Edison Electric Institute Financial Conference November 11 – 12, 2013 Exhibit 99.1 |
1 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 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 2012 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 19; (2) Exelon’s Third Quarter 2013 Quarterly Report on Form 10-Q 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 18; 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 presentation. 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 presentation. 2013 EEI Conference |
2 While we believe in market recovery, we are not waiting for it and are taking actions to improve our value The current trends in the industry… … are continuing to create a challenging environment… … and Exelon is responding… …while monitoring the power markets for recovery. Increasing natural gas production Expanding renewable capacity Growing demand response and energy efficiency Low natural gas and power prices Low load growth Lack of volatility Asset optimization and rationalization Leverage business model to identify and invest in growth areas Manage costs and improve efficiencies Advocate for policies that enable well-functioning competitive markets and create value for shareholders Full impact of coal retirements is not currently reflected in the forward markets Significant number of coal plants need additional controls to comply with MATS Forward market implied heat rates are trading at a discount to the spot market Upside in both forward and spot markets as current heat rates move higher 2013 EEI Conference 2 Setting the Context |
3 Exelon’s Strategic Response to the Current Environment We are biased towards action while we leverage our competencies and strengths to influence our financial future Asset Optimization Growth Investments Cost Management Utilities Invest $15 billion across the planning period Upgrade aging infrastructure Invest in infrastructure and new technologies Provide stable earnings growth ExGen Invest in renewables and expand footprint in the natural gas business to diversify Maintain retail pricing discipline Bolster presence in core regions Research and invest in emerging technologies Review Solutions from All Angles Infrastructure Commercial Policy Legal Scenarios for Optimization Cost and productivity enhancement Operations improvement Transmission PPAs Sale Retirement Our Record Record of managing costs $550 million in merger synergies Reduced 2013 ExGen O&M by $150 million CENG annual projected synergies of $50-70 million (1) Continued Focus Expand cost management efforts Efficiency gains through productivity and technology enhancements Share best practices across the utilities (1) At 100% ownership, Exelon share is 50% 2013 EEI Conference |
4 Advocating for Public Policy to Enhance Customer and Shareholder Value PJM: Engaged in stakeholder process regarding PJM reliance on planned resources Minimum Offer Price Rule (MOPR) Reform Demand Response Reforms ERCOT: • Resource adequacy New England: • Energy and capacity market reforms RGGI: • New Model Rule Oppose Subsidized Generation: IL: Defeated Taylorsville Energy Project Subsidy legislation MA: Opposed Footprint Power Subsidy legislation NJ: Won LCAPP Court decision Infrastructure & Ratemaking Improvements: IL: Energy Infrastructure and Modernization Legislation (Senate Bill 9) MD/PA: Policies to speed recovery for gas and infrastructure investments Market Policy Federal Policy State Policy Regulatory / Policy Actions Subsidies: Leading voice against extension of the Production Tax Credit and other electric generation subsidies EPA Regulations: Mercury and Air Toxics Standards (MATS) Greenhouse gases (new and existing sources) 316(b) 2013 EEI Conference |
5 Investing in a Stronger Future Utility Investment Operating Excellence Asset Optimization Portfolio Management Strong Balance Sheet Significant infrastructure and technology enhancements under regulatory structures that allow a fair rate of return. Generating fleet will continue unwavering focus on world class performance. Disciplined fleet evaluation will drive strategic decisions to unlock value, improve cash flow and grow earnings. Enhance the value of our portfolio through implementation of our fundamental view and disciplined retail pricing. Solid financial footing and investment grade credit rating will allow us to grow in challenging times. Core Strength Strategic Focus and Actions Well-Crafted Public Policies Advocate for policies that strengthen competitive markets, limit subsidies and enhance the value of clean generation. 2013 EEI Conference |
Financial Update * * * * * |
7 2013 Operating Earnings Guidance 2013 Prior Guidance (prior to 3Q earnings call) $2.35 - $2.65 (1) $1.40 - $1.60 $0.35 - $0.45 $0.35 - $0.45 $0.15 - $0.25 ExGen ComEd PECO BGE (1) Earnings guidance for OpCos may not add up to consolidated EPS guidance. Refer to slide 15 for a list of adjustments from GAAP EPS to adjusted (non-GAAP) operating EPS. Key Drivers of Change in Full-Year Guidance • Strong YTD earnings through Q3 • Lower than expected ExGen gross margin largely offset by O&M savings • Delay of AVSR project • Lower storm costs at utilities 2013 EEI Conference 2013 Revised Guidance (disclosed at 3Q earnings call) $2.40 - $2.60 (1) $1.40 - $1.50 $0.45 - $0.50 $0.40 - $0.45 $0.20 - $0.25 ExGen ComEd PECO BGE |
Capital Expenditure Expectations 75 100 100 25 50 25 125 100 75 50 25 50 25 75 150 2,075 750 1,050 100 2015 2,350 875 950 200 2014 2,400 900 900 150 2016 2013 2,725 950 1,000 25 500 150 Base Capex Nuclear Fuel Fukushima Response (2) MD Commitments Wind Solar Upstream Gas Nuclear Uprates 1,400 575 200 450 1,725 850 225 300 2014 3,025 1,650 700 225 450 2013 2,625 2016 2,950 1,750 725 250 225 2015 3,100 Electric Distribution Electric Transmission Gas Delivery Smart Grid/Smart Meter Exelon Utilities Exelon Generation (1) (in $M) (in $M) 8 2013 EEI Conference (1) Excludes CENG (2) Fukushima Response spend excludes Salem, which is included in Base CapEx |
2013 Projected Sources and Uses of Cash 9 2013 EEI Conference |
Commitment to Investment Grade Exelon remains committed to maintaining investment grade ratings (1) Current senior unsecured ratings for Exelon, Exelon Generation and BGE and senior secured ratings for ComEd and PECO as of September 25, 2013. (2) All ratings at S&P and Moody’s have a stable outlook. On August 23rd, BGE was upgraded one notch to A- as part of S&P’s annual review. All other entities were affirmed. Additionally, on February 8th, Fitch affirmed all ratings for Exelon and subs and placed ComEd on positive outlook. (3) Credit metric target ranges are for ExGen and include the debt obligations of Exelon Corp. 10 2013 EEI Conference |
Pension and OPEB Forecast Current Forecast: • The table below provides the combined company’s forecasted 2014 and 2015 pension and OPEB expense and contributions 11 2013 EEI Conference |
2014 Pension and OPEB Sensitivities 12 2013 EEI Conference • Tables below provide sensitivities for the combined company’s 2014 pension and OPEB expense and contributions (1) under various discount rate and S&P 500 asset return scenarios |
13 Additional 2013 ExGen and CENG Modeling (1) ExGen amounts for O&M, TOTI and Depreciation & Amortization exclude the impacts of CENG. CENG impact is reflected in “Equity earnings of unconsolidated affiliates” in the Income Statement. (2) ExGen O&M excludes P&L neutral decommissioning costs and the impact from O&M related to entities consolidated solely as a result of the application of FIN 46R. (3) TOTI excludes gross receipts tax for retail. (4) ExGen Depreciation & Amortization excludes the impact of P&L neutral decommissioning. (5) The CENG model inputs are intended to support Exelon’s guidance range and do not represent CENG’s final estimates. 2013 EEI Conference P&L Item 2013 Estimate ExGen Model Inputs (1) O&M (2) $4,275M Taxes Other Than Income (TOTI) (3) $300M Depreciation & Amortization (4) $825M Interest Expense $350M CENG Model Inputs (at ownership) (5) Gross Margin Included in ExGen Disclosures O&M/TOTI $400M - $450M Depreciation & Amortization/Accretion of Asset Retirement Obligations $100M - $150M Capital Expenditures $75M - $125M Nuclear Fuel Capital Expenditures $100M - $150M |
Debt Maturity Schedule (in $M) Debt Maturity Profile (1) (2014-2020) 14 2013 EEI Conference (1) As of 9/30/13 (2) Includes $550M in 2015 and 2020 of inter-company loan agreements between Exelon and Exelon Generation that mirror the terms and amounts of the third party obligations of Exelon. 500 840 2017 2020 1,600 1,100 1,340 2019 2018 600 500 1,125 700 425 2016 1,342 77 300 665 300 2015 1,610 550 260 800 2014 1,482 615 250 617 Exelon Corp BGE ExGen (2) PECO ComEd |
GAAP to Operating Adjustments 15 2013 EEI Conference |
Exelon Utilities * * * * * * |
17 ComEd April 2013 Distribution Formula Rate Updated Filing 2013 EEI Conference |
18 BGE Rate Case 2013 EEI Conference Rate Case Request Electric Gas Docket # 9326 Test Year August 2012 – July 2013 Common Equity Ratio 51.1% Requested Returns ROE: 10.5%; ROR: 7.87% ROE: 10.35%; ROR: 7.79% Rate Base $2.8B $1.0B Revenue Requirement Increase $82.6M $24.4M Proposed Distribution Price Increase as % of overall bill 2% 3% Timeline • 5/17/13: BGE filed application with the MDPSC seeking increases in gas & electric distribution base rates • 8/5/13: Staff/Intervenors file direct testimony • 8/23/13: Update 8 months actual/4 month estimated test period data with actuals for last 4 months (March - July 2013) • 9/17/13: BGE and staff/intervenors file rebuttal testimony • 10/3/13: Staff/Intervenors and BGE file surrebuttal testimony • 10/18/13 – 10/29/13: Hearings • 11/12/13: Initial Briefs • 11/22/13: Reply Briefs • 12/13/13: Final Order • New rates are in effect shortly after the final order |
19 ComEd Load 2013 EEI Conference Weather-Normalized Load YoY Growth Economic Forecast of Drivers that Influence Load 2013E 0.1% -0.6% -0.5% -0.3% 1.2% 2012 -0.3% 0.2% -0.6% -0.1% 2.1% GMP Large C&I Small C&I Residential All Customers Driver or Indicator 2014 Outlook Gross Metro Product (GMP) 2.2% growth in GMP reflects overall better economic conditions than the slow growth in 2013 (Manufacturing and Professional Business Services employment accelerate in 2014) Employment 1.4% increase in total employment is expected for 2014, which is consistent with the past three years Manufacturing Manufacturing employment is expected to grow 1.4% in 2014. This is a significant improvement over the 0.7% growth in 2012 and the 0.4% growth in 2013 Households Household formations are expected to increase 0.4% in 2014. This is a slight improvement over the 0.3% realized in the past couple of years Energy Efficiency Continued expansion of EE program expected to reduce usage in 2014 by approximately 1.2% Notes: 2012 data is not adjusted for leap year. Source of 2014 economic outlook data is Global Insight (July 2013). Moderate growth economy and energy efficiency initiatives will continue to impact load growth |
20 PECO Load Weather-Normalized Load YoY Growth Economic Forecast of Drivers that Influence Load 2013E -2.4% 1.7% -0.2% 0.2% 1.0% 2012 -2.7% -2.3% -1.7% -2.2% 1.5% GMP Large C&I Small C&I Residential All Customers Driver or Indicator 2014 Outlook Gross Metro Product (GMP) GMP projected to grow at 2.1% for 2014, vs. pre-recession average of 2.5% Resident Employment Resident Employment outlook is 1.0% in 2014 vs. 0.8% in 2013 Manufacturing Employment Manufacturing employment is expected to grow at 1.1%. Philadelphia has had negative growth from 2000 to 2013 Households Household growth is expected to be 0.7%, strongest growth since 2010 Energy Efficiency Deemed Energy Efficiency impact forecasted to be ~1% reduction in usage in 2014 Moderately strong economic recovery will drive sales in 2014, but this will be partially offset by on-going energy efficiency initiatives 2013 EEI Conference Notes: 2012 data is not adjusted for leap year. Source of 2013 economic outlook data is Global Insight (August 2013) |
21 BGE Load Weather-Normalized Load YoY Growth Economic Forecast of Drivers that Influence Load 2013E -3.6% 1.4% -1.1% 1.8% 2012 -0.2% -2.8% -2.1% -1.5% GMP Large C&I Small C&I Residential All Customers 2014 Outlook Gross Metro Product (GMP) GMP is projected to grow at 2.4% for 2014. Employment 1.4% growth projected. BGE’s decoupled non-rate case revenue growth is primarily driven by customer growth. The main driver for customer growth is employment. Manufacturing Manufacturing employment is expected to be fairly flat to 2013 levels in 2014 Households Household growth is projected to be 0.9%, the same as 2013. Energy Efficiency Continued expansion of EE programs will partially offset growth seen due to improvements in economic conditions. 2014 is expected to be another transition year for the Baltimore economy with continued slow to moderate growth Notes: 2012 Data is not adjusted for leap year. Source of 2014 economic outlook data is Global Insight (August 2013). 1.4% 2.5% 2013 EEI Conference Driver or Indicator |
22 Exelon Utilities: Rate Base (1) and ROE Targets Continued investment in Utilities will provide stable earnings growth ($ in billions) 2013E $5.4 $3.5 $0.7 $1.1 $1.3 2016E $4.0 $0.8 $6.1 2015E $5.9 $3.9 $0.7 $1.3 2014E $5.7 $3.8 $0.7 $1.2 Electric Distribution Electric Transmission Gas Delivery 2014E $9.5 $7.2 $2.3 2013E $8.7 $6.6 $2.1 2016E 2015E $10.7 $7.9 $2.9 $11.6 $3.1 $8.5 Distribution Transmission $3.1 $5.1 $3.0 $0.8 $1.2 2014E $4.8 $3.0 $0.7 $1.2 2013E $4.6 $2.9 $0.6 $1.1 $0.9 2016E $5.3 $1.3 2015E Electric Distribution Electric Transmission Gas Delivery (1) ComEd and PECO rate base represents end-of-year; and BGE rate base represents a trailing 13-month average. Numbers may not add due to rounding. (2) Equity component for distribution rates will be the actual capital structure adjusted for goodwill. (3) Earned ROE will reflect the weighted average of 11.5% allowed transmission ROE and distribution ROE resulting from 30-year Treasury plus 580 basis points for each calendar year. 2013 EEI Conference (4) Per MDPSC merger commitment, BGE is precluded from paying dividends through 2014. Per MDPSC orders, BGE cannot pay out a dividend to its parent company if said dividend would cause BGE’s equity ratio to fall below 48%. |
23 Capital Expenditures ($ in millions) $275 $25 $75 $100 2014E $625 $300 $175 $50 $100 2013E $550 2016E $425 $250 $75 $100 2015E $475 $225 $175 $50 $100 Electric Distribution Smart Meter/Smart Grid (1) Electric Transmission Gas Delivery 2015E $2,025 $1,150 $275 $600 2014E $1,775 $1,050 $175 $550 2013E $1,450 $850 $150 $450 2016E $1,925 $225 $500 $1,200 2015E $600 $300 $175 $125 2014E $625 $150 $150 $300 $300 $100 $100 $125 2013E $625 $300 $100 $100 $125 2016E $600 (1) Smart Meter/Smart Grid CapEx net of proceeds from U.S. Department of Energy (DOE) grant. For BGE, includes CapEx from Smart Energy Savers program of ~$10M per year. 2013 EEI Conference |
24 Regulatory Schedule 4Q13 1Q14 2Q14 3Q14 2014 formula rate case filing (by 5/15/14) ComEd Distribution Formula Rate Illinois Power Agency Procurement ComEd Transmission Rate Update 2014 formula rate case filing (by 5/15/14); rates effective June 2014 thru May 2015 2014 formula rate case filing final order (by 12/31/14); rates effective 1/2/15 – 12/31/15 4Q14 BGE Distribution Rates PECO Supply Procurement BGE Transmission Rate Update 2014 formula rate case filing (by 5/15/14); rates effective June 2014 thru May 2015 MDPSC Order expected December 13, 2013 BGE Supply Procurement Regular procurement event (January) Regular procurement event (April and June) Potential Electric and Gas DSIC Filing PECO Distribution Filing 13-0318 final order (by 12/25); rates effective 1/2/14 – 12/31/14 DSP II Procurement (January) DSP II Procurement (September) Regular procurement event (October) Regular procurement event (October) IPA proposed procurement events in April and September 2013 EEI Conference |
* * |
26 Commercial Business Overview Scale, Scope and Flexibility Across the Energy Value Chain Development and exploration of natural gas and liquids properties 12 assets in seven states ~255 BCFe of proved Reserves (1) Leading merchant power generation portfolio in the U.S. ~35 GW of owned generation capacity (2) Clean portfolio, well positioned for evolving regulatory requirements Industry-leading wholesale and retail sales and marketing platform ~150 TWh of load and ~410 BCF of gas delivered (3) ~ 1 million residential and 100,000 business and public sector customers One of the largest and most experienced Energy Management providers ~2,000 MW of Load Response under contract (4) Over 4,000 energy savings projects implemented across the U.S. Benefiting from scale, scope and flexibility across the value chain (1) Estimated proved reserves as of 12/31/2012. Includes Natural Gas (NG), NG Liquids (NGL) and Oil. NGL and Oil are converted to BCFe at a ratio of 6:1. (2) Total owned generation capacity as of 9/30/2013. (3) Expected for 2013 as of 9/30/2013. Electric load and gas includes fixed price and indexed products. (4) Load Response estimate as of 9/30/2013. 2013 EEI Conference |
New York New England ERCOT MidAtlantic 27 Generation and Load Match The combination establishes an industry-leading platform with regional diversification of the generation fleet and customer-facing load business Generation Capacity, Expected Generation and Expected Load 2014 in TWh (1,2) Expected Load Expected Generation Generation capacity: 2013 EEI Conference Peaking Intermediate Baseload Renewables (1) Owned and contracted generation capacity converted from MW to MWh assuming 100% capacity factor for all technology types, except for renewable capacity which is shown at estimated capacity factor. (2) Expected generation and load shown in the chart above will not tie out with load volume and ExGen disclosures. Load shown above does not include indexed products and generation reflects a net owned and contracted position. Estimates as of 9/30/2013. South/West/ Canada MidWest |
28 Electric Load Serving Business: Growth Target Commercial Load (1) 2013 – 2016 TWh 8% Load Split by Customer Class (2013 TWh) Focus on disciplined pricing and maximizing margin potential through all channels to market A diverse set of customers enhances margin opportunities from a sales and portfolio management standpoint 33% Wholesale 35% Large C&I Medium C&I 16% Small C&I 8% Mass Markets 7% C&I = Commercial & Industrial 2013 EEI Conference |
29 Electric Load Serving Business: Strategy Constellation is well positioned in a U.S. market where capacity available for competitive supply has room to grow Total U.S. Power Market in 2013 Estimated Load ~ 3,700 TWh (1) (1) Source: EIA, KEMA and internal estimates. Through retail and wholesale channels, Constellation currently serves 150 TWhs, or approximately 4%, of total U.S. power demand 18% Eligible Non-Switched 14% Eligible Switched 20% Muni/Co-Op Market Other Ineligible 48% 2013 EEI Conference |
Capacity Markets 30 2013 EEI Conference |
31 Retail and Wholesale Gas (1) Estimate as of 9/30/2013. Retail Gas Portfolio Size: • 410 Bcf expected to be served in 2013 with moderate growth thereafter • Month by month renewals, with high retention rates Market Potential: • All states are competitive markets with an estimated total market size of 15,000 Bcf, of which 7,500 Bcf is currently switched Growth Strategy and Objectives: • Looking to grow Northeast gas markets as well as ONEOK territories Wholesale Gas Portfolio Size: • 8 Bcf wholesale storage • 450,000 MMBtu’s per day of term transport • Over 1 Bcf/day of plant supply • ~4Bcf/day of NG flows to meet growing customer business, asset optimization, and plant supply Growth Strategy and Objectives: • Continue to expand wholesale presence to complement power assets • Increase market knowledge of regional and basis transport information to assist power forecasting • Continue to expand physically based customer business • Continue to grow NG asset portfolio that complements customer business & plant supply requirements 2013 EEI Conference |
32 (1) Oil/NGL conversion to gas is 6:1. (2) Constellation does not operate any of its properties. Note: E&P = Exploration and Production (3) 12/31/12 Year end reserves excluding Eagle Ford (4) Net daily production as of Q2 2013 excluding Eagle Ford Upstream E&P Assets 2013 EEI Conference |
2013 EEI Conference 33 Energy Price Upside - NIHub We continue to believe there is $4 of upside in NiHub energy prices in 2015/2016 driven by several factors including compliance with environmental regulations $31.00 $30.50 $31.25 $33.07 $4.21 $4.10 $3.91 2011 2012 2013 2014 2015 2016 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $30.25 $3.68 $2.75 $28.95 $3.99 Realized Forward Key Drivers • Year over year increases in fuel prices • Current and future coal retirements • Higher variable unit costs due to MATS • Modest load growth • Offset by new generation (gas and renewable) Other factors (not included) • Demand Response energy bidding • Increased variable costs due to RGGI • Scarcity pricing NG-NYMEX NIHub Upside NIHub ATC |
34 Exelon Generation Disclosures September 30, 2013 (As disclosed in Third Quarter 2013 Earnings materials) 2013 EEI Conference |
35 Portfolio Management Strategy Protect Balance Sheet Ensure Earnings Stability Create Value 2013 EEI Conference |
36 Components of Gross Margin Categories Gross margin linked to power production and sales Gross margin from other business activities 2013 EEI Conference |
37 ExGen Disclosures 2013 EEI Conference Gross Margin Category ($M) (1,2) 2013 2014 2015 2016 Open Gross Margin (including South, West & Canada hedged GM) (3) $5,600 $5,650 $5,800 $5,800 Mark to Market of Hedges (3,4) $1,700 $900 $450 $250 Power New Business / To Go $50 $500 $750 $750 Non-Power Margins Executed (5) $400 $200 $100 $100 Non-Power New Business / To Go (5) $200 $400 $500 $500 Total Gross Margin $7,950 $7,650 $7,600 $7,400 Reference Prices (6) 2013 2014 2015 2016 Henry Hub Natural Gas ($/MMbtu) $3.65 $3.86 $4.06 $4.17 Midwest: NiHub ATC prices ($/MWh) $31.18 $30.25 $30.47 $30.99 Mid-Atlantic: PJM-W ATC prices ($/MWh) $37.58 $37.19 $37.53 $38.13 ERCOT-N ATC Spark Spread ($/MWh) HSC Gas, 7.2HR, $2.50 VOM $1.09 $6.30 $8.18 $7.13 New York: NY Zone A ($/MWh) $37.07 $35.54 $35.70 $36.07 New England: Mass Hub ATC Spark Spread($/MWh) ALQN Gas, 7.5HR, $0.50 VOM $3.70 $4.88 $3.69 $2.33 |
38 ExGen Disclosures Generation and Hedges 2013 2014 2015 2016 Exp. Gen (GWh) (1) 214,700 215,500 209,400 211,000 Midwest 97,200 96,900 96,400 97,400 Mid-Atlantic (2) 74,500 73,600 70,100 71,400 ERCOT 13,200 17,800 19,600 19,400 New York (2) 14,000 12,500 9,300 9,300 New England 15,800 14,700 14,000 13,500 % of Expected Generation Hedged (3) 97-100% 84-87% 48-51% 19-22% Midwest 97-100% 85-88% 47-50% 16-19% Mid-Atlantic (2) 97-100% 90-93% 56-59% 21-24% ERCOT 92-95% 81-84% 39-42% 31-34% New York (2) 98-101% 87-90% 54-57% 19-22% New England 95-98% 49-52% 22-25% 7-10% Effective Realized Energy Price ($/MWh) (4) Midwest $37.00 $33.50 $33.00 $34.00 Mid-Atlantic (2) $49.00 $45.00 $45.00 $49.00 ERCOT (5) $24.00 $11.00 $9.50 $6.50 New York (2) $32.00 $37.00 $42.50 $39.50 New England (5) $6.00 $3.50 $2.00 $5.50 2013 EEI Conference |
39 ExGen Hedged Gross Margin Sensitivities Gross Margin Sensitivities (With Existing Hedges) (1, 2,3) 2013 2014 2015 2016 Henry Hub Natural Gas ($/MMbtu) + $1/MMbtu $10 $110 $370 $575 - $1/MMbtu $0 $(45) $(305) $(550) NiHub ATC Energy Price + $5/MWh $0 $65 $325 $450 - $5/MWh $0 $(60) $(325) $(450) PJM-W ATC Energy Price + $5/MWh $0 $35 $175 $290 - $5/MWh $0 $(35) $(170) $(280) NYPP Zone A ATC Energy Price + $5/MWh $0 $5 $20 $35 - $5/MWh $0 $(10) $(20) $(35) Nuclear Capacity Factor +/- 1% +/- $10 +/- $40 +/- $45 +/- $45 2013 EEI Conference |
40 Exelon Generation Hedged Gross Margin Upside/Risk 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 2016 2015 2014 2013 $9,300 $8,400 $7,950 $8,000 $7,900 $7,300 2013 EEI Conference $6,900 $5,900 |
Row Item Midwest Mid- Atlantic ERCOT New York New England South, West & Canada (A) Start with fleet-wide open gross margin $5.65 billion (B) Expected Generation (TWh) 96.9 73.6 17.8 12.5 14.7 (C) Hedge % (assuming mid-point of range) 86.5% 91.5% 82.5% 88.5% 50.5% (D=B*C) Hedged Volume (TWh) 83.8 67.3 14.7 11.1 7.4 (E) Effective Realized Energy Price ($/MWh) $33.50 $45.00 $11.00 $37.00 $3.50 (F) Reference Price ($/MWh) $30.25 $37.19 $6.30 $35.54 $4.88 (G=E-F) Difference ($/MWh) $3.25 $7.81 $4.70 $1.46 $(1.38) (H=D*G) Mark-to-market value of hedges ($ million) (1) $275 million $525 million $70 million $15 million $(10) million (I=A+H) Hedged Gross Margin ($ million) $6,550 million (J) Power New Business / To Go ($ million) $500 million (K) Non-Power Margins Executed ($ million) $200 million (L) Non- Power New Business / To Go ($ million) $400 million (N=I+J+K+L) Total Gross Margin $7,650 million 41 Illustrative Example of Modeling Exelon Generation 2014 Gross Margin (1) Mark-to-market rounded to the nearest $5 million. 2013 EEI Conference |
42 Constellation Energy Nuclear Group (CENG) Background As a result of Exelon’s equity interest in CENG, CENG gross margins and earnings are reflected in ExGen disclosures and other financial statements. The following is information related to PPA contracts between CENG and 3 rd parties and the PPA between CENG and its equity parents. 2013 EEI Conference |
43 Constellation Energy Nuclear Group (CENG) Background 2013 EEI Conference |
Generation * * * * * |
Exelon Generation Fleet A clean and diverse portfolio that is well positioned for environmental upside from EPA regulations (1) Total owned generation capacity as of 9/30/2013. Nuclear capacity reflects EXC ownership of CENG and Salem. 45 National Scope • Power generation assets in 20 states and Canada • Low-cost generation capacity provides unparalleled leverage to rising commodity prices Large and Diverse • 35 GW of diverse generation (1) – 19 GW of Nuclear – 10 GW of Gas – 2 GW of Hydro – 2 GW of Oil – 1 GW of Coal – 1 GW of Wind/Solar/Other Clean • One of nation’s cleanest fleets as measured by CO2, SO2 and NOx intensity • Less than 5% of generation capacity will require capital expenditures to comply with Air Toxic rules 2013 EEI Conference |
Executing on Generation Development and Growth Projects Expanding the contracted renewable portfolio of Solar and Wind while adding incremental MWs to our existing nuclear fleet 46 Los Angeles AVSR 1 Wildcat Wind 2013 EEI Conference |
Exelon Nuclear Fleet Overview (including CENG and Salem) (1) Operating license renewal process takes approximately 4-5 years from commencement until completion of NRC review. (2) The date for loss of full core reserve identifies when the on-site storage pool will no longer have sufficient space to receive a full complement of fuel from the reactor core. Dry cask storage will be in operation at those sites prior to losing full core discharge capacity in their on-site storage pools. (3) On December 8, 2010, Exelon announced that it will permanently cease generation operations at Oyster Creek by December 31, 2019. Oyster Creek’s current NRC license expires in 2029. (4) Exelon Generation has a 50.01% ownership interest in CENG (Constellation Energy Nuclear Group, LLC). Electricite de France SA (EDF) has a 49.99% ownership interest in CENG. 47 2013 EEI Conference |
48 1,208 1,169 1,104 (1) Exelon fleet averages exclude Salem and CENG (2) Source: 2012 Electric Utility Cost Group (EUCG) survey. Includes Fuel Cost plus Direct O&M divided by net generation. (3) Source: Platts Nuclear News, Nuclear Energy Institute and Energy Information Administration (Department of Energy). World Class Nuclear Operator (1) Among major nuclear plant fleet operators, Exelon is consistently one of the lowest-cost and most efficient producers of electricity in the nation 2013 EEI Conference |
Nuclear Output and Refueling Outages Fleet Average Refueling Outage Duration (Days) (1) 31% 36% 14% 14% Nuclear Output (1) (1) Net nuclear generation data at ownership excluding Salem and CENG. 2016 includes Clinton Refueling Only outage of shortened duration. 49 Nuclear Refueling Cycle • All Exelon owned units on a 24 month cycle except for Braidwood U1/U2, Byron U1/U2 and Salem U1/U2, which are on 18 month cycles • Starting in 2015 Clinton is on annual cycles 2013 Refueling Outage Impact • 10 planned refueling outages, including 1 at Salem • Exelon completed 4 refueling outages in the Spring with an average duration of 24 days • Salem completed 1 refueling outage in the Spring • 5 Exelon planned Fall refueling outages (Braidwood 1, Peach Bottom 3, Clinton, Three Mile Island and Dresden 2) (1) Exelon fleet averages exclude Salem and CENG. 2013 EEI Conference 2014 Refueling Outage Impact • 11 planned refueling outages, including 2 at Salem • 5 Exelon planned Spring refueling outages and 4 planned Fall refueling outages • 1 Salem planned Spring refueling outage and 1 planned Fall refueling outage |
Nuclear Fuel Costs (1) Projected Exelon (100%) Uranium Demand Components of Fuel Expense in 2013 2013 – 2016: 100% hedged in volume 2017: ~80% hedged in volume 2018: ~50% hedged in volume 2 1 0 11 10 9 8 7 6 5 4 3 2018E 2017E 2016E 2015E 2014E 2013 Enrichment 30% Tax/Interest 2% Conversion 3% Uranium 38% Nuclear Waste 13% Fabrication 14% (1) All charts exclude Salem and CENG. (2) At ownership, excluding Salem and CENG. Excludes costs reimbursed under the settlement agreement with the DOE. 50 Nuclear Fuel Capex 2013 EEI Conference |
Constellation Energy Nuclear Group (CENG) Operating Services Agreement 51 • Agreements signed between Exelon and EDF, with expected close in 2014 (first quarter or early second quarter) • Nuclear Operating services agreement • Integrate CENG and their 3 plants into Exelon Nuclear with transfer of operating licenses • Utilize Exelon Nuclear Management Model to improve plant performance • Leverage scale and obtain cost efficiencies of running a larger, integrated fleet • Expect cost synergies of $50-$70M at 100% ownership • Loan to CENG and distributions to EDF/Exelon Generation • Exelon Generation $400M loan to CENG at 5.25% annual interest rate • CENG $400M special distribution to EDF • Exelon Generation to receive preferred distributions from CENG’s available cash flows until loan is fully repaid • Exelon Generation also to receive aggregate distributions of $400M plus a return of 8.5% per annum from the date of the special dividend • Option provision for EDF to sell its 49.99% interest in CENG to Exelon Generation • Exercisable from January 2016 to June 2022, priced at fair market value • Indemnify EDF in the event of a future nuclear incident (as defined in the Price Anderson Act) in connection with the CENG nuclear plants or their operations • Given Exelon’s size and past performance, no material impact to premiums Leverages Exelon’s best-in-class operations, scale and low-cost fleet to add value 2013 EEI Conference |