Slide 1: Earnings Conference Call 2nd Quarter 2017
Earnings Conference Call 2nd Quarter 2017 August 2, 2017
Slide 2: Cautionary Statements Regarding Forward-Looking Information
Cautionary Statements Regarding Forward-Looking Information This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ mat
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Exelon reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). Exelon supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including:
Slide 4: Non-GAAP Financial Measures Continued
Non-GAAP Financial Measures Continued This information is intended to enhance an investor’s overall understanding of period over period financial results and provide an indication of Exelon’s baseline operating performance by excluding items that are considered by management to be not directly relat
Slide 5: Strong 2nd Quarter Results
Strong 2nd Quarter Results Q2 2017 EPS Results $0.54 • GAAP earnings were $0.09/share in Q2 2017 vs. $0.29/share in Q2 $0.22 2016 $0.09 $0.05 $0.05 $0.07 $0.07 • Adjusted operating earnings* $0.09 $0.10 were $0.54/share in Q2 2017 vs. $0.65/share in Q2 2016, near $0.13 $0.15 the top end of our guida
Slide 6: Operating Highlights
Operating Highlights Exelon Utilities Operational Metrics Exelon Generation Operational Metrics Q2 2017 Operations Metric • Continued best in class performance across our BGE ComEd PECO PHI Nuclear fleet: OSHA Recordable Rate o Q2 Nuclear Capacity Factor: 90.9%(2) Electric 2.5 Beta SAIFI (1) Operati
Slide 7: Key Developments from the Second Quarter
Key Developments from the Second Quarter ZEC Litigation Updates PHI Rate Case Progress PJM Capacity Auction TMI Shutdown Decision 7 Q2 2017 Earnings Release Slides
Slide 8: Key Market Policy Updates
Key Market Policy Updates New York ZEC Legal IL ZEC Legal DOE Report and PJM Challenges Challenges Reforms Federal Case: • Both cases dismissed and DOE Energy Report • Case dismissed on July 25 and judgment entered July 14 • On April 14, 2017, Secretary of judgment entered on July 27 • “The ZEC prog
Slide 9: 2nd Quarter Adjusted Operating Earnings Drivers
2nd Quarter Adjusted Operating Earnings* Drivers Q2 2017 Adjusted Operating EPS* Results Q2 2017 vs. Guidance of $0.45 - $0.55 $0.54 Exelon Utilities – Timing of O&M ExGen $0.22 Exelon Generation BGE $0.05 – Timing of O&M – NDT realized gains(1) PHI $0.07 PECO $0.10 $0.33 ComEd $0.15 HoldCo ($0.03)
Slide 10: Q2 Adjusted Operating Earnings Waterfall
Q2 Adjusted Operating Earnings* Waterfall $0.65 ($0.01) 2016 Weather(4) $0.03 Absence of 2016 Rate Case Disallowances $0.01 Rate base $0.01 Increased Distribution Rates $0.01 U.S. Treasuries (ROE) ($0.01) Income Taxes ($0.01) Other ($0.01) Other ($0.13) $0.54 $0.03 ($0.01) $0.01 ($0.01) $0.02 ($0.16
Slide 11: YTD Adjusted Operating Earnings Waterfall
YTD Adjusted Operating Earnings* Waterfall $1.33 $0.03 Rate Base $0.01 U.S. Treasuries (ROE) ($0.01) 2016 Weather & Load(4) ($0.01) Load & Depreciation ($0.29) $1.19 $0.00 $0.09 $0.02 ($0.02) $0.04 $0.05 Increased Distribution Rates $0.04 Other(5) ($0.17) Market Conditions(1) ($0.07) O&M Impact of O
Slide 12: Reaffirming 2017 Adjusted Operating Earnings Guidance
Reaffirming 2017 Adjusted Operating Earnings* Guidance $2.68(1) $2.50 - $2.80(2) Key Year-Over-Year Drivers • ExGen: Lower realized energy prices, partially offset by NY and ExGen $1.27 IL ZEC revenues $1.05 - $1.15 ExGen • BGE: Higher D&A, partially offset by normalization of one time items and dis
Slide 13: Trailing 12 Month ROE vs Allowed ROE
Trailing 12 Month ROE vs Allowed ROE Twelve Month Trailing Earned ROEs* Allowed ROE Earned ROE 10.7% 10.0% 9.9% 9.7% 9.7% 7.3% 7.3% 6.4% ACE Delmarva Pepco(1) Legacy EU Consolidated EU Note: Represents the period from 6/30/16 to 6/30/17 and reflects all lines of business (Electric Distribution, Gas
Slide 14: Exelon Utilities Distribution Rate Case Summary
Exelon Utilities Distribution Rate Case Summary Delmarva MD Order Pepco MD Filing Authorized Revenue Requirement Increase(1) $38.3M Requested Revenue Requirement Increase(1) $68.6M Authorized ROE 9.60% Requested ROE 10.10% Common Equity Ratio 49.10% Requested Common Equity Ratio 50.15% Order Receive
Slide 15: Updates: RPM Results and TMI Closure
Updates: RPM Results and TMI Closure PJM 2020/2021 Capacity Auction TMI Closure • Cleared 16.2 GW of generation capacity in • Exelon announced that it will retire TMI in 2020/2021 PJM base residual auction September 2019, absent needed policy reforms • The bulk of cleared capacity was in the ComEd •
Slide 16: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update June 30, 2017 Change from Mar 31, 2017 (1) Gross Margin Category ($M) 2017 2018 2019 2017 2018 2019 Open Gross Margin (2,5) $3,750 $4,000 $3,800 $(100) $(150) $(150) (including South, West, Canada hedged gross margin) Capacity and ZEC Revenues(2,5) $1,850 $2,20
Slide 17: Forward Market Liquidity
Forward Market Liquidity Overall liquidity is declining Total calendar peak traded volumes for the rolling 5-year window have been trending lower over the past year July 2016 Calendar peak traded volumes beyond prompt year +1 account for less than 10% of total traded volumes July 2017 * Please note
Slide 18: Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority
Maintaining Strong Investment Grade Credit Ratings is a Top Financial Priority Exelon S&P FFO/Debt %*(1,4,6) ExGen Debt/EBITDA Ratio*(5,6) 25% 21% 4.0 18%-20% 20% 3.0x 3.0 2.9x 15% 2.5x S&P Threshold 2.0 10% Book Excluding Non-Recourse 5% 1.0 0% 0.0 2017 Target 2017 Target Credit Ratings by Operatin
Slide 19: Innovation Expo Highlights
Innovation Expo Highlights • Our 2017 Innovation Expo in Washington, D.C. showcased the latest advanced technology products and processes Exelon is deploying to deliver on our commitment to provide safe, reliable, affordable and clean energy • Exelon employees, vendors and industry experts explored
Slide 20: Recognition for Stewardship and Employee Engagement
Recognition for Stewardship and Employee Engagement Supplier Diversity: Exelon is the only utility and energy company to be inducted into the Billion Dollar Roundtable, which recognizes corporations that have achieved spending of $1 billion with minority and women-owned suppliers; our 2016 spend was
Slide 21: The Exelon Value Proposition
The Exelon Value Proposition Regulated Utility Growth with utility EPS rising 6-8% annually from 2017- 2020 and rate base growth of 6.5%, representing an expanding majority of earnings ExGen’s strong free cash generation will support utility growth while also reducing debt by ~$3B over the next
Slide 22: Additional Disclosures
Additional Disclosures 22 Q2 2017 Earnings Release Slides
Slide 23: Capacity Market: PJM
Capacity Market: PJM Cleared Volumes 2019/2020 2020/2021 PJM Capacity Revenues(1,2,3) (MW) (4) CP Price Base Price CP Price Calendar weighted avg. price ($/Mw-day) Comed Revenues ($ Million) Nuclear 6,925 $203 - $183 8,075 $188 $180 $1,300 Fossil/Other - $203 50 $183 - $188 $170 $1,200 Subtotal 6,92
Slide 24: 2017 Projected Sources and Uses of Cash
2017 Projected Sources and Uses of Cash (1) All amounts rounded to the nearest $25M. Total Exelon Cash Figures may not add due to rounding. ($M)(1) BGE ComEd PECO PHI ExGen Corp(9) Utilities 2017E Balance (2) Gross of posted counterparty collateral Beginning Cash Balance* (2) 1,050 (3) Excludes coun
Slide 25: Exelon Generation Disclosures
Exelon Generation Disclosures June 30, 2017 25 Q2 2017 Earnings Release Slides
Slide 26: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program •Aligns hedging program with •Ensure stability in near-term cash •Ability to exercise fundamental financial policies and financial flows and earnings market views to create value within outlook •D
Slide 27: Components of Gross Margin Categories
Components of Gross Margin Categories Gross margin from Gross margin linked to power production and sales other business activities Open Gross Capacity and ZEC MtM of “Power” New “Non Power” “Non Power” Margin Revenues Hedges(2) Business Executed New Business •Generation Gross •Expected capacity •Ma
Slide 28: ExGen Disclosures
ExGen Disclosures Gross Margin Category ($M) (1) 2017 2018 2019 Open Gross Margin (including South, West & Canada hedged GM) (2,5) $3,750 $4,000 $3,800 Capacity and ZEC Revenues(2,5) $1,850 $2,200 $2,050 (2,3) Mark-to-Market of Hedges $1,900 $550 $400 Power New Business / To Go $200 $850 $950 Non-Po
Slide 29: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2017 2018 2019 Exp. Gen (GWh) (1) 203,500 200,700 202,500 Midwest 96,000 96,000 97,000 Mid-Atlantic (2,6) 60,500 60,300 58,500 ERCOT 20,400 20,700 21,600 New York (2,6) 14,600 15,400 16,600 New England 12,000 8,300 8,800 % of Expected Generation Hedged (3) 96%
Slide 30: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities Gross Margin* Sensitivities (with Existing Hedges) (1) 2017 2018 2019 Henry Hub Natural Gas ($/Mmbtu) + $1/Mmbtu $25 $240 $555 - $1/Mmbtu $30 $(220) $(540) NiHub ATC Energy Price + $5/MWh - $145 $300 - $5/MWh - $(145) $(295) PJM-W ATC Energy Price + $5/MWh -
Slide 31: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 10,000 9,500 Approximate Gross Margin* ($ million)(1,2,3) 9,000 $8,800 8,500 $8,450 $8,200 8,000 $8,050 7,500 $7,750 7,000 $6,850 6,500 6,000 2017 2018 2019 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, betwe
Slide 32: Illustrative Example of Modeling Exelon Generation 2018 Gross Margin
Illustrative Example of Modeling Exelon Generation 2018 Gross Margin* South, West & Row Item Midwest Mid-Atlantic ERCOT New York New England Canada (A) Start with fleet-wide open gross margin $4 billion (B) Capacity and ZEC $2.2 billion (C) Expected Generation (TWh) 96.0 60.3 20.7 15.4 8.3 (D) Hedge
Slide 33: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2017 2018 2019 Revenue Net of Purchased Power and Fuel Expense*(2,3) $8,675 $8,725 $8,300 Non-cash amortization of intangible assets, net, related to $50 - - commodity contracts recorded at fair value at merger date Other Re
Slide 34: Exelon Utilities Rate Case Filing Summaries
Exelon Utilities Rate Case Filing Summaries 34 Q2 2017 Earnings Release Slides
Slide 35: Exelon Utilities Distribution Rate Case Schedule
Exelon Utilities Distribution Rate Case Schedule 6/17 7/17 8/17 9/17 10/17 11/17 12/17 Commission ComEd Electric Rebuttal Proposed Hearings Order Distribution Testimony Order August 28 Expected Formula Rate Mid-July October 19 December 9 Commission Pepco Electric Order Distribution Received Rates -
Slide 36: Delmarva DE (Electric) Distribution Rate Case Final Order
Delmarva DE (Electric) Distribution Rate Case Final Order Docket # 16-0649 Approved Black Box Settlement Test Year 2015 Calendar Year Test Period 12 months actual Authorized Common Equity 49.44% Ratio Authorized Rate of Return ROE: 10.60%; ROR: 7.19% ROE: 9.70% Rate Base(1) $839M Authorized Revenue
Slide 37: Delmarva DE (Gas) Distribution Rate Case Final Order
Delmarva DE (Gas) Distribution Rate Case Final Order Docket # 16-0650 Approved Black Box Settlement Test Year 2015 Calendar Year Test Period 12 months actual Common Equity Ratio 49.44% Rate of Return ROE: 10.60%; ROR: 7.19% ROE: 9.70% Rate Base(1) $362M Revenue Requirement $22.2M $4.9M Increase(2,3)
Slide 38: Pepco DC Rate Case Final Order
38 Pepco DC Rate Case Final Order Formal Case No. 1139 Per Commission Order Test Year April 1, 2015 – March 31, 2016 Test Period 12 months actual Requested Common Equity Ratio 49.14% 49.14% Requested Rate of Return ROE: 10.60%; ROR: 8.00% ROE: 9.50%; ROR: 7.46% Proposed Rate Base (Adjusted) $1.7B $1
Slide 39: Pepco MD Rate Case Filing
39 Pepco MD Rate Case Filing Formal Case No. 9443 Test Year May 1, 2016 – April 30, 2017 Test Period 8 months actual and 4 months estimated Requested Common Equity Ratio 50.15% Requested Rate of Return ROE: 10.10%; ROR: 7.74% Proposed Rate Base (Adjusted) $1.7B Requested Revenue Requirement Increase
Slide 40: Atlantic City Electric NJ Rate Case Filing
40 Atlantic City Electric NJ Rate Case Filing BPU Docket No. ER17030308 Test Year August 1, 2016 – July 31, 2017 Test Period 5 months actual and 7 months estimated Requested Common Equity Ratio 50.14% Requested Rate of Return ROE: 10.10%; ROR: 7.83% Proposed Rate Base (Adjusted) $1.4B Requested Reve
Slide 41: Delmarva Power & Light MD Rate Case Filing
Delmarva Power & Light MD Rate Case Filing Formal Case No. 9455 Test Year October 1, 2016 – September 30, 2017 Test Period 7 months actual and 5 months estimated Requested Common Equity Ratio 50.68% Requested Rate of Return ROE: 10.10%; ROR: 7.05% Proposed Rate Base (Adjusted) $791M Requested Revenu
Slide 42: ComEd April 2017 Distribution Formula Rate
ComEd April 2017 Distribution Formula Rate The 2017 distribution formula rate filing established the net revenue requirement used to set the rates that will take effect in January 2018 after the Illinois Commerce Commission's (ICC’s) review. There are two components to the annual distribution formul
Slide 43: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 43 Q2 2017 Earnings Release Slides
Slide 44: Q2 2016 QTD GAAP EPS Reconciliation
Q2 2016 QTD GAAP EPS Reconciliation Three Months Ended June 30, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.00 $0.16 $0.11 $0.03 $0.06 ($0.06) $0.29 Mark-to-market impact of economic hedging activities 0.20 - - - - - 0.20 Unrealized gains related to NDT fund inv
Slide 45: Q2 2017 QTD GAAP EPS Reconciliation (continued)
Q2 2017 QTD GAAP EPS Reconciliation (continued) Three Months Ended June 30, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP (Loss) Earnings Per Share ($0.27) $0.13 $0.09 $0.05 $0.07 $0.02 $0.09 Mark-to-market impact of economic hedging activities 0.12 - - - - - 0.12 Unrealized gains related to
Slide 46: Q2 2016 YTD GAAP EPS Reconciliation
Q2 2016 YTD GAAP EPS Reconciliation Six Months Ended June 30, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.31 $0.28 $0.25 $0.14 ($0.28) $(0.23) $0.48 Mark-to-market impact of economic hedging activities 0.12 - - - - - 0.12 Unrealized gains related to NDT fund inv
Slide 47: Q2 2017 YTD GAAP EPS Reconciliation (continued)
Q2 2017 YTD GAAP EPS Reconciliation (continued) Six Months Ended June 30, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP Earnings (Loss) Per Share $0.19 $0.28 $0.23 $0.18 $0.22 $0.06 $1.15 Mark-to-market impact of economic hedging activities 0.15 - - - - - 0.15 Unrealized gains related to NDT
Slide 48: GAAP to Operating Adjustments
GAAP to Operating Adjustments • Exelon’s 2017 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains from NDT fund investments to the extent not offset by contractual accounting as descri
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1,2) (1,2) YE 2017 Exelon FFO Calculation ($M) YE 2017 Exelon Adjusted Debt Calculation ($M) GAAP Operating Income $3,450 Long-Term Debt (including current maturities) $32,025 Depreciation & Amortization $3,375 Short-Term Debt $1,225 EBITDA $6,825 + PPA Imputed Debt
Slide 50: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) (1) YE 2017 ExGen Net Debt Calculation ($M) YE 2017 ExGen Net Debt Calculation ($M) Long-Term Debt (including current maturities) $8,875 Long-Term Debt (including current maturities) $8,875 Short-Term Debt $375 Short-Term Debt $375 - Surplus Cash Adjustment ($300
Slide 51: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Operating ROE Reconciliation ($M)(1) ACE Delmarva Pepco EXC EU (1) Net Income (GAAP) $91 $127 $203 $1,132 $1,548 Operating Exclusions ($25) ($32) ($29) $186 $105 (1) Adjusted Operating Earnings $66 $95 $174 $1,318 $1,653 Average Equity $1,039 $1,3
Slide 52: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2017 Adjusted Cash from Ops Calculation ($M)(1) ComEd PECO BGE PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $1,150 $750 $700 $1,150 $3,450 ($250) $6,975 Other cash from investing activities - - - - ($275) - ($275) Intercompany receiva