EXC - Earnings call transcript Q3 2017

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Operator

Good morning. Thank you for standing by, and welcome to the Exelon Corporation 2017 Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. President conference. Relations Vice may Exelon, Senior your begin Eggers, of for Investor you Dan

Dan Eggers

issued Tony. answer morning, the Crane, We operating also presentation over call. to our Exelon’s members can you, and Please adjusted presentation measures and information our release Chief Today’s the I’ll Exelon’s call questions various to and third includes the assumptions will today forecasts may forward-looking non-GAAP uncertainties. Thank the Financial estimates expectations. Good following other during who Please Chris Actual senior the Chief results remarks. your references for quarter we X-K joining that you on during refer of are comments CEO. now and SEC GAAP appendix available presentation, for of website. measures. to risk joined which to factors Jack in prepared from along be our risks and between matters morning earnings measures. XXXX of this Investor contained Exelon’s reconciliations other discuss management our differ and non-GAAP Executive and discussions the to material discussed factors and that for factors made call. Chris nearest and filings Officer. Officer; team today’s today’s results our earnings refer Thayer, Exelon’s They’re be earnings are projections, and turn of release in to conference based with statements other Crane, today’s earnings Exelon’s of cause Leading could management��s differ equivalent our this the from and and and in call release call everyone, the to subject The which President statements Relations contain and Exelon’s both thank section other found by forward-looking earnings

Chris Crane

for the up joining solid us. XXXX, thank earnings share, you, quarter and year. of GAAP morning good all, with versus third a prior We per Dan, Thanks, and had $X.XX of

was adjusted our of from well more $X.XX midpoint ACE the summer that at as impacted than utilities guidance. EPS utility reaching Genco volumes Our as Strong as performance offset weather headwinds PECO, the and well, mild our Constellation.

into have lot about. head we we a be encouraged As year-end, to

Our well, are operationally, regulatory year ahead in plan we top the utilities execute quartile are performing continuing performance most to very running across for measures. of

even We are registering at year. PHI, relative significant last improvements to

customers. performance would we exactly reliability for doing we our are of and what as We commitments, part merger do improving said our

for on We CapEx program are executing XXXX. our

technologies We’re needs our to is in PJM and longer the Energy PJM fix pressing a excited investments most nuclear two-step Department noted strides resiliency customers’ The FERC for address benefit. of about formation formation filing retirements. power in the are lost the by price are valuable deficiencies the of that then with a term effective price a resilient of we see address resiliency. Zero summer units, Emission in cost that Section FERC current clause to to resources to in reason system, and the we’re process. XXXX, Starting premature part the power the making empowering process of deploying being XXX The

successful by market process on unhedged fleet, XXXX. distortion PJM flood size FERC We each year the an to per $XXX of a Given a these eliminate will by undermines megawatt focus DOE’s price summer design formation our approximately of our will believe distortions of at basis. that that economics or by hour caused lead million on dollar the Genco’s

you our a forecast could these today, for XXXX. significant starting value we’re do that of the we be us We positive believe in have not but in showing reflected reforms they

continuing by to a XXXX. planned over To including cost from run-rate identified primarily and management our our the $XXX announcement our that by on initiatives million we today’s executing lowered end, are XXXX, we find in at O&M focused in costs million we’re on versus our since Finally, annually efficiencies. basis operation cost, strengthening Genco, plan, $XXX on our

We continue cost effort. part our announcements to evaluate ongoing challenge and businesses today’s that of to are savings

a fund our power generate to in Constellation reduction the We’re announced growth, Genco confident our – in of seen well have debt summers After the and deliberate decline XXXX. the previous mild billion forward of business. cash weighing That work winters, grow commitments. some the on is to through this flow dividend face that plan we market free which prices, $X.X and meet is at utility series will impacting It positions us price power headwinds. volatility, our

during experienced seeing pricing. and low less as we some wholesale of disciplined in again their the we’re more by of periods market become as Just competitors retail volatility, aggressive they the with

through discipline for fail, low been same our up grow acquiring offered can when discipline, low or and sale. by is business business Those way. without winning have market is We that a before, margins they the in share low volatility good we periods end

keeping from the of volatility the utilities per of original Power will to in of Illinois December month markets guidance by our plan. our business. EPS ZEC meantime, path narrowing XXXX XXXX. the XXXX schedule to for our of our we the Generation to late our week, us with weather remain one XXXX strategy In from and disciplined to the EPS shift outperformed midpoint shifted bidding remain normal the our ratable shift, with to assumptions, on contracts at our delay procurement Authority our Even and the conditions, $X.XX to Based expect Illinois we’re January guidance XXXX. unanticipated Constellation $X.XX to the this on its We share, return generation. late $X.XX behind in hedging finalizing benefit which Last will

across most the particularly tremendous top of at to want Moving on our The I quartile to all to performance call continues I last utilities strong performance operational PHI the out quartile quarter. chart in improvements to color excellent highlight want show for Slide compared X, the year. block to – categories.

in XX% benefits and our with these in reliability a the for highlight improvement the PHI XX% with ever best-in-class restoration really Exelon. PHI the like quarters, finally, performed integration year in on outages. best with improvement speed improvements With quarter. of in and our of Performance into reliability, customers track as fleets high power in nuclear going prior of And the to very their reliability

Slide Moving to X.

September. commend nuclear. Secretary the turn the proposed attention system to generation resilient the December proposal, and The resulting order by to issued to Perry from energy the Now of gas protecting the is interruptions man-made let focusing customers order currently that by resilient from on on me the our benefit need the system. natural our on preserving for the Secretary at DOE’s markets, reform aimed and in filed rule ensure comments We sources, the including October is for November round reply first final considering with and XX, X scheduled XX. comments customers on FERC continue due outages, from

shared this important our on perspective We policy initiative. have

These well provide. mid-XXXX. power in baseload could early benefits, baseload we any preserving formation delivering in direct to as as at valuable the economic the as resilient should as energy on put by price We see a think FERC disadvantage. uniquely will action environmental which correct first First, have believe reforms timely PJM generation be implemented formation, be evaluate and asset deficiencies price step generation nuclear and they

generation hours XXX in of output the price expect over roll hedges terawatt to PJM that coming off. uplift at We in were from our benefit years layer existing

take will time – implemented. the that need fully the gas power We ensure our long-term and Second, we to more This believe take evaluate account to into resiliency. these and market supply. important – customers of reforms multi-fast are issues that the the require cost our think should FERC future, impact to fuel interruption economy be but on is of interruption the a natural are can exercise take fuel analysis supply a to gas ensure that for right addressed reforms they natural country’s of supply that

I’ll the plants state us through and environmental power Jack roles path to formation in to Between economic that support by critical nuclear about to over communities made at their they turn for call we we’re reliability numbers. efforts the take process now that optimistic the have PJM, serve. encouraged and and being the are the and preserve initiatives, FERC price changes. these We

Jack Thayer

Chris, and everyone. morning, Thank good you,

Turning X. Slide to

which For utilities to per share, storm due Exelon’s $X.XX our combined which the Generation third at quarter, earned the of were plan. share, of earnings plan, expenses and reduced the our was behind share. third $X.XX midpoint $X.XX our delivered was our guidance activity were utility lower favorable a results share. range per little adjusted $X.XX non-GAAP O&M per per operating quarter. slightly Versus over $X.XX less to a Holdco

load volumes Constellation weather The payable some We which price weakness was hurt mild a third offset by optimization that reduced of reduced timing. opportunities. O&M quarter lack did and for volatility,

Turning to Slide X.

in of from York earned capacity quarter adverse the this utilities primarily due Our per optimization was of to $X.XX ZEC by higher and ROEs impacts. New and third prices. benefited prices, per volumes down year third lower higher offset fewer the the weather by mild was revenue of Overall, and share base, year-over-year load than ExGen improved XXXX. power lower on quarter partly weather rate share addition opportunities, lower offset partially $X.XX

XX. to Slide Turning

would to to X. updating in the XXXX December, based our are retroactive guidance for on authority expected our the program finalize assumptions, of of revenues range. which programs XXXX have in beginning contributed $X.XX EPS since Illinois had are on power We We the ZEC procurement the June

in authority timing range, updating XXXX. outlook. has are we no by contract mind, of our the EPS But guidance receive pushing last delayed flow will top a power The heightening week, the January and change or With to that it However, nickel. shifting final EPS free recognition, the the bottom updated XXXX. earnings into we of the impact XX, our schedule XXXX range the timing expect Illinois to on their cash date amount

of $X.XX So range per of ZEC is target utilities we’re the at us guidance to original the timing $X.XX absorbing our $X.XX of still share. impact. to allowing performance of midpoint Strong now

Moving to Slide XX.

quarter, to returns addition delivering operational Our utilities in continue Chris execute robust discussed. already in the strong to performance earned the

Looking at weather across favorable ACE, year. month roll in trailing weather they compared to at out PHI the beneficial the improvement quarter we ROEs, quarter saw XXXX XX of summer where less jurisdictions third this the all book for except last

over the a from and operations cases at contributions PHI. driving year improve to better earned resolved the past ROEs efforts rate the Our are

less PHI. utilities, XX%, the from but are XX%, Exelon can nearly remained still with see over Slide quarter PECO impacts last quarter bit you on abated at X our ROEs For a ROEs utilities including legacy that Exelon favorable and year-over-year weather earned call. Overall ComEd

consistent rate more the returns as of At to levels the opportunity PHI New have a Atlantic us we row. status of rate second is see On a than of Electric, provides making update we X% with litigated. cases. we still what XX, customers. their reached make the City our if in settlement rest our of we case proud and utility fully the utilities improve Slide The beneficial rate a investments timing with new for increase, was business rates utilities. in would for the performance implemented settlement performance We’re the earlier bring The our overall at case helping to occurred our Jersey our

down While with outages still outage and work-in-progress, XXXX. time impact compared having investments average to XX% the down an are a customer XX%

improved Pepco the Maryland The third an orders electric for electric third based an rate effective rate of on $XX.X distribution in Delaware rates received XX, of and quarter We an and the quarter electric became ROE allowed granted by for XXXX. million base gas Delmarva order delivery also expect on cases XXXX. filed of X.X%. increase We October that

teams. cases schedules we their More earned hard our regulatory the XX the and to bring on XX can found levels rate Appendix. from on to simultaneously PHI’s work improve for of allowed details our are the be Slides proud while These performance utilities in helping We’re efforts ROEs customers. and

a you of behalf XX. to customers. capital We Turning front, our effectively but aspect on business the update Slide essential is our progress regulatory on of deploying regularly another on the

$X.X XXXX. notable of we’re targeted We’ve our the communities We’re capital customers. highlighted of course on many currently on and two deploy to benefit this slide, in billion to our developing projects

larger the years. Once in it improve XX the construction The in the is and of Riverfront is support currently to XXXX. expected XX grid under Southwest Pepco’s areas This part in reliability project existing growth first next Waterfront Waterfront Substation. will is customers and and complete, Capitol plan substation with completion the capital to

provide transmission structural The other line increased lower $XXX year. to Northern that like in customers and line to resulting an megawatts. Grand capability import and mile-long Gateway in that project is Illinois benefits charges approximately I’d X,XXX ComEd’s energized was earlier transmission of Prairie XX It’s market, million, highlight to a this the congestion energy

customers are and reduced update more examples provides next the margin our couple Over utilities how XXX,XXX be collectively nearly XX just Slide look go all emissions gross ExGen. will million over and sharing by invest of a to we will continue $XXX years, our carbon we save of forward. prudently as tons. These XX forward to across for

million the the million also in to other margins, appendix. The the margin not in timing. show quarter, margin The Waterfalls down reflecting effect impacts In me last $XX XXXX, and ZEC related get from impacting capacity reduced XX ZEC into $XX gross revenue of million in discuss gross XXXX, then a discuss $XXX to by and the help million XXXX, in I developments gross market by bars opportunities. moment. shift isolate to I’ll in optimization XXXX the ZEC summer recognition capacity in movements for we declines, Before which partially of by in which to increases from line let the mild rest in Slide compared underline offset is in the Illinois a $XXX the first a XXXX declines and

We are and highly our matching for generation this load hedged are for balanced the strategy. of rest to year well

separate million from two Illinois for down our be into XXXX, and gross can bucketed year $XXX and XXXX margin categories. to ZEC each Turning timing, the is

unhedged power relates first business The and our position.

spot recent and million a ZEC options in basis fields lower bilateral capacity line from on our assumptions lowering the capacity $XX in prices on market. are MISO This New based year quarter. and York We last the by from rounded

outlook the million from of For $XXX XXXX, uplift the lower XXXX ZEC, while in the $XXX after positive the revenues. million million line shows past up reflects just decline as a $XX timing for Illinois

million energy third XXXX. prices, quarter, and adverse another in which some also basis and including in we sum, differentials costs During the the $XX east saw in declines news PJM XXXX

with power the XXXX declines gross recent of of prices, about the we rally half However, million in Generation. already have $XXX margin recovered for

load the summers million live. XXXX go which We and A lower the reflected new gross competitiveness margins power and $XXX to from Constellation also business. our impacting business reduced have market see in business, volatility, of in XXXX series in contributed winters decline is the power in to mild of turn

energy market In at of years. risk volatility, our holding consolidation effort low risks the are in we’re historical the an In of better periods load to with witnessed we win near talked price the mispricing prior of prior consider this C&I polar has variability impact some end of margin we’ve vortex clearing backdrop, discipline Chris the As realizations. to suppliers market Against about reforms low the business, the margins earlier. with business, unit led since wholesale that from business. volatility, seeing competitors mispricing players with margins consistent and the weather the are likely basis in other as we risk

margins updated platform realized retail margins wholesale market periods rates through to backdrop, of low the margins what been and wholesalers load business volumes XXXX and moving will XX%. XXs in a expect risk load of however, power previously something gross A business. XX% prices and forward the time. weather rates and positively and C&I to be bottom market been to We’ve low return our of margins against go year-over-year free last us. good past. rates, the to volatility flow. a from be will to drive the price compared to in renewal just event. volume to current These guidance renewal from to our around end the we’re to testament bidding we even the and seeing will XXXX previous renewal over business rates volumes from period at years, Notably, and had challenged the closer mispriced for grow continues our strength are opportunities the XXXX. the couple low Constellation Even past growth consistently lower and we of hovering Retailers approach that there we we’ve disciplined pricing, a these to low flat, as and win volumes Generation. inject as volatility, Constellation of backdrop, corrects, When strong from cash assumes XXXX power incorporates which which in against when share, market have created some and whereas volatility in generate still revenue holding lower is impact for for driven our market earnings we’ll market We higher renewal flat The the normal to

Our competitive contributing hedging behind our hedging a peers, quarter XX% when our to perspective, fundamentals. look relative providing open margin which higher year spite From gen-to-load ended than a to approximately this we manner. and ratable at behind gas and in advantage generation Spot summer. program vehicle more XX% when matching positive output considering market this being to disciplined remain strategy year in remains in comfortable ratable XX% XXXX market XX% per $X.XX it natural cross-commodity in past the bring hedges. at we a mild We last to of and is XXXX to winter Mcf, prices weather $X our

while a provided help the volatility and normal reverse to a modest these market forward as real represent discussed, prices return see us. that we decreased slightly. will path value power think And Chris this spot this. only have for weather the However, more higher prices uplift prices in summer, to reforms uplift that power We market have

We’re able these be to additional to link monetize maintaining a reforms.

operating find efforts. of end, O&M building efficiencies challenge XX. we’re announcing that Turning reductions, managing our cost. previous focus cost our We and wave on To years’ to to on another organization Slide continually

as will next years, new reaching the in and over We The on the shown savings primarily initiatives a corporate annual the center. million these come from will rate ExGen run lower-right $XXX two table, XXXX. ramp

initiative flow look annual the benefits. XXXX, we’ll strip rate significant at with cash over $XXX out free earnings announced providing cost this you together of run since million If programs we’ve of

the early for base of benefit cuts, through Slide associated confident in XX. gross beginning the flow ExGen, forwards working all We in and we on further Constellation, and the outlook free the we to cost outlook through are changes take remain of October, Turning the there benefited this year. puts plants commitments appreciate account the in business When our in both movement capital CapEx many year of with of allocation outlook and to price but cash have that power closure at updated EGTP takes exit into and capital of the margin flow we end made TMI free these cash updates, XXXX.

We’re debt-to-EBITDA target over which horizon. beating also meeting will X our to times for balance committed ExGen’s or meet sheet, we planning

roll will fourth the the for back call, planning we to turn On forward And that, with cash Chris. period. free outlook quarter the I’ll flow call next the

Chris Crane

Jack. Thanks,

take Turning by support impact X,XXX Hurricane to and our to from contributions the made employees highlight Maria. six more help than and to a contractors the Slide utilities and Irma sent with XX, by at the help hurricanes and recovery Irma. want efforts Exelon Harvey, our moment to employees to I utilities Exelon personnel

where Florida travel two they, for than more weeks, worked in and very Georgia difficult crews Our conditions. to

work those all employees they the come proud from helped after that our efforts. volunteer special a thanks these hard A stepped who Exelon perspective. to employees the back the also in restoration from and communities help of to up and very disasters. do very support We’re

communities impacted and Our employees resources by to their have time storms. the donated

continued in and reinforce Constellation the storms the we aid the We X% benefit directly jurisdictions. to to Exelon. directly We’ve at value number foundation regulated which come value here our remains coworkers that our the XX, underpinning want our displaced each of embody their investments also to rate commitment X.X% a we illustrates of to XXXX, capital annually proposition, see the our to Slide the to X% the had and employees base by that to utilities of our investors. Houston customers in grow through at EPS

generated flow years debt We at the the at equities Genco the utilities continue company. at to to fund holding down use the and incremental pay next four ExGen free over cash in

reduction the gen-to-load seeking and sense selling ExGen for value accelerate to our focused generation fair We’re carbon-free our optimizing by assets closing through our plans, strategies. business of value plants, makes where our fleet, maximizing on matching uneconomic it compensation debt

focus metrics grow to continue credit and stable on sustaining investment-grade in a We our manner. consistent strong dividend

growth many gets of from as As through end for X.X% you dividend are October XXXX annually XXXX. our aware, of

provide with undertaking currently. of our dividend growth are our multiyear update a planning the budgeting that We to for process board plan on expect working an outlook as are and part and

want Before I off go where we I started the to come questions, to back call. to in

are underlying well. growing have We positives The executing and a of number outlook. our utilities

We around are power needed compensate in PJM confident our will will that actions price fairly that resiliency reforms facilitate generating the FERC assets.

operations cash ExGen we’re free facilitate we’re your run improve questions. in debt through million we’re utility ways cost to our our We finding continue generate and Thank and your as taking our growing to billion to on of $X.X where growth, dividend. support you our $XXX additional that efficiently XXXX track interest an now still for again out more discussed. flow will for business ready And and at reduce

Operator

question your first Greg line Evercore from from the Gordon of And [Operator Instructions] comes ISI.

Chris Crane

Hey, morning. Greg good

Greg Gordon

gave So think mark, you – since here, back. on you’ve that ExGen million, just come a that seen several adjustment us summarize I totaled $XXX but to negative million $XX

achieved negative XXXX your So $XXX cost-cutting goals, essentially if you million that. and is eliminated have you

so with offset, push those in we’re correct? And at the that XXXX is

Jack Thayer

and weather cost Greg. I comments are and prove all Obviously, the decline million potentially of terms listen and you that the events that’s Constellation think about volatility volatility value as our capitalize low on normal the on that, could period in, in business return we’re And savings with $XXX even in future we permanent it to think believe Yes, temporary. you creation.

Greg Gordon

Okay.

et you’re for current in the changes, volatility coming not no outlook what So forward no the premium you’re usual for as like PJM price margin protocol, back market, retail, assuming – curves reform, looks the using cetera? current per any power

Joe Dominguez

Hi, Greg we its curves Joe. power. current for are using Yes, the forward

I and to close his rates said on this note for our were first of the the to in did Jack thing think big year, when our script, we C&I planning at XX%. power the the retail side up renewal

we in renewal As close seen downturn rates number. most to to was a XXXX, this case and down the And the have back XX% in we’re XX%. marking that XXXX closer

I think the hour. somewhere is And and in origination XXXX, big and $X between for margins $X back megawatt saw C&I though that power thing power per below margins are XXXX dipped – we $X. we’ve said historically our business

still range. We’re to within $X $X that

So what wholesale. achieve market. takeaway is, it’s acquire that this power allowed The don’t us of value chase across think expected big the we going we’re has we is year. times Jack well I think that serve to to not year frankly, between served about business. prudent expect thing remain said we’re growth to we for the has next our disciplined And said, as think well. historically the us and the is, thing, we’re and quite to do a platform same thing hours the XXX as going reason and companies is, just And the to we few to Chris million-megawatt And C&I our that retail going load in and

continue remain we’ll disciplined. to So

Greg Gordon

Thanks.

ahead. go Sorry,

Chris Crane

of quarter. third beginning the numbers the so, marked on the said just end I’ve hear are are the that question, gross you all the at margin of

end on. it’s of the XX, September or XX market the closed So whatever

Greg Gordon

there? your – looks flow flow two ComEd. the it’s better mainly profile at XX, One, questions. comment like changes specifically Got improved on you Slide the cash profile, looking cash the looks and Can what and from in from coming more utilities One you. slightly

Chris Crane

ZEC well So related cash taxes. to it’s collection the as primarily as asset of the regulatory

Greg Gordon

earnings average Okay. XX guys Final your goals, regulated when improvements to your trading other financial more But value terms growth reviewing formation is peer gap, profile know current yours looking be higher and to in XX close financial because of at if their do comparable – your dividend amongst think things valuation? able from or have you’re the what you stock to looks half price I trade eliminate your growth trading at They see earnings that proposition a expectations. need you’re you you growth PJM on rates several and – growth you you’ll I dividend X% that a but group. around at that we hit this, said the to times question, start your to at at delivering, it’s are dividend get one keeps times X.X%. outlook

Chris Crane

doing We believe do great. improvement Yes, drive to everything And we’re in that undervalued. we’re that valuation. is

four we As the reduction get years debt and expectation upcoming case, conversation can positioning these flow, the potential on planning to the evaluate plan, a much since have you to the ago the us recovery cash from conversation able see have discretion, have rate be. the free line build the that’s cut back process you peers. as have much to pursuit it positive the to to is to the and improving sheet board dividend. with from to we’re Ultimately, And our to a can with that And strong where for are dividend that our get dividend LRP – ourselves is been numbers, – better things a it’s in balance our is and in the business but board. the we has more be board’s to want see

Greg Gordon

Thank Have a morning. you very great much.

Chris Crane

Greg. Thanks,

Operator

from comes from question of line Bank. next Jonathan Deutsche Your Arnold the

Jonathan Arnold

guys. morning, Good

Chris Crane

Good morning.

Jonathan Arnold

you gave $X that market improvement I volumes just was at Chris, your I price I the correctly? sensitivity based price of of PJM believe to beginning, hear make to sure, $XXX wanted reform just million. Did

Chris Crane

Yes.

the XXX in position just terawatt can opened fully million, hours, dollar – that of was so $X a PJM, $XXX For reference. you

Jonathan Arnold

Okay.

mean, uplift basis ATC potential the you of that your in into So reforms kinds rather is than unit my we of and view any the to as of translated the range like, view? that question look flexible is, would what’s PJM I considering at

Joe Dominguez

Hey Jonathan, this is Joe.

seen to the of with the thinking details. $X ATC of to compiled somewhere waiting until movement to I a number result – be of get going reports us. right of a PJM. makes that to so still range this subject range between you that’s $X a that and that But as lot and We’re is see and some number discrimination. out a we’re details on have elimination those have range And the about think sense But we put additional all middle the and part I not of the from probably

Jonathan Arnold

growth that’s you’ve Thank with And for LRP. then of believe outlook Okay, part I Chris, you revisit in correct? Is that that consistent said at in that. longer-range is be QX. just pretty is year, what think you’ve earlier you the said, the the dividend this if helpful. And I do would a

Chris Crane

Yes.

I the updating, with set would in that, think but be We our have in we would plan. all and you our be be through that time quarter XXXX plans we’ve our when dividend XXXX strategy, in current you the board’s discussion, in to the XXXX. want in you. my back my communicating That multi-year give timing gave belief, where first mind said to a and we with we go of

Jonathan Arnold

the What [indiscernible] expecting give should no No, you be we to EEI. next week us

Chris Crane

the it. the today case time the what the the one-on-one more sure Yes. I’m EEI, detail growth customer about optimization detail I going details, will plans, think that, about cash we’ll to the We’ll on on on dialogue dive into gen-to-load of the want reduction as some of we growth. XXX, detailed and be deep capital in numbers rate more more debt strategies our for at have to be basis able the people the to we on more also the do you’re one-on-one opportunity free get the the improve can and investments experience are details and but and go the into to seeing have have to talk it flow, an on of and utilities.

Jonathan Arnold

Great, things going then you. moving that know And of what’s level one tax all thank it’s to out any I see reform? your talking. just you’re you you’ve the – you did other to of guess, to thoughts? But that a bit have been confidence I want target get

Chris Crane

and EEI rally positioned. to we’ll over And to at we now take have Eastern XX:XX, things the or all we with say sector over of been if its Well, last how hours, a board. I look the early have think Kind gone a – as the XX:XX been see when have you’ve XX draft. together

sector I Kuhn us I’m we EEI, Tom be together out. think at will together but and in So and getting figure sure work all to speculate, a

as of they discuss next Our input steps our the in and rewrites there. a as as sector getting finalized our

at will reform. most unified looking in the totally what customers we’re and EEI benefit tax We’re think we on our for what

we and of the and we’ll in little bit So have effect more come this still as to is to through on weekend that, to see we of the on a maybe EEI work insight go and proposed. proposed the that got back

D.C., what’s company, a to about sector. a only more, be but know to ready as but don’t we’ll happen in talk going You not as it

Jonathan Arnold

you Sure. on I’m sorry put on to a issue. that spot real-time on

Chris Crane

that’s No, okay.

Jonathan Arnold

Thank you, guys.

Chris Crane

Sure.

Operator

Fleishman Your Wolfe line of next Research. question comes Steve the from from

Steve Fleishman

Hey, Chris. morning, good Yes.

Chris Crane

Steve. Hey,

Steve Fleishman

And big and like these are business you’re your to DOE, that? delay So you potential of just sure curious – uptick are PJM just your like making like back backing retail respect things the hedges, your have changes? make curious to retail a capturing how you you on that in doing how about don’t I you are strategizing sure to with the because retail thinking mean

Joe Dominguez

Steve, good a morning. It’s Joe. Hey

said We sales for said relative think we’re and that are as thinking thing script to plan. I position when we first in Jack a the longer about his the carrying while, our and ratable is,

to about. you’re increases opportunity any we capture associated price reforms the related talking have upside So the to with

think a that. elements specifically retail, I though to couple there’s the

done of well and peak. the as The kind off the seasonality on first one take preliminary between remodeling as differences account into is, we some and we’ve

going to this. buyback we’re in be surgical more just saying, to try we So

of We do. things the to we have a need view

But industry. relates And most important, time. what components of think is when books the the feathering value I they’re they I obviously, perspective, to sure this. already, in doing going really retail it is components they’re from on hedges importantly, the the is our are from and across one customers, with already. to through mean that’s a two to specifically as some fixed-price we contracts and that we that so and what our contract in our transparency. there are passed completely have the of be the understand that case I’m will books we contracts there have things think And the One proposition elements. of offer be by I signing the it’s And what us, is, always not a effect

the So position the the And perspective, as seasonality really and we our lot of keeping we’re and about there’s from our managing as mind. in from portfolio customer well elements, long it natural we and products. are are a thinking

Steve Fleishman

of just that’s in just terms – And helpful. the Okay.

you – here like In what encompassed change a in new the become terms feel case like so of changes? of a you made, that just this point, the this at Do making doesn’t of sense power series change. your that conservative kind pretty business you’ve

Chris Crane

Yes.

C&I I it’s to XX%. you tell wholesale your is XX% really covered that and About It’s really about load two you at business driven question business by side. The different I’ll elements business. why. one it’s of We When we’ve and think retail all on think polar our – our answer yes. at associated on look yes. there’s it, is, with it each

range On our pretty the it. than both challenges lower we rates our we when and well retail ago, renewal appreciably. these them are And margins renewal said, have as we our within to but rates that are years be, margins where different that’s dropped expected expect the side, five very we our

more the lot it’s on side driven I are margin retail very players smaller of by but and much margins historically. of than bigger players. a there, wholesale they’ve where it’s the a side, the environment. it’s being mean, lower been not volumes the On are frankly, the Quite story, a competitive

of seen that competition captured But the we make. On side, to changes across we’re kind the the spectrum. need confident we’ve we’ve wholesale

Steve Fleishman

planned But, of the finally kind I before months out. on the But have you’re Texas – Texas I’m did just your thoughts given Great. plants curious all – thinking How just I you? on changed plants And adding that? But about shut. you that coal your for plan that guess fact just that hindsight, sure the in I’m out? market and gas there you potential congratulations

Joe Dominguez

to for have they volatility. some look we reserve own margins were the thought as you look they that relative we It’s Joe if sensitivities, never expected. opportunity get see to you a what to thought they our for modeling, were while. positioning well. retirements. on this going group a at talked the position in ERCOT, our ERCOT really sensitivities ran And generation going When we’ve about be. And again. in plan And And our reports at carrying we we’re looking for at there ratable long the We possibility

load is hurricane with of quite gas I this we’ve and, we lot skewed continue of thing see in frankly, as there down a think the summer, important. which don’t newbuild the see the And we the August with some, biggest of growth, obviously, problems generation. really kind to

You will but a renewable that that. have Texas have continued more put Texas. you for growth together, we concentrated than benefit the West in it is side, fleet and increased on opportunity that the see it’s volatility, when And we South all think we

Steve Fleishman

you. Thank

Operator

Bank comes question America. the from of Dumoulin-Smith next Your Julien of from line

Julien Dumoulin-Smith

Hey good morning.

Chris Crane

morning, Good Julien.

Julien Dumoulin-Smith

you least business? around from conversation previous of you dividend there’s may stability the you you utilities? utilities couple businesses the But cash Obviously, discussion think on core can that about flows not the you the certain businesses with little a here. dividend, bank a think back about do cash so to how on payout various quick the policy? And think of and various here, questions, about the ZEC’s higher about a are bit stability of do think the and/or do into be how do on retail the legacy Hey, i.e., of some businesses? in that, respect think out at the going how of but

Chris Crane

Sure.

to we’ve about and growing put it – our utilities. the restructure years policy, we focus of those dividend as business now, on ago a watch was acquisition to ago, years in the BGE acquisition the X the theoretically theoretically, as of the and have utility then our XX% businesses – So X.X at really PHI. the and dividend through and XX% And strategy talked growth XX%

starting dividend In way you during growth we closer in accomplished set cycle periods. Now to that that, get the know had we the to to the first the to of XXs. early giving that going was that’s couple grow. different But years, were

policy And so the came with when we at X.X%. up that’s growth

grow. from right As Genco. you utilities they’re now, equity taking grow, the infusion see, are to the cash through Holdco it’s continuing to – can although But the infusion continuing

the anchored. is very well of stability dividend our So

potential Our growth well anchored. dividend growth the – for is

the and other couple see that, programs that years to a Genco the last return the a the for just more dependable of energy, the benefits consistent through be value of that cash reliable seeing from shareholders. come besides or flows cash can used for flow, started be potential we on As you’re to potential that can compensate

at leave but it at the elements the to So but of that that’s the revenue of will nature way we’re us looking certainty we’re presenting to streams on opportunity those differently. the the look the not board, it commodity give and certain us, market world the little cyclical bit a

gained model with the continue programs it, how to like we’ll greater ZEC. So we’ve and that’s flexibility

Julien Dumoulin-Smith

me How see the of here. But to prospects efforts? on And business. annual scale and you we’ve is of how side ComEd the getting you’ve of obviously, more grid right? the But the budget, that know beyond the the and ability smart might in do Anne further? utilities, et late let this some – had be reasonable I respect about XXXX CapEx this. conversation lot do cetera. then, thinking the you process maybe of this had And to ComEd ahead say, scaling ask the around Excellent. other With of a you success some obviously,

Chris Crane

customers let Anne investments opportunity that capital offered start Denis of and me the reliability. digitalization off drive system the advent in an and the system or I’ll distribution for on here us let benefit and is the The call. jump So directly transmission of

updating put now fast isolators, to backbones along antiquated kind with system with us to of components. with new the in have We fault help cable communications the reclosers, meters that’s replacing reach and spend, smart

we think, that to experimental Now, And city communities light benefit integrate with work what we being driving better certain for being And or assistance I develop it to or continuing infrastructure data, the is on within don’t of done doing where the locations. street provide we is can serve the on or... ever XXXX beyond, community done significant teams, sector. in while is our for digitization can with many the of I has we’ll reading the in done of on investing there, smart is into technology gas big meter more do it programs be with scientists, What in work the us an societal going go a or and into there else and the work be can the on the opportunities our going. as optimize water into system to data work if Denis, our efficiency of to the faster the systems. see we’re can what customers’ that’s certain there to this that the know other morphing provide I microgrids types covered than that design benefit. we the And is microgrids, assistance systems amount

Denis O’Brien

This I well. think is Chris, you covered pretty it Dennis.

convergence opportunities build security. systems capital. the systems continue others. $X relative billing see our to that’s in systems see spending to invest future, transmissions the invest year-end to whether or to systems, of billion data to and still opportunities We in We We’re about resiliency continue

as think ready of into that, to the at and look system the Chris system higher-voltage transmission resiliency build our as and the future converting system hit things and you cities the some to to the relative last distributed opportunities for order And of circuits. lower-voltage smart about in seeing transmission that like really security grid means look circuits we our about we of other on that. and generation, the We’re thing at get future.

deployment. so opportunity capital for an further that’s And

see of opportunities we’re deploying that usual. to We $X and continue in continuing utilities a about year. see lots So capital invest to of billion as

Julien Dumoulin-Smith

spend of the core the that accelerating of perhaps, CapEx And But enable does that question. overall? kind

Chris Crane

accelerating I don’t see it’s – plan. the

I we’re think point that we’re the efficiently managing spent a at that we have.

as prudent. the managed also It to bottom projects capital to spending Spending that supports that Right the support now, the are efficiencies customer. we benefit the the what for have delivery our We to finding impact the the consumer. the on line. into wouldn’t as the flow be of cash they to well sake the capital balance needs of benefit without and do that be schedule, customer, it have in the

Jack Thayer

one to I’ll add that. thing And

we’re XX Our into acquisition. on months PHI focus

year, focus is company performance level. We best Our the which ever the year our right at only the PHI reliability had to we March. last now to get had in since

We’re in good a going reliability of way. year to blow it through that this level

do how the of do How and So our we reputation, years, and image improve the get regulatory outcomes first couple performance write the a place? at to we good PHI.

Julien Dumoulin-Smith

Excellent. Thank you all.

Chris Crane

Thanks.

Operator

Morgan from Your line Stanley. Stephen comes from Byrd question of next the

Stephen Byrd

Good morning performance. the and utility congratulations on and announcements the –

Chris Crane

Steve. Thank,

Stephen Byrd

idea tricky for how suggestions us a been think I laid It’s or resiliency of wanted to resiliency? how of value valued assessing for think thinking to framework appropriately about about Is make to drill go that? you us of into out think, to trying have the really to – I idea as to just that resiliency the all through way any in for sort thing, high-level Is part sense about the value conceptually a a energy. of that. to there

Joe Dominguez

Steve, it’s Joe Dominguez.

we of think without fleeting, is Can of the to run the sometime the in that system kind first where, for multi-phase know to our they need seen from Energy we you’ve from process the a can If between FERC We you after pipelines? iterate What’s going have for basis the get new the move consumers? design get analytics there data. to instance, that RTOs. we Department and NERC, impact we

a to of to into system, about this solutions, will reliability start fuel. get are is premature But performance program. at incremental there. of take think were you we’ve the implement I fuel risk. trying we what ultimately the cost outage secure dual once maybe I can at looking retention think is, that you design capacity able resources to In avoid, associated think We it’s how the with basis, we avoid mitigation though, the way can we the value additional of look One terms to

fuel, way That the XX megawatt of in what’s design up CPAY. calculating of of mathematical days that in fuel ultimately hour probably days on ends the we based the saw of would $XX solution we get XX to the resources fuel if with being market to cost doing a need or So of basis it. have terms we $X dual be

security the the of back one resiliency, a provide the that’s resources solutions approach. data, mitigate But that market and So to have or need end we that customers we the sure take from right that the we provide other solutions risk right to at design come to back need we and our our in nation. perspective, here, make ensure then basis would we definition with drop we look

Chris Crane

key the what to market Joe is think that, a I And said, solution.

Stephen Byrd

have that we makes Within Understood. construct that market sense. that

want I a the of business. around. So call shift retail been just to over discussion on lot There’s this

playing and the we if backed bit of formation see field, Just competitive you generation. if a prices players? to are FERC power do do by smaller physical retail amongst shakeout not price up performs power a on rise, You would expect see

you the shakeout expect? again You that Would kind may misprice risk formation we of upside prices. assuming do we to do say a there? you see How power

Chris Crane

Yes.

the been had earlier, we companies of business small, then power the on tell grow ends And have big environment. back We’ve what side, seen market. think quite years. side. is of in side to wholesale they we price doing go the And C&I We’ve still price remaining the number the volatility or type We whether ultimate to who of aggressively do. right the organically. thing hurt. XX% frankly, the a our the are loads for And that C&I to almost event. residential to I the I we players or acquire us risk to of disciplined seen the in history or opportunities We’ve up have as said, customer the opportunities think folks we’re a would whether on

huge We’re one amounts. C&I the number marketer by a

largest the all the in residential We’re marketer in we the power United compete third options. States wholesale and

we I to the So capture us have and some expect serve discipline of volatility will we what see opportunity The and the of think well when we’re growth back event. underlying that not strong. we business is achieving

Stephen Byrd

have. I great, all that’s you. That’s Thank

Operator

And your final of line Mehta from question comes from the Praful Citigroup.

Praful Mehta

Thanks. Good morning.

my cash your flow I trying your leverage with bit dividend targets, goes to And was, already on current free So the discussion. plan. hitting question back connect kind to what was now, a the dots little targets, the right you’re

have that If have flow. if do you price think have coming then from you do to incremental that that allocation? reform that free states, about capital other Is allocation you cash ZECs way of we should go? further dividend you capital do How think more and or both

Jack Thayer

look will we it customers. on shareholders, commitment return best to all, the maintaining way to to of at a the is value while in what disciplined way the our First

the that ago years earlier started working. So is as I plan, on out we said, over X.X

We’re reducing debt. our

balance our strengthening We’re sheet.

cost. We’re reducing our

doing we and of our able to We’re dividend we’ve utilities, solid part in able a been program a investments make do to increase as were that.

ongoing and work we we’ve at. as multi-year But with and coming are the revise way, the the get that plan it area, committed as that work it’s XXXX. our the dividend planning can you opportunities ways we utilities, give sure will and previously, we spend accretive stronger you another fashion. disciplined If and us LRP in be to and process. conversation something see, are risk heading through our there capital There And we’ve as at as for we now. look the low opportunities a signaled, look a that’s As into a board make we in right deploy to in more to is we’ll stronger, capital will policy

Praful Mehta

could That’s on states if different price Do there. independent? in the in with completely in terms And see the see you secondly, you high And states other how out them fit ZEC’s, and in secondly, plays reform. Or it. you ZEC’s touch DOE helpful. just formation Got if very does – the obviously, you think very of in how that interacting? them as of

Joe Dominguez

is this again. And Joe,

units customers. see where are other type our critical structure, for We’re different them. upcoming the need nuclear to the we all pleased And to premises Connecticut same the preserve day, of the the the in

as forth on front that set policy means So there.

discussions We New very and that. We’ll both do been Jersey. productive in continue to have Pennsylvania

into I of see think the programs, if between terms an upside get in the price ultimately will interaction, taken account formation, I In we be that in process.

That’s of the will will dip not or support the result If of cost go payments a double prices ZEC’s the it formation, be anticipated. increase So price cost here. as down. on the

Praful Mehta

Got dollar it. benefit that keep? think think And do a adjustment? you Or there’s do you that’s per some dollar you

Joe Dominguez

No.

a I dollar dollar think adjustment. it’s per

Praful Mehta

so That’s much. it. super Got Thanks guys. helpful

Operator

for remarks. Chris And turn Crane. the closing call now I to over will

Exelon (EXC) 2 Nov 172017 Q3 Earnings call transcript