Fitch Places Constellation Energy and Baltimore Gas & Electric Co. on Watch Negative

Business Wire, Feb 1, 2008

CHICAGO -- Fitch Ratings has placed Constellation Energy Group, Inc. (NYSE: CEG) and Baltimore Gas and Electric Company (BGE) on Ratings Watch Negative. Fitch is concerned that the actions and statements made during the last few weeks by company management, its regulator the Maryland Public Service Commission (MPSC), and the Maryland General Assembly, have materially elevated the risk profile and operating environment for the companies. These statements and actions include, among other items, a report by the MPSC to the General Assembly that the deregulation of BGE's service territory was not in the public interest, recent bills introduced in the General Assembly that would re-regulate rates and require CEG to return $975 million stranded costs, and CEG's decision to sue for $386 million related to the 2006 rate relief package.

The issues between the companies and regulators and political leaders largely resurrect the same issues that surfaced in 2006 as customers of BGE were to face market-based electric rates that were substantially above the levels in place since 1999 following the utility's restructuring. Since the publish of the MPSC's report on BGE deregulation, all parties have, at a minimum, stepped up the rhetoric or at worst, espoused what appear to be intransigent positions.

At the present time, Fitch is unable to predict the ultimate resolution of these matters, nor their potential financial implications. Potential outcomes include full or partial re-regulation, the forced divestiture of BGE by CEG, and/or material penalties and refunds to ratepayers.

Constellation Energy Group, Inc.

--Issuer default rating (IDR) 'BBB ';

--Short-term Issuer default rating (IDR) 'F2';

--Senior unsecured notes 'BBB ';

--Commercial paper 'F2'.

Baltimore Gas and Electric Company

--Issuer default rating (IDR) 'BBB ';

--Short-term Issuer default rating (IDR) 'F2';

--First-mortgage bonds 'A';

--Unsecured notes and pollution control revenue bonds 'A-';

--Preferred stock 'BBB ';

--Commercial paper 'F2'.

BGE Capital Trust II

--Preferred stock 'BBB '.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.