Slide 1: Earnings Conference Call 1st Quarter 2017
Earnings Conference Call 1st Quarter 2017 May 3, 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 1st Quarter Results
Strong 1st Quarter Results Q1 2017 EPS Results $1.07 • GAAP earnings were $1.07/share in Q1 2017 vs. $0.19/share in Q1 $0.46 2016 $0.65 $0.18 • Adjusted operating earnings* $0.13 were $0.65/share in Q1 2017 vs. $0.14 $0.68/share in Q1 2016, at the $0.15 top of our guidance range of $0.09 $0.14 $0.55
Slide 6: Best in Class Operations
Best in Class Operations Exelon Utilities Operational Metrics Exelon Generation Operational Metrics Q1 2017 Operations Metric • Continued best in class performance across BGE PECO ComEd PHI our Nuclear fleet: OSHA Recordable Rate o Q1 Nuclear Capacity Factor: 94.0% Electric 2.5 Beta SAIFI Operations
Slide 7: Update on Key Ongoing Items
Update on Key Ongoing Items New York ZEC Legal IL ZEC Legal Capacity Market Challenges Challenges Update • Hearings on motion to • Plaintiffs filed for a • Transition to 100% Capacity dismiss held on March 29 preliminary injunction on Performance could lead to • Currently awaiting decision; March 31
Slide 8: 1st Quarter Adjusted Operating Earnings Drivers
1st Quarter Adjusted Operating Earnings* Drivers Q1 2017 Adjusted Operating EPS* Results Q1 2017 vs. Guidance of $0.55 - $0.65 $0.65 Exelon Utilities – Timing of O&M ExGen $0.18 – Unfavorable weather BGE $0.14 Exelon Generation – Generation performance PHI $0.09 – Timing of O&M PECO $0.14 $0.47 ComE
Slide 9: Q1 Adjusted Operating Earnings Waterfall
Q1 Adjusted Operating Earnings* Waterfall $0.68 ($0.02) $0.65 $0.02 Rate Base $0.09 $0.01 U.S. Treasuries (ROE) ($0.16) $0.03 $0.00 ($0.01) Interest Expense $0.03 ($0.01) Other $0.02 Increased Distribution Rates ($0.04) Increased Outages $0.01 Lower Storm Costs ($0.03) Market Conditions(1) ($0.01) D
Slide 10: 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 11: Trailing 12 Month ROE vs Allowed ROE
Trailing 12 Month ROE vs Allowed ROE Twelve Month Trailing Earned ROEs* Allowed ROE Earned ROE 10.8% 10.0% 9.9% 9.7% 9.9% 8.2% 7.2% 6.5% ACE Delmarva Pepco Legacy EU Consolidated EU Note: Represents the period from 3/31/16 to 3/31/17 and reflects all lines of business (Electric Distribution, Gas Dis
Slide 12: 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) $68.6M Authorized ROE 9.60% Requested ROE 10.10% Common Equity Ratio 49.10% Requested Common Equity Ratio 50.15% Order Receive
Slide 13: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update March 31, 2017 Change from Dec 31, 2016 (1) Gross Margin Category ($M) 2017 2018 2019 2017 2018 2019 Open Gross Margin (2) $3,850 $4,150 $3,950 $(250) $(50) $(100) (including South, West, Canada hedged gross margin) Capacity and ZEC Revenues(2) $1,850 $2,250 $2
Slide 14: Summary of Recent Key Transactions
Summary of Recent Key Transactions Exelon Generation FitzPatrick Nuclear ExGen Texas Power Mystic 8 & 9 Renewables JV Station •3,476 MW ERCOT •No longer pursuing • $400M of pre-tax • Acquisition completed conventional power sale of assets proceeds from on March 31, 2017 portfolio consisting of •No i
Slide 15: 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) ExGen Debt/EBITDA Ratio*(5) 25% 21% 4.0 18%-20% 20% 3.2x 3.0x 3.0 2.6x 15% S&P Threshold 2.0 10% Book Excluding Non-Recourse 5% 1.0 0% 0.0 2017 Target 2017 Target Credit Ratings by Operating Co
Slide 16: 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 17: Additional Disclosures
Additional Disclosures 17 Q1 2017 Earnings Release Slides
Slide 18: 2017 Projected Sources and Uses of Cash
2017 Projected Sources and Uses of Cash (1) All amounts rounded to the nearest $25M. Total Exelon Cash ($M)(1) BGE ComEd PECO PHI ExGen Corp(9) Figures may not sum due to rounding. Utilities 2017E Balance (2) Gross of posted counterparty collateral Beginning Cash Balance* (2) 1,050 (3) Excludes coun
Slide 19: Exelon Generation Disclosures
Exelon Generation Disclosures March 31, 2017 19 Q1 2017 Earnings Release Slides
Slide 20: 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 21: 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 22: ExGen Disclosures
ExGen Disclosures Gross Margin Category ($M) (1) 2017 2018 2019 Open Gross Margin (including South, West & Canada hedged GM) (2) $3,850 $4,150 $3,950 Capacity and ZEC Revenues(2) $1,850 $2,250 $2,050 (2,3) Mark-to-Market of Hedges $1,600 $500 $400 Power New Business / To Go $400 $850 $950 Non-Power
Slide 23: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2017 2018 2019 Exp. Gen (GWh) (1) 203,400 208,700 212,200 Midwest 95,700 96,000 97,000 Mid-Atlantic (2,6) 60,300 60,400 60,100 ERCOT 21,000 28,500 29,500 New York (2) 14,600 15,400 16,600 New England 11,800 8,400 9,000 % of Expected Generation Hedged (3) 97%-1
Slide 24: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities Gross Margin Sensitivities (with Existing Hedges) (1) 2017 2018 2019 Henry Hub Natural Gas ($/Mmbtu) + $1/Mmbtu $15 $285 $520 - $1/Mmbtu $60 $(270) $(490) NiHub ATC Energy Price + $5/MWh $10 $200 $335 - $5/MWh $(10) $(200) $(330) PJM-W ATC Energy Price + $5/M
Slide 25: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 10,000 9,500 $9,150 Approximate Gross Margin* ($ million)(1,2,3) 9,000 $8,900 8,500 $8,250 8,000 $8,000 7,500 $7,750 7,000 $6,800 6,500 6,000 2017 2018 2019 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, betwe
Slide 26: 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 $4.15 billion (B) Capacity and ZEC $2.25 billion (C) Expected Generation (TWh) 96.0 60.4 28.5 15.4 8.4 (D) H
Slide 27: 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) $8,725 $8,875 $8,450 Non-cash amortization of intangible assets, net, related to $50 - - commodity contracts recorded at fair value at merger date Other Re
Slide 28: Exelon Utilities Rate Case Filing Summaries
Exelon Utilities Rate Case Filing Summaries 28 Q1 2017 Earnings Release Slides
Slide 29: Exelon Utilities Distribution Rate Case Schedule
Exelon Utilities Distribution Rate Case Schedule 3/17 4/17 5/17 6/17 7/17 8/17 9/17 ComEd Electric 2017 FRU Rebuttal Distribution Filing Testimony Formula Rate April 13 Mid-July Commission Pepco Electric Evidentiary Final Reply Order Distribution Hearings Briefs April Expected Rates - DC Mar 15-21 2
Slide 30: 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 took effect in January 2018 after the Illinois Commerce Commission's (ICC’s) review. There are two components to the annual distribution formula rat
Slide 31: Atlantic City Electric NJ Rate Case Filing
31 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) $1.37B Requested Rev
Slide 32: Pepco MD Rate Case Filing
32 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: 7.79% Proposed Rate Base (Adjusted) $1.71B Requested Revenue Requirement Increas
Slide 33: Delmarva DE (Electric) Distribution Rate Case
Delmarva DE (Electric) Distribution Rate Case Docket # 16-0649 Black Box Settlement Terms 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 $839M Revenue Requirement Increase $60.2M $31.5M (Updated on Marc
Slide 34: Delmarva DE (Gas) Distribution Rate Case
Delmarva DE (Gas) Distribution Rate Case Docket # 16-0650 Black Box Settlement Terms 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 $362M Revenue Requirement $22.2M $4.9M Increase(1,2) Revenue increase
Slide 35: Pepco DC Distribution Rate Case
Pepco DC Distribution Rate Case Formal Case No. 1139 Test Year April 1, 2015 – March 31, 2016 Test Period 12 months actual Requested Common Equity Ratio 49.14% Requested Rate of Return ROE: 10.60%; ROR: 8.00% Proposed Rate Base (Adjusted) $1.7B Requested Revenue Requirement Increase(1) $76.8M (Updat
Slide 36: Delmarva MD Distribution Rate Case – Final Order
Delmarva MD Distribution Rate Case – Final Order Formal Case No. 9424 Authorized Common Equity Ratio 49.1% Authorized Rate of Return ROE: 9.60%; ROR: 6.74% Authorized Rate Base (Adjusted) $707M Authorized Revenue Requirement Increase(1) $38.3M Revenue increase includes net reduction of $11.8M in new
Slide 37: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 37 Q1 2017 Earnings Release Slides
Slide 38: 1Q YTD GAAP EPS Reconciliation
1Q YTD GAAP EPS Reconciliation Three Months Ended March 31, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 GAAP Earnings (Loss) Per Share $0.34 $0.13 $0.14 $0.11 $(0.34) $(0.18) $0.19 Mark-to-market impact of economic hedging activities (0.07) - - - - - (0.07) Unrealized gains related to NDT fund i
Slide 39: 1Q YTD GAAP EPS Reconciliation (continued)
1Q YTD GAAP EPS Reconciliation (continued) Three Months Ended March 31, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP Earnings (Loss) Per Share $0.46 $0.15 $0.14 $0.13 $0.15 $0.04 $1.07 Mark-to-market impact of economic hedging activities 0.03 - - - - - 0.03 Unrealized gains related to NDT fu
Slide 40: GAAP to Operating Adjustments
GAAP to Operating Adjustments • Exelon’s 2017 adjusted (non-GAAP) operating earnings exclude the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains from NDT fund investments to the extent not offset by contractual accounting as describ
Slide 41: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1,2) (1,2) YE 2017 Exelon FFO Calculation ($M) YE 2017 Exelon Adjusted Debt Calculation ($M) GAAP Operating Income $4,300 Long-Term Debt (including current maturities) $32,650 Depreciation & Amortization $3,200 Short-Term Debt $1,575 EBITDA $7,500 + PPA Imputed Debt
Slide 42: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (1) (1) YE 2017 ExGen Net Debt Calculation ($M) YE 2017 ExGen Net Debt Calculation ($M) Long-Term Debt (including current maturities) $9,550 Long-Term Debt (including current maturities) $9,550 Short-Term Debt $650 Short-Term Debt $650 - Surplus Cash Adjustment ($375
Slide 43: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Operating ROE Reconciliation ($M)(1) ACE Delmarva Pepco EXC EU (1) Net Income (GAAP) $87 $120 $208 $1,156 $1,571 Operating Exclusions ($24) ($31) ($28) $160 $77 (1) Adjusted Operating Earnings $63 $89 $180 $1,316 $1,648 Average Equity $970 $1,240
Slide 44: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2017 Adjusted Cash from Ops Calculation ($M)(1) ComEd PECO BGE PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $1,075 $725 $700 $1,225 $3,300 ($225) $6,825 Other cash from investing activities - - $25 - ($275) - ($250) Intercompany recei