Exelon Corporation · NASDAQ:EXC
Exelon — Lehman Brothers 2007 CEO Energy/Power Conference
50 slides from Exelon's conference presentation, Sep 4, 2007
Slide 1: Exelon – Unique Value
Exhibit 99.1 Exelon – Unique Value John W. Rowe Chairman, President & CEO Lehman Brothers 2007 CEO Energy/Power Conference New York City September 4, 2007
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: Strong Financial Performance
Strong Financial Performance Adjusted (non-GAAP) Operating EPS Total Shareholder Return 10/20/00 – 8/24/07 Assumes dividend reinvestment Source: Bloomberg EXC 206% $4.15 - $4.30 $3.22 $3.10 $2.78 $2.61 $2.41 UTY $2.24 88% $1.93 Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- 20
Slide 4: Premier Nuclear Operator
Premier Nuclear Operator Average Capacity Factor Average Capacity Factor Range of Fleet 2-Yr Avg Capacity Factor (2002-2006) 100 100 EXC 93.2% 90 95 90 80 85 70 80 60 75 50 70 Range 5-Year Average 40 65 Note: Exelon data prior to 2000 represents ComEd-only nuclear fleet Exelon Industry Operator (# o
Slide 5: Unique Competitive Position
Unique Competitive Position Midwest Capacity New England Capacity Owned: 11,389 MW Owned: 622MW Contracted: 4,791 MW Total: 16,180 MW Large, low-cost, low-emissions, exceptionally well-run nuclear fleet ERCOT/South Capacity Owned: 2,299 MW Contracted: 2,900 MW Complementary and flexible Mid-Atlantic
Slide 6: Disciplined Financial Management
Disciplined Financial Management • In December, the Exelon Board approved a new “Value Return Policy” • The Policy: – Established a base dividend at $1.76/share, growing modestly over time – Returns excess cash and/or balance sheet capacity through share repurchases After funding maintenance capital
Slide 7: Our Strategic Direction
Our Strategic Direction Protect Today’s Value + Grow Long-Term Value • Deliver superior operating performance • Take the organization to the next level of – Keep the lights on performance – Continue nuclear excellence – Foster positive employee relations • Support competitive markets – Require accou
Slide 8: Financial Swap Agreement
Financial Swap Agreement Financial Swap Agreement between ComEd and Exelon Generation promotes price stability for residential and small business customers Designed to dovetail with ComEd’s remaining auction contracts for energy, increasing in volume as the auction contracts expire • By June 1, 2010
Slide 9: Underlying Policy Challenges
Underlying Policy Challenges Address climate change Support competitive markets Support nuclear energy 9
Slide 10: Our Vision, Goals and Values
Exelwn. 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 nuclear f
Slide 11: Appendix – Other Information
Appendix – Other Information 11
Slide 12: Revised 2007 Operating Earnings Guidance
Revised 2007 Operating Earnings Guidance Operating EPS (1): $4.15 - $4.30 per share 2007 and Beyond GAAP EPS (2): $3.70 - $4.00 per share Exelon Generation $4.15 - $4.30 ComEd $ / Share $0.20 - $0.25 PECO $0.60 - $0.63 $0.65 - $0.70 $3.22 Earnings Drivers $0.78 ComEd regulatory recovery plan $0.67 I
Slide 13: Exelon Generation
_— Exelen. Generation a
Slide 14: Exelon Generation Operating Earnings Drivers: Next Five Years
Exelon Generation Operating Earnings Drivers: Next Five Years Market Sensitivities (1) Exelon Generation’s $2,320M - $2,385M As of 12/31/06 Competitive Position (After-Tax $M) 2007 2011 +/- $1/mmBtu Gas $25 $390 Large, low-cost, low-emissions, +/- 500 Btu/KWh ATC Heat rate $25 $340 exceptionally wel
Slide 15: Valuing Exelon Generation
Valuing Exelon Generation Hedged – 2007 Un-Hedged – 2007 (1) $ Millions $6,700 ($2,600) Mid- Atlantic $4,700 $2,650 $4,100 Midwest $4,050 Revenue Net Fuel (2) O&M and EBITDA (3) – EBITDA (3) – Other Expenses Hedged Un-Hedged Un-hedged (“Open”) EBITDA plus upside from unique competitive position driv
Slide 16: Nuclear Performance – Fuel Costs
Nuclear Performance – Fuel Costs Exelon Uranium Cost vs. Market Uranium market prices have increased, but 100 90 Exelon is managing its portfolio 80 • Reduced uranium demand by 25% 70 60 • Contracting strategy protects us and ensures 50 we are significantly below current spot market 40 prices throug
Slide 17: Energy Policy Act – Nuclear Incentives
Energy Policy Act – Nuclear Incentives Production Tax Credit (PTC) Regulatory Delay “Backstop” Government Loan Guarantee $18 per MWh, 8 year PTC for “Insurance” protecting against first 6,000 MWe of new capacity regulatory delays in Results in ability to obtain commissioning a completed non-recourse
Slide 18: Portfolio Management
Portfolio Management Target Financial Hedge (1) Range Power Team employs commodity hedging Prompt Year Second Year Third Year strategies to optimize Exelon Generation’s (2008) (2009) (2010) earnings: Maintain length for opportunistic sales 90% - 98% 70% - 90% 50% - 70% Use cross commodity option str
Slide 19: Portfolio Characteristics
Portfolio Characteristics 2007 Expected Total Sales (GWh) 2007 Expected Total Supply (GWh) PECO PPA 22% Nuclear 139,750 Fossil & Hydro 37,500 IL Auction Other Mid- 15% Atlantic Sales Forward & Spot Purchases 7,300 13% Other South Total 184,550 Sales Other Midwest 8% Sales 42% The transition to compe
Slide 20: Fundamentals
Fundamentals Year New Capacity is Needed Cost of New Build Generation Construction (1) Technology EIA ($/KW) S&P ($/KW) 2007 2008 2009 2010 2011 2012 2013 Gas CT 428 CCGT 615 700 MAAC NY ERCOT ECAR Pulverized Coal 1,316 2,438 MRO SPP IGCC 1,581 2,795 – 2,925 MAIN VACAR Nuclear 2,123 4,000 NEPOOL (1)
Slide 21: Full Requirements Cost
Full Requirements Cost New Jersey BGS Auction for PSEG $102.51/MWh $98.88/MWh (36-Month Price) Full-Requirements Costs ($/MWh): (36-Month Price) ~ $35 Transmission and Congestion ~ $41 $15.50 Renewable Load Shape and $1.00 Energy Ancillary Services $1.50 ATC $10.30 Migration Risk Forward $67.20 - $5
Slide 22: PJM RPM 2007/2008 & 2008/2009
PJM RPM 2007/2008 & 2008/2009 Eastern MACC • 2007/2008 RPM auction: $197.67/MW-day • 2008/2009 RPM auction: $148.80/MW-day Rest of Market 2007/2008 System • 2007/2008 RPM auction: Total CTR Value = 4,599 MW $40.80/MW-day 2008/2009 System • 2008/2009 RPM auction: Total CTR Value = 5,128 MW $111.92/MW
Slide 23: Carbon Value
Carbon Value Assumes Open Position at Exelon Generation 40 Carbon Value (2011 Assumptions) 3,000 35 Europe Carbon Trading Midwest 2,500 2011: $28.20/ton (1) 30 ~90,000 GWhs in Midwest nuclear portfolio 25 2,000 ~55% of time coal on the margin EXC Market Sensitivity EIA Carbon Case (2) 20 ~40% of tim
Slide 24: Current Market Prices
Current Market Prices 1 1 1 5 6 6 PRICES (as of August 29th, 2007) Units 2004 2005 2006 2007 2008 2009 2 2 2 PJM West Hub ATC ($/MWh) 42.35 60.92 51.07 55.28 59.18 62.02 2 2 2 PJM NiHub ATC ($/MWh) 30.15 46.39 41.42 43.09 44.63 46.25 2 2 2 NEPOOL MASS Hub ATC ($/MWh) 52.13 76.65 59.68 63.36 71.69 74
Slide 25: Market Price Snapshot
Market Price Snapshot As of August 29, 2007. Source: OTC quotes and electronic trading system. Quotes are daily. 9.4 Forward NYMEX Natural Gas 90 PJM-West and Ni-Hub On-Peak 9.2 Forward Prices 85 9 2009 PJM-West 8.8 80 2009 8.6 75 8.4 2008 PJM-West 70 8.2 2009 Ni-Hub 8 65 7.8 60 7.6 2008 2008 Ni-Hub
Slide 26: Market Price Snapshot
Market Price Snapshot As of August 29, 2007. Source: OTC quotes and electronic trading system. Quotes are daily. 70 PJM-West ATC Forward Prices NIHUB ATC Forward Prices 54 68 66 52 2009 64 50 62 2009 48 60 58 2008 46 56 44 2008 54 42 52 50 40 1/2/07 2/2/07 3/2/07 4/2/07 5/2/07 6/2/07 7/2/07 8/2/07 1
Slide 27: Market Price Snapshot
Market Price Snapshot As of August 29, 2007. Source: OTC quotes and electronic trading system. Quotes are daily. Houston Ship Channel Natural Gas ERCOT ATC Forward Prices 9 Forward Prices 71 69 8.5 2009 67 2009 65 8 63 61 7.5 2008 59 2008 7 57 1/2/07 2/2/07 3/2/07 4/2/07 5/2/07 6/2/07 7/2/07 8/2/07
Slide 28: Market Price Snapshot
Market Price Snapshot As of August 29, 2007. Source: OTC quotes and electronic trading system. Quotes are daily. ERCOT On-Peak Forward Prices 83 81 79 77 2009 75 73 71 69 67 2008 65 1/2/07 2/2/07 3/2/07 4/2/07 5/2/07 6/2/07 7/2/07 8/2/07 28
Slide 29: ComEd. An Exelon Company
_— 7 ComEd. An Exelon Company a
Slide 30: ComEd Operating Earnings: Next Five Years
ComEd Operating Earnings: Next Five Years 2011 Assumptions (1) Rate base: ~$9.6B $528M ComEd Highlights Equity (2): ~45% ROE: ~10% Roll-out of customer rate relief ~$430M programs per the IL Settlement IPA and new procurement 2007 Assumptions Rate Base: ~$8.1B process Equity (2): ~44% Regulatory rec
Slide 31: PECO. An Exelon Company
— => PECO. An Exelon Company a
Slide 32: PECO Operating Earnings: Next Five Years
PECO Operating Earnings: Next Five Years PECO Highlights Legislative activity: HB 1203 and HB 1530 signed by governor on $435M - $470M 7/17/07 2011 Assumptions (1) Other energy issues are expected to be Rate Base: ~$4.7B addressed in a special legislative session Equity: ~50% scheduled for 9/17/07 R
Slide 33: Legislative Overview
Legislative Overview The Pennsylvania General Assembly introduced four bills that would enable elements of Governor Rendell’s Energy Independence Plan One of the four bills, HB 1203, was passed by the General Assembly and was signed into law on July 17, 2007 • HB 1203 amends the Alternative Energy P
Slide 34: Special Session Agenda
Special Session Agenda Senate has agreed to take up the following topics in the Special Session: • Investment in clean and renewable energy and incentives for conservation without new taxes • Legislation to set standards for liquid fuels Additional legislation supporting the Governor’s Energy Indepe
Slide 35: Governor’s Energy Independence Strategy – Legislative Package
Governor’s Energy Independence Strategy – Legislative Package • Procurement using the portfolio model with “lowest reasonable rates” and prioritizes demand side management and alternative energy resources HB 1201 – PAPUC • Allows for long-term, cost-based rates for larger energy users Statute Bill •
Slide 36: Summary of PAPUC Rulemakings
Summary of PAPUC Rulemakings Rulemaking Description Final Order Effective Date Default Service Addresses issues Issued May 10, 2007 Expected in September Regulations around procurement, 2007 rate design, cost recovery, filing requirements Default Service Reflects the PAPUC’s Issued May 10, 2007 May
Slide 37: Default Service Provider Regulations/Policy
Default Service Provider Regulations/Policy • Competitive process but no statewide auction • Utility run RFPs or auctions are preferred; portfolio approach is Procurement allowed • Staggered auctions/RFPs to avoid high market risk • Long term contracts limited to renewable resources • Non-renewable
Slide 38: PECO Post-2010 Strategy
PECO Post-2010 Strategy • PECO to propose an auction approach to conduct multiple Procurement procurements prior to 2011 • May offer 1-year fixed rate for large energy users • Requirement for some spot market purchases • Procurement plan will include early, staggered procurement • Rate increase phas
Slide 39: PECO Average Electric Rates
PECO Average Electric Rates Electric Restructuring Settlement Post-Transition Factors Unit Rates (¢/kWh) (1) CTC terminates at year-end 2010 11.18¢ 11.18¢ +4.8% 10.67¢ Energy / Capacity price is expected to increase; price will reflect associated full requirements costs (including capacity, load sha
Slide 40: Appendix – Key Assumptions, Projected 2007 Credit Measures & GAAP Reconciliation
Appendix – Key Assumptions, Projected 2007 Credit Measures & GAAP Reconciliation 40
Slide 41: Key Assumptions
Key Assumptions 2005 Actual 2006 Actual 2007 Est. (1) Nuclear Capacity Factor (%) 93.5 93.9 94.0 Total Genco Sales Excluding Trading (GWhs) 194,337 190,680 184,500 (5) Total Genco Sales to Energy Delivery (GWhs) 121,961 119,354 40,500 (2) Total Genco Market and Retail Sales (GWhs) 72,376 71,326 144,
Slide 42: Projected 2007 Key Credit Measures
Projected 2007 Key Credit Measures With PPA & Without PPA & S&P Credit “BBB” Target Pension / OPEB (1) Pension / OPEB Ratings (2) Range (3) Exelon Cons: FFO / Interest 4.6x 5.6x BBB 3.2x – 4.5x FFO / Debt 22% 28% 20% – 30% Rating Agency Debt Ratio 70% 63% 55% – 45% Adjusted Book Debt Ratio: 54% Gene
Slide 43: FFO Calculation and Ratios (updated)
FFO Calculation and Ratios (updated) FFO Calculation FFO Interest Coverage Net Income FFO + Adjusted Interest Add back non-cash items: Adjusted Interest + Depreciation,amortization(including nucl fuel amortization),AFUDC/Cap. Interest Net Interest Expense (Before AFUDC & Cap. Interest) + Change in D
Slide 44: GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2000-2002 2000 GAAP Reported EPS $1.44 Change in common shares (0.53) Extraordinary items (0.04) Cumulative effect of accounting change -- Unicom pre-merger results 0.79 Merger-related costs 0.34 Pro forma merger accounting adjustments (0.07) 2000 Adjusted (non-GAAP) Operatin
Slide 45: GAAP EPS Reconciliation 2003-2005
GAAP EPS Reconciliation 2003-2005 2003 GAAP Reported EPS $1.38 Boston Generating impairment 0.87 Charges associated with investment in Sithe Energies, Inc. 0.27 Employee severance costs 0.24 Cumulative effect of adopting SFAS No. 143 (0.17) Property tax accrual reductions (0.07) Enterprises’ Service
Slide 46: GAAP Earnings Reconciliation Year Ended December 31, 2006
GAAP Earnings Reconciliation Year Ended December 31, 2006 (in millions) ExGen ComEd PECO Other Exelon 2006 GAAP Reported Earnings (Loss) $1,407 $(112) $441 $(144) $1,592 Mark-to-market adjustments from economic hedging activities (61) 3 - - (58) Investments in synthetic fuel-producing facilities - -
Slide 47: GAAP EPS Reconciliation Year Ended December 31, 2006
GAAP EPS Reconciliation Year Ended December 31, 2006 ExGen (1) ComEd (1) PECO (1) Other (1) Exelon 2006 GAAP Reported EPS $2.08 (0.17) 0.65 (0.21) $2.35 Mark-to-market adjustments from economic hedging activities (0.09) - - - (0.09) Investments in synthetic fuel-producing facilities - - - 0.04 0.04
Slide 48: 2007 Earnings Outlook
2007 Earnings Outlook Exelon’s outlook for 2007 adjusted (non-GAAP) operating earnings excludes the earnings impacts of the following: • costs associated with the Illinois electric rate settlement, including ComEd’s previously announced customer Rate Relief and Assistance Initiative • mark-to-market
Slide 49: Reconciliation of Net Income to EBITDA
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
Slide 50: Exelon Investor Relations Contacts
Exelon Investor Relations Contacts Inquiries concerning this presentation should be directed to: Investor Relations Contacts: Exelon Investor Relations Chaka Patterson, Vice President 10 South Dearborn Street 312-394-7234 Chicago, Illinois 60603 Chaka.Patterson@ExelonCorp.com 312-394-2345 312-394-40
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