Doing More with Less: Increasing Reliability and Efficiency While Decreasing Energy Spending

1. Doing More with Less: Increasing Reliability and Efficiency While Decreasing Energy Spending 2011 VACo Annual Conference Larry Godleski, VP, Energy Efficiency

2. Constellation Energy at a Glance We help customers intelligently buy, manage and use energy • A leading supplier of competitive power and natural gas, energy products and services for home and business • Customers in 38 states & Washington, DC • Owns and operates Maryland’s largest utility, Baltimore Gas and Electric Company • 12,000+ megawatts of generating capacity – fossil, nuclear and renewable • FORTUNE 500 company • Revenues: $14.3 billion (2010) • Ticker symbol: (NYSE) CEG • Headquartered in Baltimore, Maryland • 10,000+ employees (includes CENG)

3. Pressures in Today’s Marketplace The Business of Government: Needs vs. Means • A Political Landscape In Motion • Enhanced Pressure on Operating Budgets • Uncertainty in the Financial Markets • Operating Costs Continue to Escalate • Tax Revenues Remain Stagnant • Financial Subsidies Dramatically Reduced • Infrastructure Continues to Age While the Need for Services Continues to Expand The Challenges Facing Elected Officials Today Energy Efficiency Must Maintain Visibility • Recent Shifts in Legislative Policy and Focus • Model Programs Under Review • Resource Allocation (Financial and Human) Financing is a Requirement for Success • Concern over Approaching Debt Ceilings and Focus on Debt Ratings • Market Access and Availability of Financing • Balance Sheet Preservation

4. Energy Efficiency Value Proposition Energy Savings Energy Spend $↓ Q↓ COST = (P x Q↓) over T Energy Performance Contracting will significantly reduce the quantity of energy used, and therefore cost, over time while improving the reliability of your facilities 4

5. Energy Conservation Measures (ECMs) • Water Conservation • Ultra-low flow toilets • Ultra-low flow urinals • Low flow faucet aerators • Low flow showerheads • Groundwater irrigation • Laundry Ozone systems • Leak detection systems • Lighting System Upgrades • Occupancy based redesign • Direct/indirect systems • Intelligent lighting system controls • High efficiency re-lamp and re-ballast • LED Applications • Street and traffic lighting upgrades • Incandescent to fluorescent conversion • Parking area lighting upgrades • Building Automation System Upgrades • Enhance existing systems • Complete new DDC systems • Unoccupied setback control • Integration of multiple systems • Remote access and monitoring • Efficient operation algorithms • Outside air control strategies • HVAC System Upgrades • New air handling system installations • Economizer / HVAC Damper • Zone isolation • Constant volume to variable air volume conversions • De-stratification fans • Building Envelope • Window replacement • Roof improvements/replacements • Stack effect mitigation • Crack repair/weather-stripping • Window solar film • Miscellaneous • High efficiency motors • Kitchen exhaust hood control systems • Variable speed drives on many systems • Elevator controllers • Instantaneous hot water heaters • Retro / Continuous commissioning • Appliance / plug load timers • Communication, Training & Awareness • Stakeholder involvement • Communications – internal & • external • Community participation • Central Plants • Steam to hot water conversion • District steam & HW systems • New chiller & boiler installations • New cooling tower installations • Primary/secondary systems • Heat recovery systems • Variable speed pumping systems • Steam trap replacements • Renewable Energy • On-site Solar Energy Systems • Geothermal system • Heat pump installation • Wind energy • Alternative fuel conversion

6. Energy Performance Contracting Success in Virginia • March 2001: Energy & Operational Efficiency Performance-Based Contracting Act • Maximum 15 year blended payback; self funding • Savings guaranteed by energy services company (ESCO) • Virginia’s record of success with energy performance contracting • Over $350mm of projects completed to date • Resources: • Va DMME Performance Contracting website: http://www.dmme.virginia.gov/DE/StateAgencyProgs/performancecontracting.shtml • Charlie Barksdale • Constellation Energy Efficiency website: http://www.constellation.com/SolutionsForBusiness/ProductsServices/EnergyEfficiency/Pages/EnergyEfficiency.aspx

7. 2011 ACEEE State Energy Efficiency Scoreboard Virginia Ranks #34 in Energy Efficiency Policies

8. Case Study: FCC Petersburg • Constellation implemented a $10.6mm EPC project at the Federal Corrections Facility in Petersburg, one of the larger prisons in the US (3,400 inmates; 1mm sq. ft.) • FCC Petersburg is saving more than $1.4mm annually in energy costs • The energy conservation measures (ECMs) include: • 350-hp biomass boiler base load heating source • First of its kind at a DOJ facility • Geothermal heat pump system for the gymnasium • Solar PV system on the new biomass boiler building • Two all-electric vehicles • “Please extend a thanks to your staff for doing a superb job at the ribbon cutting event. Everyone enjoyed the function and the hands-on look at the ECMs. Well done!” • Dave Williams • Energy Project Manager • FCC Petersburg

9. Conclusion Energy performance contracting is a technical means to a financial end • Counties can save money and enhance reliability and environmental attributes even in today’s challenging economy • Virginia has a very successful energy performance contracting process that must be utilized to a greater extent (ACEEE ranking #34) • Constellation has over 25 years of experience implementing energy performance contracts • Over 4,000 projects with an average savings of 102% (exceed guaranteed savings) • 142,000 MWh conserved by customers in 2010 • Financed and built over $1Bn in energy related projects • National Super Energy Savings Performance Contract supplier chosen by DOE

10. Larry Godleski, VP, Energy Efficiency Walter.Godleski@Constellation.com (724) 657-4040