BOMA of Greater Cleveland “Ask the Expert”

October 2013

©2013 Constellation Energy Resources, LLC. All rights reserved. The presentation has been prepared for informational

purposes only by Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Errors and omissions excepted.

Summary messages

1

• Upward price pressure on FirstEnergy (FE) Ohio retail electric prices

• Low volatility and market prices present an opportunity for a “strategic

value play” on electric commodity

• There exists a “better fix” to purchasing energy

• A “solution” to increase budget certainty & reduce future energy spend

by over 10%

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Agenda

1. FirstEnergy Ohio’s “Strategic Value Play”

2. A “Better Fix” to Purchasing Energy

2 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Today’s retail electric prices are mostly made up of energy

3

FE Ohio Price Component Breakdown for 2012-14 Deal Term1

1Representative 1 MW commercial load profile used in this illustration

Source: Constellation

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Long-term power prices show value

• Power prices shift down about 50% since highs but downward acceleration has slowed

• Prices are at relative discount, but locking in 100% fixed price still has risk

4

2008 = $86.15

2009 = $61.25

2010 = $51.50

2011 = $50.50

2012 = $38.50

Historical Power Prices

Current = $37.50

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Constellation

Power prices are significantly higher in eastern PJM

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

FE-OH

$57.59/MWh

AEP-OH

$54.79/MWh

BGE-Blt

$67.39/MWh

PEPCO-DC

$64.23/MWh

JCPL-Nth NJ

$65.15/MWh

PSEG

$65.95/MWh

COMED-Chicago

$52.23/MWh

DAYTON-OH

$55.33/MWh

5

Peak Summer Energy Only 2015-2017

Penelec

$59.50/MWh

PPL

$64.17/MWh

Meted

$62.20/MWh

Source: PJM, Constellation

Source: PJM, Constellation

6

Coal retirements affecting regional supply & demand balance

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: PJM 2012 RTEP in Review (page 16), Constellation

Transmission expansion driven by coal retirements

7 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: PJM 2012 RTEP in Review (page 18), Constellation

Low prices stimulating new demand for natural gas

LNG exports begin by late 2015 (4 to 6 Bcf/d by 2020)

Gas-to-Liquids Est. Demand Impact (2 Bcf/d by 2021)

LNG And CNG Vehicles (2 to 4 Bcf/d by 2020)

2014 2015 2016 2017 2018 2019 2020

Coal Retirements Increase Gas Demand (4 to 6 Bcf/d by 2016)

Industrial Demand Increase (2 Bcf/d by 2016)

8 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Constellation

Capacity cost overview

9

Capacity

Obligation

Capacity Charge Formula

X RPM Rate Days X = Annual Cost

Example Calculation

X X = .750 MW $28.45/

MW-Day 365 $7,788

Source: PJM, Constellation

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

RPM rate in FE OH to increase significantly in coming years

10

FirstEnergy Ohio RPM Rates by Planning Year

Notes:

PY 2013/14 rates based on RPM Third Incremental Auction Results

PY 2014/15 rates based on RPM First Incremental Auction Results

PY 2015/16 & PY 2016/17 results based on RPM Base Residual Auction Results

Source: PJM

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Capacity charges are generally sensitive to load factor

11

FE Ohio $ / MWh Capacity Charges by Load Factor

Source: Constellation

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

FE Ohio retail electric prices expected to increase about 10%

12

3% decrease

in energy

196% increase

in capacity

6% increase in

other 10% price increase in overall

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

FE Ohio Price Build Up for 2012-14 and 2015-17 Deal Terms1

1Representative 1 MW commercial load profile used in this illustration Source: Constellation

A solution to reduce budget volatility & spend by over 10%

13

1

Immediate benefit of a lower electric rate

with participation in a Load Response

program (Rate Response)

Reduce total energy

usage by implementing

high-impact energy

conservation

measures, with costs

of measures factored

into the price

3% decrease in spend

7% decrease

in spend

3

2 3-5% decrease

in spend

Take advantage of low prices by fixing

layers today, & consider a “better fix”

with a flexible purchasing platform

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Annual Spend by Scenario for a 2015-2017 Deal Term1

Source: Constellation

1Notes:

1) Representative 1 MW commercial load profile used in this illustration

2) Constellation’s proprietary i2i Energy Strategy Planner capability used to estimate impact of a blended strategy

3) Rate response scenario assumes a 20% load response reduction

4) EME scenario assumes 20% reduction is usage after implementation of energy conservation measures

Agenda

1. FirstEnergy Ohio’s “Strategic Value Play”

2. A “Better Fix” to Purchasing Energy

14 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Evaluating electric supply choices can be daunting

15 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Options have given customers unprecedented flexibility to align energy

purchasing strategy with corporate goals, budgets and calendars

Groundbreaking study seeks “better fix” to purchasing energy

16

• New Constellation whitepaper evaluated performance of six

purchasing strategies over a 10-year period

• Study identified which strategies would have helped customers

manage price and budget volatility risk over the past 10 years

• Whitepaper limited to review of “passive” strategies that don’t

attempt to actively optimize price or volatility over time

• Results are intended to help energy buyers better understand

their options and make more informed purchasing decisions

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Six purchasing strategies illustrated

17

Ris

k

100% FP Point in Time

100% Fixed 0% Fixed

0% Fixed (Index)

Strategy

1

Blended Strategies

60 %

Fixed RTC

100% Peak Fixed

(=60% fixed overall)

100% Peak Fixed (Summer)

(=23% fixed overall)

3

4

5

6

100% FP

Layered

2

100% Fixed Price Point-in-time 100% Index (0% Fixed)

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Example of 100% FP layered purchasing…

0

50

100

150

200

250

300

Sun Mon Tue Wed Thu Fri Sat

kW

h P

er

Ho

ur

Usage Purchase 1 - 40% Purchase 2 - 35% Purchase 3 - 25%

100%

usage at

fixed

prices

18 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Constellation

Example of 60% Fixed RTC blended purchasing…

Flexible Index Solutions

-

50.00

100.00

150.00

200.00

250.00

300.00

Sun Mon Tue Wed Thu Fri Sat

kWh

Per

Ho

ur

Usage Fixed Price Amount

Fixed

Price

For 60%

of Load

40% load not

fixed and on

Index

19 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Example of 100% peak fixed blended purchasing…

20

0

20

40

60

80

100

120

140

160

180

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

kW

h p

er

ho

ur

Hours

Fixed

Index

Index

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

10 years of dramatically rising and falling prices

21

Median Price of the Six Strategies, 2003-2012

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies

performed over 10 years of rising & falling power markets”

Significant high and low price range over 10 years

22

Annual Median, High, Low Range in Prices of the Six Strategies, 2003-2012

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies

performed over 10 years of rising & falling power markets”

Range in low and high prices varied considerably over 10 years

23

Price Range Frequency, 2003-2012

Less than

$7.50/MWh

$7.50/MWh to

$15.00/MWh

Greater than

$15.00/MWh

In 6 out of 10

years, the

price range

was greater

than

$7.50/MWh

YE

AR

S

4 YEARS

3 YEARS

3 YEARS

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies

performed over 10 years of rising & falling power markets”

Relative price performance of strategies has changed over time

24

2003 2004 2005 2006 2007

Lowest

Highest 100%

SUMMER

PEAK

Price

100 % Fixed

Price Point in

Time [FP PIT]

100% Index

(0% Fixed)

60% Fixed

RTC

100% Peak

Fixed

100% Peak Fixed

(summer only)

2008 2009 2010 2011 2012

Year

Annual Price Ranking of the Six Strategies from 2003-2012

60%

FIXED

RTC

100 % Fixed

Price Layered

[FP Layered]

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

SUMMER

PEAK

100%

INDEX

100%

INDEX

100%

INDEX

100%

INDEX

100%

INDEX

100%

INDEX 100%

INDEX

100%

INDEX

100%

INDEX

100%

INDEX

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

100% FP

LAYERED

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

60%

FIXED

RTC

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100%

PEAK

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

100% FP

PIT

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies

performed over 10 years of rising & falling power markets”

Energy price and budget volatility differ by strategy

25

Index vs 100% Fixed Price Strategies Index vs Blended Strategies

In many cases, there is a tradeoff between volatility

and price over time…

Fixed Price Point-in-Time Fixed Price Layered 100% Peak Fixed (Summer)

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies performed over 10

years of rising & falling power markets”

Blended options: “sweetspot” in lowering risk & price over time

26

10-Year Average Price and Volatility by Strategy, 2003-2012

FIX

ED

PR

ICE

BLE

ND

ED

BLE

ND

ED

BLE

ND

ED

IND

EX

FIX

ED

PR

ICE

This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.

Source: Forthcoming Constellation whitepaper “A Study of Electricity Procurement Strategies: How Price, Index & Blended Strategies

performed over 10 years of rising & falling power markets”

Future Paths

• Key takeaway is that blended strategies have reduced both

budget risk and price over the last 10 years

• Past performance is not indicative of future results, but

findings suggest blended solutions are viable options in

developing long-term purchasing strategies

• This study did not evaluate the impact of an actively managed

purchasing strategy, where market intel, price alert tools, and

programs, support informed decisions

• An actively managed purchasing strategy may produce even

lower prices and volatility over the long term

27 This presentation has been prepared solely for informational purposes relating to CNE’s business as a physical energy provider. CNE does not provide and is not providing advice regarding the value or

advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would

cause CNE or any of its affiliates to be considered a commodity trading advisor under the CEA.