These merchant assets are located in California, Texas, Illinois, West Virginia and Virginia, respectively. Of these assets, the High Desert plant in Victorville, Calif. currently has a tolling contract with the California Department of Water Resources that expires in 2011.

"Physical assets have been and will continue to be at the core of our overall business strategy," said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. "However, in the current market environment our gas-fired assets offer fewer synergies to our competitive supply portfolios, than our base load coal and nuclear assets.

"Our employees have been able to optimize the performance of these assets, and with gas-fired assets trading at attractive values and a limited supply of plants of this caliber available for sale, we believe it to be an appropriate time for Constellation Energy to consider the divestiture of these assets," Shattuck said.

"We have a broad array of investment opportunities available and if an attractive value can be realized from this effort, we would look to redeploy this capital in investments more closely aligned with our strategy."

Constellation Energy believes this effort in the aggregate will enhance capital returns. Consistent with the company's prior practice, proceeds will be applied to debt reduction. Based on the company's estimate of the market value of the plants, Constellation Energy should be at its target leverage ratios upon completion of the divestiture.

After the sale is complete, 2007 free cash flow would then be fully available for reinvestment in the business or for the repurchase of shares. In total, we expect the sale of plants, earlier attainment of targeted leverage levels, and availability to begin to fully reinvest free cash flow in the business, to be modestly dilutive in 2007 and accretive in 2008. If market conditions remain favorable, the company expects the transaction to be concluded in 2006.

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