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Constellation Energy Group (NYSE: CEG) sells electricity to electric utilities, cities and companies. CEG also has an electric and natural gas utility subsidiary which serves 1.7 million customers in central Maryland through Baltimore Gas and Electric Company (BGE). CEG has a maximum capacity of 8,800 megawatts(MW) of electricity, enough to power around 6.8 million homes[1].

Electric utility companies are facing mounting pressure in the form of government legislation to adopt cleaner electricity generation methods while maintaining competitive prices. CEG, however, is in an advantageous position versus many of its peers due to its substantial nuclear generation portfolio. CEG is particularly well positioned because more than half of all energy CEG produces is through nuclear power.

Company Overview

Business Financials

In 2009, CEG earned a total of $15.6 billion in total revenues. This was a substantial decline from its 2008 total revenues of $19.8 billion. However, despite the decrease in total revenues, CEG was able to improve its net income situation. Between 2008 an 2009, CEG went from a net loss of $1.3 billion in 2008 to a net profit of $4.5 billion in 2009.[2]

Business Segments

Constellation Energy Group has three primary business segments: Merchant Energy Business, Regulated Electric Business and Regulated Gas Business.

Merchant Energy Business

This business operates electric power plants (nuclear, coal, oil, gas, renewable) throughout the United States and sells it to large customers and businesses such as electric utilities, cities and companies.

Regulated Electric & Gas Business

CEG's regulated electric and gas business operates within central Maryland and operates under the name, Baltimore Gas and Electric Company (BGE). It delivers electricity to more than 1.1 million customers and natural gas to 600,000 customers.

Key Trends/Forces

Ahead of the Curve: CEG's "Green" Profile

Growing political awareness of the risks of global warming is resulting in increasing governmental pressure for utility companies to reduce emissions. Three major investment banks predicted that the U.S. government would cap CO2 emissions in the next three years. Caps would effectively penalize big CO2 producers such as electric utility companies that own coal-fired power plants to encourage the use of cleaner electricity generating technologies. However, unlike peer Allegheny Energy (AYE), more than half of CEG's comes from nuclear and renewable energy better positioning the company to withstand the possible upcoming legislation aimed at reducing CO2 emissions.

CEG is expanding its Nuclear Power generation ability

The key difference between nuclear and fossil plants is the cost structure. Nuclear plants require very large capital investments (to construct the plant) but little expenditure for fuel because it takes relatively little uranium to power a plant. On the other hand, fossil fuel plants require relatively little capital investment but have high fuel costs because they require large amounts of coal, oil or gas. In the past, low fossil fuel prices gave given fossil fuel plants a cost advantage over nuclear plants. The cost advantage, compounded by the stigmas of nuclear energy (the not in my backyard phenomenon) has prevented new nuclear construction for almost 30 years.[3]

Rising fossil fuel prices along with growing awareness of the carbon dioxide emissions are making nuclear energy a more viable choice. Already, nuclear utilities such as Exelon, Entergy and Duke Energy Corporation (DUK) have begun filing for permits for construction of new nuclear plants. CEG is ahead of the pack. The company owns three nuclear power plants and has increased its nuclear generation capacity by 32% over the past 5 years[4] The company has also submitted an application to the U.S. Nuclear Regulatory Commission to build a new 1,600MW reactor in their existing Maryland nuclear power plant [5] and another application to the U.S. Nuclear Regulatory Commission to seek approval for a new 1,600MW nuclear generator in its existing New York plant to address the New York's growing energy needs.[6]

Increasing demand for wholesale electricity

A growing shortage of available electrical power plants has stemmed from strict environmental regulations and a "not in my back yard" mentality which has limited regional utilities from building new power plants to sustain and meet their customer's growing energy needs. To remedy the supply shortfall, utilities must purchase additional electricity on the open market from companies such as CEG. In recent times, CEG has benefited greatly from their low-cost nuclear generation fleet as utilities around the country try to find cheaper supply alternatives to their costly coal, oil and natural gas electricity facilities.

A high commodity price environment coupled with power plant shortages due to legislation bode well for CEG's future. In addition, competing on the open markets allows them to sell electricity to the highest bidder, setting them apart from electric utilities, as their rates are regulated and capped by the government.


Some of CEG's competitors include Duke Energy Corporation (DUK) and Exelon Energy Corp (EXC).


  1. Power of Electricity
  2. CEG 10-K 2009 Item 6 Pg. 30
  3. Scientific American (9/26/07) - Nuclear Power Reborn
  4. Constellation Energy Elevates Michael J. Wallace to Vice Chairman to Expand New Nuclear Strategy
  5. Firm Applies To Expand Nuclear Plant In Maryland
  6. Firm Notifies USNRC
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