Based on our evaluation of cash flows, we consider about two-thirds of the pro forma company as unregulated under the pro forma base case. The unregulated proportion declines to about 60% under our base case, because of lower cash flow in a lower commodity-price environment. Despite the decline in natural gas prices, which have affected power prices adversely, under both management's and our base cases, we would likely assign the consolidated pro forma company a "strong" business risk profile. However, we have yet to assess the financial risk profile to determine the rating of the pro forma company.
Our stand-alone ratings on Constellation primarily reflect the risk of its wholesale and retail unregulated electricity supply businesses. We assess Constellation's stand-alone business risk profile as "satisfactory," because ring-fencing of the lower-risk transmission and distribution (T&D) utility subsidiary hurts Constellation's overall business risk profile. This is because the utility's stable cash flow is no longer freely available to Constellation. Factors that partly offset these risks are the performance of Constellation's low-cost, base-load fleet of power plants, the favorable location of its Mid-Atlantic fleet, and a portfolio that shows better alignment of the company's generation footprint and its load obligations.
Constellation's operations aggregate 30,000 megawatts (MW) and 350 billion cubic feet (bcf) of natural gas, and the company serves about 26,000 retail, commercial, and industrial customers, as well as 64 utility and cooperative wholesale customers. In addition, Constellation's generation group operates approximately 12,000 MW of owned generation, mostly in the Mid-Atlantic region. Because of ring-fencing, we deconsolidate the utility subsidiary BGE and analyze it as an equity investment,What is a real time Location system ? counting only distributions to Constellation as primary contributions to its credit quality and financial profile. Constellation's businesses consist of its unregulated generation and customer supply operations. The generation business consists of Constellation's 50.01% ownership interest in Constellation Energy Nuclear Group LLC (CENG) and its nonnuclear generation assets. The customer supply business (Constellation NewEnergy) includes retail gas supply and retail and wholesale power supply. NewEnergy also includes the upstream gas and customer services and solutions businesses. These unregulated businesses have exposure to market risk, moderate to high liquidity requirements, and significant counterparty credit exposure.
Constellation is facing the same pressures as most other unregulated companies do. Power prices and net revenues are under pressure from abundance in gas inventory,Here's a complete list of oil painting supplies for the beginning oil painter. due to a decline in load and higher production of shale gas. Given continuing oversupply from the shale-gas gathering regions, natural gas prices are clearly not cooperating. Along with the decline in natural gas prices, power prices too had dropped about 50%, on average, by the fourth quarter of 2011 from 2008 levels. The stay of the Environmental Protection Agency's (EPA) Cross State Air Pollution Rule (Casper) on Dec. 30, 2011 has also dimmed the outlook across the sector. Yet the front end of the forward curve is not that meaningful, in our view, because in the near to medium term, companies are usually highly hedged. Requirement contracts in Constellation's markets for various volumes and periods have ensured that a high percentage of its Mid-Atlantic power-plant fleet's near-term margins through 2011 is locked in (100% and 73% for 2011 and 2012, respectively),The TagMaster Long Range Hands free access is truly built for any parking facility. which we view favorably. However, the wholesale generation business exhibits a meaningful EBITDA drop from 2012, which is a credit concern.
Constellation's NewEnergy business offsets these issues because lower prices encourage customers to lock in contracts with longer durations, which benefits retail margins. In the first half of 2011, Constellation completed the acquisition of MXEnergy and StarTex, and as a result,Distributes and manufactures RUBBER SHEET, NewEnergy now services nearly one million residential and business customers. In our opinion, acquisitions of retail power operations are consistent with Constellation's strategy, because these operations offer a natural hedge against natural gas exposure. This is because when power prices are low, capital charges for retail operations decline and improve gross margins. However, customers are more inclined to lock in power prices at these levels. As a result, we also expect fixed-price sales to increase, increasing total capital requirements and somewhat hurting average margins on the existing retail volumes (though not enough to overtake the advantage of the sales increase). Thus, the profitability of the retail business improves when power prices are low, even as the profitability of the wholesale generation business declines, and the opposite occurs when power prices rise.
Constellation has a number of legacy supply agreements, such as power purchase agreements (PPAs) and toll contracts that serve its customer supply load obligations. The company also accounts for other PPAs, in which it has substantial economic interest as operating leases. We treat these contracts as debt because of their debt-like characteristics. In addition, we do the same for the company's underfunded pension obligations and its capital adequacy requirements relating to trading counterparty credit and market risks. Over the past two years, Constellation has shed some of these obligations. We now attribute about $1.4 billion of debt to the merchant business, which is substantially lower than the $3.2 billion we added to Constellation's financial measures in the first half of 2008. Although deconsolidating the utility improves Constellation's financial measures because BGE has about 47% of total unadjusted debt, Constellation's nonutility businesses must achieve stronger financial measures to compensate for the higher business risk. Given Constellation's reliance on customer supply and other merchant cash flows, Standard & Poor's expects the unregulated segment to achieve adjusted funds from operations (FFO) to total debt of about 30% and adjusted FFO interest coverage of more than 5x for 2012. As of Sept. 30, 2011, Constellation's adjusted FFO to debt and FFO interest coverage were about 30.5% and 6.2x,Bathroom Floor tiles at Great Prices from Topps Tiles. respectively.
Our stand-alone ratings on Constellation primarily reflect the risk of its wholesale and retail unregulated electricity supply businesses. We assess Constellation's stand-alone business risk profile as "satisfactory," because ring-fencing of the lower-risk transmission and distribution (T&D) utility subsidiary hurts Constellation's overall business risk profile. This is because the utility's stable cash flow is no longer freely available to Constellation. Factors that partly offset these risks are the performance of Constellation's low-cost, base-load fleet of power plants, the favorable location of its Mid-Atlantic fleet, and a portfolio that shows better alignment of the company's generation footprint and its load obligations.
Constellation's operations aggregate 30,000 megawatts (MW) and 350 billion cubic feet (bcf) of natural gas, and the company serves about 26,000 retail, commercial, and industrial customers, as well as 64 utility and cooperative wholesale customers. In addition, Constellation's generation group operates approximately 12,000 MW of owned generation, mostly in the Mid-Atlantic region. Because of ring-fencing, we deconsolidate the utility subsidiary BGE and analyze it as an equity investment,What is a real time Location system ? counting only distributions to Constellation as primary contributions to its credit quality and financial profile. Constellation's businesses consist of its unregulated generation and customer supply operations. The generation business consists of Constellation's 50.01% ownership interest in Constellation Energy Nuclear Group LLC (CENG) and its nonnuclear generation assets. The customer supply business (Constellation NewEnergy) includes retail gas supply and retail and wholesale power supply. NewEnergy also includes the upstream gas and customer services and solutions businesses. These unregulated businesses have exposure to market risk, moderate to high liquidity requirements, and significant counterparty credit exposure.
Constellation is facing the same pressures as most other unregulated companies do. Power prices and net revenues are under pressure from abundance in gas inventory,Here's a complete list of oil painting supplies for the beginning oil painter. due to a decline in load and higher production of shale gas. Given continuing oversupply from the shale-gas gathering regions, natural gas prices are clearly not cooperating. Along with the decline in natural gas prices, power prices too had dropped about 50%, on average, by the fourth quarter of 2011 from 2008 levels. The stay of the Environmental Protection Agency's (EPA) Cross State Air Pollution Rule (Casper) on Dec. 30, 2011 has also dimmed the outlook across the sector. Yet the front end of the forward curve is not that meaningful, in our view, because in the near to medium term, companies are usually highly hedged. Requirement contracts in Constellation's markets for various volumes and periods have ensured that a high percentage of its Mid-Atlantic power-plant fleet's near-term margins through 2011 is locked in (100% and 73% for 2011 and 2012, respectively),The TagMaster Long Range Hands free access is truly built for any parking facility. which we view favorably. However, the wholesale generation business exhibits a meaningful EBITDA drop from 2012, which is a credit concern.
Constellation's NewEnergy business offsets these issues because lower prices encourage customers to lock in contracts with longer durations, which benefits retail margins. In the first half of 2011, Constellation completed the acquisition of MXEnergy and StarTex, and as a result,Distributes and manufactures RUBBER SHEET, NewEnergy now services nearly one million residential and business customers. In our opinion, acquisitions of retail power operations are consistent with Constellation's strategy, because these operations offer a natural hedge against natural gas exposure. This is because when power prices are low, capital charges for retail operations decline and improve gross margins. However, customers are more inclined to lock in power prices at these levels. As a result, we also expect fixed-price sales to increase, increasing total capital requirements and somewhat hurting average margins on the existing retail volumes (though not enough to overtake the advantage of the sales increase). Thus, the profitability of the retail business improves when power prices are low, even as the profitability of the wholesale generation business declines, and the opposite occurs when power prices rise.
Constellation has a number of legacy supply agreements, such as power purchase agreements (PPAs) and toll contracts that serve its customer supply load obligations. The company also accounts for other PPAs, in which it has substantial economic interest as operating leases. We treat these contracts as debt because of their debt-like characteristics. In addition, we do the same for the company's underfunded pension obligations and its capital adequacy requirements relating to trading counterparty credit and market risks. Over the past two years, Constellation has shed some of these obligations. We now attribute about $1.4 billion of debt to the merchant business, which is substantially lower than the $3.2 billion we added to Constellation's financial measures in the first half of 2008. Although deconsolidating the utility improves Constellation's financial measures because BGE has about 47% of total unadjusted debt, Constellation's nonutility businesses must achieve stronger financial measures to compensate for the higher business risk. Given Constellation's reliance on customer supply and other merchant cash flows, Standard & Poor's expects the unregulated segment to achieve adjusted funds from operations (FFO) to total debt of about 30% and adjusted FFO interest coverage of more than 5x for 2012. As of Sept. 30, 2011, Constellation's adjusted FFO to debt and FFO interest coverage were about 30.5% and 6.2x,Bathroom Floor tiles at Great Prices from Topps Tiles. respectively.
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