EXC - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to Exelon 2018 Second Quarter Earnings Call. My name is Nora and I will be facilitating the audio portion of today's interactive broadcast. This event also features streaming audio which allows you to listen to the show through your PC speakers. And for those of you on the stream, please take note of the option available in your event console. At this time, I'd like turn the show over to Dan Eggers, Exelon's Senior Vice President of Investor Relations. sir. ahead, go Please

Daniel L. Eggers

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

Christopher M. Crane

for you understand joining earnings Thank a everybody. busy period. morning, good and release it's We us Dan, Thanks, today.

we're for achieved results pleased and being operational thanks X, We the another utilities on side while fronts. deliver the at slide performance enhance and financial legislative gains to So continuing both to regulatory on our great with quarter. us. meaningful make our Starting strong

advances Taken strategy technology better at infrastructure, these will support together invest service in continued utilities to our our our customers. in for delivering

we year, the is basis, last earned versus $X.XX to share puts share above $X.XX in the $X.XX per guidance a our a the per share $X.XX last basis, For footing year. $X.XX on a in we which earned year. the of quarter, per range non-GAAP On for and $X.XX GAAP versus midpoint strong us

paying at customer key at Turning we our satisfaction, in are strong the investments satisfaction top customer continue we to off The are utilities, quartile slide regulators. making and strengthens reliability, to improving X, in which levels with turn metrics. relationships operating execute across our

All we utilities outages which decile of performance able which when average are the in to occur. power our are measures top restore speed, achieving KD,

to terawatt XX fewer driving last targeted had and ExGen, days We last practices across leading as a results. they best connect generation are the when We implemented XX.X%. priority hours of tools improved with the are Safety was utilities service utilities service. output and customer year. we customers remains factor programs give the delivering metrics nuclear performance on share highest still more At our capacity also to XX need outage quarter compared with

rate match hydro continue of perform with Our to dispatch well gas economic XX.X%. and fleet very

the adding an that distribution of benefits on discussed operations additional report call. $XXX these I'm tax X, our slide customers to to $XXX FERC our from happy that will savings benefit our last Turning the regulated savings assets we million, million to transmission from by

from to provide plans tax very the allow legislation in investments. pleased present timely customers us while positioning benefits effective benefit will customers customers, Delaware, make to ground for infrastructure stakeholders to future. quarter infrastructure in Appeals X, June, are we a utility with the to mechanism, respectively. thank of that customer and legislation of to utility state while reflect for decoupling investments signed in ZEC and the to that our finding future. improve of fourth position fashion. laws. we Public In New the Charge. million allowing utility customers, plans passed Commission customers. the in reliability over include system Pennsylvania, constructive for enhance can in filing in relationships Delaware the priorities support our XX regulatory much the Wolf I these Slide these the Power, decreasing investing frequency Flipping cases. for to Our important group the reform. to over by the utilities needed back approve pass our make its rate with FERC an final will that recovery and all programs, performance future, York, the in We're for Pennsylvania It PECO traditional both especially broad annual This for of to the also Delaware needed to grid realize improving formula and slide common our our options will supporting rates. the our of multi-year design these to ensure the Investment will In as performance-based our legislation on laws more rate rates infrastructure and rate both increase the help a capital consistent regulators a first of alternate state quarter in and Illinois of utility Delmarva the regulators the will and decision our look future support authorizing Pennsylvania Distribution for investment and forward-looking that service rate X, our across better of a also Court. Governor investment to jurisdictions, of System from want the rates, first Both mechanism service Utility gradual turning the Delaware review Pennsylvania deploy timely in mechanisms The in XXXX. our both a of and awaiting to and the We forward utility $XXX,XXX more on focus new support Federal passed

are Governor is beginning Solicitor to are to and XXXX. the We ZEC In enact of We the Board position Utilities filed brief take Murphy's the legal to we revenues remain ZEC the case in adjudicated. that which the programs. ZEC pleased confident authority the agreed the in being Seventh with the the continue quarter have the Circuit, the General's cases, to in states Public our both in the as around collect they end signature, first there, implement effect of which Jersey, program New following expect Illinois

FERC PJM PJM proposals. Federal two mitigation is capacity issued and proposal. the Energy part order front, existing the and unjust multiple determined established an market the that it FERC of unreasonable. policy order two-stage a two rejected submitted proceeding to The new introduce re-pricing proposal also by tariff capacity on On RECs a Instead

will current not all be is MOPR proposal if requirement. to that payments that minimum most offer first out-of-market plants subject receive the to to a ensure The expand

asset MOPR with the the payments load. disagree receiving the the by specific for allow market be would amount plants the by the however, with for to proposal, commensurate environmental states MOPR set that January final state's days of of be has We align second policies. avoid to FRR This days schedule along implemented allowing and out-of-market a X. instead and comments, withdrawn The a can to decision the goal FERC XX necessary. XX the is replies, from reaching

reforms emissions. We FERC design the believe to will payments the we matter has states to the in policy but we allow price should that in their PJMs committed the that timely could partial With operating the reengaging critical order, now relaxation. forward are the by a reduction on and the a continue ensure The work a decision on set treated after implementation to storage has energy to fashion formation, from had deadlines FERC those pursuant same. reserves stakeholders the goals, to respect out-of-market we encouraged PJM said is all changes. to PJM to advance it included related for look through those implement rule curve to work FERC for FRR demand integral receiving needed start think in rule carbon which fast rules that to which full assets reserves continues changes September details on be including pricing

all market changes security, has PJM preserve the allow while fuel resilience assess This FERC the the implement on its the evaluating and that it we PJM essential changes to resiliency, taken these assumptions to security open direction to Finally order to efforts as design and in that We to PJM model it docket. ongoing awaits the is valuing these competitive will effective from forward generation changes. ensure and properly fleet. to the design potential in of and needs see market applaud input it in move fuel to on further the scenarios

to walk through it turn Now, of and some Joe I'll over he the can numbers.

Joseph Nigro

morning, Thank you, good and Chris, everyone.

expenses of financially, to weather Compared approval $X.XX XXXX non-GAAP well earned in Exelon's a planned. Turning operating and earned from our $X.XX less in to share share. $X.XX our true-up range quarter, favorable delivered Pepco combined better the nuclear plan, came of our better a per from share revenue Holding higher was delivering at which strong at $X.XX share. the decommissioning Upside Maryland of from we the adjusted share $X.XX gains distribution second as a quarter the of per had Company above the realized trust. second earnings than transmission utilities is as revenue quarter were the XX, guidance results which slide PECO. also on settlement, BG&E we per to per Generation $X.XX utility impacts per

we year with by had transmission days compared this another both And benefited and for higher including FTR was allocated plants in offset These costs. nuclear what conditions Our budgeted to favorable were year. strong settlements partially last fewer market quarter PJM. from outage

to We share, range slide which are reaffirming on XX. can of you our guidance full $X.XX per year see $X.XX

deliver third year. operating in $X.XX compared with quarter $X.XX to share earnings expect We last the of to per $X.XX

Turning to of $X.XX $X.XX share per year the was quarter the in slide second quarter share than the this XX, of XXXX. second higher per

driven from year mill by from compared primarily contributions per collectively and were and with share rate fewer decommissioning nuclear utility were unplanned offset up base higher trust program associated per benefiting outage nuclear power partially last year, lower and Our earnings planned last price realizations. days, with the Illinois gains rates by ZEC compared earnings cases. share Generation $X.XX completed realized to rate $X.XX higher up

deliver each utility our execute our to as Starting modest look XX, we improved ROEs. effect X, we the operational continued made from financially XXXX. Pepco recent and at that June the to as Maryland financial and the utilities earnings Pepco's rate with merger. earned slide reflect higher to we Moving XX-month at fall since distribution continue took cases gains performance PHI, last settlement trailing on

Pepco's rates April City and Looking the settlement. in higher quarter, Atlantic a at ROEs effect that to largely offset settlement full which quarter XXXX, interim Delaware of took a earned earned pending in from partial the should expense. saw Electric Maryland in O&M the higher and next XXXX, Delmarva's with earnings the and effective benefit DC ACE of reached benefits depreciation October from now we was benefit March returns settlement include from quarter

with see the flow settlement. XXXX to full expect ROE We through improvement of October

the trailing utilities, FAS of fourth as XXXX PHI XX from month quarter the of quarter the of in fourth should changes uplift the the show ROEs out drop calculation. all XXX additional For

Exelon the remained our PHI. utilities, consolidated earned lifting utilities the including XX%, For to ROEs platform X.X% nearly over legacy

on deliver plan on utilities. ROEs be XX% to utility with at And confident room but earned overall Turing we range busy returns. regulatory as ability are to still happy have operating X% before, the into across said improvement and in in expect performance the earned to performance XXXX our as our still XX, are PHI front. We translates the remain to our for the higher we we better in see slide

May April effective call, of million decreases Maryland last Maryland providing DC June XX, X. with after settlement Maryland, approved tax the discussed for the arrangements benefits for at revenue Pepco and savings reflecting PSC both $XX million we in on On On Pepco the Pepco customers. respectively rates and settlement $XX.X

in Pepco For settlement with the the effective the approve to Commission rates thereafter. quarter third DC, shortly expected is

benefits. Delmarva, have revenue are $X Delaware reach We on able tax provide million of to our the also making June XXXX in a case it settlement history. reduction inclusive a second settled electric recent The consecutive distribution case electric in will case XX, we

order final a in expect the third We quarter.

appearing fourth As customer Investment the tracker first the Chris its first Delaware new charge bills quarter noted earlier, expects with to Charge System the of the in XXXX, Delmarva under make quarter XXXX. Power, Distribution by filing of on

June this we quarter. filed programs for the an are In number rate in the in a for at gas for first STRIDE distribution filed have reset case Delaware, base surcharge expected safety $XX in gas Delmarva cases revenues still also million continued order in of Xth, PECO need increase for Pennsylvania, systems In distribution increase. electric a We requested time to that an in and scheduled STRIDE in with is three and the driving investments BGE's a rate million outstanding play. BG&E for completion its rate On gas XXXX. January reliability and $XX March have fourth an years. case

an receive to expect second the this in half of year. order We

XXth, standard formula process. rate as April on filed updates of we annual for at ComEd Finally, the part

We of and the in teams. the expect appreciate hard utilities fourth We our order receive quarter. an to regulatory work

able can focused return while make investment through the and delivering strategy, details More capital is schedules in a improving and deployed. on being benefits positive be fair Appendix. communities system we're on these regulatory the the and to cases XX on Our a also earning slides customer on rate serve. investments, are By reliability XX found we timely in the experience on having the their

are I at to and $X.X that XX Turning billion our communities. utilities second on billion utilities, invested the benefits capital We at the and $X.X additional Today, of meet like investment billion quarter projects capital to would to during our track highlight and our remain of on capital our $X.X for slide XXXX. year-to-date. we at of overall budget budget topic part continuing two offer to are customers real and the

already miles gas gas completed. PECO's The and main replacement mains will of lines XXX has replace been is project X,XXX of first which service service The program. and nearly miles

to state the We implementations continue shortened believe program by system having years of work to years, we These aged which start the today. for reduce XX at on distribution our is the the with cycle replacement to replacing will risk XX customers. accelerate materials, good the efforts the from

Trade The second TPA. project or relates Atlantic in to BGE's investments Point

jobs, Over with an of drive This five industrial megawatt states Baltimore efforts to TPA support the next and our acre XX,XXX additional of construction. substation. is plus These territories. will generate efforts is distribution investments in in development will project support a XX which economic invest permanent XX,XXX our identify new during $XXX infrastructure another our transmission the example BGE in to million County, that years growth X,XXX commercial work including and continuously construction projected service to development

our to gross provides update ExGen. margin Turning XX, for it slide

movement ZEC This XXXX XXXX revenue some the within our the to quarter saw included time. New and have Jersey update, disclosures buckets. we in the for our we first Relative last

of New with both in total revenue. and with associated additional our Our the XXXX is update Jersey an from year ZEC exception XXXX the margin gross each unchanged last in million $XX

higher million is with capacity up $XX Zone New shows to New gross million spark gross $XXX Open gross ZEC in open and up on NI ZEC A offset business million flat XXXX Business quarter our as are XXXX. West the and revenue, million volatility. Hub margin in West and in capitalized was Power which Jersey higher had XXXX, $XXX margin margins and in wholesale execution We up gross New total of $XXX margin the in our York prices due Open XXXX, ERCOT by primarily channels For and spreads PJM XXXX in we creating strong In hedges. weakening a Hub. each is to line. year prices, PJM Hub and due retail new ERCOT in up

line cross Hub. We concentration. commodity XXXX at in and hedging comfortable prices also forward market ratable executed and remain look ratable increased to We to New NI where $XX XX% behind our XXXX. we XXXX have XXXX million ended fundamentals of more the at X% XX% open in Power we when particularly in XXXX in being compared Business considering basically program X% to when We and hedges ratable quarter our the in with behind

balance efforts June. XX, with our Turning to outlook on to remain Fitch and have strong PECO, all on placing committed sheet Exelon, been in slide and BG&E this we noticed positive maintaining front a

corporate metrics meaningfully Our consolidated ranges credit our remain and above thresholds. target above S&P

we We leverage times. at X.X below to debt-to-EBITDA our a which ExGen's target. are long-term basis, target our recourse is X.X times, forecasting debt at below is which of be times year-end X.X XXXX, are On well

sheet ExGen to continue at level. our the will debt-to-EBITDA We time X.X over to balance manage

reduction I us back the GenCo. for call on to you. debt look focus both and to at Chris. turn Thank now So will HoldCo

Christopher M. Crane

Joe. Thanks,

Turning that dedication of hard XX, our quarter financial strong again, is work operationally a to employees. slide we and the a to and testament had

sounding financial to momentum. continues Our footing and gain

I'll Here again, restate our value. proposition

on focus growing to growth XXXX. EPS base rate X.X% through growth to continue We and our X% targeting X% utilities

to continue down cash incremental of four and utilities, at faster pay part dividend HoldCo the debt at the equity the the years use GenCo We over and the fund needs growth. to from free fund next ExGen

continue value supporting in free We PJM focus recent business to market to develop and and price working capacity the by FRR our order. to the compensation on carbon fair resiliency fleet, optimizing for PJM formation FERC generation reforms at initiatives at seeking proper for ExGen pursuant

our where and continue load close plans to uneconomic and maximize reduction to sense gentle it value We accelerate makes matching. plants the sell debt assets through

Joe out, that operator, through driven now sustain can metrics, for it to up our strong With in growth continue open questions. we as We X% pointed XXXX. credit investment-grade at consistently

Operator

you. Thank

question of line first comes from the Ali Your SunTrust. of

open. is line Your

Ali Agha

Thank you. Good morning.

Christopher M. Crane

morning, Good Ali.

Ali Agha

morning. Good

mean, do allowed I set way the when will think up and of permanent lag or earned you can there? a will and versus aspiration (XX:XX)? set up, are in the there they what's utilities, maximum PHI earn the the that their ROE is system on they authorized in ultimately the those terms system be at question the are first utilities you The be your ROE

Christopher M. Crane

it So now the and by of on reduce in within We do X.X% lag We've component we're at DC. there think on. Maryland end package working PHI and Delaware Pepco different utilities We help we about have a talked at a be on right couple that working track to project range XXXX. is that. that to that We're the the of proceedings the also we're ACE. Pepco legislative to

have helping. that the are activities We developed

have in we're also putting place. the programs We efficiency

we're So, New constructive issues We are plan. continue having that to legacy we've recognize happening I Delaware, on the well legislators were with doing in in Jersey and we'll around on think with as filing the done focus that and as our we're regulators, our dialogue that.

Ali Agha

to that for proposal what relative aspect that moves then And extent Forex Okay. the your do it and for forward. and Exelon? Chris and the How look become means does of at FRR you law that portfolio to PJM

Christopher M. Crane

you have Well, that. choose our now path Kathleen do a I'm benefits and you right lot to to the can really fleets. customers Barrón we But, can imagine. let to cover evaluation there's of that our going that as imagine,

Kathleen? So,

Kathleen L. Barrón

Yeah. the question, Thanks for Ali.

I know, uncleared resources, pollution ours, think expensive as less what we're that auction. making out last resources you XX.X facing including gigawatts the clean pricing in here of pushing is they're look not they're emitting nuclear because markets are and

support to pay units I RPM in push and they don't assets. this opportunity units perhaps saying safety want they out, continue to giving think of to FERC rather order paying what pull them directly PJM is those that that to instead than those is can support in they're letting

matter. carbon the running constructive choose our But an they opening said of that to the allowing details for implementation air extremely so, to their resources certainly to continue goals we clean keep Chris reducing resources, need citizens. call, to the of pollution to in and as achieve is approach And this think the the states

Ali Agha

litigation Okay. when York give from eye come And pending keeping either of last states? decision Illinois, question we with to framework the us be regards in on should any might and to the of those New some marker an

Kathleen L. Barrón

nothing know them when no briefed time. and them up. exactly but Unfortunately, we we issue know we any have expect to holding fully that to way issue cases orders that's those been the have is There will

Ali Agha

Thank you.

Operator

line Your the question from comes Greg next from Evercore of ISI.

is open. line Your

Greg Gordon

morning. good now. basis first we're Hey, I'm happy name on a

Daniel L. Eggers

Thank you, Greg.

Greg Gordon

necessarily for I NDT. $X.XX to guidance the consider that you wouldn't every mean I regard just that range. you quite mean, moves I necessarily you Joe, were question earnings. quarter. of highest but still numbers – the even know with the was from around But if positive that's exclude robust, a there earnings were obviously of ahead but quarter, quality I prior that, that not your

a just basis in walk excess can and was of think us what So sort you through expectations? clean that of still you your

Joseph Nigro

Yeah.

settlement the weather the option a implementation as related the and $X.XX favorable when XX% I an big And during was little If what $X.XX. $X.XX transmission stable from the midpoint you I the balance then GenCo to on Greg, that the more drivers you subtract mentioned Maryland, my is also say And coming yearly We we at quarter. at our BG&E, at but had NDT Pepco as operating there. in were the it overall, range by market look the of than the was that conditions would was obviously of rate for PECO big is, things: well of it NDT, the utilities. three of driven basis. was A FDR remarks, at earned as prepared piece and settlement

was Generation some and costs. Our performance then was offset by transmission it stellar,

businesses. you see strong even very operating was the the subtracting So out could across the NDTs, performance

Greg Gordon

evolve down indicate working utility there's happen bigger that which in debt. rate-based capacity just cash high energy paying lower relative the agencies but get it know getting the you more and rating of on What heard you're the profile to debt on using rating your is threshold? to the you've – one issue Right. to to of country? on a you excessively not to the can certainty thus growth, I And the house But the targets that you're and to agencies since you is – shown below dependent FFO target think here, addition dividend, funding to ExGen company. that reforms show address that holding you're debt at well think that a debt, this point And about parent to to also your running conversation EBITDA risk down by are side that in operators has the best of you really the seem with market demonstrably and declining the just

Christopher M. Crane

Yes.

So agencies. have to will the dialogue with Greg, we been continue and have all rating

You We've wanting heard had good a dialogue that see conversation to Fitch. S&P. with Joe's it on is implemented. They it being understand They they're our recognize strategy, implemented. consistently consistently

a path know with the revenue, de-risking, part you regulated space, into milestones that and from more nuclear think liability that of our assets on also part making look life the with building the sheet but is on of which the is debt and their balance it matching reduction, of Appellate XXs through the I XXs. coming follow like much continuing revenue couple final approval to ZECs, Court

to a that execute more We just the it but continue hearing we'll have we the positive. thresholds, rating. very forward and from We our dialogue. able potentially plan. shortly to Fitch talk and hopefully not about only moving positive to having be they're on seeing to appreciate positive So We're others look

Greg Gordon

restructuring to the that states important be an regions. – option currently you're the already in need need and of market Okay. have legislators type properly for the Jersey and they are out FRR question flexibility go answered deemed legislation back create demonstrably would given pursuing fact, to of bring to that you that you your if give My in a those to them? instance you flexibility have may structure capacity last Illinois and the Does the or for plants of those them given assets compensate but in the you do New and to are them that engage previously, to would in legislation

Kathleen L. Barrón

at We're authority states. our legislative Kathleen. in of all It's currently Greg. Hey, looking existing

to in to And says FERC's on the will it's authority exercise this And of depend on to ultimately jurisdiction. states about order what going so to going be take order it's option. depend also I think what advantage

So the the this help I to of think best we're clean forward have evaluating on will we the targets order energy each going But think, differ in state. that it's states path depending meet. them that currently

Greg Gordon

Okay. all. day. a Thank Have you great

Christopher M. Crane

Greg. Thanks,

Operator

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

line is Your open.

Steve Fleishman

morning. Hi. Chris. Good Hey,

Christopher M. Crane

Hi.

Steve Fleishman

know you of to it's directions. guess, lot I in Just hard FERC these of a kind proposals different interpret

also had decision. the You Mystic

perspective and proposal a so, to versus guess here of what final initial by achieve could just can a they're And before you maybe what structure next hear trying this we kind just broader change early I give of year?

Christopher M. Crane

Yeah.

the ultimate benefit is operate XX% of nuclear FE a of every like of money PJM outside is in PJM the have. that at understand We the they They that within have that's deemed announcement, would that and start and – we penny of the received they playing lower carbon plants conversation power you REX on as federal lack spent like skip threw level disagreement the preserve – that, states would carbon, being the continues to want output the really and stakeholders field fix. look states to that social carbon that states. the would away. the the nuclear. states allow on that out. be So fight the of majority is been although the to That down income the State shutting Short Illinois of (XX:XX) be around you in supplemental in the know our is of support for of we reduction federal carbon It's policy. carbon-free, the wiped low We within a achieve XX% policy that the output

states separate under point has to stakeholders. and PJM been be some within a keep that passionate to So this to unable assets. they support of very at environmental the you've needs current got of their our want these tariffs belief the able

could administration Jersey New New thing. if to to wants something, York. do same New look So citizens. say low future to It allows FERC carbon York If for what something it a wanted state preserve legislation its in do the is to move its positive and this allows the a the for Illinois from and for at

gaining finally be are to very had we the that in mean Katko also So about manage the plant. capacity this his with out only keep and We positive. economic he about final not and we assets is the revenue these in with on Congressman low conference and wants the I but is on their Perry carbon. the momentum, of them. commented state think, with it capabilities how on not he's opening of press concerned may I tour but clearing, diversity for the the Secretary benefits decision officials, yesterday Plant concerned comments, setting and our fuel FitzPatrick the was reliability He's local in the stream, at the discussion resiliency

and other you've gives So finally to from ZECs seen against between other arguments it bed. forth think go try us to put it this us I the to and back stakeholders save. programs to seen and We've a between path

Steve Fleishman

time And to like for That's any of plant, Okay. a if a good, of know that's on would do is structure that were get for that ZECs helpful. you reregulation the sense you i.e., the know form into of of have how kind an on be of you set one are? long you question is amount it, that like, like if just other kind FRR

Kathleen L. Barrón

the one Yeah. out for units of worked not like to about Steve, way it's talking the docket, about that's important to pay choose talking letting that the be know opposed assets. the we're they'd (XX:XX) details capacity, certainly in but jump we're on as capacity which for pay and implementation alternative that, reload I'll the FERC select will RPM to let states units regulation, to an through

structure ultimately the in. And current with step RPM anticipate zones will know if decisions price carbon The longer five our customers. that structure as longer carbon made of for future these term this units option we will benefit term towards you the short-term. a year will then be it's a to come the that allows be that and out Chris that be step will identified, Chris market a back identified, or a to FRR get through So solution we the period that to by

Steve Fleishman

very Got it. much. Thank you

Christopher M. Crane

Sure.

Operator

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

is line Your open.

Julien Dumoulin-Smith

morning. good Hey,

Christopher M. Crane

morning, how you Good are Julien, doing?

Julien Dumoulin-Smith

Good. Great. Thank you.

want would clarify can expectation given would Just this FRR the just motions the quo to itself to there. with costs your assets for your just start move attempt clear respect sure this rather to hearing that or or to we clear I'm if avoided states file assets question make status through Is actually to expectation correctly. actually be? it to that that continue might is I last your maintain wherever

Kathleen L. Barrón

Julien, it's Kathleen.

nuclear states response at (XX:XX) think former not we would fleet the this to efficiency looking of that's asset of closely the Difficulty] from opportunity, receiving the course that any be expect because just effects, demand customers [Technical renewable very it's I support directly.

and sure so clean procurements the recognized of an capacity do are PJM making have are – states lot to going a stakeholders interest in And that who be have there RPM capacity by to that able rather. by

Julien Dumoulin-Smith

both in that's And it where Illinois you've the confidence way support that to a path find clear? from to if regulatory an Jersey, be you compensation units, goes New implementation a can FRR including and for indeed

Kathleen L. Barrón

Yes, sir.

Julien Dumoulin-Smith

excellent. right, All

turn the side with New CapEx? comment Now, about opportunities the Governor lot New a than Jersey in utility the back seems on equation maybe is ACE. booming things nuclear more lot a offshore you implementing the energy here efficiency obviously filings, side to wind generate let obviously. Jersey that, the at I mean where plants, but context of of are talked we've Can the me to some

Just in stands curious thinking and what's how reflected it about you're the budget that today? as

Anne R. Pramaggiore

Pramaggiore. you? Julien, are it's Hi, Anne How

Julien Dumoulin-Smith

you. Good, thank

Anne R. Pramaggiore

Good morning.

couple there's new with legislation, are – come. regulatory that On to proceedings the it's of we're subject the to that areas it's New lot to yet subject Jersey into, side, of a looking obviously a

budgets been there's area So past, But have the the the look traditionally we we in an reflected except things going toward around be you program energy would the forward. not that's or for efficiency, to-date. see would involved one in some not efficiency and earnings of at funding we'll energy looking what in programs

going So programs, investment to you the forward. extent capital those to could reflected energy that in see there's voltage efficiency, start conservation

of the in proceedings, that have invest and we we have in here of products types programs opportunity of looking especially of are like. before in services future, we kind like. about that But subject at think the that customers can solar utility opportunity looks But a again, the as sense think New exactly with commission storage to all Jersey. We businesses serving and going there's also and the what tremendous forward to these be forward, they we

the there's do work think but with some we there, So to a great platform regulatory agency.

Christopher M. Crane

The only rates that we thing add is, I'd on our to high have a very to customers. sensitivity

downturn. of that know As has the you part through state gone a that

going which do make can rates. efficiently, to focus a as so on we're the we keep constant And those we investments

future commercial, residential not or of the we're So customers. development impairing industrial

Julien Dumoulin-Smith

Excellent. Thank all very you much.

Operator

Credit of question Michael the next line of Your from comes Suisse.

guys. line Weinstein (USA) Hi, Credit - Thanks call. LLC Securities Michael Your taking for my open. is Suisse

Christopher M. Crane

then Hi, Hey. a implications side off talk Suisse are Constellation FES guys from summer what (USA) that for kind the expectations with recent I given about it's Mike. on your the to guess are what Weinstein about gotten acquisition LLC power Can for And Texas, Michael mild you of executed talk in little also Securities retail the market you the bit a start? - Credit and that?

James McHugh

Hi, Constellation. from It's McHugh Jim Okay. Michael.

As on In it ERCOT the day we've even some we've ORDC weekly pricing the and to summer, curve, real-time forward going in higher hasn't the and fruition. is seen far in some that volatility delivery what spikes. price come the markets, the ahead markets market, some seen exhibited as into markets

wind generators and well, generation saw the the as at ahead minimal weeks or period, of So $XXX The In it's July in $XXX led all There were to trading But between operating real-time, very were into range. a better performed August to and the conditions. large as performed some really high outages, force saw there forecast. we and $XXX response trading prior the spread demand good real-time. than great day or so and availability. going month we

As that of far as forward market take markets. we're we in portfolio, able saw the our volatility performed to of well, advantage some

to for do of side, owned. and new fleet we by represented to once high a we proved were our that demand quarter the You chunk business executed our activity million able valuable the strategy high saw We peaking serve is and of options $XXX that the and able power load with the our again. gen-to-load that XXXX we're on good this in Texas what and

think Going I that we volatility forward, continue. expect to

with demand gigawatt continued out combined and X solar X.X a gas growth very thermal year really some cycle of little have You'll build wind generation to and gigawatts build out.

around summer. on So trading period now and forward right curve of would see volatility we that volatility same expect continue, the delivery next right is will exhibited the between and the next now you $XXX would summer

gen-to-customer it's XXX,XXX For the our would a the of moves on FirstEnergy, there's fit million price adjustments portfolio. the We great to over. paying on market customers before subject But hedges fit $XXX acquisition side the and for buying We'd side states. be based is C&I that and process of great also as be our power been we've a across some It'd for be process. six residential deploying. part in certain strategy gen-to-load basis

it's it Hey, a our to customer would Weinstein sustainable and LLC Credit - So Michael us. Suisse repeatable quick through recognition complement just brand existing a (USA) follow-up. for portfolio strong renewals and provide business Securities and

reading little just earlier that think closer of as it should XXXX closer out, I that I'm in said you that into is on you're you're you the I markets that take go to And think power the negative that I ratable wondering, becoming to in versus call sort was XXXX. be anything for ratable a hedging a further or?

James McHugh

XXXX. behind The behind cross-commodity ourselves hedges is program, largely We're X% in hedged hedges continue of actually position, in as power gas the our position. year X% It's currently ratable We've to further position some NI ratable markets. and that that Hub not. it's about just building to to grow or and we added Michael, we're No, our in behind three we'll upside concentration of expose ERCOT. third year ratable

read wouldn't that. I into So

those to and across LLC Credit our Thank is think similar Securities position Weinstein both - years. much. you Suisse very growing I Michael (USA) be similar Great.

Operator

question from Citigroup. next Praful of Your the line comes of

is open. Your line

Praful Mehta

Thanks so much. Hi, guys.

Christopher M. Crane

Hi.

Praful Mehta

to timeframe. So required think in asset losers sense the both well it getting piece. to get there auction back capacity are some ZEC just this the winners, states versus payment reform terms as states this the any a market of get to would from done for in especially on wanted more as I support If (XX:XX), there kind of the capacity difficult be get who are to Are to inclined more states, others? will make the

Kathleen L. Barrón

can to implemented. the gets that certainly state's well. depend It's on readiness, as I going how take one this quickly

of of looking there going at, what period whether the to to subject advantage question be think understand kind take sort allow take of So be at active hearing in that's rules be and as the be transition paper to of I one FERC, to are the I of them. debate what transition and period a to to needs some might we states

FERC So for I of think that look you to out should play the part as process.

Praful Mehta

you volatility position Thank at retail in expect And you're goals in retail that end struggling that back see expand the terms are you. looking you. is the of then should to portfolio has position any of your Got there that ERCOT high, at we ERCOT, volatility extreme or your been if there to clearly if of players all? expand kind

James McHugh

Jim Hi it's again. Praful,

out ERCOT, some for the harder collateral include with It through be balance at business markets. see did one posting small into their summer, the going providers we which to of new the go undercapitalized requirements. think sheet forward by collateral a those retail I smaller look the might manage if retailer of requirements they're

For value is us, same. I think look the good for strategy We'll propositions.

the record what for and Integrys and continue track be will value. at looking with Ed same Our with Con to FES now to book the we're look

the the further volatility you the term are the extended in start far As lag dates as see longer impact maybe of tenures larger may the the the contract for out players impact curve. in as effect, and the

So they're two years or forward. three currently for out contracting load

Praful Mehta

all XXXX, now? Got in think quickly just, just cost right you. I track And that XXXX. noticed on I XX% their XX% target, mean, Thanks. I ExGen Is O&M reductions, by

Christopher M. Crane

It's not on it's track. Crane, only only track, on not it's Praful,

in to continuing are we're more to efficient, become compete work to continue the in. We markets

to exceed are We we're those those, track achieve if so good to on shape. not in

Praful Mehta

Excellent. Good Thanks guys. hear. so much, to

Operator

Thank sir. Crane. to Chris much. to turn like go ahead, would speaker, you so I call Please back the over

Christopher M. Crane

joining again everybody call. And for thanks Yes. the Thanks.

sure be in communicate. big and your we will much right Look that Joe calls, the third are track, we together of the strategy ahead and a updated. to keep a years Dan very part continue have and from answer continue not we We I any to and ourselves making out good our put quarter forward quarter making see of plan so ago, will getting available to third if drop can the and but during and As to you schedule on we're day. you also of you thank back questions,

Operator

This conference call. concludes today's

You may now disconnect.

Daniel L. Eggers	Exelon Corp.
Christopher M. Crane	Exelon Corp.
Joseph Nigro	Exelon Corp.
Kathleen L. Barrón	Exelon Corp.
Anne R. Pramaggiore	Exelon Corp.
James McHugh	Exelon Corp.
Ali Agha	SunTrust Robinson Humphrey, Inc.
Greg Gordon	Evercore ISI
Steve Fleishman	Wolfe Research LLC
Julien Dumoulin-Smith	Bank of America Merrill Lynch
Michael Weinstein	Credit Suisse Securities (NYSE:USA) LLC
Praful Mehta	Citigroup Global Markets, Inc.

Exelon (EXC) 2 Aug 182018 Q2 Earnings call transcript