk Energy management ‘Strong wind (FPL Group expertise position Both Strong nuclear capability Focus on cost and operational efficiency i—— Constellation 25 En
Slide 26: A Unique Blending Of Related And Complementary Assets And Skills
A Unique Blending Of Related And Complementary Assets And Skills FPL Constellation Group Energy Retail Competitive Supply Operations (peak MWs) © 6 Wholesale Competitive Supply Operations (gross margin) e @® Generation Operations (MWs) ~ Total @ e@ ~ Nuclear @ @ - Renewables @ * Regulated Utility Op
Slide 27: Complementary Generation and Customer Businesses
Complementary Generation and Customer Businesses FPL Group Constellation Energy Combined Peak Peak Peak Load Load Load Served“ Generation® | Served" Generation® | Served Generation @ (MW) (MW) (MW) (MW) (MW) (MW) NEPOOL 900 2,793 9,800 - 10,700 2,793 PJM 600 1,159 13,200 6,413. 13,800 7,572 ERCOT 4,
Slide 28: Value Of Constellation Energy's Competitive Supply Portfolio Scale
Value Of Constellation Energy’s Competitive Supply Portfolio Scale 800 703 200 700 621 175 z g 600 508 180 68 3 476 2 $_ 500 128 2 z az £ % 5 400 100 Be #E 300 5 a £2 200 50 z 8 = 100 23 2s oO 7 2003A 2004A 2005E 2006E Portfolio Scale -8 PM&T Gross Margin 28
Slide 29: Other Complementary Competitive Skills
Other Complementary Competitive Skills = Pairing FPL Group’s leading wind business with Constellation Energy’s retail business — Ability to market “green” products = Applying FPL Group’s Qualifying Facility restructuring expertise to Constellation Energy's Qualifying Facilities = Marrying Constellat
Slide 30: Financials
Financials CROUP. 30
Slide 31: 2007 Baseline: 16% Annual Growth Over 2005
2007 Baseline: 16% Annual Growth Over 2005 Retail Constellation Comp. Energy CTC! 2,300 Wholesale Supply Other _ Supply 60 (40) j ret 100 150 3 2 220 [] 3 2 2,000 SE 1,900 ae ; 2 £ 4,800 38 = 1,700 oe LL Rannuat stove 1,500 "2006 2007 Note: Note: Combined amourts exclude the elects of synergies, as
Slide 32: Balanced Earnings Profile
Balanced Earnings Profile 2007 Combined Estimated EBIAT “) Contribution BGE 8% FPL 38% Note: Note: Combined amounts exclude the effects of synegi well as purchase accounting, which are expected to be favor Represents eamings before intrest but afer taxes See appendix CROUPs Deregulated operations 54
Slide 33: Synergies
Synergies = Balanced footprint and portfolio scale drive revenue opportunities = Systems and process alignment and purchasing leverage drive cost opportunities Competitive Supply Utility Operations Increased scale to mid- and back- Enhanced purchasing leverage offices, — Systems commonality — System
Slide 34: Growing Dividends
Growing Dividends Current FPL Group 2005 dividend $1.42 Current Constellation Energy 2005 dividend $1.34 Exchange ratio 1.444 Effective Constellation Energy dividend increase ” (post-closing) “ 53% Significant value to Const through 53% di ion Energy shareholders lend increase (© Dividends are based
Slide 35: Value Capture To Shareholders
Value Capture To Shareholders Constellation Energy FPL Group Shareholders Shareholders = Premium paid $1.5 billion = Premium received $1.5 billion = Value of synergies $1.5 - $2.1 = Value of synergies $1.0 - $1.4 billion billion = Immediately accretive to = Enhanced P/E earnings = Increased dividend
Slide 36: Commitment To Credit Quality
Commitment To Credit Quality = FPL Group and Constellation Energy believe they will retain solid investment-grade ratings on a combined basis Combined Estimated Key Ratios (1) Funds from Operations / Total Debt 31% - 33% Funds from Operations / Interest Coverage 6.0x - 6.5x Debt / Total Capital 40%
Slide 37: Conclusions
Conclusions CROUPs 37
Slide 38: Summary
Summary = Compelling opportunity to create U.S. market leading competitive energy provider = Well-matched, complementary contributions from two strong companies = Multiple channels of growth, balanced by strong base of moderate risk cash flow and earnings = Multiple sources of synergy = Combined ent
Slide 39: Transaction Timeline
Transaction Timeline | Major regulatory filings = Federal Trade Commission — Department of Justice — Federal Energy Regulatory Commission Nuclear Regulatory Commission Maryland Public Service Commission Florida Public Service Commission (Notice Only) FRPL © gezsteliation CROUS. 39
Slide 40: Shareholder Value Focus (Stock Price Appreciation)
Shareholder Value Focus (Stock Price Appreciation) 150% 125% CEG +112% 100% 19% i FPL +52% S&P Elec 436% 25% ‘SBP 500 -+10% % 058) (60%) Two management teams with proven records of di shareholder value ivering 40
Slide 41: Appendix
Appendix CROUP. 4
Slide 42: Strong Combined Presence In Key Regions
Strong Combined Presence In Key Regions CROUPs
Slide 43: Synergies
Synergies = Retained revenue and cost synergies of at least $200 - $250 million by year three — Excludes costs to achieve — Approximately one-third in year one and second third achieved in year two. = Accretive to both former Constellation Energy and FPL Group shareholders in first full year of comb
Slide 44: More-Balanced Generation Mix
More-Balanced Generation Mix ity FPL Group‘ Constellation Energy @ Combined oer 33,333 MWs- 11,861 MWs 45.194 MWs ier ‘Other 2% Wind eel Nuclear eee wind Coal Nuclear Coal Coal, Oil! Gas Oil/Gas Oil/Gas Balanced fuel, geography and dispatch with improved load serving capabilitie: As of 125505 plus 4
Slide 45: Non-GAAP Financial Measures
Non-GAAP Financial Measures 45
Slide 46: Summary of Non-GAAP Measures
Summary of Non-GAAP Measures ‘Bisa Whee ‘Usedin Sige Conatning Non-GAAP Measure Presentation Most Comparable GAAP Measure econetation [agiotea net incore ‘Repomed GAAP Net income FPL Group (12 morths ended 970105) 1 a Consteliaton Energy (12 mors ended 92005 7 a Combined (12 mort ended 330105) 1 a [
Slide 47: Adjusted Net Income
Adjusted Net Income RECONCILIATION: ($s in Millions) Twelve Months Ended 9/3005 Constellation Energy Notes | FPLGroup | Notes | Combined Reported GAAP net income 5 53 5 857 5 (ate Adjustments Income from discontinued operations (18) a (16) Non-quaiified hedges 2b wid 170 ‘Workforce reduction costs g
Slide 48: Searchable text section of graphics shown above
Searchable text section of graphics shown above [LOGO] [LOGO] Creating the Premier Competitive Energy Company Investor Presentation December 19, 2005 Sa fe Harbor Language This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 19