MidAmerican Outlines Benefits of Proposed Merger With Constellation Energy

Business Wire, Oct 17, 2008

MidAmerican proposes up to $70 million in Baltimore Gas and Electric Company customer benefits

Support for UniStar Nuclear joint venture and proposed nuclear plant development at Calvert Cliffs is reaffirmed

Companies intend to increase Constellation Energy Group Foundation endowment

Headquarters to remain in Baltimore

DES MOINES, Iowa, & BALTIMORE -- MidAmerican Energy Holdings Company and Constellation Energy (NYSE: CEG) announced that MidAmerican today filed an application with the Maryland Public Service Commission requesting approval to acquire Baltimore Gas and Electric Company.

"This transaction will bring financial stability to Constellation Energy and BGE, and comes with our proposal to reduce and delay planned BGE rate requests for the benefit of BGE customers," said Gregory E. Abel, president and chief executive officer of MidAmerican.

"Our application identifies the significant commitments we are making to BGE customers, communities and employees regarding rates, community involvement, job opportunities and investment in energy infrastructure in the state of Maryland," added Abel. "We strongly support the efforts of UniStar Nuclear Energy, LLC to develop advanced nuclear generation in the United States, and we affirm our support for the proposed new nuclear plant at Calvert Cliffs."

"The application filed today underscores the conviction of MidAmerican's commitment to successfully closing this transaction, and to Constellation Energy and BGE remaining integral members of the local community," said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. "This merger will deliver significant long-term benefits to our customers, employees and the communities we serve by allowing BGE and Constellation Energy to operate autonomously and providing the strong financial backing of Berkshire Hathaway."

BGE Benefits

MidAmerican has identified two significant rate benefits for BGE customers as part of its application.

* MidAmerican has proposed to cut in half the 5 percent cap that was to apply to any increase in an electric distribution rate case filed by BGE in 2009. The rate cap on the 2009 electric distribution rate increase was negotiated between BGE and various state interests in March of this year.

* In addition, MidAmerican commits to not file the next BGE electric distribution and natural gas distribution rate cases until January 2011.

As a result, there will be no increase in BGE's gas and electric base distribution rates in 2010 and the first half of 2011. The value to BGE customers from these actions depends upon the amount of BGE gas and electric rate increases granted by the Maryland Public Service Commission. Based upon assumptions identified in testimony filed by MidAmerican as part of its application, the combined potential benefit from these two commitments could be as much as $70 million for BGE electric and natural gas customers.

MidAmerican's application pledges that BGE's charitable and community-related contributions will be maintained at no less than the past three-year average level of approximately $2.9 million annually through Dec. 31, 2013. In addition, the application states BGE's headquarters will remain in Baltimore and no reduction in force at BGE is planned as a result of the proposed merger.

MidAmerican has committed that BGE will be protected from any adverse financial results at Constellation Energy or MidAmerican or any of their affiliates through a procedure called ring-fencing.

MidAmerican also promised that no costs related to the transaction or any severance or change-in-control payments to Constellation Energy staff would be included in BGE rates.

Constellation Energy Benefits

MidAmerican affirmed its support for Constellation Energy's involvement in the UniStar Nuclear Energy, LLC joint venture and the commitment to prioritize the development of a new nuclear unit at the company's Calvert Cliffs Nuclear Power Plant over the development of a nuclear facility at any other site it controls. MidAmerican further committed to keep Constellation Energy's headquarters in Baltimore, and that Constellation Energy would continue to be a prominent contributor to charitable and community-related activities.

In addition, Mr. Shattuck has irrevocably waived his right to receive payment of any cash severance to which he would otherwise be entitled under his change-in-control agreement as a result of the merger. He has requested that Constellation Energy donate that amount to the Constellation Energy Group Foundation. At the time of closing, MidAmerican has agreed to match any such contribution, resulting in a total endowment increase of $36 million to support future charitable endeavors for the long-term benefit of the Baltimore community and the state of Maryland.

On Sept. 19, MidAmerican and Constellation Energy reached a definitive merger agreement in which MidAmerican will purchase all of the outstanding shares of Constellation Energy for a cash consideration of approximately $4.7 billion, or $26.50 per share. In addition, MidAmerican provided an immediate $1 billion cash infusion to Constellation Energy through the purchase of preferred equity. The definitive agreement has been approved by both companies' boards of directors and is subject to, among other things, shareholder and customary federal and state regulatory approvals. Information about the transaction is available at www.constellationmidamerican.com.