1.0.0.3 false Commitments and Contingencies, Long-Term Power Sales Contracts, Litigation false 1 $ false false shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 usd Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 usdPerShare Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 NOTES TO FINANCIAL STATEMENTS 0 ceg_NotesToFinancialStatementsAbstract ceg false na duration string Notes To Financial Statements [Abstract] false false false false false true false false false 1 false false 0 0 false false Notes To Financial Statements [Abstract] false 3 Commitments and Contingencies, Long-Term Power Sales Contracts, Litigation 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=Content-Type content="text/html; charset=utf-8"> <META content="MSHTML 6.00.6000.16825" name=GENERATOR></HEAD> <BODY> Commitments and Contingencies We have made substantial commitments in connection with our merchant energy, regulated electric and gas, and other nonregulated businesses. These commitments relate to: <UL> <DL compact> <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">purchase of electric generating capacity and energy, <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">procurement and delivery of fuels, <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">the capacity and transmission and transportation rights for the physical delivery of energy to meet our obligations to our customers, and <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">long-term service agreements, capital for construction programs, and other. </DD></DL></UL>         Our merchant energy business enters into various long-term contracts for the procurement and delivery of fuels to supply our generating plant requirements. In most cases, our contracts contain provisions for price escalations, minimum purchase levels, and other financial commitments. These contracts expire in various years between 2009 and 2028. In addition, our merchant energy business enters into long-term contracts for the capacity and transmission rights for the delivery of energy to meet our physical obligations to our customers. These contracts expire in various years between 2009 and 2030.         Our merchant energy business also has committed to long-term service agreements and other purchase commitments for our plants.         Our regulated electric business enters into various long-term contracts for the procurement of electricity. As of June 30, 2009, these contracts expire during 2009, 2010, and 2011 and represent BGE's estimated requirements for residential customers as follows:  <DIV align=center> <TABLE cellSpacing=0 cellPadding=0 border=0> <TBODY> <TR> <TD style="FONT-FAMILY: times" align=left width=162></TD> <TD style="FONT-FAMILY: times" width=12></TD> <TD style="FONT-FAMILY: times" align=right width=4></TD> <TD style="FONT-FAMILY: times" width=45></TD> <TD style="FONT-FAMILY: times" width=3></TD></TR> <TR vAlign=bottom> <TH style="FONT-FAMILY: times" align=left>Contract Duration </TH> <TH style="FONT-FAMILY: times"> </TH> <TH style="FONT-FAMILY: times" align=middle colSpan=2>Percentage of Estimated Requirements </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=bottom> <TH style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align=middle colSpan=4> </TH> <TH style="FONT-FAMILY: times"> </TH></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> From June 30, 2009 to May 2010</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>100</TD> <TD style="FONT-FAMILY: times">%</TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times"> From June 2010 to September 2010</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>75</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=#cceeff> <TD style="FONT-FAMILY: times"> From October 2010 to May 2011</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>50</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR vAlign=bottom bgColor=white> <TD style="FONT-FAMILY: times"> From June 2011 to September 2011</TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times"> </TD> <TD style="FONT-FAMILY: times" align=right>25</TD> <TD style="FONT-FAMILY: times"> </TD></TR> <TR style="FONT-SIZE: 1.5pt" vAlign=top> <TD style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" colSpan=4> </TD> <TD style="FONT-FAMILY: times"> </TD></TR></TBODY></TABLE></DIV>         The cost of power under these contracts is recoverable under the Provider of Last Resort agreement reached with the Maryland PSC.         Our regulated gas business enters into various long-term contracts for the procurement, transportation, and storage of gas. Our regulated gas business has gas procurement contracts that expire between 2009 and 2011, and transportation and storage contracts that expire between 2012 and 2027. The cost of gas under these contracts is recoverable under BGE's gas cost adjustment clause discussed in Note 1 of our 2008 Annual Report on Form 10-K.         Our other nonregulated businesses have committed to gas purchases, as well as to contribute additional capital for construction programs and joint ventures in which they have an interest.         We have also committed to long-term service agreements and other obligations related to our information technology systems.         At June 30, 2009, the total amount of commitments was $4,973.4 million. These commitments are primarily related to our merchant energy business. <A name=xxx44501_long-term_power_sales_contracts></A><A name=toc_xxx44501_2></A> Long-Term Power Sales Contracts We enter into long-term power sales contracts in connection with our load-serving activities. We also enter into long-term power sales contracts associated with certain of our power plants. Our load-serving power sales contracts extend for terms through 2019 and provide for the sale of energy to electricity distribution utilities and certain retail customers. Our power sales contracts associated with power plants we own extend for terms into 2015 and provide for the sale of all or a portion of the actual output of certain of our power plants. Substantially all long-term contracts were executed at pricing that approximated market rates, including profit margin, at the time of execution. <A name=xxx44501_contingencies></A><A name=toc_xxx44501_3></A> Contingencies Litigation In the normal course of business, we are involved in various legal proceedings. We discuss the significant matters below. Merger with MidAmerican Beginning September 18, 2008, seven shareholders of Constellation Energy filed lawsuits in the Circuit Court for Baltimore City, Maryland challenging the then-pending merger with MidAmerican. Four similar suits were filed by other shareholders of Constellation Energy in the United States District Court for the District of Maryland.         The lawsuits claim that the merger consideration was inadequate and did not maximize value for shareholders, that the sales process leading up to the merger was <A name=page_xxx44501_1_25></A>unreasonably short and procedurally flawed, and that unreasonable deal protection devices were agreed to in order to ward off competing bids and coerce shareholders into accepting the merger. The federal lawsuits also assert that the conversion of the Preferred Stock issued to MidAmerican into debt is not permitted under Maryland law. The lawsuits seek declaratory judgments establishing the unenforceability of the merger based on the alleged breaches of duty, injunctive relief to enjoin the merger, rescission of the merger or rescissory damages, the imposition of a constructive trust in favor of shareholders of any benefits received by the individual members of the Board of Directors of Constellation Energy, and reasonable costs and expenses, including attorney's fees.         The termination of the MidAmerican merger renders moot the claims attempting to enjoin the merger with MidAmerican. One of the federal merger cases was voluntarily dismissed on December 31, 2008. The other federal merger cases filed in the United States District Court for the District of Maryland were dismissed as moot on May 27, 2009. We believe there are meritorious defenses to the remaining claims or requests for relief. However, we are unable at this time to determine the ultimate outcome of these lawsuits or their possible effect on our financial results. Securities Class Action Three federal securities class action lawsuits have been filed in the United States District Courts for the Southern District of New York and the District of Maryland between September 2008 and November 2008. The cases were filed on behalf of a proposed class of persons who acquired publicly traded securities, including the Series A Junior Subordinated Debentures (Debentures), of Constellation Energy between January 30, 2008 and September 16, 2008, and who acquired Debentures in an offering completed in June 2008. The securities class actions generally allege that Constellation Energy, a number of its present or former officers or directors, and the underwriters violated the securities laws by issuing a false and misleading registration statement and prospectus in connection with Constellation Energy's June 27, 2008 offering of Debentures. The securities class actions also allege that Constellation Energy issued false or misleading statements or was aware of material undisclosed information which contradicted public statements including in connection with its announcements of financial results for 2007, the fourth quarter of 2007, the first quarter of 2008 and the second quarter of 2008 and the filing of its first quarter 2008 Form 10-Q. The securities class actions seek, among other things, certification of the cases as class actions, compensatory damages, reasonable costs and expenses, including counsel fees, and rescission damages.         The Southern District of New York granted the defendants' motion to transfer the two securities class actions filed there to the District of Maryland, and the actions have since been transferred for coordination with the securities class action filed there. On June 18, 2009, the court appointed a lead plaintiff, who we expect to file a consolidated amended complaint. We are unable at this time to determine the ultimate outcome of the securities class actions or their possible effect on our, or BGE's financial results. ERISA Actions In the fall of 2008, multiple class action lawsuits were filed in the United States District Courts for the District of Maryland and the Southern District of New York against Constellation Energy; Mayo A. Shattuck III, Constellation Energy's Chairman of the Board, President and Chief Executive Officer; and others in their roles as fiduciaries of the Constellation Energy Employee Savings Plan. The actions, which have been consolidated into one action in Maryland (the Consolidated Action), allege that the defendants, in violation of various sections of ERISA, breached their fiduciary duties to prudently and loyally manage Constellation Energy Savings Plan's assets by designating Constellation Energy common stock as an investment, by failing to properly provide accurate information about the investment, by failing to avoid conflicts of interest, by failing to properly monitor the investment and by failing to properly monitor other fiduciaries. The plaintiffs seek to compel the defendants to reimburse the plaintiffs and the Constellation Energy Savings Plan for all losses resulting from the defendants' breaches of fiduciary duty, to impose a constructive trust on any unjust enrichment, to award actual damages with pre- and post-judgment interest, to award appropriate equitable relief including injunction and restitution and to award costs and expenses, including attorneys' fees. We are unable at this time to determine the ultimate outcome of the Consolidated Action or its possible effects on our, or BGE's, financial results. Mercury Since September 2002, BGE, Constellation Energy, and several other defendants have been involved in numerous actions filed in the Circuit Court for Baltimore City, Maryland alleging mercury poisoning from several sources, including coal plants formerly owned by BGE. The plants are now owned by a subsidiary of Constellation Energy. In addition to BGE and Constellation Energy, approximately 11 other defendants, consisting of pharmaceutical <A name=page_xxx44501_1_26></A>companies, manufacturers of vaccines, and manufacturers of Thimerosal have been sued. Approximately 70 cases, involving claims related to approximately 132 children, have been filed to date, with each claimant seeking $20 million in compensatory damages, plus punitive damages, from us.         In rulings applicable to all but three of the cases, involving claims related to approximately 47 children, the Circuit Court for Baltimore City dismissed with prejudice all claims against BGE and Constellation Energy. Plaintiffs may attempt to pursue appeals of the rulings in favor of BGE and Constellation Energy once the cases are finally concluded as to all defendants. We believe that we have meritorious defenses and intend to defend the remaining actions vigorously. However, we cannot predict the timing, or outcome, of these cases, or their possible effect on our, or BGE's, financial results. Asbestos Since 1993, BGE and certain Constellation Energy subsidiaries have been involved in several actions concerning asbestos. The actions are based upon the theory of "premises liability," alleging that BGE and Constellation Energy knew of and exposed individuals to an asbestos hazard. In addition to BGE and Constellation Energy, numerous other parties are defendants in these cases.         Approximately 512 individuals who were never employees of BGE or Constellation Energy have pending claims each seeking several million dollars in compensatory and punitive damages. Cross-claims and third-party claims brought by other defendants may also be filed against BGE and Constellation Energy in these actions. To date, most asbestos claims which have been resolved have been dismissed or resolved without any payment and a small minority have been resolved for amounts that were not material to our financial results.         BGE and Constellation Energy do not know the specific facts necessary to estimate their potential liability for these claims. The specific facts we do not know include: <UL> <DL compact> <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">the identity of the facilities at which the plaintiffs allegedly worked as contractors, <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">the names of the plaintiffs' employers, <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">the dates on which and the places where the exposure allegedly occurred, and <DT style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> <DD style="FONT-FAMILY: times">the facts and circumstances relating to the alleged exposure. </DD></DL></UL>         Until the relevant facts are determined, we are unable to estimate what our, or BGE's, liability might be. Although insurance and hold harmless agreements from contractors who employed the plaintiffs may cover a portion of any awards in the actions, the potential effect on our, or BGE's, financial results could be material. </BODY></HTML> Commitments and Contingencies We have made substantial commitments in connection with our merchant energy, regulated electric and gas, and other false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true