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&lt;td&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="3"&gt;&lt;b&gt;Environmental
Matters&lt;/b&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;&lt;u&gt;Solid and Hazardous
Waste&lt;/u&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;In 1999, the EPA
proposed to add the 68th&amp;nbsp;Street Dump in Baltimore, Maryland to
the Superfund National Priorities List, which is its list of sites
targeted for clean-up and enforcement, and sent a general notice
letter to BGE and 19 other parties identifying them as potentially
liable parties at the site. In March&amp;nbsp;2004, we and other
potentially responsible parties formed the 68th&amp;nbsp;Street
Coalition and entered into consent order negotiations with the EPA
to investigate clean-up options for the site under the Superfund
Alternative Sites Program. In May&amp;nbsp;2006, a settlement among the
EPA and 19 of the potentially responsible parties, including BGE,
with respect to investigation of the site became effective. The
settlement requires the potentially responsible parties, over the
course of several years, to identify contamination at the site and
recommend clean-up options. BGE is fully indemnified by a wholly
owned subsidiary of Constellation Energy for costs related to this
settlement, as well as any clean-up costs. The clean-up costs will
not be known until the investigation is closer to completion, which
is expected by mid-2010. The completed investigation will provide a
range of remediation alternatives to the EPA, and the EPA is
expected to select one of the alternatives by the end of the first
quarter of 2011. The clean-up costs we incur could have a material
effect on our financial results.&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;&lt;u&gt;Air
Quality&lt;/u&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;In May&amp;nbsp;2007, a
subsidiary of Constellation Energy entered into a consent decree
with the Maryland Department of the Environment to resolve alleged
violations of air quality opacity standards at three fossil fuel
plants in Maryland. The consent decree requires the subsidiary to
pay a $100,000 penalty, provide $100,000 to a supplemental
environmental project, and install technology to control emissions
from those plants.&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;
&lt;font size="2"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;In
January&amp;nbsp;2009, the EPA issued a notice of violation (NOV) to a
subsidiary of Constellation Energy, as well as the other owners and
the operator of the Keystone coal-fired power plant in Shelocta,
Pennsylvania. We hold an approximately 21% interest in the Keystone
plant. The NOV alleges that the plant performed various capital
projects beginning in 1984 without complying with the new source
review permitting requirements of the Clean Air Act. The EPA also
contends that the alleged failure to comply with those requirements
are continuing violations under the plant's air permits. The EPA
could seek civil penalties under the Clean Air Act for the alleged
violations.&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;
&lt;font size="2"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;The
owners and operator of the Keystone plant are investigating the
allegations and have entered into discussions with the EPA. We
believe there are meritorious defenses to the allegations contained
in the NOV. However, we cannot predict the outcome of this
proceeding and it is not possible to determine our actual
liability, if any, at this time.&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;&lt;u&gt;Water
Quality&lt;/u&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;In October&amp;nbsp;2007,
a subsidiary of Constellation Energy entered into a consent decree
with the Maryland Department of the Environment relating to
groundwater contamination at a third party facility that was
licensed to accept fly ash, a byproduct generated by our coal-fired
plants. The consent decree requires the payment of a
$1.0&amp;nbsp;million penalty, remediation of groundwater contamination
resulting from the ash placement operations at the site,
replacement of drinking water supplies in the vicinity of the site,
and monitoring of groundwater conditions. We recorded a liability
in our Consolidated Balance Sheets of approximately
$7.9&amp;nbsp;million, which includes the $1&amp;nbsp;million penalty and
our estimate of probable costs to remediate contamination, replace
drinking water supplies, monitor groundwater conditions, and
otherwise comply with the consent decree. We have paid
approximately $4.4&amp;nbsp;million of these costs as of
September&amp;nbsp;30, 2009, resulting in a remaining liability at
September&amp;nbsp;30, 2009 of $3.5&amp;nbsp;million. We estimate that it
is reasonably possible that we could incur additional costs of up
to approximately $10&amp;nbsp;million more than the liability that we
accrued.&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;
&lt;font size="2"&gt;&lt;i&gt;Insurance&lt;/i&gt;&lt;/font&gt;&lt;/p&gt;
&lt;p style="FONT-FAMILY: times"&gt;&lt;font size="2"&gt;We discuss our nuclear
and non-nuclear insurance programs in&lt;/font&gt;
&lt;font size="2"&gt;&lt;i&gt;Note&amp;nbsp;12&lt;/i&gt;&lt;/font&gt; &lt;font size="2"&gt;of our
2008 Annual Report on
Form&amp;nbsp;10-K.&lt;/font&gt;&lt;/p&gt;&lt;/td&gt;&lt;/tr&gt;&lt;/table&gt;&lt;/td&gt;&lt;/tr&gt;&lt;/table&gt;
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Solid and Hazardous
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