Together, strength and flexibility are the formula for our success.

In an industry buffeted by unpredictable forces, ranging from regulatory uncertainty to the bankruptcy of industry "leaders" such as PG&E and Enron, success can be measured by the ability to withstand powerful forces and prosper under challenging conditions. It can also be measured in a commitment to values that have stood the test of time: service excellence, reliability, integrity, respect for the environment, and involvement in the community.

Here are some of our 2001 success stories.

They include the expansion of our power generation fleet and a continued focus on risk management and customized approaches to supply the needs of wholesale energy customers. They also include significant reliability improvements and business milestones achieved by our utility operations, as well as some of our notable accomplishments in community outreach and environmental stewardship.

From the momentum gained from last year, we expect our strength and flexibility to bring us even greater success in 2002 and beyond.

Supplier of Choice
In deregulated energy markets like New England’s, customers can choose their electric supplier. Those not making a choice receive a fixed-rate energy supply, or standard offer service, from their utility. To meet that obligation, electric distribution utilities have turned to companies like Constellation Power Source, our origination and risk management business.

Last September, the Maine Public Utilities Commission chose Constellation Power Source to provide the standard-offer-service energy supply to 550,000 residential and small-business customers in the state. The three-year contract runs through February of 2005 and fits nicely with our overall strategy to be a key player in the national merchant energy market.

Constellation Power Source manages risk for large, load-serving customers (such as utilities and municipalities), including their exposure to volatile energy prices. Balanced by owned or controlled generation assets, it designs the wholesale products and services necessary for the emerging competitive marketplace.

Focusing on deregulated regions, Constellation Power Source has gained a major foothold in key markets, including:

• The Northeast, where contracts like the one in Maine have made it one of the major regional suppliers;
• Maryland, where it won the competitively bid contract to supply 90% of BGE’s standard-offer-service electric load from July 1, 2003, through June 30, 2006—an extension of its current contract to serve 100% of BGE's standard offer service through June 30, 2003; and
• Texas, where it forged a special alliance with TNP Enterprises, Inc., for managing the Texas power resource needs of its two subsidiaries, Texas-New Mexico Power Company and First Choice Power.

Through transactions like these, we have built a strong platform for growth.