Constellation Energy, parent of Baltimore Gas and Electric, sent a memo to employees today announcing job cuts equal to 8 percent of its work force. That's more than 700 jobs. An alert employee sent it to my colleague Hanah Cho.

From the desk of Mayo Shattuck:

Dear Colleague,

In today's challenging economic environment, we have a responsibility to take swift and prudent steps to preserve our company's financial strength and to ensure our long-term ability to serve our customers. We have and will continue to take aggressive action to conserve cash and reduce discretionary spending. Unfortunately, our unique financial circumstances, and eroding global market conditions, require that we go further and reduce the overall size of our company, resulting in a corresponding reduction in our global workforce of approximately 8 percent.

Two factors are driving this action. The first is the near certainty of a prolonged and deep economic recession. This downturn is affecting virtually every company in every sector, as well as state and local governments. The second factor is the current financial market conditions that are placing severe restrictions on access to capital for investment or to support ongoing operations. We are addressing this challenge by acting on our previously announced plans to reduce risk in our commercial businesses and scale back or sell certain commodities business units.

Accordingly, the majority of job losses will be related to reducing risk and refocusing our commercial business. While there will be job reductions enterprise-wide, the largest share will occur in our commodities group and among related corporate staff. Over the past several years, growth in our global commodities business has required an increase in hiring to meet our expanded business needs. As we redirect our business strategy and exit certain non-core businesses, we must resize our workforce accordingly. Some of these reductions will be related to the previously announced divestiture of our London-based coal, freight and uranium commodities business, Houston-based gas trading unit and certain gas production assets. Other reductions will take place in our Baltimore-based commodities operations and in related headquarters staff. There will also be smaller staff reductions in our other commercial businesses, BGE and generation. We will take no action that compromises legal or regulatory compliance or our commitment to safety and reliability, but across the company, expenses must be curtailed. Our company and its budget must be sized appropriately, and each business must earn appropriate returns on capital.

I deeply regret this action but it's a necessary and responsible step we must take. I assure you this decision was the result of thoughtful deliberations and was taken only after many other cost-cutting options were considered and implemented. We will make every effort to ensure employees affected by this reduction will be treated with respect and fairness, and severance and outplacement services will be offered. The timing of the reductions is largely dependent on incremental steps we are taking related to our global commodities business. Some reductions will occur in the near-term, while others will take effect in 2009, as commodities business activities wind down and as we finalize the divestiture of the London-based business and Houston trading platform.

This workforce reduction and the strategic realignment of our business are unrelated to our pending merger with MidAmerican Energy Holdings Company. We're a stand-alone company today and will operate as an autonomous subsidiary of MidAmerican once the merger is completed.

The shocking declines in financial markets are understandably a cause for concern. When I look back at the last time our company was in distress, it was the fall of 2001 and we had to make the tough decision to cancel the separation of the company into two pieces. Our stock was at $22 per share and our generation fleet had eroding profitability due to below-market price caps in place in Maryland. The S&P 500 index was 25 percent higher than it is today. We have had a fascinating journey since that time as we built up our commercial and risk intermediation businesses to help buffer the malaise in other businesses. Now the tide has turned, and risk-oriented businesses require very expensive capital to support them. Our diversification has helped us weather storms of different types over the years, and today we must react to the market realities facing us. Our goal is to remain on solid financial footing.

Thank you for staying focused and keeping up the hard work during a very difficult time. I cannot overstate my deep appreciation for your professionalism and dedication to Constellation Energy.

Regards,

Mayo