Slide 1: Earnings Conference Call 2nd Quarter 2018
Earnings Conference Call 2nd Quarter 2018 August 2, 2018
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: 2nd Quarter Results
2nd Quarter Results Q2 2018 EPS Results(1,2) • GAAP earnings were $0.56/share in Q2 2018 vs. $0.10/share in Q2 $0.71 2017 $0.56 $0.34 • Adjusted operating earnings* ExGen $0.18 were $0.71/share in Q2 2018 vs. $0.56/share in Q2 2017, BGE $0.05 $0.05 exceeding our guidance range of PECO $0.10 $0.10 $0
Slide 6: Operating Highlights
Operating Highlights Exelon Utilities Operational Metrics Exelon Generation Operational Performance Operations Metric Q2 2018 Exelon Nuclear Fleet(2) BGE ComEd PECO PHI • Continued best in class performance across our OSHA Recordable Rate Nuclear fleet: Electric 2.5 Beta SAIFI o Q2 2018 Nuclear Capa
Slide 7: Tax Reform Producing Significant Customer Bill Savings
Tax Reform Producing Significant Customer Bill Savings DPL ACE ComEd • DPL has filed to provide over $40M in • ACE has filed to provide $23M in • ComEd has filed to provide $201M in annual distribution tax savings to annual distribution tax savings to annual distribution tax savings to customers cus
Slide 8: Constructive Legislation for Our Utilities
Constructive Legislation for Our Utilities Delaware Pennsylvania • On June 14, Governor Carney signed • On June 28, Governor Wolf signed House Senate Bill 80, which enacted the Bill (HB) 1782 Distribution System Investment Charge • HB 1782 authorizes the PA PUC to review (DSIC) legislation and appro
Slide 9: ZEC & Energy Policy Updates
ZEC & Energy Policy Updates ZEC Updates FERC Capacity Order PJM Price Formation New Jersey: • On June 29, 2018, FERC issued an • PJM fast start proceeding was • Governor Murphy signed the NJ ZEC order rejecting both capacity repricing initiated by FERC (Docket No. EL18- bill into law on May 23rd and
Slide 10: 2nd Quarter Adjusted Operating Earnings Drivers
2nd Quarter Adjusted Operating Earnings* Drivers Q2 2018 Adjusted Operating EPS* Results Q2 2018 vs. Guidance of $0.55 - $0.65 $0.71 Exelon Utilities – Higher distribution and transmission revenue ExGen $0.34 – Favorable weather BGE $0.05 Exelon Generation – NDT realized gains(1) PECO $0.10 – Genera
Slide 11: QTD Adjusted Operating Earnings Waterfall
QTD Adjusted Operating Earnings* Waterfall $0.01 Distribution Investment $0.03 Rate Increases $0.01 Other ($0.01) Other $0.71 $0.02 ($0.01) $0.02 $0.00 $0.00 $0.12 ($0.01) Other $0.56 $0.07 Nuclear Outages(1) $0.05 Capacity Pricing $0.03 Illinois Zero Emission Credit Revenue $0.05 NDT Fund Realized
Slide 12: Trailing 12 Month Earned ROEs vs Allowed ROE
Trailing 12 Month Earned ROEs* vs Allowed ROE Trailing Twelve Month Earned ROEs* Allowed ROE Q1 2018 TTM Earned ROE Q2 2018 TTM Earned ROE 9.9% 9.9% 10.3% 9.7% 10.2% 9.4% 9.4% 7.7% 7.6% 7.4% 7.3% 5.4% 5.4% ACE Delmarva Pepco Legacy Exelon Consolidated Utilities Exelon Utilities Note: Represents the
Slide 13: Exelon Utilities' Distribution Rate Case Updates
Exelon Utilities’ Distribution Rate Case Updates Rate Case Schedule and Key Terms Requested Revenue Expected Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar ROE / Requirement Order Equity Ratio (1) 8.69% / ComEd CF IT RT EH IB RB FO ($22.9M) Dec 2018 47.11% Delmarva RT SA EH FO (1,3) 9.70% / ($6.9M)
Slide 14: Utility CapEx Update
Utility CapEx Update PECO’s Gas Main and Service Replacement Program • Forecasted project cost: − $2.3 billion of spend remaining • In service date: − Multiple in service dates based on work plans with local townships • Project scope: − Replace remaining 289 miles of gas services lines by end of 202
Slide 15: Exelon Generation: Gross Margin Update
Exelon Generation: Gross Margin Update June 30, 2018 Change from March 31, 2018 (1) Gross Margin Category ($M) 2018 2019 2020 2018 2019 2020 (2,5) Open Gross Margin $4,700 $4,050 $3,800 $100 $100 - (including South, West, Canada hedged gross margin) Capacity and ZEC Revenues(2,5,6) $2,300 $2,050 $1,
Slide 16: 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% 3.0x 3.0 2.6x 15% 2.1x S&P Threshold 2.0 10% Book Excluding Non-Recourse 5% 1.0 0% 0.0 2018 Target 2018 Target Credit Ratings by Operating Co
Slide 17: The Exelon Value Proposition
The Exelon Value Proposition ▪ Regulated Utility Growth with utility EPS rising 6-8% annually from 2017- 2021 and rate base growth of 7.4%, 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 18: Additional Disclosures
Additional Disclosures 18 Q2 2018 Earnings Release Slides
Slide 19: 2018 Adjusted Operating Earnings Guidance
2018 Adjusted Operating Earnings* Guidance $2.90 - $3.20(3) Key Year-Over-Year Drivers $0.25 - $0.35 BGE • BGE: Return to normal storm $2.60(1,2) (historical average) and inflation impacts $0.40 - $0.50 PECO BGE $0.33 • PECO: Favorable weather and higher transmission revenue, offset by $0.45 $0.40 -
Slide 20: YTD Adjusted Operating Earnings Waterfall
YTD Adjusted Operating Earnings* Waterfall $0.03 Distribution Investment ($0.01) Other $0.01 Other $1.66 $0.04 ($0.01) $0.01 $0.01 ($0.01) $0.04 Rate Increases $0.41 ($0.04) Increased Storm Cost ($0.03) Other (5) $0.03 Favorable Weather $1.21 $0.01 Increased Transmission Rates ($0.02) Increased Stor
Slide 21: 2018 Projected Sources and Uses of Cash
2018 Projected Sources and Uses of Cash Total Exelon Cash (1) All amounts rounded to the nearest ($M)(1) BGE ComEd PECO PHI ExGen Corp(8) $25M. Figures may not add due to Utilities 2018E Balance rounding Beginning Cash Balance* (2) 1,450 (2) Gross of posted counterparty Adjusted Cash Flow from Opera
Slide 22: Exelon Utilities Trailing Twelve Month Earned ROEs
Exelon Utilities Trailing 12 Month Earned ROEs* Q2 2018: Trailing Twelve Month Earned ROEs* 12.0% 11.5% Legacy Exelon Utilities 11.0% 10.5% Consolidated Exelon Utilities 10.0% 9.5% $28.0/10.3% 9.0% Earned ROE (%) 8.5% Delmarva $37.8/9.4% 8.0% Pepco 7.5% $2.9/7.7% 7.0% $4.7/7.4% 6.5% 6.0% ACE 5.5% 5.
Slide 23: Capacity Market: PJM
Capacity Market: PJM PJM Capacity Revenues(1,2,3) Recent BRA Results Calendar weighted avg. price ($/Mw-day) Cleared Volumes 2020/2021 2021/2022 (4) CP Price CP Price Revenues ($ Million) (MW) $180 $1,300 ComEd Nuclear 8,075 $188 5,175 $196 $170 $1,200 Fossil/Other - $188 - $196 Subtotal 8,075 5,175
Slide 24: Tax Reform: Distribution-Related Customer Bill Savings
Tax Reform: Distribution-Related Customer Bill Savings DPL ACE ComEd • MD PSC accepted DPL’s proposal to • ACE has filed a request with NJ BPU to • ICC approved ComEd’s petition seeking provide $14M in annual tax savings to provide $23M in annual tax savings to approval to pass along approximately c
Slide 25: Tax Reform: Transmission-Related Customer Bill Savings
Tax Reform: Transmission-Related Customer Bill Savings DPL ACE ComEd • DPL has filed to provide $12M in • ACE has filed to provide $11M in • ComEd has filed to provide $69M in annual transmission tax savings to annual transmission tax savings to annual transmission tax savings to customers. DPL also
Slide 26: Exelon Utilities
Exelon Utilities 26 Q2 2018 Earnings Release Slides
Slide 27: ComEd Distribution Rate Case Filing
ComEd Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 18-0808 • April 16, 2018, ComEd filed its annual distribution formula rate update with the Illinois Test Year January 1, 2017 – December 31, 2017 Commerce Commission seeking a decrease to Test Period 2017 Actual Costs + 20
Slide 28: Delmarva DE (Electric) Distribution Rate Case Filing
Delmarva DE (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 17-0977 – Per Settlement (Black Box) • August 17, 2017, Delmarva DE filed an application with Delaware Public Service Test Year January 1, 2017 – December 31, 2017 Commission (DPSC) seeking an increase in
Slide 29: Delmarva DE (Gas) Distribution Rate Case Filing
Delmarva DE (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 17-0978 • August 17, 2017, Delmarva DE filed an application with Delaware Public Service Test Year January 1, 2017 – December 31, 2017 Commission (DPSC) seeking an increase in Test Period 8 months actual and 4
Slide 30: Pepco DC (Electric) Distribution Rate Case Filing
Pepco DC (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 1150 & 1151 – Per Settlement (Black Box) • December 19, 2017, Pepco DC filed an application with Public Service Commission of Test Year January 1, 2017 – December 31, 2017 the District of Columbia (PSCDC) see
Slide 31: Pepco MD (Electric) Distribution Rate Case Filing
Pepco MD (Electric) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. 9472 – Per Settlement (Black Box) • January 2, 2018, Pepco MD filed an application with Maryland Public Service Commission Test Year January 1, 2017 – December 31, 2017 (MDPSC) seeking an increase in electric
Slide 32: PECO Distribution Rate Case Filing
PECO Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. R-2018-3000164 • PECO filed an electric distribution base rate case on March 29, 2018 Test Year January 1, 2019 – December 31, 2019 • Since January 1, 2016, through the Fully Projected Test Period 12 Months Budget Future Te
Slide 33: BGE (Gas) Distribution Rate Case Filing
BGE (Gas) Distribution Rate Case Filing Rate Case Filing Details Notes Docket No. Case No. 9484 • Case filed on June 8, 2018 seeking an increase in gas distribution revenues only Test Year August 1, 2017 – July 31, 2018 • The increase is primarily driven by infrastructure Test Period investments sin
Slide 34: Exelon Generation Disclosures
Exelon Generation Disclosures June 30, 2018 34 Q2 2018 Earnings Release Slides
Slide 35: Portfolio Management Strategy
Portfolio Management Strategy Align Hedging & Financials Portfolio Management Over Time Exercising Market Views Establishing Minimum Hedge Targets % Hedged High End of Profit % Hedged Low End of Profit Purely ratable Capital Credit Rating Structure Actual hedge % Capital & Market views on timing, pr
Slide 36: 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 37: ExGen Disclosures
ExGen Disclosures Gross Margin Category ($M) (1) 2018 2019 2020 Open Gross Margin (including South, West & Canada hedged GM) (2,5) $4,700 $4,050 $3,800 (2,5,6) Capacity and ZEC Revenues $2,300 $2,050 $1,900 (2,3) Mark-to-Market of Hedges $400 $400 $300 Power New Business / To Go $150 $600 $800 Non-P
Slide 38: ExGen Disclosures: Generation and Hedges
ExGen Disclosures Generation and Hedges 2018 2019 2020 Exp. Gen (GWh) (1) 199,000 202,400 193,100 Midwest 96,700 97,100 96,700 Mid-Atlantic(2,6) 60,100 54,100 48,600 ERCOT 20,000 25,900 23,600 New York(2,6) 15,900 16,600 15,500 New England 6,300 8,700 8,700 % of Expected Generation Hedged (3) 97%-10
Slide 39: ExGen Hedged Gross Margin Sensitivities
ExGen Hedged Gross Margin* Sensitivities (1) Gross Margin* Sensitivities (with existing hedges) 2018 2019 2020 Henry Hub Natural Gas ($/MMBtu) + $1/MMBtu $25 $335 $580 - $1/MMBtu - $(295) $(535) NiHub ATC Energy Price + $5/MWh $5 $155 $305 - $5/MWh $(5) $(155) $(305) PJM-W ATC Energy Price + $5/MWh
Slide 40: ExGen Hedged Gross Margin Upside/Risk
ExGen Hedged Gross Margin* Upside/Risk 9,000 8,500 Approximate Gross Margin* ($ million)(1) $8,100 $8,000 8,000 $7,900 $7,950 7,500 $7,350 7,000 $6,800 6,500 6,000 2018 2019 2020 (1) Represents an approximate range of expected gross margin, taking into account hedges in place, between the 5th and 95
Slide 41: Illustrative Example of Modeling Exelon Generation 2019 Total Gross Margin
Illustrative Example of Modeling Exelon Generation 2019 Total Gross Margin* South, Mid- New Row Item Midwest ERCOT New York West & Atlantic England Canada (A) Start with fleet-wide open gross margin $4.05 billion (B) Capacity and ZEC $2.05 billion (C) Expected Generation (TWh) 97.1 54.1 25.9 16.6 8.
Slide 42: Additional ExGen Modeling Data
Additional ExGen Modeling Data Total Gross Margin Reconciliation (in $M)(1) 2018 2019 2020 Revenue Net of Purchased Power and Fuel Expense*(2,3) $8,500 $8,075 $7,750 Other Revenues(4) $(200) $(175) $(200) Direct cost of sales incurred to generate revenues for certain $(250) $(300) $(250) Constellati
Slide 43: Appendix Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 43 Q2 2018 Earnings Release Slides
Slide 44: Q2 QTD GAAP EPS Reconciliation
Q2 QTD GAAP EPS Reconciliation Three Months Ended June 30, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP (Loss) Earnings Per Share(1) ($0.25) $0.13 $0.09 $0.05 $0.07 $0.02 $0.10 Mark-to-market impact of economic hedging activities 0.12 - - - - - 0.12 Unrealized gains related to NDT fund inves
Slide 45: Q2 QTD GAAP EPS Reconciliation (continued)
Q2 QTD GAAP EPS Reconciliation (continued) Three Months Ended June 30, 2018 ExGen ComEd PECO BGE PHI Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.18 $0.17 $0.10 $0.05 $0.09 ($0.04) $0.56 Mark-to-market impact of economic hedging activities (0.07) - - - - - (0.07) Unrealized losses related to
Slide 46: Q2 YTD GAAP EPS Reconciliation
Q2 YTD GAAP EPS Reconciliation Six Months Ended June 30, 2017 ExGen ComEd PECO BGE PHI Other Exelon 2017 GAAP Earnings Per Share(1) $0.20 $0.28 $0.23 $0.18 $0.22 $0.06 $1.17 Mark-to-market impact of economic hedging activities 0.15 - - - - - 0.15 Unrealized gains related to NDT fund investments (0.1
Slide 47: Q2 YTD GAAP EPS Reconciliation (continued)
Q2 YTD GAAP EPS Reconciliation (continued) Six Months Ended June 30, 2018 ExGen ComEd PECO BGE PHI Other Exelon 2018 GAAP Earnings (Loss) Per Share $0.32 $0.34 $0.22 $0.18 $0.15 ($0.06) $1.16 Mark-to-market impact of economic hedging activities 0.13 - - - - - 0.13 Unrealized losses related to NDT fu
Slide 48: Projected GAAP to Operating Adjustments
Projected GAAP to Operating Adjustments • Exelon’s projected 2018 adjusted (non-GAAP) operating earnings excludes the earnings effects of the following: − Mark-to-market adjustments from economic hedging activities − Unrealized gains and losses from NDT fund investments − Certain merger and integrat
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) (2) Exelon FFO/Debt = FFO (a) Adjusted Debt (b) Exelon FFO Calculation(2) GAAP Operating Income + Depreciation & Amortization = EBITDA - GAAP Interest Expense +/- GAAP Current Income Tax (Expense)/Benefit + Nuclear Fuel Amortization +/- GAAP to Operating Adjustmen
Slide 50: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ExGen Debt/EBITDA = Net Debt (a) ExGen Debt/EBITDA = Net Debt (c) Operating EBITDA (b) Excluding Non-Recourse Operating EBITDA (d) ExGen Net Debt Calculation ExGen Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term
Slide 51: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Legacy Consolidated Q2 2018 Operating ROE Reconciliation ($M) ACE Delmarva Pepco EXC EU Net Income (GAAP) $57 $102 $189 $1,384 $1,731 Operating Exclusions $0 $8 $3 $2 $13 Adjusted Operating Earnings $57 $109 $192 $1,386 $1,744 Average Equity $1,044 $1,425 $2,577 $13,
Slide 52: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 2018 Adjusted Cash from Ops Calculation ($M)(1) BGE ComEd PECO PHI ExGen Other Exelon Net cash flows provided by operating activities (GAAP) $700 $1,475 $625 $1,100 $4,250 $175 $8,325 Other cash from investing activities - - - - ($275) - ($275) Counterparty collatera