1. Arizona Residential Utility Consumer Office Workshop on Electric Competition August 27, 2013 Mary Lynch Vice Presidenti, Regulatory Affairs Constellation

2. Focus of Today’s Remarks Retail Competition Is Successful Elsewhere Constellation’s Competitive Footprint Opponents of retail choice have presented misinformation and flawed analytics, with respect to Impact on Coal Reliability Escalating Costs for Non-choosing Customers Loss of State Control Over Energy Policy Economic Benefits to Arizona RTO Formation Market Behavior/FERC Issues © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

3. Retail Electric Competition: Proven, Growing and Sustainable 2 Since 2008, customer accounts served under retail choice have grown by over 53% from 8.7 million to more than 13.3 million in 2011 Since 2008, total electric load served competitively has grown by 40% from about 500 million MWh to almost 700 million MWh Source: KEMA Retail Energy Outlook, January 2012 Policy and Politics: Competitive Electricity Markets

4. Retail Electricity Choice: US Overview Seventeen States and District of Columbia have adopted retail choice Policy and Politics: Competitive Electricity Markets3

6. 5-year all sector electricity price trends – Illinois v. Arizona

7. 5-year residential electricity price trends – Illinois v. Arizona

8. Retail Competition Is Successful Elsewhere: AZ Utilities have proven that customers want choice o Opponents say retail choice is not needed in Arizona. o Each of APS, TEP, and SRP tout their multiple rate schedules for their ratepayers. o This proves only that customers want choice. o If multiple service offerings are good for customer, how can it not be good to allow competition in the provision of those services? © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

9. Retail Competition Is Successful Elsewhere: The truth about rate and price comparisons o Opponents efforts to discredit choice by calling it costly compared to regulation are fundamentally flawed. o Comparison of regulated rates to restructured product prices across geographic regions is not valid. o Comparison of regulated rates to average restructured prices within a geographic region is not valid. o Alarming statistics about increases in rates with restructuring were due to rate freezes. o It is more valid to look at the range of prices that apply to the range of products that are offered. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

10. Buy Energy Gas, Power & Renewable Energy Supply ‘Smart’ procurement programs On-Site Solar Manage Energy Energy Risk Management Demand Response Programs Online Energy Management Greenhouse Gas (GHG) Reduction Use Energy Building & Plant Energy Efficiency Central Plant Outsourcing Water Conservation Projects Lighting & HVAC Projects Integrated Solutions to Help Businesses Intelligently Buy, Manage & Use Energy Retail Electric Competition in Arizona: Constellation – Who We Are © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

11. Natural Gas: 279 Bcf delivered in open retail markets (2012) Retail Power: 87 TWh peak load served (2012) Load Response: 1,336 MW of dispatchable load (2012) Energy Efficiency: 0.4 GW conserved by customers (2012) Solar: 126 MW of solar installations completed or under construction (2012) Trusted supplier to 2/3 of the Fortune 100 More than 100,000 C&I & Public Sector customers More than 1 million Residential customers Constellation is headquartered in Baltimore, MD and is a unit of Exelon Corporation Retail Electric Competition in Arizona: Constellation – Who We Are © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

12. o Myth: Giving customers the ability to choose their supplier will reduce coal consumption. o Facts: o The future of coal in Arizona is part of a national debate. o The extent to which national initiatives and environmental policy impact coal in Arizona is not impacted by retail choice. o ACC retains control over whether and how to pay for coal investments. o Coal remains an important part of the mix in retail choice states. Refuting Misinformation: 1. Retail Choice WILL NOT Determine Coal’s Future in AZ © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

13. o Myth: Retail choice leads to unreliablity and loss of power for critical needs, such as the 2003 blackout: o Facts: o Not one investigative study cited restructuring as a factor in the 2003 northeastern blackout. o PJM – neighboring RTO where every state has retail choice – avoided the blackout because of their state of preparedness. o FERC chairman Pat Wood testimony before the Senate: “…the operator’s primary charge is to work the system you got…. Markets do not compromise reliability, but it is our job to redouble our efforts…” Refuting Misinformation: 2. Retail Choice WILL NOT Lead to an Unreliable Grid © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

14. o Myth: Retail choice leads to unreliablity and loss of power for critical needs. o Facts – cont’d: o The electric grid – transmission and distribution – remains the same, subject to the same reliability standards, oversight, and regulated control over investment. o Supply becomes more efficient and productive as customers become better educated and demand the most cost effective service. o States continue to have authority to establish reserve margins or other reliability metrics. Refuting Misinformation: 2. Retail Choice WILL NOT Lead to an Unreliable Grid © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

15. Refuting Misinformation: 3. Retail choice WILL NOT escalate costs for non-choosing customers o Myth: Only large customers will chose an alternative supplier and non-choosing residential/smaller commercial customers will see escalating costs. o Facts: o Retail choice does usually begin with larger commercial and industrial customers. o Recovery of stranded costs from all customers prevents escalating costs to non-choosing customers. o Default service designs provide protections as well and brings benefits of competition to non-choosing customers. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

16. Refuting Misinformation: 4. Retail choice WILL NOT dilute state control of energy policy o Myth: ACC will lose control of energy policy and market oversight. o Facts: o Wholesale energy markets become more active due to presence of more buyers and sellers in a competitive retail market. o FERC oversees wholesale market activities, so overall presence will increase and wholesale transactions increase. o But ACC continues to grant licenses to all retail suppliers and enforce consumer protections. o ACC retains jurisdiction to determine and enforce reliability metrics. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

17. Refuting Misinformation: 5. Retail choice WILL NOT harm the AZ economy o Myth: Keeping new entrants out by prohibiting retail choice will not protect the AZ economy. o Facts: o New entrants will invest. o Constellation already serving or about to serve 9 different school districts in Arizona with solar installations and serves some of the APS AG-1 load. o Customer choice that leads to cost savings for families and businesses will ripple through the economy. o Customer choice that leads to innovative choices – like more renewable – will create revenues and jobs. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

18. Refuting Misinformation: 6. RTO formation IS NOT necessary for retail choice to move forward o Myth: RTO formation or membership is necessary for congestion management and scheduling of retail power. o Facts: o Retail choice does take place in markets without an RTO, such as Oregon. o AZISA was formed for just this purpose. o AZISA’s initial interim status is not relevant to the start of retail choice. o Some retail choice markets began without RTO-like functionality, with RTOs implemented later when benefits of doing so were clear. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

19. Refuting Misinformation: 3. FERC settlements DO NOT demonstrate harm from retail choice o Myth: FERC’s market behavior investigations and imposition of penalties demonstrate that retail choice is harmful and costly to ratepayers. o Facts: o Markets have strong oversight – FERC, FTC, DOJ, CFTC. o Market behavior investigations show that these agencies are doing their job. That does not change with retail choice. o Settlements have been relative to wholesale markets, not retail choice. o ACC determines who gets a license, and continue to have oversight over those licensees. © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

20. The information contained herein has been obtained from sources which Constellation NewEnergy, Inc. (“CNE”) believes to be reliable. CNE does not represent or warrant as to its accuracy or completeness. All representations and estimates included herein constitute CNE's judgment as of the date of the presentation and may be subject to change without notice. This material has been prepared solely for informational purposes relating to our business as a physical energy provider. We are not providing advice regarding the value or advisability of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the “CEA”), including futures contracts, swaps or any other activity which would cause us or any of our affiliates to be considered a commodity trading advisor under the CEA. CNE does not make and expressly disclaims, any express or implied guaranty, representation or warranty regarding any opinions or statements set forth herein. CNE shall not be responsible for any reliance upon any information, opinions, or statements contained herein or for any omission or error of fact. This material shall not be reproduced (in whole or in part) to any other person without the prior written approval of CNE. Legal Disclaimer © 2013. Constellation Energy Resources, LLC. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.