1.0.0.3 false Investment Agreement with EDF Group 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 Investment Agreement with EDF Group 1 ceg_OtherEventsTextBlock ceg false na duration string Description of an investment agreement initiated during the period, including background, timing, and allocation of... false false false false false false false false false 1 false false 0 0 <table style="font-size:10pt; font-family:'Times New Roman',times,serif;"> <tr> <td> Investment Agreement with EDF Group On December 17, 2008, we entered into an Investment Agreement with EDF Group and related entities (EDF) under which EDF will purchase from us a 49.99% membership interest in our nuclear generation and operation business for $4.5 billion (subject to certain adjustments). We discuss the Investment Agreement with EDF in more detail in Note 15 of our 2008 Annual Report on Form 10-K.         In October 2009, the Maryland PSC issued an order approving our transaction with EDF subject to the following conditions: <ul> <li style="list-style: none"> <dl compact="compact"> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">Constellation Energy is to fund a one-time per customer distribution rate credit for BGE residential customers, before the end of March 2010, totaling $110.5 million, for which we will record a liability upon closing.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">Constellation Energy will make a $250 million cash capital contribution to BGE by no later than June 30, 2010.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">BGE will not pay dividends to Constellation Energy if (a) after the dividend payment, BGE's equity ratio would be below 48% or (b) BGE's senior unsecured credit rating is rated by two of the three major credit rating agencies below investment grade.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">BGE may file an electric distribution rate case at any time beginning in January 2010 and may not file a subsequent electric distribution rate case until January 2011. Any rate increase in the first electric distribution rate case will be capped at 5% as agreed to by Constellation Energy in its 2008 settlement with the Maryland PSC. The timing of any gas distribution rate filing will also occur no earlier than the electric cases.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">Constellation Energy will be limited to allocating no more than 31% of its holding company costs to BGE until the Maryland PSC reviews cost allocation in the context of BGE's next rate case.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">Upon closing the EDF transaction, Constellation Energy and BGE will begin to implement "ring fencing" measures to ensure the bankruptcy protection and credit rating separation of BGE from Constellation Energy including the formation of a new special purpose subsidiary by Constellation Energy to hold all of the common equity interests in BGE. Timing for implementation of these measures will be proposed at a Maryland PSC hearing in December 2009.</dd></dl></li></ul>         With the receipt of the Maryland PSC's order, Constellation Energy and EDF are proceeding with closing this transaction. Upon closing of the transaction, we will sell a 49.99% membership interest in Constellation Energy Nuclear Group LLC and its affiliates (CENG), our nuclear generation and operation business, to EDF for total consideration of approximately $4.7 billion (includes $4.5 billion at close and expense reimbursements). As a result, we will cease to have a controlling financial interest in CENG and will deconsolidate CENG in the fourth quarter of 2009. The following summarizes the estimated impact of this transaction upon closing: <ul> <li style="list-style: none"> <dl compact="compact"> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">We receive total cash consideration of approximately $3.5 billion and redeem the $1.0 billion of the Series B Preferred Stock held by EDF as additional purchase price resulting in net proceeds of approximately $2.2 billion after the payment of taxes.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">We remove the individual assets and liabilities of CENG from our balance sheet with a net asset value of approximately $2.6 billion.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">We record our retained investment in CENG at its estimated fair value of approximately $4.7 billion.</dd> <dt style="MARGIN-BOTTOM: -11pt; FONT-FAMILY: times"> </dt> <dd style="FONT-FAMILY: times">We recognize a pre-tax gain on sale of approximately $6.8 billion, calculated as follows:</dd></dl></li></ul> <div style="PADDING-RIGHT: 0pt; PADDING-LEFT: 0pt; PADDING-BOTTOM: 0pt; MARGIN-LEFT: 10%; WIDTH: 80%; PADDING-TOP: 0pt; POSITION: relative">   <div align="center"> <table cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="HEIGHT: 0px"> <td style="FONT-FAMILY: times" align="left"></td> <td style="FONT-FAMILY: times" width="12"></td> <td style="FONT-FAMILY: times" align="right" width="6"></td> <td style="FONT-FAMILY: times" width="63"></td> <td style="FONT-FAMILY: times" width="12"></td> </tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="bottom"> <th style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" align="center" colspan="4"> </th> <th style="FONT-FAMILY: times"> </th></tr> <tr style="HEIGHT: 0px" valign="bottom"> <th style="FONT-FAMILY: times" align="center">   </th> <th style="FONT-FAMILY: times"> </th> <th style="FONT-FAMILY: times" align="center" colspan="2"> (In billions) </th> <th style="FONT-FAMILY: times">  </th></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> Fair value of the consideration received from EDF</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> $</td> <td style="FONT-FAMILY: times" align="right"> 4.7</td> <td style="FONT-FAMILY: times">  </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> Estimated fair value of our retained interest in CENG</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> 4.7</td> <td style="FONT-FAMILY: times">  </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="#CCEEFF"> <td style="FONT-FAMILY: times"> Carrying amount of CENG's assets and liabilities prior to deconsolidation</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> (2.6</td> <td style="FONT-FAMILY: times">)</td></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top"> <td style="BORDER-BOTTOM: #000000 1pt solid; FONT-FAMILY: times" valign="bottom" colspan="4"> </td> <td style="FONT-FAMILY: times" valign="bottom"> </td></tr> <tr style="HEIGHT: 0px" valign="bottom" bgcolor="white"> <td style="FONT-FAMILY: times"> Estimated pre-tax gain</td> <td style="FONT-FAMILY: times"> </td> <td style="FONT-FAMILY: times" align="right"> $</td> <td style="FONT-FAMILY: times" align="right"> 6.8</td> <td style="FONT-FAMILY: times">  </td></tr> <tr style="FONT-SIZE: 1.5pt; HEIGHT: 0px" valign="top"> <td style="BORDER-BOTTOM: #000000 2.25pt double; FONT-FAMILY: times" valign="bottom" colspan="4"> </td> <td style="FONT-FAMILY: times" valign="bottom">  </td></tr></table></div> </div>         Upon closing, we will account for our retained investment in CENG using the equity method and report our share of its earnings in the merchant energy segment. As a result, we will no longer record the individual income statement line items, but instead will record our share of the investment's earnings in a single line in our Consolidated Statements of Income (Loss).         Immediately prior to the closing of the sale, we will execute a power purchase agreement (PPA) with CENG with a fair value of approximately $0.7 billion. We will report the PPA on our Consolidated Balance Sheets within "Unamortized energy contract assets" and amortize its value on our Consolidated Statements of Income (Loss) to "Fuel and purchased energy expense" over a period of approximately two years.         In addition, the completion of the transaction with EDF will impact our credit facilities as discussed in the Financing section beginning on page 21.</td></tr></table> Investment Agreement with EDF Group On December 17, 2008, we entered into an Investment Agreement with EDF Group and related entities (EDF) under which false false Description of an investment agreement initiated during the period, including background, timing, and allocation of acquisition costs. This element may be used as a single block of text to encapsulate all disclosure (including data and tables) regarding this investment agreement. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true