Slide 1: Earnings Conference Call 1st Quarter 2016
Earnings Conference Call 1st Quarter 2016 May 6, 2016
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: Combined Company at a Glance
Combined Company at a Glance 3 Q1 2016 Earnings Release Slides
Slide 4: Exelon Utilities are an Industry Leader
Exelon Utilities are an Industry Leader US Utility Customers (millions) 10.0 9.7 8.2 8.0 7.9 6.0 5.5 5.3 5.0 4.8 4.8 4.5 4.0 3.8 2.8 2.0 Combined PGE SRE Legacy DUK FE XEL AEP EIX ED NEE SO PEG D ETR Legacy EXC EXC PHI Total Capital Expenditures 2016-2018 ($B)(1) 26.3 23.0 18.9 17.9 17.7 16.1 15.0 1
Slide 5: Exelon Generation is an Industry Leader
Exelon Generation is an Industry Leader Total Generation Output (TWh)(1) 243.4 195.1 180.1 175.7 153.1 129.4 103.0 99.4 96.5 93.9 88.6 68.8 60.8 54.4 DUK EXC(3) SO NEE AEP ETR CPN NRG FE D PPL/TLN XEL DYN PEG Carbon Intensity (lb/MWh)(1) 1,752 1,878 1,507 1,552 1,686 1,194 1,390 1,126 779 815 555 56
Slide 6: Best in Class Operations
Best in Class Operations Legacy Exelon Utilities Operational Metrics ExGen Operational Metrics Operations Metric 2015 YE • Continued best in class performance across BGE PECO ComEd our Nuclear fleet: OSHA Recordable Rate o Q1 Nuclear Capacity Factor: 95.8% Electric 2.5 Beta SAIFI (Outage Operations
Slide 7: Early Retirement of Clinton and Quad Cities
Early Retirement of Clinton and Quad Cities We will shut down Clinton Power Station on June 1, 2017 and Quad Cities Generating Station on June 1, 2018 if Illinois does not pass adequate legislation by May 31, 2016 and if Quad Cities does not clear the 19/20 PJM capacity auction in May Impact on Illi
Slide 8: Q1 2016 Financial Results
Q1 2016 Financial Results • Delivered adjusted (non-GAAP) operating Adjusted Operating EPS Results (1,2) earnings in Q1 of $0.68/share near the top of our guidance range of $0.60- $0.68 $0.70/share • Utilities ExGen $0.34 – Lower bad debt expense – Unfavorable weather – Higher storm costs BGE $0.11
Slide 9: 2016 Adjusted Operating Earnings Guidance
2016 Adjusted Operating Earnings Guidance $2.40 - $2.70(1) $2.40 - $2.70(2,3) Key Changes $1.20 - $1.30 ExGen ExGen $1.25 - $1.35 • Average outstanding share count of 926M vs. 890M from Q4 standalone guidance • Interest on debt issued for PHI transaction captured at $0.25 - $0.35 BGE BGE $0.25 - $0.
Slide 10: Reaffirming Legacy Exelon Utilities Net Income Outlook
Reaffirming Legacy Exelon Utilities Net Income Outlook Exelon Utilities Net Income ($M)(1,2) $1,400 $1,400 $1,325 $1,300 $1,250 $1,250 $1,200 $1,175 $1,100 $1,100 $0 2016 2017 2018 Legacy Exelon Utilities projected average earnings growth is still in the 7-9% range per year from 2015-2018 (1) Number
Slide 11: Exelon Utilities Distribution Rate Case Schedule
Exelon Utilities Distribution Rate Case Schedule Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 BGE Electric MD Rate Final Order and Gas Case Filed Expected Distribution November Rates June 6 IL Formula Final Order ComEd Electric Rate Case Expected Distribution Formula Rate Filed April 13 December
Slide 12: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update March 31, 2016 Change from Dec. 31, 2015 (1) Gross Margin Category ($M) 2016 2017 2018 2016 2017 2018 (3) Open Gross Margin (including South, West, Canada hedged gross $4,450 $5,350 $5,800 $(750) $(450) $(350) margin) Mark-to-Market of Hedges(3,4) $2,650 $1,150
Slide 13: Financial Developments Since Q4 2015
Financial Developments Since Q4 2015 Incremental Combined Company Tax Impacts(1) 2017 2018 • ExGen earnings are lower as increased cash tax 2019 benefits reduce the Domestic Production Activities Deduction (DPAD) in 2018 but should EPS $(0.00) - $(0.02) $(0.06) - $(0.08) $(0.00) - $(0.01) normalize
Slide 14: Delivering Value to Shareholders Through a Defined Capital Allocation Policy
Delivering Value to Shareholders Through a Defined Capital Allocation Policy • Our strong balance sheet underpins our capital allocation policy • Capital decisions are made to maximize value to our customers and shareholders • We are harvesting free cash flow from Exelon Generation to: – First, inve
Slide 15: Quarter over Quarter Disclosures
Quarter over Quarter Disclosures 15 Q1 2016 Earnings Release Slides
Slide 16: Exelon Utilities Adjusted Operating EPS Contribution
Exelon Utilities Adjusted Operating EPS Contribution(1) Key Drivers – 1Q16(2) vs. 1Q15: BGE ComEd PECO PHI BGE (-0.01): • Increased storm costs: ($0.01) $0.39 $0.37 PECO (-0.02): $0.12 • Unfavorable weather (RNF): $(0.04) $0.11 • Increased electric distribution rates: $0.02 ComEd (+0.01): $0.16 $0.1
Slide 17: ExGen Adjusted Operating EPS Contribution
ExGen Adjusted Operating EPS Contribution(1) Key Drivers – Q1 2016 vs. Q1 2015 2015 2016 ExGen (-0.01) $0.35 • Unfavorable RNF primarily due to lower realized energy prices in $0.34 the Midwest, New York, and New England regions, partially offset by nuclear refueling outage timing, fewer non-refueli
Slide 18: Exelon Generation Disclosures
Exelon Generation Disclosures March 31, 2016 18 Q1 2016 Earnings Release Slides
Slide 19: Portfolio Management Strategy
Portfolio Management Strategy Strategic Policy Alignment Three-Year Ratable Hedging Bull / Bear Program •Aligns hedging program with •Ensure stability in near-term cash •Ability to exercise fundamental financial policies and financial flows and earnings market views to create value within outlook •D
Slide 20: Components of Gross Margin Categories
Components of Gross Margin Categories Gross margin from Gross margin linked to power production and sales other business activities Open Gross MtM of “Power” New “Non-Power” “Non-Power” Margin Hedges(2) Business Executed New Business •Generation Gross •Mark-to-Market •Retail, Wholesale •Retail, Whol
Slide 21: ExGen Disclosures
ExGen Disclosures Gross Margin Category ($M)(1) 2016 2017 2018 Open Gross Margin (including South, West & Canada hedged GM)(3) $4,450 $5,350 $5,800 Mark-to-Market of Hedges(3,4) $2,650 $1,150 $400 Power New Business / To Go $250 $750 $1,000 Non-Power Margins Executed $350 $150 $100 Non-Power New Bus
Slide 22: ExGen Disclosures
ExGen Disclosures Generation and Hedges 2016 2017 2018 Exp. Gen (GWh) (1) 200,100 205,400 206,600 Midwest 97,700 96,300 96,700 Mid-Atlantic(2) 63,300 61,300 60,600 ERCOT 17,200 26,000 30,800 New York(2) 9,300 9,200 9,100 New England 12,600 12,600 9,400 % of Expected Generation Hedged(3) 96%-99% 69%-
Slide 23: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin Sensitivities (1) Gross Margin Sensitivities (With Existing Hedges) 2016 2017 2018 Henry Hub Natural Gas ($/Mmbtu) + $1/Mmbtu $20 $270 $570 - $1/Mmbtu $60 $(300) $(580) NiHub ATC Energy Price + $5/MWh $35 $185 $350 - $5/MWh $(30) $(180) $(345) PJM-W ATC Energy Price + $5/MW
Slide 24: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin Upside/Risk 11,000 10,500 10,000 Approximate Gross Margin ($ million)(1,2,3) 9,500 $9,150 9,000 8,500 $8,350 8,000 $7,950 7,500 $7,650 7,000 $7,100 6,500 $6,550 6,000 5,500 5,000 2016 2017 2018 (1) Represents an approximate range of expected gross margin, taking into accoun
Slide 25: Illustrative Example of Modeling Exelon Generation 2017 Gross Margin
Illustrative Example of Modeling Exelon Generation 2017 Gross Margin South, West & Row Item Midwest Mid-Atlantic ERCOT New York New England Canada (A) Start with fleet-wide open gross margin $5.35 billion (B) Expected Generation (TWh) 96.3 61.3 26.0 9.2 12.6 (C) Hedge % (assuming mid-point of range)
Slide 26: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2016 2017 2018 Revenue Net of Purchased Power and Fuel Expense(2)(3) $8,425 $8,325 $8,325 Other Revenues(4) $(325) $(325) $(325) Direct cost of sales incurred to generate revenues for certain $(300) $(300) $(300) Constellati
Slide 27: Illinois Nuclear Plant Details
Illinois Nuclear Plant Details Clinton Quad Cities(1) Capacity 1,069 MW Capacity 1,403 MW (2) (2) Generation Output 8,700 GWh Generation Output 11,700 GWh Start of Operations 1987 Start of Operations 1973 License Expiration 2026 License Expiration 2032 Refueling Cycle 12 month Refueling Cycle (per u
Slide 28: Additional Disclosures
Additional Disclosures 28 Q1 2016 Earnings Release Slides
Slide 29: Exelon Utilities Overview
Exelon Utilities Overview Operating Statistics Combined Service Territory Commonwealth Edison Potomac Electric Power Chicago Trenton PA Customers: 3,800,000 Customers: 842,000 NJ Philadelphia Service Territory: 11,400 sq. Service Territory: 640 sq. miles Wilmington miles Peak Load: 23,753 MW Peak Lo
Slide 30: 2015 Earned vs. Allowed ROE at PHI Utilities
2015 Earned vs. Allowed ROE at PHI Utilities 9.62% 9.70% 9.81%* 9.75%* 9.75% 10 9.40% 9 8 7.36% 6.98% 7.00% 7 6.62% 6 5 4.77% 4.79% 4 3 2 1 0 Pepco - MD Pepco - DC DPL - DE DPL - MD DPL - DE - Gas ACE - NJ - Electric 2015 Allowed ROE 2015 Estimated Earned ROE Significant Opportunity for Earned ROE I
Slide 31: Exelon Utilities Load
Exelon Utilities Load All Customers Residential Small C&I Large C&I ComEd PECO BGE 1.0% 0.6% 0.6% 0.7% 0.3% 0.4% 0.6% 0.5% 0.4% 0.3% 0.2% 0.2% (0.9%) 0.1% 0.0% (0.1%) 0.7% (0.1%) (0.2%) (0.5%) (1.0%) (1.4%) (1.5%) (2.0%) 2015 2016E 2015 2016E 2015 2016E Chicago GMP 1.5% Philadelphia GMP 2.1% Baltimo
Slide 32: Exelon Utilities Load (cont'd)
Exelon Utilities Load (cont’d) All Customers Residential C&I ACE Delmarva Pepco 6.7% 2.1% 2.2% (2.5%) 0.0% 0.2% 0.2% (2.7%) 0.6% (0.4%) (0.3%) (0.9%) (0.7%) (1.9%) (1.6%) (2.2%) (2.6%) (3.3%) 2015 2016E 2015 2016E 2015 2016E ACE GMP 0.3% DPL GMP 2.2% Pepco GMP 2.2% ACE Unemployment 7.3% DPL Unemploy
Slide 33: PHI Jurisdiction Comparison
PHI Jurisdiction Comparison Rate Cases District of Columbia Maryland Delaware New Jersey Partially Forecasted (1) Yes Yes Yes Yes Test Year Required to update test No Yes No Yes year to actual Statute - 7 months; rates Statute - 7 months; company Statute - 9 months; company Timing for Rate No statut
Slide 34: BGE Electric and Gas Distribution Rate Case
BGE Electric and Gas Distribution Rate Case Electric Gas Docket # 9406 Test Year December 2014- November 2015 Common Equity Ratio (1) 53.7% Requested ROE 10.60% 10.50% Requested Rate of Return 7.95% 7.90% Rate Base (adjusted) $3.0B $1.2B Revenue Requirement Increase (1) $117.6M $79.1M Proposed Distr
Slide 35: ComEd April 2016 Distribution Formula Rate
ComEd April 2016 Distribution Formula Rate The 2016 distribution formula rate filing established the net revenue requirement used to set the rates that will take effect in January 2017 after the Illinois Commerce Commission's (ICC’s) review. There are two components to the annual distribution formul
Slide 36: ACE Electric Distribution Rate Case
ACE Electric Distribution Rate Case Docket # ER16030252 Test Year 2015 Calendar Year Test Period Partially Forecasted Test Period (9 months actual & 3 months forecasted) Requested Common Equity Ratio 49.5% Requested Rate of Return ROE: 10.60%; ROR: 8.06% Proposed Rate Base $1.4B Requested Revenue Re
Slide 37: Pepco MD Electric Distribution Rate Case
Pepco MD Electric Distribution Rate Case Docket # 9418 Test Year 2015 Calendar Year Test Period Partially Forecasted Test Period (9 months actual & 3 months forecasted) Requested Common Equity Ratio 49.6% Requested Rate of Return ROE: 10.60%; ROR: 8.01% Proposed Rate Base $1.8B Requested Revenue Req
Slide 38: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 38 Q1 2016 Earnings Release Slides
Slide 39: 1Q 2015 YTD GAAP EPS Reconciliation
1Q 2015 YTD GAAP EPS Reconciliation Three Months Ended March 31, 2015 ExGen ComEd PECO BGE Other Exelon 2015 Adjusted (non-GAAP) Operating Earnings (Loss) Per Share $0.35 $0.11 $0.16 $0.12 $(0.03) $0.71 Mark-to-market impact of economic hedging activities (0.11) - - - - (0.11) Unrealized gains relat
Slide 40: 1Q 2016 YTD GAAP EPS Reconciliation (continued)
1Q 2016 YTD GAAP EPS Reconciliation (continued) Three Months Ended March 31, 2016 ExGen ComEd PECO BGE PHI Other Exelon 2016 Adjusted (non-GAAP) Operating Earnings (Loss) Per $0.34 $0.12 $0.14 $0.11 $0.00 $(0.02) $0.68 Share Mark-to-market impact of economic hedging activities 0.07 - - - - - 0.07 Un
Slide 41: GAAP to Operating Adjustments
GAAP to Operating Adjustments • Exelon’s Q1 2016 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains and losses from NDT fund investments to the extent not offset by contractual accoun