Exelon Corporation (NYSE: EXC) announced first quarter 2015
consolidated earnings as follows:
First Quarter
2015
2014
Adjusted (non-GAAP) Operating Results: Net Income ($
millions) $615 $530 Diluted Earnings per Share $0.71
$0.62 GAAP Results: Net Income ($ millions) $693 $90 Diluted
Earnings per Share $0.80 $0.10
“Exelon achieved earnings above our guidance range this quarter,
with strong performance at both our utilities and Constellation,”
said Christopher M. Crane, Exelon’s president and CEO. “We continue
to advocate strongly for policies and regulations that will bring
additional value to our customers, communities and
shareholders.”
First Quarter Operating Results
As shown in the table above, Exelon’s Adjusted (non-GAAP)
Operating Earnings increased to $0.71 per share in the first
quarter of 2015 from $0.62 per share in the first quarter of 2014.
Earnings in the first quarter of 2015 primarily reflected the
following favorable factors:
- Lower storm costs at PECO;
- Higher revenue net of purchased power
and fuel at Generation as a result of the lower costs to serve
load, the Integrys acquisition, and the cancellation of the
Department of Energy spent nuclear fuel disposal fees;
- Favorable weather and volume at PECO;
and
- Higher distribution revenue pursuant to
increased rates effective in December 2014 at BGE.
These factors were partially offset by:
- Higher operating and maintenance
expenses for contracting and inflation, offset in part by cost
savings from plan design changes for certain Other Post-Employment
Benefits plans;
- Lower realized energy prices at
Generation;
- Higher interest expense due to higher
outstanding debt;
- Unfavorable weather and volume at
ComEd; and
- Losses on the termination of interest
rate swaps.
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2015 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions)
(per diluted share)
Exelon Adjusted (non-GAAP) Operating
Earnings
$615
$0.71
Mark-to-Market Impact of Economic Hedging
Activities
100 0.11 Unrealized Gains Related to NDT Fund Investments 24 0.03
Amortization of Commodity Contract Intangibles 24 0.03 Merger and
Integration Costs (21) (0.02)
Mark-to-Market Impact of PHI Merger
Related Interest Rate Swaps
(48) (0.06) Midwest Generation Bankruptcy Recoveries 6 0.01 CENG
Non-Controlling Interest (7) (0.01)
Exelon GAAP Net Income
$693
$0.80
Adjusted (non-GAAP) Operating Earnings for the first quarter of
2014 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions)
(per diluted share)
Exelon Adjusted (non-GAAP) Operating
Earnings
$530
$0.62
Mark-to-Market Impact of Economic Hedging
Activities
(443) (0.52) Unrealized Gains Related to NDT Fund Investments 8
0.01 Amortization of Commodity Contract Intangibles (31) (0.04)
Merger and Integration Costs (9) (0.01) Tax Settlements 35
0.04
Exelon GAAP Net Income
$90
$0.10
First Quarter and Recent Highlights
- Pepco Holdings, Inc. Merger: On
February 11, 2015, the New Jersey Board of Public Utilities (NJBPU)
approved the proposed merger and the previously filed settlement
signed and filed by Exelon, PHI, Atlantic City Electric (ACE),
NJBPU staff, and the Independent Energy Coalition. On February 13,
2015, Exelon and PHI announced that they had reached a settlement
agreement in the proceeding before the Delaware Public Service
Commission (DPSC) to review the proposed merger. The settlement,
which was amended on April 7, 2015 and is subject to the approval
of the DPSC, was signed and filed by Exelon, PHI, Delmarva Power
& Light Company (DPL), the PSC staff, the Delaware Public
Advocate, the Delaware Department of Natural Resources and
Environment Control, the Delaware Sustainable Energy Utility, the
Mid-Atlantic Renewable Energy Coalition and the Clean Air Council.
Additionally, on March 17, 2015, Exelon and PHI announced that they
had reached a settlement agreement with Montgomery and Prince
George’s Counties in the proceeding before the Maryland Public
Service Commission (MPSC) to review the proposed merger. The
settlement, which is subject to the approval of the MPSC, was
signed and filed by Exelon, PHI, Montgomery County, Prince George’s
County, the National Consumer Law Center, National Housing Trust,
Maryland Affordable Housing Coalition, the Housing Association of
Nonprofit Developers and a consortium of nine recreational trail
advocacy organizations led by the Mid-Atlantic Off-Road
Enthusiasts. The merger continues to be conditioned upon approval
by the public service commissions of the District of Columbia,
Delaware and Maryland. Exelon and PHI continue to expect the merger
to be completed late in the second or third quarter of 2015.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and beginning April 1, 2014, 100 percent of the CENG units,
produced 42,657 gigawatt-hours (GWh), of which 7,796 GWh were
produced by CENG, in the first quarter of 2015, compared with
35,261 GWh in the first quarter of 2014. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 92.7 percent
capacity factor for the first quarter of 2015, compared with 94.1
percent for the first quarter of 2014. The number of planned
refueling outage days totaled 89, of which 41 were related to CENG,
in the first quarter of 2015, compared with 52 in the first quarter
of 2014. There were 32 non-refueling outage days, of which five
were related to CENG, in the first quarter of 2015, compared with
20 days in the first quarter of 2014.
- Low Carbon Portfolio
Legislation: In March 2015, the Low Carbon Portfolio Standard
(LCPS) legislation was introduced in the Illinois General Assembly.
The legislation would require ComEd and Ameren to purchase low
carbon energy credits to match 70 percent of the electricity used
on the distribution system. The LCPS is a technology-neutral
solution, so all generators of zero or low carbon energy would be
able to compete in the procurement process, including wind, solar,
hydro, clean coal and nuclear. Costs associated with purchasing the
low carbon energy credits would be collected from customers. If
passed by the General Assembly, the legislation would be presented
to the governor, who would have 60 days to decide on the bill.
- Fossil and Renewable Operations:
The dispatch match rate for Generation’s fossil/hydro fleet was
98.0 percent in the first quarter of 2015, compared with 92.9
percent in the first quarter of 2014. The performance in 2014 was
impacted by equipment issues in January. Energy capture for the
wind/solar fleet was 95.9 percent in the first quarter of 2015,
compared with 94.7 percent in the first quarter of 2014.
- PECO Electric Distribution Rate
Case: On March 27, 2015, PECO filed a petition with the PAPUC
requesting an increase of $190 million to its annual service
revenues for electric delivery, which would reflect a 4.4 percent
increase of total Pennsylvania jurisdictional operating revenues.
The requested rate of return on common equity is 10.95 percent. The
results of the rate case are expected to be known in the fourth
quarter of 2015. The new electric delivery rates would take effect
no later than January 1, 2016.
- Financing Activities: On March
2, 2015, ComEd issued $400 million aggregate principal amount of
its First Mortgage 3.70 percent Bonds, Series 118, due March 1,
2045.
- Hedging Update: Exelon’s hedging
program involves the hedging of commodity risk for Exelon’s
expected generation, typically on a ratable basis over a three-year
period. Expected generation is the volume of energy that best
represents our commodity position in energy markets from owned or
contracted for capacity based upon a simulated dispatch model that
makes assumptions regarding future market conditions, which are
calibrated to market quotes for power, fuel, load following
products, and options. The proportion of expected generation hedged
as of March 31, 2015, was 94 percent to 97 percent for 2015, 67
percent to 70 percent for 2016, and 37 percent to 40 percent for
2017. The primary objective of Exelon’s hedging program is to
manage market risks and protect the value of its generation and its
investment-grade balance sheet, while preserving its ability to
participate in improving long-term market fundamentals.
Operating Company Results
Generation consists of the generation, physical delivery
and marketing of power across multiple geographical regions through
its customer-facing business, Constellation, which sells
electricity and natural gas to both wholesale and retail customers.
Generation also sells renewable energy and other energy-related
products and services, and engages in natural gas and oil
exploration and production activities (Upstream).
Generation's first quarter 2015 GAAP Net Income was $443
million, compared with a net loss of $(185) million in the first
quarter of 2014. Adjusted (non-GAAP) Operating Earnings for the
first quarter of 2015 and 2014 do not include various items (after
tax) that were included in reported GAAP Net Income:
($ millions)
1Q15
1Q14
Generation Adjusted (non-GAAP)
Operating Earnings
$303
$258
Mark-to-Market Impact of Economic Hedging Activities 100 (446)
Unrealized Gains Related to NDT Fund Investments 24 8 Amortization
of Commodity Contract Intangibles 24 (31) Merger and Integration
Costs (7) (9) Midwest Generation Bankruptcy Recoveries 6 — Tax
Settlements — 35 CENG Non-Controlling Interest (7) —
Generation GAAP Net Income
(Loss)
$443
$(185)
Generation’s Adjusted (non-GAAP) Operating Earnings in the first
quarter of 2015 increased $45 million compared with the same
quarter in 2014. This increase primarily reflected higher revenue
net of purchased power and fuel at Generation as a result of lower
cost to serve load, the Integrys acquisition, and the cancellation
of the DOE spent nuclear fuel disposal fees, offset by lower
realized energy prices. The increase was partially offset by higher
operating and maintenance expenses reflecting increased inflation,
offset in part by reduced other postretirement benefit costs, and
increased interest expense.
ComEd consists of electricity transmission and
distribution operations in Northern Illinois.
ComEd's first quarter 2015 GAAP Net Income was $90 million,
compared with net income of $98 million in the first quarter of
2014. Adjusted (non-GAAP) Operating Earnings for the first quarter
of 2015 do not include merger and integration costs that were
included in reported GAAP Net Income:
($ millions)
1Q15
1Q14
ComEd Adjusted (non-GAAP) Operating
Earnings
$92
$98
Merger and Integration Costs (2) —
ComEd GAAP Net Income
$90
$98
ComEd’s Adjusted (non-GAAP) Operating Earnings in the first
quarter of 2015 decreased $6 million from the same quarter in 2014
primarily as a result of unfavorable weather and volume in the
first quarter of 2015. Electric distribution earnings were flat,
reflecting the impacts of increased capital investment, offset by
lower allowed return on common equity due to a decrease in treasury
rates.
For the first quarter of 2015, heating degree-days in the ComEd
service territory were down 6.2 percent relative to the same period
in 2014 and were 14.8 percent above normal. Total retail electric
deliveries decreased 3.5 percent in the first quarter of 2015
compared with the same period in 2014.
Weather-normalized retail electric deliveries decreased 1.9
percent in the first quarter of 2015 compared with the same period
in 2014.
PECO consists of electricity transmission and
distribution operations and retail natural gas distribution
operations in Southeastern Pennsylvania.
PECO’s first quarter 2015 GAAP Net Income was $139 million,
compared with net income of $89 million in the first quarter of
2014. Adjusted (non-GAAP) Operating Earnings for the first quarter
of 2015 do not include merger and integration costs that were
included in reported GAAP Net Income:
($ millions)
1Q15
1Q14
PECO Adjusted (non-GAAP) Operating
Earnings
$140
$89
Merger and Integration Costs (1) —
PECO GAAP Net Income
$139
$89
PECO’s Adjusted (non-GAAP) Operating Earnings in the first
quarter of 2015 increased $51 million from the same quarter in 2014
primarily due to decreased storm costs and favorable weather and
volume.
For the first quarter of 2015, heating degree-days in the PECO
service territory were up 3.2 percent relative to the same period
in 2014 and were 18.4 percent above normal. Total retail electric
deliveries were up 1.5 percent compared with the first quarter of
2014. Natural gas deliveries (including both retail and
transportation segments) in the first quarter of 2015 were up 4.9
percent compared with the same period in 2014.
Weather-normalized retail electric and gas deliveries increased
0.4 percent and 2.0 percent, respectively, in the first quarter of
2015 compared with the same period in 2014. The increased gas
volumes were driven primarily by moderate economic and customer
growth.
BGE consists of electricity transmission and distribution
operations and retail natural gas distribution operations in
Central Maryland.
BGE’s first quarter 2015 GAAP Net Income was $106 million,
compared with net income of $85 million in the first quarter of
2014. Adjusted (non-GAAP) Operating Earnings for the first quarter
of 2015 do not include merger and integration costs that were
included in reported GAAP Net Income:
($ millions) 1Q15
1Q14
BGE Adjusted (non-GAAP) Operating
Earnings
$107
$85
Merger and Integration Costs (1) —
BGE GAAP Net Income
$106
$85
BGE’s Adjusted (non-GAAP) Operating Earnings in the first
quarter of 2015 increased $22 million from the same quarter in
2014, primarily due to increased distribution revenues pursuant to
increased rates effective in December 2014. Due to decoupling,
BGE's distribution revenues are not affected by actual weather.
Adjusted (non-GAAP) Operating Earnings
Adjusted (non-GAAP) operating earnings, which generally exclude
significant one-time charges or credits that are not normally
associated with ongoing operations, mark-to-market adjustments from
economic hedging activities and unrealized gains and losses from
NDT fund investments, are provided as a supplement to results
reported in accordance with GAAP. Management uses such adjusted
(non-GAAP) operating earnings measures internally to evaluate the
company’s performance and manage its operations. Reconciliation of
GAAP Net Income to adjusted (non-GAAP) operating earnings for
historical periods is attached. Additional earnings release
attachments, which include the reconciliation on page 8, are posted
on Exelon’s Web site: www.exeloncorp.com and have been furnished to the
Securities and Exchange Commission on Form 8-K on April 29,
2015.
Cautionary Statements Regarding Forward-Looking
Information
This press release 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 materially from the
forward-looking statements made by Exelon Corporation, Commonwealth
Edison Company, PECO Energy Company, Baltimore Gas and Electric
Company and Exelon Generation Company, LLC (Registrants) include
those factors discussed herein, as well as the items discussed in
(1) Exelon’s 2014 Annual Report on Form 10-K in (a) ITEM 1A. Risk
Factors, (b) ITEM 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations and (c) ITEM 8.
Financial Statements and Supplementary Data: Note 22; (2) Exelon’s
First Quarter 2015 Quarterly Report on Form 10-Q (to be filed on
April 29, 2015) in (a) Part II, Other Information, ITEM 1A. Risk
Factors; (b) Part 1, Financial Information, ITEM 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations and (c) Part I, Financial Information, ITEM 1. Financial
Statements: Note 17; and (3) other factors discussed in filings
with the SEC by the Registrants. Readers are cautioned not to place
undue reliance on these forward-looking statements, which apply
only as of the date of this press release. None of the Registrants
undertakes any obligation to publicly release any revision to its
forward-looking statements to reflect events or circumstances after
the date of this press release.
Exelon Corporation (NYSE: EXC) is the nation’s
leading competitive energy provider, with 2014 revenues of
approximately $27.4 billion. Headquartered in Chicago, Exelon does
business in 48 states, the District of Columbia and Canada. Exelon
is one of the largest competitive U.S. power generators, with more
than 32,000 megawatts of owned capacity comprising one of the
nation’s cleanest and lowest-cost power generation fleets. The
company’s Constellation business unit provides energy products and
services to more than 2.5 million residential, public sector and
business customers, including more than two-thirds of the Fortune
100. Exelon’s utilities deliver electricity and natural gas to more
than 7.8 million customers in central Maryland (BGE), northern
Illinois (ComEd) and southeastern Pennsylvania (PECO). Follow
Exelon on Twitter @Exelon.
EXELON CORPORATION Reconciliation of
Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated
Statements of Operations (unaudited) (in millions,
except per share data) Three Months Ended March 31,
2015 Three Months Ended March 31, 2014
Adjusted Adjusted GAAP
(a) Adjustments Non-GAAP GAAP (a)
Adjustments Non-GAAP Operating revenues $
8,830 $ (194 ) (b),(c) $ 8,636 $ 7,237 $ 850 (b),(c),(d) $ 8,087
Operating expenses Purchased power and fuel 4,470 7 (b),(c)
4,477 4,340 81 (b),(c) 4,421 Operating and maintenance 2,081 (12 )
(d),(e) 2,069 1,858 (14 ) (d) 1,844 Depreciation and amortization
610 — 610 564 — 564 Taxes other than income 304 — 304
293 — 293
Total operating
expenses 7,465 (5 ) 7,460 7,055 67 7,122
Equity in earnings
(loss) of unconsolidated affiliates — — — (19 ) 12 (c),(d) (7 )
Gain on sales of assets 1 — 1 5
— 5
Operating income 1,366 (189 ) 1,177
168 795 963
Other income and
(deductions) Interest expense, net (345 ) 89 (d),(f) (256 )
(227 ) — (227 ) Other, net 80 (49 ) (g) 31 98
(42 ) (g),(i) 56
Total other income and (deductions)
(265 ) 40 (225 ) (129 ) (42 ) (171 )
Income before income
taxes 1,101 (149 ) 952 39 753 792
Income taxes 363
(64 )
(b),(c),(d),(e),(f),(g)
299 (54 ) 313 (b),(c),(d),(g),(i) 259
Net
income 738 (85 ) 653 93 440 533
Net income attributable to
noncontrolling interests, preferred security dividends and
redemption and preference stock dividends 45 (7 ) (h) 38
3 — 3
Net income attributable to
common shareholders $ 693 $ (78 ) $ 615 $ 90
$ 440 $ 530
Effective tax rate 33.0 %
31.4 % (138.5 )% 32.7 %
Earnings per average common share
Basic $ 0.80 $ (0.09 ) $ 0.71 $ 0.10 $ 0.52 $ 0.62 Diluted $ 0.80
$ (0.09 ) $ 0.71 $ 0.10 $ 0.52 $ 0.62
Average common shares outstanding Basic 862 862 858
858 Diluted 867 867 861 861
Effect of adjustments on earnings
per average diluted common share recorded in accordance with
GAAP: Mark-to-market impact of economic hedging activities (b)
$ (0.11 ) $ 0.52 Amortization of commodity contract intangibles (c)
(0.03 ) 0.04 Merger and integration costs (d) 0.02 0.01
Midwest Generation bankruptcy recoveries
(e)
(0.01 ) —
Mark-to-market impact of PHI merger
related interest rate swaps (f)
0.06 — Unrealized gains related to NDT fund investments (g) (0.03 )
(0.01 ) CENG Non-controlling interest (h) 0.01 — Tax settlement (i)
— (0.04 ) Total adjustments $ (0.09 ) $ 0.52
Note: For the three months ended March 31, 2015, includes the
results of operations of Constellation Energy Nuclear Group, LLC
due to the execution of the nuclear operating services agreement on
April 1, 2014.
(a) Results reported in accordance with GAAP. (b) Adjustment
to exclude the mark-to-market impact of Exelon’s economic hedging
activities, net of intercompany eliminations. (c) Adjustment to
exclude the non-cash amortization of intangible assets, net,
related to commodity contracts recorded at fair value, if and when
applicable, related to the Constellation merger and the Integrys
acquisition. (d) Adjustment to exclude certain costs associated
with the Constellation merger, pending PHI acquisition, and at
Generation, the CENG integration and Integrys acquisition,
including, if and when applicable, professional fees,
employee-related expenses, integration activities, upfront credit
facilities fees, merger commitments, and certain pre-acquisition
contingencies. (e) Adjustment to reflect a benefit related to the
favorable settlement of a long-term railcar lease agreement
pursuant to the Midwest Generation bankruptcy. (f) Adjustment to
exclude the mark-to-market impact of Exelon Corporate's
forward-starting interest rate swaps related to anticipated
financing for the pending PHI acquisition. (g) Adjustment to
exclude the unrealized gains on NDT fund investments to the extent
not offset by contractual accounting as described in the notes to
the consolidated financial statements. (h) Adjustment to account
for Generation's non-controlling interest related to CENG exclusion
items, primarily related to the impact of unrealized gains and
losses on NDT fund investments. (i) Adjustment to reflect a benefit
related to favorable settlements in 2014 of certain income tax
positions on Constellation’s 2009-2012 tax returns.
Exelon CorporationFrancis IdehenInvestor
Relations312-394-3967orPaul AdamsCorporate
Communications410-470-4167
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