MARKET INTEL NEWSLETTER

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1 Constellation s MARKET INTEL NEWSLETTER Energy Market Update for Commercial & Industrial Customers April 2018 Fuels Natural Gas Coal Oil Power Prompt-month NYMEX natural gas traded in a tight range during the past month with a low of $2.63 per MMbtu and a high of $2.75. Natural gas production continued its upward momentum last month posting an average of about 78 Billion Cubic Feet (bcf) per day. Strong natural gas production has kept a lid on price throughout Natural gas storage inventories are at a four-year low. Low storage inventories are supportive of prices in the near- and mid-term. April 2018 will be one of the top five-coldest since Lower-than-normal early spring temperatures in densely populated areas have been a factor in supporting natural gas prices in the second quarter. Calendar 2019 is trading at $2.73 per MMbtu, and calendar 2021 is trading at $2.75. National balancing point (United Kingdom LNG price) is trading at $7.33 per MMbtu, a significant premium to U.S. natural gas. Q Powder River Basin (PRB) coal was $12.55 per ton. PRB for 2019 was unchanged at $12.41, and 2020 was unchanged at $ Q Central Appalachian (CAPP) coal for rail was $59.35 per ton. CAPP coal was $59.41 for 2019 down $0.19 and 2020 was unchanged at $ API #2 (Rotterdam delivered coal) was $83.00 per ton for 2019 down $0.15, and 2020 was down $0.15 to $ API #4 (South Africa delivery) was down $0.15 for 2019 to $88.00 per ton, and 2020 was down $0.15 to $ Newcastle coal (Australian coal) for 2019 was up $0.15 to $90.30 per ton. NYMEX crude oil prices have risen more than 9% since the beginning of April hitting $68.32 per barrel, their highest level since The International Energy Agency (IEA) revised its global crude oil demand forecast upward for 2018 to 1.5 million barrels per day year-over-year, a 13% increase from its previous estimate of 1.3 million barrels per day. The Energy Information Administration (EIA) latest forecast for year-over-year demand for crude oil calls for an increase of 1.8 million barrels per day for U.S. military strikes in Syria earlier this month were cited as a factor in providing some geopolitical tension in the Middle East and therefore supporting upward momentum in oil markets. A cold April has supported power burns at Bcf/d, which are higher by 1-2 Bcf/d y-o-y. Forward power markets for in PJM (West & NI Hubs) and ISONE have moved higher over the past month while NY has been flat. ERCOT and CAISO have continued to move higher as well. Inside This Issue Natural Gas... 2 Bulls and Bears... 3 Production Continues Recovering... 3 Where Is U.S. LNG Going?... 3 Summary & Regional Trends Prompt Month Settlements Nat Gas $/mmbtu Crude Oil $/bbl As of 4/19/2018. Apr 18/ May 18 $ Day Change +$0.04/ MMBTU $ $6.23/BBL Temperature Outlook Source: NOAA Economy The National Association of Realtors said on Monday that existing home sales rose 1.1 percent to a seasonally adjusted annual rate of 5.60 million units. The U.S. unemployment rate was unchanged in March at 4.1%, the Bureau of Labor Statistics (BLS) said. U.S. non-farm payrolls increased by 103,000 in March, generally a lower-than-expected number. U.S. economic productivity was unchanged in the fourth quarter of 2017 from the prior quarter, the BLS reported. Oil prices moved up more than 9% since early April prompting some concerns among economists that rising oil prices could dampen consumer spending.

2 MARKET INTEL NEWSLETTER 2 Natural Gas NYMEX prompt month gas futures remained rangebound between $ $2.81/MMBtu since March 1st. NYMEX calendar strip prices remained tight as well with Cal 19-Cal 22 strips trading at $2.71-$2.81/MMBTU. Continued new highs in gas production ~80 Bcf/day has a ceiling on movement higher in NYMEX while a widening storage deficit supports prices on the down side. Residential and commercial gas consumption is still at 28 Bcf/d for the week ending 4/11 vs. 17 Bcf/d for the same week year ago. This is driving continued draws on storage. Storage inventories stand at 1,299 Bcf, a 449 Bcf (-26%) deficit to the five-year average and 808 Bcf (-38%) lower than year-ago levels. Stocks ended March at their lowest level in four years. Storage withdrawals are possible into second half of April but the larger point is that the start to meaningful injections has been delayed. Gas production regained an upward trajectory, growing to an all-time high of 80.1 Bcf/day. Growth in associated gas in the Permian basin remains a key driver of recent production growth. Cove Point liquefaction has begun full commercial operation as it loads its second cargo and Freeport LNG (TX) announced train #1 will commence operations in September. In west TX, a limitation on pipeline capacity is growing. There are four pipelines at ~8 Bcf/d total capacity planned to move gas from Waha to east TX load centers but it will not likely be until 2020 before any of them are operational. Not all four pipelines will necessarily get built. NYMEX Futures Pricing Current Price Last Month M/M Change Last Year Y/Y Change Prompt (Apr18) $2.660 $2.688 ($0.028) $3.163 ($0.503) Winter (Nov18-Mar19) $2.921 $3.003 ($0.081) $3.118 ($0.197) 12 Month Strip $2.796 $2.876 ($0.079) $3.372 ($0.575) 2019 $2.763 $2.821 ($0.057) $3.101 ($0.338) 2020 $2.715 $2.810 ($0.095) $2.865 ($0.150) 2021 $2.707 $2.763 ($0.057) $2.865 ($0.158) 2022 $2.748 $2.814 ($0.065) $2.890 ($0.142) As of 4/19/2018. Month Temperature Outlook Source: NOAA This April is likely to be the coldest (on a national heating degree day basis) since 1983 and among the top 5 coldest since Strong blocking for most of the month has pushed Arctic air very far to the south, with some areas of the Midwest coming in about 8-10 degrees below normal. Overall, the weather vendors are expecting a hotter-than-normal summer across most of the U.S. Most of the strong drought is currently located over the interior Southwest and West Texas. Natural Gas Storage Source: NOAA Storage finished April 6th at 1,335 Bcf, the lowest level since With expectations for lingering below-normal temperatures in the Midwest and East in the 6-10 day forecast, we are looking at the possibility of small withdrawals for the balance of April. This will limit the beginning of the injection season (Apr-Oct) and is helping to support 12-month NYMEX strip prices. For the week ending April 13th, the Energy Information Administration (EIA) reported a withdraw of 36 Bcf. The 36 Bcf draw compares to a build of 47 Bcf a year ago and a build of 38 Bcf for the five-year average. This puts current storage levels at 1,299 Bcf, an 808 Bcf (38.3%) deficit to year-ago levels and 449 Bcf (29.7%) below the five-year average. The EIA April Short-Term Energy Outlook (STEO) forecasted end of October storage to reach 3.76 Trillion cubic feet (Tcf), close to Oct 17 level of 3.79 Tcf.

3 MARKET INTEL NEWSLETTER 3 Bulls vs. Bears Bulls A hotter-than-normal summer in densely populated areas Natural gas inventories at a four-year low of 1,299 Bcf A strong year-over-year continuance of above-average natural gas demand for electric power generation A retreat in the crude oil rally toward $60 Bbl Unplanned nuclear and coal outages in key markets OPEC Announces current production cuts effective through Russia remains aligned with OPEC on production cuts into U.S. dollar weakness. Global economic indicators move upward. Inflation indicators turn upward. Bears Natural gas production continues its upward momentum reaching 80 Bcf/d Above-average injection of natural gas into underground storage Crude oil rally sustains and breaks $70 mbbl Cooler-than-normal summer in populated regions Russia peels away from OPEC on effective cuts to production in U.S. dollar strengthens. Global economic indicators move downward. Inflation indicators turn downward. Dallas Federal Reserve Releases Updated Figures on Oil Well Economics NYMEX prompt month gas futures remained rangebound between $ $2.81/MMBtu since March 1st. NYMEX calendar strip prices remained tight as well with Cal 19-Cal 22 strips trading at $2.71-$2.81/MMBTU. Continued new highs in gas production ~80 Bcf/day has a ceiling on movement higher in NYMEX while a widening storage deficit supports prices on the down side. Residential and commercial gas consumption is still at 28 Bcf/d for the week ending 4/11 vs. 17 Bcf/d for the same week year ago. This driving continued draws on storage. Storage inventories stand at 1,299 Bcf, a 449 Bcf (-26%) deficit to the five-year average and 808 Bcf (-38%) lower than year-ago levels. Stocks ended March at their lowest level in four years. Storage withdrawals are possible into second half of April but the larger point is that the start to meaningful injections has been delayed. Gas production regained an upward trajectory, growing to an all-time high of 80.1 Bcf/day. Growth in associated gas in the Permian basin remains a key driver of recent production growth. Cove Point liquefaction has begun full commercial operation as it loads its second cargo and Freeport LNG (TX) announced train #1 will commence operations in September. Source: Dalllas Fed In west TX, a limitation on pipeline capacity is growing. There are four pipelines at ~8 Bcf/d total capacity planned to move gas from Waha to east TX load centers but it will not likely be until 2020 before any of them are operational. Not all four pipelines will necessarily get built. is Natural Gas Stocks End March at Lowest Level since 2014 as Declines Continue into April As U.S. oil production surpasses 10 million barrels/day, two key growth regions have been the Permian basin in TX/NM and the Bakken in ND. Texas production reached 3.9 million barrels/day in January and is expected to continue expanding in Favorable drilling economics continue to drive growth in U.S. oil and associated gas production. A Dallas Fed survey in March showed average breakeven prices for new wells be between $47-$55/bbl for U.S. shale. Current forward oil prices on NYMEX are the $68/bbl range. Continued growth in oil production is bearish for U.S. natural gas because of the growth associated gas that is extracted with oil production. to in in Source: EIA

4 MARKET INTEL NEWSLETTER 4 Great Lakes Electric Summary: Customer Takeaways On April 13th, the Midwest Independent System Operator (MISO) released the results from its 2018/19 Planning Reserve Auction (PRA). Capacity rates cleared below expectations at a near-uniform rate of $10/MW-Day across MISO as coal generation faces competition from cheap natural gas and an expanding renewable portfolio. Forward power prices in the Illinois and Michigan markets are currently trading within 4% of the new contract lows set this winter. Buyers should look for opportunities as Midwest forward power prices have put in seasonal lows in the late February to mid-april time frame over the past three years. Ohio forward power prices have traded largely sideways since the beginning of February and have found support at 7-9% above the contract lows achieved in August Forward prices in the Ohio market are in backwardation, making longer contract terms more favorable for energy buyers. Day-ahead index power prices in the Midwest increased month-over-month, with Michigan prices up ~18% and Illinois up ~7% on average from March to April as below-normal temperatures lingered into April driving heating demand. By contrast, prices in parts of Ohio have fallen this month, nearly 7% below March levels. Great Lakes Retail Power Price Trends % Change in Forward Power ComEd ComEd Mich Hub Mich Hub AEP-Day AEP-Day Ameren Ameren DAY Year-over-Year -2% -2% -3% -2% 5% 4% -2% -3% Month-over-Month 1% 0% 2% 1% 2% 2% 2% 1% Year-to-Date -3% -4% -5% -5% 4% 1% -1% -5% Compared to All-Time Low 1% 0% 3% 2% 9% 7% 4% 2% ComEd Mich Hub AEP-Dayton Hub Ameren

5 MARKET INTEL NEWSLETTER 5 Mid-Atlantic Electric Summary: Customer Takeaways After tailing-off from mid to late March due to the perceived end of winter demand, power and gas prices recovered in the early part of April as cold temperatures made a return and prolonged the end of gas withdrawal season which continued to weigh on the widening gas storage deficit. PJM forward energy prices, through 2022, are trading 2% higher over the past month and are 8% above the historical low prices. The historical low prices were established in August Day-Ahead index prices in eastern PJM settled 10% lower this March versus a year ago, except for BGE and PEPCO zones which averaged 14% higher. Mid-Atlantic Retail Power Price Trends 24-Month Fwd Trading Range PSEG PSEG PECO PECO APS APS BGE BGE PPL PPL vs High ($/MWh) -$4.80 -$7.53 -$4.85 -$6.51 -$1.55 -$2.29 -$4.17 -$4.79 -$4.63 -$4.58 vs Low ($/MWh) $2.05 $1.45 $2.35 $1.79 $3.33 $2.87 $3.27 $2.76 $2.45 $2.16 vs High (%) -14% -20% -14% -19% -5% -7% -10% -12% -13% -14% vs Low (%) 7% 5% 9% 7% 11% 10% 10% 8% 8% 8% PSEG PECO APS BGE

6 MARKET INTEL NEWSLETTER 6 Northeast Electric Summary: Customer Takeaways New York Independent System Operator (NYISO) forward capacity prices through winter 18/19 moved up across zones this month as several Ravenswood units entered forced outage. Impacts were greatest for the Zone J locality. Forward power prices across New York also saw support this month as lingering cold in the East led to above-normal heating demand into April, putting pressure on Cal 19 forwards that are up ~2-3% month-over-month. Beyond 2019, forward pricing for Zones F-J are 1% above the three-year lows. Western zones A-C are currently 3-5% above their all-time low. In New England, MassHub forward power prices saw upward pressure this month with prices 7-10% above their three-year low. The shape of the forward price curve remains flat beyond Cal 2019 in the ~$42/MWh range. In the spot market, Day Ahead Locational Marginal prices (LMPs) for April are well above March LMPs in both New York and New England, with unseasonal heating demand being the primary factor. Northeast Retail Power Price Trends 3-Year Price Trend New England Mass Hub 2018 New England Mass Hub 2019 New England Mass Hub 2020 New England Mass Hub 2021 New England Mass Hub Current Price vs 3-Year Average Current Price vs 3-Yeat Maximum Current Price vs 3-Year Minimum -21% -1% 0% -2% -4% -22% -10% -11% -12% -14% -48% -19% -19% -24% -29% -47% -33% -33% -36% -42% 3% 7% 10% 9% 9% 3% 3% 0% 0% 1% New York Zone A Mass Hub NE & NY v.s. NYMEX

7 MARKET INTEL NEWSLETTER 7 Texas Electric Summary: Customer Takeaways ERCOT summer strips for July/Aug on peak remain elevated in April holding above $140/MWh, up from $90/MWh in early March before the summer Seasonal Assessment of Resource Adequacy (SARA ) was released. ERCOT reported 918 MWs of mothballed generation (two gas plants and one coal plant) will return to operational service this summer. Texas Retail Power Price Trends % Change in Forward Power Houston Houston North Zone North Zone South Zone South Zone West Zone West Zone Year-over-Year 12% -5% 15% -4% 14% -3% 14% -8% Month-over-Month 0% -2% 1% -1% 1% -1% 0% -3% Year-to-Date 12% -4% 13% -5% 14% -2% 10% -10% Compared to All-Time Low 18% 2% 22% 6% 20% 4% 23% 7% ERCOT North Zone ERCOT Houston Zone ERCOT South Zone ERCOT West Zone

8 MARKET INTEL NEWSLETTER 8 California Electric Summary: Customer Takeaways Water inventories for California hydroelectric plants are much improved and are now 70% of normal. This should ease a bit of the pressure for California natural gas prices as hydro power reduces demand on the margin for natural gas in late Spring. Forward calendar strips for remain elevated as maintenance work at the SoCal border and constraints to the SoCal city gate have pushed prices higher. California Retail Power Price Trends % Change in Forward Power NP Cal 2018 NP Cal 2019 NP Cal 2020 NP Cal 2021 SP Bal 2018 SP Cal 2019 SP Bal 2020 SP Cal 2021 Mid Cal 2019 Mid Cal 2020 Mid Cal 2021 Year-over-Year 17% 8% 10% 13% 26% 15% 14% 18% -8% -5% 1% Month-over-Month 0% 1% 0% 2% 5% 5% 2% 3% -2% 0% 1% Year-to-Date 11% 1% 3% 9% 21% 8% 7% 12% -18% -14% -7% Compared to All-Time Low 21% 9% 11% 15% 31% 17% 16% 20% 3% 2% 5% NP 15 7X24 SP 15 7X24 Mid C 7x24 The information contained herein has been obtained from sources which Constellation NewEnergy, Inc Constellation NewEnergy-Gas Division, LLC (collectively, Constellation ) believes to be reliable. Constellation does not represent or warrant as to its accuracy or completeness. All representations and estimates included herein constitute Constellation 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. Constellation does not make and expressly disclaims, any express or implied guaranty, representation or warranty regarding any opinions or statements set forth herein. Constellation shall not be responsible for any reliance upon any information, opinions, or statements contained herein or for any omission or error of fact. All prices referenced herein are indicative and informational and do not connote the prices at which Constellation may be willing to transact, and the possible performance results of any product discussed herein are not necessarily indicative of future results. This material shall not be reproduced (in whole or in part) to any other person without the prior written approval of Constellation. Electricity Natural Gas CPower LR/DR Renewable Energy Energy Efficiency Onsite Generation constellation.com