Exelon Corporation · NASDAQ:EXC
Exelon — Investor Day (December 2006)
111 slides from Exelon's investor day presentation, Dec 12, 2006
Slide 1: Value Driven: Time and Again
Value Driven: Time and Again John W. Rowe Chairman, President & Chief Executive Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes 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 materially from these forward-looking statem
Slide 3: Today's Agenda
Today's Agenda 8:00 a.m. - 8:45 a.m. John Rowe - Welcome and Strategic Overview 8:45 a.m. - 9:30 a.m. Jack Skolds - Operations Update 9:30 a.m. - 9:45 a.m. Ian McLean - Power Marketing Update 9:45 a.m. - 10:15 a.m. Break 10:15 a.m. - 10:45 a.m. Barry Mitchell - ComEd Update 10:45 a.m. - 11:00 a.m. L
Slide 4: 10/31/2000 11/30/2000 12/29/2000 1/31/2001 2/28/2001 3/30/2001 4/30/2001 5/31/2001 6/29/2001 7/31/2001 8/31/2001 9/28…
10/31/2000 11/30/2000 12/29/2000 1/31/2001 2/28/2001 3/30/2001 4/30/2001 5/31/2001 6/29/2001 7/31/2001 8/31/2001 9/28/2001 10/31/2001 11/30/2001 12/31/2001 1/31/2002 2/28/2002 3/29/2002 4/30/2002 5/31/2002 6/28/2002 7/31/2002 8/30/2002 9/30/2002 10/31/2002 11/29/2002 12/31/2002 1/31/2003 2/28/2003 3
Slide 5: Exelon vision, goals and values
Exelon. our vision Exelon will be the best group of electric generation and electric and gas delivery companies in the United States — providing superior value for our customers, employees, investors and the communities we serve. our goals > Keep the lights on and the gas flowing > Run the nucleat f
Slide 6: Exelon's Strategic Direction
Exelon's Strategic Direction Protect Today's Value Deliver superior operating performance Keep the lights on Continue nuclear excellence Support competitive markets Maintain/bolster PJM Step up advocacy Encourage market-based new entry Enhance auction construct Participate in competitive new entry P
Slide 7: Value Driven Operations
1998 2004 2005 2006 YTD Nov ComEd 2.21 1.24 1.2 1.43 PECO 1.42 1.05 1.07 1.67 Energy Delivery 1.09 Run the nuclear fleet at world-class levels Keep the lights on and the gas flowing Fewer Interruptions (Frequency) Capitalize on environmental leadership and clean nuclear energy 2000 2001 2002 2003 20
Slide 8: 10/31/2000 11/30/2000 12/29/2000 1/31/2001 2/28/2001 3/30/2001 4/30/2001 5/31/2001 6/29/2001 7/31/2001 8/31/2001 9/28…
10/31/2000 11/30/2000 12/29/2000 1/31/2001 2/28/2001 3/30/2001 4/30/2001 5/31/2001 6/29/2001 7/31/2001 8/31/2001 9/28/2001 10/31/2001 11/30/2001 12/31/2001 1/31/2002 2/28/2002 3/29/2002 4/30/2002 5/31/2002 6/28/2002 7/31/2002 8/30/2002 9/30/2002 10/31/2002 11/29/2002 12/31/2002 1/31/2003 2/28/2003 3
Slide 9: Will We Repeat the Cycle?
Will We Repeat the Cycle? History does not always repeat itself. Sometimes it just yells, "Can't you remember anything I told you?"... - John W. Campbell
Slide 10: We Must Protect Today's Value...
We Must Protect Today's Value... Build healthy, self-sustaining delivery companies Protect the market value of our generation Support competitive markets Deliver superior operating performance
Slide 11: ....And Build Long-Term Value
....And Build Long-Term Value Acquire Generation Integrated Merger / Acquisition Sell Transmission Separate Businesses Sell Generation Acquire T&D Asset Swap Financial Policy Alignment - Maximize Business Cycle Sustainability Share Repurchase Capitalize on Cleaner Power
Slide 12: A Time of Testing
Exelwn. A Time of Testing “| propose to fight it out on this line, if it takes all summer.” uses 5. Gran
Slide 13: World-Class Operations
World-Class Operations John L. Skolds President, Exelon Energy Delivery and President, Exelon Generation
Slide 14: Multi-Regional, Diverse Company
Multi-Regional, Diverse Company Note: Megawatts based on Exelon Generation's ownership as of 12/31/05; excludes investments in two facilities in Mexico of 230 MWs. Generating Plants %MW Nuclear Hydro Coal Intermediate Peaker 50 5 9 7 29 Midwest Capacity Owned: 11,300 MW Contracted: 5,291 MW Total: 1
Slide 15: Exelon Operations
Exelon Operations Exelon has a strong operational foundation Improving reliability across the board Generation operations T&D operations Management Model is basis for strong performance Exelon's model promotes Sound fundamentals Continuous improvement Effective cost management Consistent results
Slide 16: Cost Management
Cost Management Facing upward cost pressures Rising pension and benefit costs Aging material condition and system expansion Higher material and service costs Nuclear fuel and security costs Investing in potential new generation development Continue current cost management initiatives and prudently p
Slide 17: Exelon Generation
Exelon Exelwn. Generation ee.
Slide 18: Exelon Generation Value Proposition
Exelon Generation Value Proposition Generation has a well-balanced portfolio: Large, low-cost, low-emissions, well-run nuclear fleet Complementary and flexible fossil and hydro fleet Exelon Power and Exelon Nuclear have a track record of improving asset performance Generation business is uniquely po
Slide 19: Exelon Power - Reliability
Exelon Power - Reliability 2003 2004 2005 2006 YTD Nov Commercial availability 89.8 89.6 90.8 93.2 Exelon Power ensures plants are available when the market demands them Exelon Power capitalizes on market opportunities through: Short start-up times on key units Operational flexibility Improved unit
Slide 20: Exelon Power - Integral to Portfolio
Exelon Power - Integral to Portfolio Mid-Atlantic Portfolio Intermediate and peaking units complement the baseload nuclear, coal, and hydro units, meet peak demand, support outages to help serve load and reduce exposure within the portfolio Exelon Power also operates merchant assets in Texas and Mas
Slide 21: Exelon Power Going Forward
Exelon Power Going Forward Continue to analyze capital to ensure sound investments are being made for a reliable and flexible portfolio Continue to invest to upgrade capacity of hydro units Continue to monitor environmental legislation and ensure compliance across the fleet FGD (flue gas desulfuriza
Slide 22: Track Record of Nuclear Excellence
Track Record of Nuclear Excellence Exelon Nuclear has implemented its Management Model in 20 units, with sustained excellent results Capacity factor is consistently high Production cost shows similar results Sustainability of Exelon Model The Exelon Nuclear model works - and is scalable 1998 1999 20
Slide 23: Superior Nuclear Operating Performance
Superior Nuclear Operating Performance Range of Nuclear Capacity Factors (2001-2005) Sources: Platt's, Nuclear News, NRC and Department of Energy EXC 93.1% - - 5-year Average Exelon Nuclear's sustained reliability is a competitive advantage
Slide 24: Nuclear Performance - Refueling
Nuclear Performance - Refueling Range of Nuclear Refueling Outage Durations (2001-2005) Source: Platt's; excludes steam generator replacement and reactor head replacement outages Exelon Nuclear's refueling excellence drives higher generation EXC 25 days
Slide 25: Nuclear Operating Services Contract
Nuclear Operating Services Contract PSEG Nuclear Operating Services Contract (NOSC) Salem and Hope Creek have demonstrated significant performance improvement under NOSC 95% November '06 YTD site capacity factor 18% improvement in capacity factor since 2004 World and site record-setting refueling ou
Slide 26: Nuclear Going Forward
Nuclear Going Forward Exelon's conditions for new build remain unchanged; economics must be right Recently announced intent to file Construction & Operating License (COL) in ERCOT by end of 2008 Preserves option to participate in Energy Policy Act incentives Supports NRC resource planning New nuclea
Slide 27: Exelon Generation Summary
Exelon Generation Summary Well-run generating fleet Significant nuclear cost advantage Focus on the fundamentals Well-positioned to respond to market demand Scalable management model Sustained track record of performance
Slide 28: ComEd / PECO
— ComEd. An Exelon Company => PECO. An Exelon Company
Slide 29: ComEd - Operational Overview
ComEd - Operational Overview ComEd reliability has improved Improving trend in outage duration and frequency Challenged by distribution material condition Transmission reliability among the best in the nation System reliability in top quartile amongst peer group 1999 2005 SAIFI 1.49 1.2 1999 2005 CA
Slide 30: PECO - Operational Overview
1999 2005 SAIFI 1.76 1.07 1999 2005 CAIDI 235 98 PECO - Operational Overview PECO continues to deliver strong reliability Improving trend in outage duration and frequency Record storms in 2006 will impact that trend Transmission reliability among the best in the nation 2003-2005 Distribution reliabi
Slide 31: Customer Satisfaction
Operations Update Customer Satisfaction Exelon achieved American Customer Satisfaction Index (ACSI) Proxy 2nd quartile in 2006 First time since company was formed PECO customer satisfaction is strong and improving ComEd customer satisfaction has improved since 1999 Common customer information system
Slide 32: Operations Going Forward
Operations Going Forward Material Condition Improvement Underground Cable Replacement, Overhead Distribution Circuits, Fire Protection Automation Distribution Sectionalizing, Philadelphia Center City Network Upgrade, Re-closers Reliability Programs Vegetation Management, Top Priority Circuits Emerge
Slide 33: PECO - Solid Business Profile
PECO - Solid Business Profile Consistently solid operational and financial results over the past five years Predictable source of earnings through remainder of transition period No plans for T&D rate increases through 2010 - will continue to monitor Full requirements contract Annual electric and gas
Slide 34: Operations Summary
Operations Summary Strong Operational Foundation Focused on reliability and cost management Generation company: uniquely positioned to capture market opportunities through operational and commercial excellence Delivery companies: maintain operational focus and prepared for effective transitions
Slide 35: Appendix
Appendix
Slide 36: Nuclear Performance - Fuel Costs
Nuclear Performance - Fuel Costs Uranium market prices have increased, but Exelon is managing its portfolio Reduced uranium demand by 25% Contracting strategy protects us and ensures we are significantly below current spot market prices through 2011 Uranium is small component of total production cos
Slide 37: Enhancing the Value of Our Generation
Enhancing the Value of Our Generation Ian McLean President, Power Team
Slide 38: Portfolio Management
Portfolio Management Supplemented portfolio with load following products Maintained length for opportunistic sales Used physical and financial fuel products to manage variability in fossil generation output Deployed option strategies in the Midwest and Mid-Atlantic to protect against retail load swi
Slide 39: Commodity Hedging Targets
Flexibility in our targeted financial hedge ranges allows us to be opportunistic while mitigating downside risk *Definition Percent Financially Hedged is our estimate of the gross margin that is not at risk due to a market price drop and assuming normal generation operating conditions. The formula i
Slide 40: Total Portfolio Characteristics
Total (Annual) Portfolio Characteristics Expected Total Supply Expected Total Sales 2006 2007 Nuclear 139300 139750 Fossil & Hydro 31900 37500 Forward / Spot Purchases 29350 7300 GWh The transition to power procurement auctions places more emphasis on hedging and risk management, but allows Exelon G
Slide 41: Illinois Auction Results
Illinois Auction Results Timeline Sept 5: Descending clock auction competitive bidding process began Sept 15: ICC approved the results of the fixed price auction Dec 6: ICC released results and report on the auction process Jan 2008: Next auction held Overall Results 21 registered bidders, with 16 c
Slide 42: Total Portfolio Revenue Net Fuel
Total Portfolio Revenue Net Fuel Load Nuclear & Hedges Other Supply Total 2006 -1200 5700 400 4900 2007 -950 6950 700 6700 2007 2006 Legend Total Portfolio Revenue Net Fuel Increase ('06-'07): ~$1,800M + $250M + $1,250M + $300M Expiration of below market ComEd PPA offset by higher cost-to-serve PECO
Slide 43: Enhancing the Value of Our Generation
Enhancing the Value of Our Generation Power Team optimizes the value of Exelon Generation's portfolio by utilizing its core strengths: Industry Experience Financial Discipline Market Knowledge Teamwork Processes Power Team creates value by protecting the portfolio against downside risk, while captur
Slide 44: Generation Appendix
—————_—_= xelon. Generation Appendix ff
Slide 45: Midwest Portfolio Characteristics
2006 2007 Nuclear 90700 91500 Coal 9000 10000 Forward/Spot Purchases & Other Generation 14900 2100 Midwest Portfolio Characteristics 2006 2007 ComEd Load 79100 0 ComEd and Ameren Auction Load 0 27450 Actual and Expected Forward Hedges 31400 67950 Open Position (Full Year) 4100 8200 Expected Midwest
Slide 46: Mid-Atlantic Portfolio Characteristics
Mid-Atlantic Portfolio Characteristics 2006 2007 Nuclear 48600 48250 Fossil & Hydro 11500 12150 Forward / Spot Purchases 8750 5850 2006 2007 PECO Load 39800 40500 Actual & Expected Forward Hedges 25100 22450 Open Position (Full Year) 3950 3300 Expected Mid-Atlantic Supply Expected Mid-Atlantic Sales
Slide 47: South Portfolio Characteristics
South Portfolio Characteristics 2006 2007 Generation 10800 13600 Forward / Spot Purchases 6300 1100 2006 2007 Actual & Expected Forward Hedges 15400 13800 Open Position (Full Year) 1700 900 Expected South Supply Expected South Sales GWh GWh Note: 2007 position is projected as of end of 2006
Slide 48: Midwest Revenue Net Fuel
Midwest Revenue Net Fuel Load Nuclear & Hedges Other Supply Total 2006 -750 3250 -50 2450 2007 0 4000 50 4050 2007 2006 Legend Midwest Revenue Net Fuel Increase ('06-'07): ~$1,600M Expiration of below market PPA Improved nuclear performance and higher power prices +$750M +$750M +$100M +$1,600M ($ in
Slide 49: Mid-Atlantic Revenue Net Fuel
Mid-Atlantic Revenue Net Fuel Load Nuclear & Hedges Other Supply Total 2006 -450 2450 450 2450 2007 -950 2950 650 2650 2007 2006 Legend Mid-Atlantic RNF Increase ('06-'07): ~$200M ($500M) + $500M + $200M Higher prices / increased cost-to-serve Improved Nuclear performance and higher power prices +20
Slide 50: South Revenue Net Fuel
South Revenue Net Fuel Generation & Hedges Total 2006 -45 -45 2007 -55 -55 2007 2006 Legend Total Portfolio RNF Decrease ('06-'07): ~($10)M ($10M) Higher spark spreads offset by roll-off of income from the TXU toll agreement ($10M) ($ in millions, pre-tax) Based on prices as of 9/14/06
Slide 51: Reliability Pricing Model (RPM) Update
Reliability Pricing Model (RPM) Update Timeline: September 29th: RPM settlement reached in principle by the significant majority of parties and subsequently filed with FERC December 22nd: FERC ruling expected June 2007: Implementation by PJM Key features of settlement: 3-year forward capacity procur
Slide 52: Commodity Hedging Example
Market implied heat rate NYMEX Historic Fwd. Gas Power Team utilized put options in power and natural gas to smoothly transition to the load auction. The recent increase in market implied heat rates enhanced the value of our gas hedge. Commodity Hedging Example
Slide 53: 2007 Around-the-Clock Historical Forward Prices
PJM West Hub PJM NI Hub Source: OTC quotes and electronic trading systems. 4/19: $73.94 4/19: $53.59 9/28: $56.81 9/25: $43.01 2007 Around-the-Clock Historical Forward Prices 11/30/06
Slide 54: Current Market Prices
Current Market Prices 2004 and 2005 are actual settled prices. Real Time LMP (Locational Marginal Price) Next day over-the-counter market Average NYMEX settle prices 2006 information is a combination of actual prices through November 30, 2006 and market prices for the balance of the year 2007 and 20
Slide 55: New Construction Cost Comparison
Nuclear Coal Integrated Gasification Combined Cycle Combined Cycle Gas Turbine New Construction Energy / Capacity ($/MWh) POLR Price ($/MWh) 1,500 Net MWe 93% Capacity Factor ~$2,100 / kWe $4.50 / MWh Fuel ~3 years to Permit ~5 years to Construct Tech. Readiness: Low 590 Net MWe 79% Capacity Factor
Slide 56: ComEd Update
J. Barry Mitchell President, ComEd ComEd Update
Slide 57: Key Messages
Key Messages In 2007, ComEd becomes a "wires-only" business with power cost pass through - transition is challenging Auction process approved and implemented for electricity supply In the absence of appropriate rate recovery, significant investment in the delivery infrastructure and increased operat
Slide 58: ComEd Regulatory Recovery Phases
Transitioning from vertically integrated structure with an extended rate freeze to a regulated distribution-only utility while maintaining ComEd's short-term and long-term stand-alone financial viability requires three overlapping phases: Develop and approve structures to pass through supply costs P
Slide 59: Important ComEd Milestone: Purchased Power Cost Recovery
Important ComEd Milestone: Purchased Power Cost Recovery IL Commerce Commission (ICC) authorized recovery of purchased power costs in the Distribution Case Rate Order - July 2006 Illinois auction results approved - September 2006 Culmination of nearly 3-year process to approve procurement methodolog
Slide 60: Distribution Case Update
Distribution Case Update ICC July 2006 Order: $8M increase Administrative Law Judges' (ALJs') Proposed Order: $164M ComEd's request: $317M Due to ICC Order, ComEd and Exelon recorded after-tax impairment charge to goodwill of $776M in 3Q06 On August 30, ICC voted 5-0 to grant key elements of ComEd's
Slide 61: Residential Rate Stabilization Case Update
Residential Rate Stabilization Case Update On August 29, ComEd submitted modified plan that ICC Staff supports: For residential customers, "10/10/10" caps 2007 to 2009; deferral recovery 2010 to 2012 with 6.5% annual carrying charge Optional phase-in plan (residential customers may "opt-in" through
Slide 62: Legislative Update
Legislative Update In October, IL House Speaker requested special session to try to enact a 3-year rate freeze extension November veto session provided additional opportunity Three-year freeze legislation was passed by House Electric Oversight Committee, but did not receive necessary 3/5 vote in Hou
Slide 63: If Freeze Legislation Passes, ComEd Would Pursue Legal Remedies
If Freeze Legislation Passes, ComEd Would Aggressively Pursue Legal Remedies Challenge the law on constitutional grounds by seeking injunction ComEd will decide course of action and has choice of forum for challenge Federal court; followed by bankruptcy, if necessary Bankruptcy court Strong legal ca
Slide 64: Future Rate Cases
Future Rate Cases A transmission rate case is anticipated to be filed with FERC in early 2007 with rates effective later in 2007 Increase request driven by major transmission project - West Loop TSS (approximately $325 million investment) Increase to total customer bill likely to be less than 1% Dis
Slide 65: Appendix
Appendix .
Slide 66: Adding Value for Illinois Consumers
Adding Value for Illinois Consumers 10 Year Price Trends (in % price increases 1996 - 2006) Sources: 10-Year Price Trends: CPI, City Average for all Urban Consumers, Dept of Labor, Bureau of Labor Statistics Electricity Rates in Major Cities: Edison Electric Institute (EEI) -- Typical Bills and Aver
Slide 67: ComEd Regulatory History and Calendar
2004 & Q1-Q2 2005 8/31/05: Distribution case filed 2/25/05: Procurement case filed Rates frozen since 1997 and subsequently reduced 20%. ComEd's mitigation proposal would ease residential customers' transition to cost-based rates. New rates effective January 2, 2007 12/16/05: FERC confirms auction m
Slide 68: ComEd - Rate Case Summary
ComEd - Rate Case Summary While the Administrative Law Judges' (ALJs') Proposed Order provided for a revenue increase of $164M compared to ComEd's original request of $317M, the ICC Order provided for only an $8M increase ($ in millions) Revenue Requirement Revenue Increase Original request $1,895 $
Slide 69: Post Auction Processes
Post Auction Processes Conduct Auction NERA Economic Consulting was the Auction Manager under the oversight of the ICC Staff The auction was conducted in rounds for which the Auction Manager announced a price for each product Bidders bid for number of tranches they would serve for each product at th
Slide 70: Illinois Auction Results
Illinois Auction Results Ancillary services Load shape Congestion Risk premium Capacity Other Costs: ATC Energy Price** ComEd energy 48.5 adder 15 $63.76/MWh (Blended Price*) ~ $15 ~$48 - $49 Winning Bidders: Ameren Energy Marketing American Electric Power Conectiv Energy Supply Constellation Energy
Slide 71: PECO Regulatory Update
PECO Regulatory Update Lisa Crutchfield Vice President, PECO Regulatory & External Affairs
Slide 72: Regulatory Position
Regulatory Position PA Regulatory Constructive regulatory environment Good open relations with Public Utility Commission (PUC) Provider of Last Resort (POLR) and Alternative Energy Portfolio Standard (AEPS) rulemakings are a priority for the PUC PA Legislative Senate - Republicans maintain control a
Slide 73: Regulatory Position
Regulatory Position T&D rate cap expires at the end of 2006; no plans for T&D rate increases through 2010 - will continue to monitor Total electric rates increase 4.8% on 1/1/07 (all of the increase is in the energy rate) Expect FERC activity on transmission rate design 2007- 2009 Finalization of PO
Slide 74: Post 2010 Planning
Post 2010 Planning Active participation in PUC POLR rulemaking Proposed POLR rulemaking issued December 2004 Final POLR rules by April 2008 May 2006 PUC Investigation on Rate Shock Monitor other POLR developments Pike County, Penn Power, Duquesne plans in place First Energy, PP&L filings pending Pur
Slide 75: Appendix
Appendix ff
Slide 76: PECO Expected Rate Base
PECO Expected Rate Base 2007 2008 2009 2010 2011 Distribution Rate Base 2.5 2.6 2.8 2.9 3 Transmission Rate Base 0.5 0.5 0.5 0.5 0.6 Gas Rate Base 1 1.1 1.1 1.1 1.2 CTC Rate Base 3 2.4 1.7 0.9 $- Change in rate base is amortization of stranded assets offset by CapEx - Depreciation Post transition, P
Slide 77: PECO Average Electric Rates
PECO Average Electric Rates 2006 2.59 0.46 2.7 4.92 2007 2.59 0.46 2.7 5.43 2008 - 2010 2.59 0.46 2.7 5.43 2011 2.59 0.46 9.09 Energy / Capacity Competitive Transition Charge Transmission Distribution 10.67¢ 11.18¢ 11.18¢ Unit Rates (¢/kWh)(1) (1) Rates increased from original settlement by 1.6% to
Slide 78: Disciplined Financial Management
Disciplined Financial Management John F. Young Executive Vice President, Finance and Markets Chief Financial Officer
Slide 79: The Exelon Story - Value Driven
The Exelon Story - Value Driven Premier U.S. nuclear generator uniquely positioned to capture market opportunities through operational and commercial excellence Primary source of Exelon's value going forward ~10% average annual operating EPS growth since inception Continued strong growth trend throu
Slide 80: YTD Highlights
YTD Highlights Solid financial operating EPS results Higher generation margins Strong nuclear and fossil performance Higher O&M costs ICC approved IL auction Completed ComEd ring-fencing Unfavorable ICC Rate Order YTD 2006: 5% growth in operating earnings, 11% growth in weather- normalized operating
Slide 81: ComEd
— ComEd. An Exelon Company ff
Slide 82: Low ComEd Operating Earnings: Next Five Years
Low 510 65 20 60 430 ComEd Operating Earnings: Next Five Years Executing ComEd's Regulatory Recovery Plan Investment is required over the next five years to: Maintain the reliability of ComEd's system Keep pace with critical system improvements Meet growing customer requirements Improve customer ser
Slide 83: ComEd Key Issues
ComEd Key Issues Distribution rate case rehearing decision Residential rate mitigation plan ICC filing Pending compromise rate phase-in legislation Potential rate freeze legislation Transmission rate case filing with FERC Regulatory recovery plan implementation
Slide 84: PECO
— => PECO. An Exelon Company ff
Slide 85: Low PECO Operating Earnings: Next Five Years
Low 400 20 235 PECO Operating Earnings: Next Five Years PECO's Transition Period Operating earnings gradually decrease primarily due to amortization of the CTC CTC terminates January 1, 2011 Post Transition Period, PECO's rate base is expected to be ~$4.7B (reflecting full amortization of stranded a
Slide 86: Exelon Generation
Exelon Exelwn. Generation el
Slide 87: Exelon Generation Operating Earnings Drivers: Next Five Years
Exelon Generation Operating Earnings Drivers: Next Five Years Exelon Generation is poised for earnings growth over the next five years driven by the end of the IL and PA transition periods and its unique competitive position 2007 - 2011 Earnings Drivers End of PECO PPA (2011+) Market conditions - He
Slide 88: Valuing Exelon Generation
Valuing Exelon Generation $ Millions Revenue Net Fuel (2) O&M and Other Expenses EBITDA (3) - Hedged EBITDA (3) - Un-Hedged Hedged - 2007 Un-Hedged - 2007 (1) Mid- Atlantic $2,650 $6,700 Midwest $4,050 ($2,600) $4,100 $4,700 Un-hedged ("Open") EBITDA plus upside from unique competitive position driv
Slide 89: 2007 Earnings Guidance
2006 2007 HoldCo -0.075 -0.13 0 ExGen 1.9 3.5 0 PECO 0.625 0.625 0 ComEd 0.775 0.15 0 $3.15 - $3.30 $0.75 - $0.80 $0.60 - $0.65 $1.85 - $1.95 $0.60 - $0.65 $3.40 - $3.60 $4.00 - $4.30 $0.10 - $0.20 2006 Operating EPS Guidance (1) 2007 Operating EPS Guidance (1) $ / Share ComEd PECO ExGen HoldCo $0.6
Slide 90: Strategic Policy Alignment
Strategic Policy Alignment Exelon's financial policies are aligned for its changing business mix Spending Plans Growth Plans Capital Structure Liquidity Risk Controls Commodity Hedging NOTE: See "Key Assumptions" slide in Appendix (1) Operating Earnings Guidance; see Appendix for reconciliation of a
Slide 91: Value Return Framework
Value Return Framework After meeting commitments and analyzing value creation opportunities, free cash flow and/or balance sheet capacity can be used to return value to shareholders Less Equals Maintenance Capital and Committed Dividends Free Cash Flow before Dividends and CapEx Strengthen Balance S
Slide 92: Value Return Policy
Value Return Policy Exelon's changing composition of earnings warrants a new value return policy Existing dividend policy based on a business mix in which the regulated utilities contributed a larger share of earnings Existing share repurchase program designed solely to offset dilution from shares i
Slide 93: 2007 Projected Sources and Uses of Cash
2007 Projected Sources and Uses of Cash $ Millions ComEd PECO Exelon Generation Exelon (4) Cash Flow from Operations (1) $700 $1,025 $2,900 $4,900 Capital Expenditures ($1,050) ($350) ($1,350) ($2,800) Net Financing (excluding Dividend) (2) $350 ($375) $675 $525 Available Cash before Dividend $0 $30
Slide 94: 2011 Balance Sheet Capacity (Illustrative)
0.2 0.25 0.3 0.35 Without latest S&P Adj 13.036 9.536 6.036 3.836 With latest S&P Adj 10.036 6.336 2.636 0.336 2011 Balance Sheet Capacity (Illustrative) Exelon expects to create substantial incremental balance sheet capacity over the next five years, based on planning assumptions Potential Uses of
Slide 95: Creating Shareholder Value
Creating Shareholder Value Strong financial and operating performance in 2006 Uniquely positioned generation business, driving continued strong growth through 2011 Managing the transition to competitive markets in Illinois and Pennsylvania Executing regulatory recovery plan to put ComEd on a path to
Slide 96: Appendix - Financial and Operational Statistics
Appendix - Financial and Operational Statistics
Slide 97: Key Assumptions
Key Assumptions 2005 Actual 2006 Est. 2007 Est. Nuclear Capacity Factor (%)(1) 93.5 93.8 94.0 Total Genco Sales Excluding Trading (GWhs) 194,337 200,550 184,550 Total Sales to Energy Delivery (GWhs) 121,961 118,900 40,500 Total Market and Retail Sales (GWhs)(2) 72,376 81,650 144,050 Henry Hub Gas Pr
Slide 98: ComEd 2007 Operating EPS
ComEd 2007 Operating EPS 2006 EPS RNF O&M Depreciation / Amortization Interest Expense Other 2007 EPS Guidance Ghost $- 0.25 0.17 0.17 0.13 0.13 $- Bar Lo 0.76 0.53 0.08 0.02 0.06 0.01 0.1 Range 0.03 $- $- $- $- $- 0.09 As a "wires-only" company, ComEd is expected to earn less on an operating basis
Slide 99: PECO 2007 Operating EPS
2006 EPS Weather RNF O&M Depreciation / Amortization Other 2007 EPS Guidance Ghost $- 0.64 0.67 0.71 0.64 0.61 $- Bar 0.61 0.03 0.04 0 0.07 0.03 0.61 Range 0.04 $- $- $- $- $- 0.04 PECO's operating earnings are expected to decrease slightly from 2006 to 2007 primarily due to the CTC amortization 200
Slide 100: Exelon Generation 2007 Operating EPS
Exelon Generation 2007 Operating EPS 2006 EPS RNF O&M Other 2007 EPS Guidance Ghost $- 1.92 3.48 3.48 $- Bar 1.85 1.71 0.15 0.05 3.41 Range 0.1 $- $- $- 0.21 Earnings growth is driven by the expiration of the below-market ComEd PPA, favorable market conditions, and a contractual price increase in th
Slide 101: Projected 2007 Key Credit Measures
Projected 2007 Key Credit Measures With PPA & Pension / OPEB (1) Without PPA & Pension / OPEB S&P Credit Ratings (2) "BBB" Target Range (3) Exelon Cons: FFO / Interest 4.8x 6.2x BBB 3.2x - 4.5x FFO / Debt 24% 32% 20% - 30% Rating Agency Debt Ratio Adjusted Book Debt Ratio: 58% 74% 68% 55% - 45% Gene
Slide 102: FFO Calculation and Ratios
FFO Calculation and Ratios FFO Calculation Net Income Add back non-cash items: + Depreciation, amortization (including nucl fuel amortization), AFUDC/Cap. Interest + Change in Deferred Taxes + Gain on Sale and Extraordinary Items - Transition Bond Principal Paydown = FFO FFO Interest Coverage FFO +
Slide 103: Appendix - GAAP EPS Reconciliation
Appendix - GAAP EPS Reconciliation
Slide 104: GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2000-2002
Slide 105: GAAP EPS Reconciliation 2003-2005
GAAP EPS Reconciliation 2003-2005
Slide 106: GAAP EPS Reconciliation Nine Months Ended Sep. 30, 2006 and 2005
GAAP EPS Reconciliation Nine Months Ended Sep. 30, 2006 and 2005 2005 GAAP Reported EPS $2.60 Mark-to-market (0.11) Investments in synthetic fuel-producing facilities (0.11) Charges related to proposed merger with PSEG 0.02 Reduction in severance reserves (0.01) 2005 financial impact of Generation's
Slide 107: GAAP Earnings Reconciliation Year Ended December 31, 2005
GAAP Earnings Reconciliation Year Ended December 31, 2005 (in millions) ComEd PECO ExGen Other Exelon 2005 GAAP Reported Earnings (Loss) $(685) $517 $1,098 $(7) $923 Mark-to-market - - 10 - 10 Investments in synthetic fuel-producing facilities - - - (81) (81) Charges related to proposed merger with
Slide 108: GAAP EPS Reconciliation Year Ended December 31, 2005
GAAP EPS Reconciliation Year Ended December 31, 2005 ComEd (1) PECO (1) ExGen (1) Other (1) Exelon (1) 2005 GAAP Reported Earnings (Loss) Per Share (2) $(1.02) $0.76 $1.62 $(0.01) $1.36 Mark-to-market - - 0.02 - 0.02 Investments in synthetic fuel-producing facilities - - - (0.12) (0.12) Charges rela
Slide 109: 2006 - 2007 Exelon Earnings Guidance
2006 - 2007 Exelon Earnings Guidance Exelon's outlook for 2006 - 2007 adjusted (non-GAAP) operating earnings excludes the earnings impacts of the following: mark-to-market adjustments from non-trading activities; investments in synthetic fuel-producing facilities; certain costs associated with the t
Slide 110: Reconciliation of Net Income to EBITDA
Net income (loss) +/- Cumulative effect of changes in accounting principle +/- Discontinued operations +/- Minority interest + Income taxes Income (loss) from continuing operations before income taxes and minority interest + Interest expense + Interest expense to affiliates - Interest income from af
Slide 111: Exelon Investor Relations Contacts
Exelon Investor Relations Contacts Inquiries concerning this presentation should be directed to: Exelon Investor Relations 10 South Dearborn Street Chicago, Illinois 60603 312-394-2345 312-394-4082 (Fax) For copies of other presentations, annual/quarterly reports, or to be added to our email distrib