If I could ask everybody to take your seats, we're going to go ahead and get started. For you that are listening via the web and phone, we're just gathering here in New York. But I would like to thank everyone for joining us here today. I am Kevin Hadlock, Vice President of Investor Relations and Financial Planning and Analysis. Welcome to our 2008 Analyst Presentation and Fourth Quarter Earnings Call. I'm glad so many of you could join us today here in New York. Before we begin our presentation, let me remind you that our comments today will include forward-looking statements, which are subject to certain risks and uncertainties. For a complete discussion of these risks, we encourage you to read our documents on file with the SEC. Our presentation today is being webcast and the slides are available on our website, which you can access at constellation.com under Investor Relations. On slide three, you will... notice that we will use non-GAAP financial measures in this presentation to help you understand our operating performance. We have attached an appendix to the charts on the website reconciling non-GAAP measures to GAAP measures. Throughout this presentation, we will provide information shown in a new integrated Merchant framework to assist you in modeling and valuing the company's business activities. This information should be considered preliminary and we will… will be subjected to changes as we refine our estimates associated with the components of the Merchant segment. With that, I would like to turn the time over to Mayo Shattuck, Chairman, President and CEO of Constellation Energy.

Thank you, Kevin. Good morning, everybody. I'm glad to see that all of New York is not yet shifted out to Arizona. Thank you for coming, and thank you for everyone on the webcast for attending this morning. So here is our agenda for the morning. First, I'm going to provide some perspective on industry trends and strategic outlook. After that, Tom Brooks, the President of our Integrated Merchant Activities, will provide an overview of our competitive businesses. Following Tom, Mike Wallace will discuss Constellation Energy's new nuclear initiative. And then finally, John Collins, our Chief Financial Officer, will cover the financials. And after John, we'll have time for questions. In addition to the presenters, there are a number of other Constellation business leaders in attendance here today. We've provided bios for all the executives in attendance. Following the meeting, please introduce yourself to them and ask them any additional questions that you might have. Let's begin on slide five. This management team is sharply focused on delivering results, and in 2007 we had another outstanding year. We grew earnings by 27% and generated adjusted earnings of $4.60 per share. This performance was towards the top of management's upwardly revised guidance range of $4.45 to $4.65 per share. Our earnings growth rate outpaced the S&P Electric Utility Index and the S&P 500 by at least 10 percentage points. I'm very proud of our employees and the management team for their dedication and focus on execution that helped deliver these excellent results. Our success in driving strong earnings has translated into significant total return for shareholders. Considering both stock price appreciation and dividends, we delivered total shareholder return of 52% in 2007 following the 23% and 35% total shareholder return realized over the last two years. In addition, we announced this…

Thank you, Mike. Good morning, everyone, and welcome to New York. I'm glad to see you today. Let's begin on slide 47. I will start this morning by highlighting a few of our financial successes during 2007, then review our 2007 results before turning to a review of 2008 forecasted results. I will wrap up by reviewing our financial outlook beyond 2008. Moving to slide 48, as Mayo discussed earlier, 2007 was another strong year. Let me start by highlighting several of our key financial successes. We continued our strong track record with earnings growth of 27% over a strong 2006. As a result, we landed in the top end of our revised guidance range that we provided to you in October. I will provide additional 2007 earnings details in a minute. As Mayo mentioned, we delivered total shareholder return of 52% in 2007, well above both the S&P Utility and S&P 500 indices. In June, we successfully completed the issuance of $623 million of rate stabilization bonds associated with the delayed transition to market rates for BGE residential customers. We completed the financing roughly one year after enabling legislation was approved, which is one of the fastest executions of a utility securitization. As of January 1 of this year, all of BGE's residential customers have completed the transition to full market rates. In July, we refinanced our existing liquidity faculties into a $3.85 billion, five-year revolving credit facility. This provides a long-term sustainable liquidity cushion to support the growth of the business over the next five years. As previously discussed, we formed the UniStar joint venture advancing our new nuclear initiatives. As part of this agreement, EDF is permitted to purchase up to 10% of Constellation stock in the open market with a 5% limit in the year of…

Thanks, John. So throughout the presentation you’ve heard me and Tom and Mike and John describe the outlook for Constellation. Before we open up for questions, let me take a moment to summarize the key themes that make up the investment basis for the company. First, our highly hedged Generation fleet provides clear and substantial earnings growth. Through 2009, we are projecting compound annual earnings growth of 15% to 22% following on 2006 increase of 27%. Second, our business is supported by high quality assets in high value markets. Our low cost baseload, nuclear and coal fleet is located in PJM and New York where the market dynamics continue to point to the need for new generation and where we are positioned to deliver. Additionally, with greenhouse gas regulation on the horizon, our low emitting fleet is well positioned to benefit from a constraint carbon environment. Third, we see opportunities to deploy capital that will crate potential for future earnings growth. As Tom and John described, we see a clear path for many of our investments. We are also laying the foundation in another areas like advanced metering or new nuclear that could lead to significant investment and sustained earnings growth. Our disciplined approach to investing capital and reputation for being good stewards of capital should hold us in good stead as we evaluate these opportunities. And finally, this management team has a superior track record of driving significant earnings growth and delivering substantial total shareholder return. As you've seen throughout the presentation, we are poised to continue this in the future. So this concludes our prepared remarks. We'd now like to open it up for questions we have. Question and Answer

[Operator Instructions]. One moment please.

Basically, we calculate that your nine-month cash flow is roughly $150 million less than your nine-month EBITDA, and that includes about $52 million of non-cash gains from the sale of CEP stock and about $104 million of lower depreciation recorded on your cash flow statements. Why is the cash flow depreciation lower than your income statement depreciation? And should we continue to look for non-cash EBITDA adjustments in your forecast numbers?

Andrew Good, CFO in our Merchant activities.

One of the differences that we encounter in the presentation of cash flows versus depreciation has to deal with how emission allowances that we hand into the EPA for burn of the fleet. So if you are trying to look at what's going on in the inventory and you look at the actual decreases that would show up in say working capital, when we hand in it shows up as the variation or change in the inventory. It won't show up in a... use on the cash flow statement. So one of the drivers that we can try to point that up more clearly, possibly in additional math modeling in the future. That tends to be the biggest variation there.

We can actually sit down with you after just to walk through that detail type of questions. Yes, they would continue, but I mean, I don't... I'm not sure that's material to the overall cash flow picture of the company.

Question for John. I noticed that last year you gave... there was sum-of-the-parts valuation slide in your presentation. This year you don't have a sum-of-the-parts value slide. So I went to page 18 and I looked at the unhedged EBITDA and PV of hedged value and I looked back on page 85 and I got the EBITDA for the other components and I reran your slide using the midpoint of the ranges. I’m coming out at around $150 to $160 a share. Is that... am I doing that correctly?

Math work.

I haven't done the math like you did, but I think if you do the sum-of-the-parts evaluation, I believe last year this time on the Analyst Day we showed you somewhere in the neighborhood of $96 to about a $145, sum-of-the-parts valuation if you did the math properly. I think if you redid the math this time, you will see the number is slightly higher than that range, so your number is probably not outside the relative range that you can get to.

My other question was just on EDF. Have they started buying your stock and--?

We actually cannot comment on whether EDF has actually started buying our stock or not. That is something that you'd actually have to ask EDF.

Hi. It's Andy Levy from [inaudible]. Just two quick questions, accounting related. How much of your EBITDA is non-cash? As I noticed, you have about $10 billion liability on your balance sheet called unamortized energy liabilities. I believe that is in [inaudible] to debt, but you don't seem to have this on your adjusted debt figures. Can you explain why we should not count this as debt… like a debt-the instrument? And then in addition, I noticed in 2007 it did actually turn around, but it appears that the last three years, '04, '05, '06, your net income has been increasing while your cash from operations has been declining. So I was just wondering if you could reconcile it difference for us from that.

Yes, Andrew will handle it because it’s primarily about the Merchant when you are talking about the derivatives.

Well, I can take the first part, the energy… the unamortized energy is I believe we disclosed in 2006 that we moved the contract out of a cash flow hedging. So formally it's shown up in portfolio risk management, moved it over, we declared it as a normal purchase, normal sale. We had to keep track of it on the balance sheet. So easiest way I can describe it for you is think of that category as similar how we talked about our cash flow hedging for the mark-to-market asset liability in our portfolio risk management asset liability, which is why actually it'll show up in S&P as equivalent to how they treat that behavior. The broader question though--.

Can you state the second part of the question again, I'm sorry?

Second part of the EBITDA question or the cash flow question?

The three-year cash flow.

Looking at 2004, 2005, 2006 cash from operations on a GAAP basis, I think we are $1.86 billion, 627 and 523, and then it actually climbed to 928 in 2007. So they were declining, but your net income went from 539 to 623 to 936, I don't have the 2007 number. So I was just curious, if you could reconcile the differences?

We can reconcile that with you after this in fact. So if you want to get with us after the Q&A, Kevin and we'll sit down with you and reconcile that for you.

Yes, up front here.

I wanted to ask you, on 586, with your asset dispositions and contract restructuring, just if you could out a break out a little bit for us in '07, what sort of happened there because I recall you guys getting a little bit more cash from some of these contract purchases that you guys got? And just what are you actually seeing in 2008 in terms of that? And how do you break out the constituents associated with that? That's one question that I sort of was just wondering if you could elaborate on. The second question I have is really sort of back to Maryland and what you're seeing there with respect to the IRP proposals that the Commission seems to supportive of. I don't know what they are going to actually do, but their report seems to be very supportive of. How do you see that impacting the potential for getting to new-build economics in wholesale market in Maryland, I mean just in general if you could sort of comment on that? I had seen some of your comments in some of your filings. I was just wondering if you could just elaborate a little bit on that and what you see… potentially, what we should be expecting from your interaction with the Commission in the next few months?

Why don't you start with question one?

Well, really what's in the light are two things, number one is any asset dispositions that we would be planning to undertake and then the amortization of contract that has been restructured and also part of when we have entered into PPAs and we get cash for PPAs that those cash has been amortized over. So that's really what's driving in '07. In '08, we have planned some divestures in the portfolio, which basically would make that a positive number in '08. So that's really what's your seeing within the plan.

What I'm wondering is why is the… $30 million seems to be a lot lower than the amount of money that your guys got… I think from just the Progress Energy contracts that they... that financing? I’m just wondering how… that’s now just $30 million?

Can we just… we’ll go through the accounting of that after because it get a little technical and I’m not sure that we want to.

On the second question, I'll start a response and ask Tom to elaborate on it. But I think it's evident to most people that the construction of the capacity markets in PJM has been received by the participants in the market well as creating the construct to provide market signals for us to make investment decisions and we are headed down that path. Tom explained some of the details associated with where we might build, where we have filed for with PJM, and you are obviously well aware of our interest in new nuclear development over a longer term. Given that a lot of this has really just happened in the last year as is to be expected, the political side of the equation is impatient with capacity markets and the evolution of those capacity markets, because it doesn't provide the instant gratification associated with lowering rate. So there is clearly a philosophical debate here going on in the political environment about whether we all have enough patience to let the market work. Now, we are, as a company, tremendous advocates of the competitive markets as everybody who has followed our company for years knows. We believe it's working. We believe there are a lot of specific signals that it's working. On the other hand, the way in which market pricing is evolving at the moment, it doesn't necessarily give the absolute clear signal that it's time to build. And so, as we are making plans, creating the optionality for plans of different types, obviously the decisions we make are going to be contingent upon what we think the return is going to be, that's going to be contingent on where we think gas is and where pricing is and so forth. So there are a lot of things that…

We want to go to the phone. We have a question on the phone.

Dan Eggers from Credit Suisse, your line is open.

Good morning. Mike, I was wondering if you could give us an update on your thinking as far as new-build costs for the nuclear project, if you have updated your numbers kind of in the '05 [inaudible] yet? Michael J. Wallace - President and CEO, Constellation Energy Nuclear; and EVP, Constellation Energy Group: Sure. We did a cost estimating process about two years ago when we first began working with Areva, and importantly since we formed the partnership joint venture with Electricite de France and closed that in August, we are now importing the data from the Flamanville project, which the think to be most appropriate because that's what we intend to replicate as a baseline plant for developing our cost estimate here. All that information flows into the post model that our Bechtel partner uses. Today, it's well in excess of 20,000 line items, and we're evaluating that and we would expect over the next two months to bring that to closure so that we have an update with where those cost are. And the numbers that we've used in the past publicly are $2,400 a kilovolt levelized over four units in just under 3,000 a kilowatt for one unit, those are two-year-old numbers. We expect those are going to go up slightly, but we also believe that the experiences in France are going to mitigate where they may go. So in the next two months, we will have an outcome that we can talk about. In general, as we look at all the factors, we believe the costs would seem to be well within a range of reasonableness to support an economic decision, but we haven't finalized our review yet.

And I guess either Mayo or Tom, could you just share the thought process behind how you might consider going to Nine Mile Point, which is the next expansion project [inaudible] depending on kind of New York market developments and probably more importantly what's happening in PJM and Maryland? Michael J. Wallace - President and CEO, Constellation Energy Nuclear; and EVP, Constellation Energy Group: This is Mike Wallace. Let me take the first part of that perhaps and that is very much in the beginning, three years ago, as we started down this path, we wanted to make sure we always had options, should we not be able to resolve uncertainties on any one of a number of variables. One of those variables, of course, is always the ability to permit and license any given site. So while Calvert was our choice for the reference plant, we early on established Nine Mile Point as our fallback. So we have been pursuing all of the information permits required and actually, we've gathered the site data in Nine Mile Point in support of our license applications. Intentionally, Nine Mile has always been several months behind Calvert Cliffs in a sequence, that's where it is today, but it's very much an alternative for U.S. EPR.

Two quick questions. I sensed from the Q&A that there is some concern over the delta between net income and cash flow because a lot of your business is in structured products. Maybe I can ask that question a little bit differently. When you look at the half-life of some of these deals that you enter into, which you have to either... which you have to mark-to-market and not use accrual accounting for, what's the general time frame over which the cash actually flows into the company? Is it a two-year half-life, one-year half-life, five-year half-life? I mean, how long do you have to wait for these cash flows from these transactions to flow in on average?

Well, let me start and then Andrew could chime in. Two things I guess, Greg, when you look at it. Number one, you have obviously mark-to-market earnings from your portfolio management and trading results. And generally speaking, those probably are two-year type time horizons, but you also have a portfolio that's always being managed and entered into new transactions. On the structured products, many of those which are not necessarily mark-to-market, but if you are talking about like PPAs that we enter into, and this gets into a little bit of the accounting, is that in effect that what you have to do is you have to amortize that cash into income over a certain period of time over the life of those PPAs relative to the economic value of where it falls. And then, what we've done on the line item on the asset dispositions and restructuring, that's kind of where the cash comes in, but then it's also where you net out the amortization, because that is non-cash income. So you don't necessarily see the income associated with those. The cash is really down that asset restructuring line. So if you were to look in the additional modeling, say back in 2006, the 1.75 billion you have there, basically that's large cash inflows coming from asset restructurings or contract PPAs or whatever you want to do and then over time, as we get… that has to be amortized into income, which doesn't have cash associated with it. So that's one of the big deltas that you are seeing driving that. And so, if you were to look at '07, you see that $30 million. While we did the Progress transaction, which did bring in cash, we're amortizing existing type of contracts similar to that that actually have to get amortized out, and that's really what's driving it here. Andrew, I don't know if you want to add anything?

Just for clarification, '07 would also have our--.

Gas plant sale.

'06 has had gas plant sale, '07 has our acquisition of the Cornerstone as we explained in our retail gas presentation. So there is a variety of things going both ways. If I can just say, maybe you think about it three ways, let's – actually when you get structured products backwards, Greg. So we get cash in upfront and then… so we get this large cash infusion and we get paid-out because the underlying tolls that we are acquiring our underwater. So on a go-forward, we pay cash back out. Over time we believe we can use that profitable margins. And so with the cash in, we've already declared to you the cash upfront, we can go back and show that to you, paid in cash over time. On our energy investment side, so as we’ve talked about… we invest in assets and then we earn on those assets over time. That would be the traditional cash out upfront and we'll get back cash in over time. And I see, if you look at our '08 earnings for example that Tom showed you on the energy investments in our structured product, you’ll see how we are getting a return on net cash flow. And then, we’ve got the mark-to-market where we will show you the earnings and we actually disclosed you in our Ks and Qs kind of the average life and as John indicated by the two to three-year contract utilization, if you will. So these aren’t [ph] 20-year contracts.

Okay. Second question. I just looked in the appendix at the earned return for the electric and gas distribution into at BGE at 6.7%, just did a rough math assuming a 50% equity ratio, and it looks like if you were to earning 10, which would be a little bit lower than the average authorized ROE in the last 12 months, that you are under-earning by about $0.25 a share. So if you are going to be systematically under-earning in this business, why would you continue to want to own it and invest as much capital as you are investing in it? And then, as a follow-on question, why in the world would you commit billions of dollars to invest in a nuclear plant in a state that is using 20-20 hindsight on deals that you didn't do ten years ago?

Two good questions, I'll start and have others chime in, but I'd... BGE is under-earning. I think I understand the impact of the last couple of years on… principally why they are under-earning, but it is also a function of the fact that we've had no rate case really since '93, of course the '99 settlement agreement lowered overall rates by 6.5%. So it has been many, many years. We have, I think in our I guess our last call, given the indication that we will file a rate case this year. So that will be obviously a movement to get things back in the right direction. And we will… since it's been many, many years, it's sort of hard to predict what the outcome [inaudible] be, but we would certainly hope to get a fair return on the investments being made there. And I do things that the state has a considerable incentive to make sure that the utility gets a fair return since our plans for capital expenditure, particularly on the efficiency and conservation measures, are quite significant and they seem to be very receptive to those programs. So my sense is that we’ll have a fair debate about that issue and that the overall profitability of the utility will be restored over time. The issue of… sort of more macro issue is how stormy is the state with respect to making investment decisions, and I think that you can tell from our public comments in our release that we perceive it as being pretty stormy right now. It is hard to put it all in context, but I'll try just for a moment to review the quick history, which is to say that we all know what happened at the end of the rate freeze. After for…

Thanks very much. I was wondering if you could comment on forward heat rates for the next few years in PJM and whether they are consistent with your views on the trend in reserve margin, really where reserve margins are going and if not when and how you see that getting reconciled? And then, secondarily, can you comment on how the recent volatility in coal prices impacts your business model? Thomas V. Brooks - President, Constellation Energy Resources; and EVP, Constellation Energy Group: In terms of heat rates, which I think you mean to serve as a proxity... as a proxy for growing market, scarcity if you will, certainly heat rates [inaudible], heat rates obviously did widen during 2007 considerably. I think as a proxy for scarcity that gets to the point of creating an investment signal, in most areas in PJM, if the... sort of if the incremental investment will need to be in gas-fired capacity by and large, I guess I would argue that in general heat rates are not to a point where new investment gas-fired capacity generally looks attractive. So I think to us that would suggest that something has got to give, presumably prices need to go up. In terms of the impact of recent coal price movement, limited on the... in terms of the impact on the Generation fleet, relatively limited on the front end simply because of our overall hedge... hedging approach relatively long-dated. In terms of the longer-term impact, a bit a bit harder to say, particularly where we're in process for our stations, Crane and Wagner, of broadly considering a variety of environmental compliance alternatives, which could well involve coal switching as a significant element. So in terms of the sort of movement in the Central Appalachian coal market, this may or may not be... as our overall compliance approach evolves, this may or may not be a hugely relevant issue for us.

Okay. Well, thank you all very much for coming this morning. We'll be around… the whole management team for a few minutes and we welcome your questions. Thanks again. See you next quarter.