EXC - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Exelon 2019 Third Quarter Earnings Call. At this time all participant lines are in a listen only mode. After the speakers’ presentation there will be a question and answer session. [Operator Instructions].

I would now like to hand the call over to your speaker today, Dan Eggers, Senior Vice President of Corporate Finance. sir. ahead, go Please

Dan Eggers

Executive Good of quarter and remarks. questions Leading XXXX Chris will joined to and today Tamara. Chief available Nigro joining Officer. be senior Financial the you our management our following are They're Chief President Exelon's third earnings other Crane, your and morning, you, prepared Joe thank Exelon's members everyone, by for call Officer; Exelon Thank answer conference who call. team

from morning other Exelon's forward-looking assumptions and along risk for during management's during can other this this risks factors the earnings issued presentation, on factors the differ and to which release We differ expectations. we today's today's our and and of today's with be statements various could forward-looking projections, to SEC and may Investor estimates factors Exelon's refer both from forecasts earnings uncertainties, discuss that based release our X-K contain which comments and matters, and material Relations website. statements and filings call. made that actual in call cause in results to discussed found are of section results of discussions The Please subject

GAAP reconciliations references for includes between Today's presentation our of the appendix non-GAAP information measures and measures. earnings contained the release Please other non-GAAP adjusted the also to refer operating measures. in the And equivalent nearest to our earnings and presentation.

call the over Chris Exelon's turn I'll Mr. Executive Crane, Chief to Officer.

Chris Crane

nuclear at levels morning, service our quarter strong customer delivering Dan, ran across and good high good our and earnings, Thank We everyone. reliability. a had you, of utilities excellent units

financial first on to our matter I address want but a is minds. regular minute, in to performance turn know reporting our a that of of all our I'll I

two behind have the company's These news the and dominated about We what's about Exelon Illinois grand-jury have which with practices lobbying Illinois them relationship speculation reported senator. subpoenas have subjects and the in and ComEd. are subpoenas; an received we publicly state the

but an and I'll of we that that ongoing Given government investigations this, learned are pledged the you investigations we been informed or are necessary outside with standards, tell investigation. is sharing discuss to operate the many complete investigation being taken. results have changes have investigation not rather the cooperation is the possible Their company's when of details, ethical we been us what we investigation beyond cannot to which the actions is the outside by are a its relevant on the subpoenas, the the exhaustive of on undertaking of counsel committee determine facts internally reproach. has an special briefed at Board ensure going we forward path lawyers lawyers The also the ongoing represented and outside own these enabling that whether the with the Exelon's highest legal basis. to not government but go

our the ball the success. on operational focused We that by staying are keeping eye the delivered strategic the path has on and

had Now at call. and positive on Slide about developments end regular the I'll to answer we've questions turn the of the any can X, that the Starting quarter. over report I

First, North of the top the industries. American in companies Sustainability a all we Exelon named XXth to score with Jones for in Dow row XX% Index were in continuing year

reduce Initiative in change are working Investment launched we mitigating start-ups emissions new climate gas emission that Second, in on and Climate $XX greenhouse our territories climate a -- change. to service to invest -- million technologies

improvement case. customers. to through granted Maryland its results a service Third, the is enhancement recent most -- continued our and an the in and customer in our This Pepco ROE allowed was X.X reliability rate for

year. proceeding in multi-year order next to XX, rate plan soon PSC file the Maryland known alternative PC making as the a utilities as rate as allowing Fourth, an issued Maryland

ZEC York the to New Regional the challenge Court beginning Initiative. the Pennsylvania Issue carbon while nuclear Fifth, join will York state's order to front This the executive us. New Supreme last for goals process to Wealth the Greenhouse challenges in and remaining to Sixth plants. remaining legal Governor program the of meet removing allow Gas zero helping preserve REGI, its Pennsylvania climate rejected to

this earlier announced health Bay. the Hogan agreement Dam an with will that Seventh, Governor we the allow Conowingo and continue to protect Chesapeake in us to week, long-term Maryland operate of

clean to electricity production Governor Continued from energy generating a vital carbon in by dam is goal XXXX. support in of the free Maryland Hogan's XXX%

Finally, $XXX of new an savings. savings cost ExGen round announcing additional at finding we're million

help plants. current to We not continue overcome our the will depressed financial nuclear of These of to Illinois market forwards work hard savings efficiencies but challenges and to the navigate conditions. adapting will enough ExGen at driving some be

has there realize clean on impact in the one bigger of the Illinois. energy a investigation for on than been of prospects the one company. potential need some energy or is just I clean legislation discussion legislation stakeholder The

Illinois. ongoing in about discussion We for urgent are but the only legislation of need the one one part, part

With rollback to ensure are the me, state they million excuse environmental protect consumers. where stakeholders Illinois more the consumers act emission -- million taxes tons emission policymakers contribute without country customers of urgently and retire clean our more $XX so can result. action to air, is goals. domestic billion The communities. require states product needed to they Illinois and Illinois prematurely is want pay than X.X state the drive many from nuclear $XXX clean plants if will on million avoid drive dioxide reliable electrification transportation for essential XXX% in benefit of economy Washington, This are in gross to four and carbon Exelon service roadblock, action energy across They electricity the Illinois in a affordable regulations annually. metric true ZECs path will reductions, to believe in Illinois were $XXX pay of and achieving for plants these in clean in rates to with taking that

allow in Illinois clean and FERC issuing PJM market due delays of XXXX/XXXX fall until enacting programs will in to in is treatment linked FERC's before of This potentially be the PJM energy procurement to as and the that auction end Spring delay implement an the from the is does XXXX. quorum protect until legislation legislation negative late mechanism XXXX order least passage will delay changes very delay for Commissioner XXXX/XXXX capacity back part frustrating. energy place on Illinois the FERC auction push out in the the of to and in the capacity point time well. the recusal before should order auction. Glick are capacity. and time lack completes of The 'XX I in in to the November at enact legislation It more his clean when to while allow period, auction

results, have quarter above the our our we with to earnings had guidance. Moving strong a financial

we per Our versus remarks. details On cover basis, GAAP-based a we -- share share a last $X.XX on versus GAAP $X.XX non-GAAP share $X.XX per will in $X.XX his per Joe year. per year. basis, these share earned earned last

Slide the top utilities onto mix utilities X, at customer mostly operational side, performance. quarter. quartile our Moving was performance this operations with on performed Each well of

which seen on vegetation in year, outage significantly in ComEd the This temperatures reliability increased caused only frequency related have Middle impacts abnormally metrics. duration higher performed we Atlantic, more the and it and storms the and quartile first However, issues.

some lower well utilities. in with These power of drove XX.X the our of the and match storms a had of and compared For XX.X electricity were had produced dispatch That metrics in and instance miss terawatt in in emission outages XX.X. critical XX.X. hours quarter. of disappointing capture a performed of also to Generation during reliability to ERCOT. hydro XXXX. opportunities had XXXX gas zero exceeded hours cause and capacity four we factor the our us PHI minor bigger some Texas on plan for solar mid-Atlantic and Nuclear during wind a out that Exelon XX said,

over it questions For to now, we'll Thank then go after. and the I'll Joe, to you. turn

Joe Nigro

you, Chris, the our good also results, month I at financial full including Thank management trailing will provide cost our our everyone. year hedge morning, an XX quarter and ROEs and will guidance updates, utilities on Today, update quarterly third program. XXXX cover I and our disclosures.

a higher on PECO, weather favorable which were by a delivered share earnings to timing turning O&M to combined to relative Utility outperformance Electric $X.XX range $X.XX of The $X.XX a Delmarva X, expenses. basis and earned $X.XX including First, which per Delaware. basis of driven guidance share. and net Exelon per holding on utility was company non-decoupled guidance, by driven the jurisdictions Atlantic share City quarter largely our per per GAAP share in during Slide exceeded our non-GAAP $X.XX we and

behind As utilities. which ExGen total, we was our XX% approximately decoupled a reminder, $X.XX share, per earned little are our plan. in a across

in assets was quarter high owned outages prices. hit third ERCOT periods unfortunately unplanned contracted impacted of during by which and at The

hottest record, we wholesale during and one in which summers on XX XX optimize in saw prices the to and ability the of Although, volatility in we less lower our quarter. had the years portfolio September third resulted top hottest PJM

up share quarter quarter-over-quarter earnings share in earnings PECO. to compared quarter X, year. distribution higher quarter of growth XXXX. offset per with rate Utilities $X.XX the This The per weather Turning was relative were in was primarily completed of rates, share unfavorable by partially to associated Slide last The third was year third with show per HoldCo driven we at $X.XX $X.XXX the third our the Exelon higher this less cases by walk. load of than XXXX.

management were ExGen's pricing, operated by pricing our the outage PJM. savings partially contributed York cost year-over-year also our from April $X.XX program earnings of XXXX per ZEC fewer the the benefiting up increase capacity offset Jersey associated growth. owned planned from New nuclear in in were days plants last ExGen's lower ZEC and compared at earnings These in with year, of ZEC revenues and with and Higher start to program. share primarily New

we EPS are our $X.XX XXXX Turning range $X $X.XX narrowing X, from to to share. per a to Slide $X.XX share to guidance

tied beginning As to declined you is about ROE which of the year. the since the points are is basis aware XX-year treasury XX ComEd's rates

into in account we in the the degradation slight takes from guidance updated seeing earnings Our decline are treasuries.

and our commitments be year-end. revised financial we confident at our on will delivering guidance are range within We

XX% utility but to ROE. due equity as trailing Moving capital looking X% XX to ROE. not on continue at our XX.X% a forward of The ROEs a treasuries if yield year rebound. to dipped declining which utilities a our ROE continue legacy XX% remained Earned in ComEd's they consolidated primarily will quarter, last consolidated returns above impacted remainder with the well impact decline month Slide and do target XX, we treasury investments for modestly going to to the to infusion as Exelon exceed BG&E basis, for support the ComEd's

at distribution higher a utilities ROE by earned both distribution basis point for revenue at from the trailing PHI earned the XX the Pepco PHI Maryland sustaining Atlantic constructive growth earnings settlement a maintaining target our ROEs from other order quarter consolidated utility last months, Electric. remain City The and at X.X% strong at rate XX performance increase and our driven meeting We focused the on utilities. by

Turning to Slide XX.

front were regulatory rate there the important some outside on quarter, of the our During developments cases.

filing frequent implementation to duration the utilities caused by The reducing XX Chris plans mentioned, cases the working three-year as its the a rate be rate of order First, plans and providing rate found both alternative rate traditional can group August, administrative predictability. Maryland proceeding costs and PC the of PSC and beneficial of established rules. that supports develop by to a in in customer customers multi-year

commission in participating Maryland consistent rate the to the a final a basis multi-year Commission's issues file actively are with order. plan will group able utilities staggered its process. Once be on We order, the

lines. of will Commission It notice capital DC Public the Second, request area DC the the facilitate XXXkV rebuilding approximately substation by improve two XXXX. grid district's strengthen for X construction Pepco's Phase electric and XX constructing This completion Service resiliency of help phase system, transmission project. is miles X the for commitments. scheduled reliability Phase two and capital and of including climate approved underground

rate final Commission $XX.X annual on approved electric increase XXth. revenues. The On order our Maryland August a cases, million Pepco a received distribution Maryland current in

allowed Pepco's customer in Rates to at by reliability August Importantly, X.X%, a basis recognition and points the increase XXth. performance of effect into strong XX ROE order on went satisfaction.

administrative the rate also rate adjustments over the no revenue October judge annual were issued ComEd's have formula We to cases proposed in providing recommending. additional order, requirements XXrd, several still progress. On case a law

and filed The BGE's order from PSC. receive Commerce of the natural on final Friday, We settlement expect for Commission to and BGE year. gas a the agreement million Xth provides to with respectively. annual December rate this $XX settlement $XX million electric Illinois distribution an Last a of increase Maryland

December by XXXX. order of We a expect final

we Finally, quarter on a the found be through XXXX. fourth More DC in can the our rate Slides on received XX expected final procedural of schedule multi-year plan cases details with Pepco of the in appendix. XX order

continuing deployment consumers. we and on third capital invested during robust the at infrastructure to investing Turning capital and we in Slide our of utilities, capital benefit our billion are XX, utilities, for have at quarter. our $X.X $X.X the resiliency the Year-to-date, of reliability increasing billion the improving

to more year, $XXX rates capital reminder, And million either deploy billion above is original growth base our a We expect under this tracker. our than as XX% $X.X like formula of rate covered or mechanisms plan.

I customers Maryland projects these of that two will about bring New performance talk efforts to Jersey. our part Today, improved will are and in and

transmission to electric key are install approaching line X.XX link caused restoration electric useful mile circuits of reliability and failure grid will the long-term and aging is end the infrastructure double interruptions the support is symptoms BGE underground reliability Patapsco in by will the multi-year of of XXXkV replacing are circuit. critical system the project River, forward. improve Key customer and risk crossing across circuit $XXX initiative, life. which overhead The a system of project crossing a first The exhibiting power going by outages faster are reducing the million

customers project Atlantic and in are rebuilding project XXXkV potential million galvanized total in improving XXX long Higbee area wood reliability This second City. of existing to and replacing new $XX system Lewis structures. service rebuild and The include transmission reliability project which with about resiliency XXX miles Island. lines project structures the thereby line issues, XX.X in steel The Ontario performance Absecon, results

optimize Since On have we business current in even strong margin reduced Constellation gas company. added to wholesale prices volatility. on Slide environment an and XX, as update hedging out market the liquidity gross curve less to we conditions our power These with provide in leads merger, our portfolio natural our incurring to compared delivered well of the declining the lower Generation as combined strategy results quarter-after-quarter opportunity at history. wholesale

are million reductions our optimization we cost that target also target these These non-power are business. our our the business business result, next reducing 'XX $XX by new in slide. a I reflect new expectation in million our by discuss for mostly which and savings, As XXXX. on changes stress business power target new XXXX and I by will $XX wholesale should offset

to perform well delivering Our customer new margins success facing in with Constellation products sustained businesses customers. continue our very for and

in we higher to the in which Turning in total gross margin benefit 'XX which margin tables, prices the can that margin forward were did the from see targets third just business flat. gross wholesale positives leaves line. I open by lower and gross discussed, you the XXXX These quarter offset

the their prices quarter During than we a hedged as lows. quarter, ratable from a amount recovered late modestly more second

a XXXX we closer ending to hedging ratable ratable Although, in we much X% in overall the behind X% to still are 'XX, behind to ratable behind X% ratable are X% and quarter amount.

rebound upside markets power not certain but to significant prices. see expecting We a in are continue in

XX. our have more and million include primarily in which Turning $XXX we announced with XXXX services were PHI. to the not Between merger These with synergies approximately coming does Generation at XXXX, savings Exelon one-third company. than corporate our cost from from savings Slide

flows. $XXX elimination cash of the base O&M reductions capital savings expenditures generation Constellation's and from we the capital our billion for growth in addition to to million in savings, solar XXXX, customer business. fleet and have $XXX capex projected reduced ExGen reliability capital billion at improve find annual we facing these fuel. savings In Since have ways reduce total our of to intensity $X.X a its ExGen's of of most $X.X to while safety million continued fleet. from nuclear are the and of maintaining Included except XXXX,

ability in O&M savings cash pre-tax $XX targets. business the key and we which rate, announcing attributed $XX for One run items, is reduction of cash additional to is mostly other ExGen's components million our continue P&L million of the flow. flow are in generate to its in million is look Today, and value proposition we new $XXX to reductions XXXX. optimize ways free to cash offset

of and amounts will I can stewardship. find who should efficiently, work vary due all employees, every our to run these point nuclear community hard of challenged savings of that for to additional our state day more and commitments state reflect an expect depending of in company safety, current we that our these to on We stations. the reliability Illinois savings opportunity the out strive while adhering the our future savings

Finally, Slide committed balance our we strong sheet to remain rating. credit a on investment-grade moving to maintaining in XX,

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

we of X.X to debt EBITDA our ahead at Looking target are times. ExGen, well of

XXXX, X excluding expect to debt times to times non-recourse and debt we For be EBITDA when X.X EBITDA debt. to at

over call back disclosures. to remarks, Chris I the to for closing want turning for our Before his quarter expectations set fourth

in lack year usual we four-year the of ExGen's and of have some and providing will not the February, around cash disclosures, the of the Given including held fact of disclosures outcome PJM clarity flow of our in for delivery will Illinois, free auction the before be outlook. the not XXXX roll that our will updated hedge future our Generation shape to Exelon forward the call which legislation capacity XXXX-XXXX

remarks. I'll and turn back you, call now closing Thank to the for Chris his

Chris Crane

Thanks, Joe.

billion to for this we our industry maintaining to meeting support year in more things across energy. utilities Slide capital policies Turning deploying operations, XX, effectively commitments, $X accomplishing advocating and we leading are financial our including clean committed that do, than

we remains one our and proposition. are strategy committed right to value the Our

to X% X% will base the earnings and a growth utilities grow to targeting continue rate XXXX. through a growth We X.X%

incremental dividend. and the from part utilities, at Joe as free of growing the use, paydown the cash fund to equity Genco needs continue fund flow mentioned, to We debt

value optimize Constellation. continue match our ExGen where makes business seeking plants of did uneconomic it fair sense TMI we Oyster the through selling and Creek, to by fleet, to Generation debt our for load reduction the zero at compensation value and like assets emitting maximizing generation We strategy plans accelerate will closing with to

optimizing strong ongoing sustain committed underpinning Exelon. by proposition will We of strategy our our investment-grade earn metrics. We XXXX. is We'll and value annually The your grow this to of value remain effective. dividend support through businesses X% the

it can we Thank now turn Operator, to you. over questions.

Operator

[Operator Instructions].

ahead. Evercore. Your Greg first Gordon is go from response Please of

Greg Gordon

good Thanks, questions. couple Got of morning. a

to pertains plant with it sort as closures. regard First end ExGen, the commented of at to you

for reason for the another, Illinois get to moving most of the understand increased point you're, unable state to of units? uneconomic go compensation shutdown necessity economic or At nuclear you one If what path to do of down the of the fleet. your

Chris Crane

how sites of can't not that be four future covered session I the important stress ZEC under will the spring legislative program. the the for are

be to So what couple order or of we'll and variables the there's -- announcements the FERC potential here, with making responses FERC first half of a the the order what we'll watching real decision one be and in watching point PJMs will critical XXXX, legislation, but way driving other. the happens be

Greg Gordon

And Joe.

details pertains less that effectively the give wholesale more optimization but cost color and or volatility the book lower volatility expectations. a less prices on it the of making -- just lessening it's us the can for opportunity -- some cutting, steps you to prices, for two that? Is that a forward, manage back function lower but outlook the of little traders sort your overall of -- on guidance, lower better to As the ExGen steps X.X and it

Joe Nigro

Yeah, Greg.

You're spot on.

about warm marketplace, it's didn't much in factors. we to business here to prices had cost offset talking mean, see we very side the the summer and business respond. wholesale volatility, a our didn't I as retail relates the these solid. a do I volatility lower the targets. announced of I remains stress new business, want that reduction mostly cuts which ExGen, combination it see we of It's our And -- we're we in think

would other levers hand, model outcome business how we that some we would our costs we'll of mentioned, other of there we things have -- and other As still continue assets. capex Chris There Illinois, evaluate that at address disposition have at the obviously look is to any changes is the to on and asset of financing. depending on

drop seeing. new the specifically So of there here. combination business we're environment that But a the the factors targets, market to in it is is

Greg Gordon

steepening like a Okay. -- the then on And headwind be curve. and on a yield XX-year we very year one into questions, regulated it'll is operating well it's next and continue the a more of the two side, but headwind until sounds to ComEd see

you're areas business. -- the looking outcomes utility other the So like of as at the in

you before? The impact XX% X% than X% from you're earnings opportunities that equal, should lower guidance the all that to assume offset things interest are the XX%, seeing in of trending ComEd, contribution of rates outside or range you other we were to

Joe Nigro

questions, or year Good will February. at to in Greg. the point again. $X.XX expect Yeah, we down up for it said -- we our and of are utilities XX We call ROEs about to Having update impact seeing lower and as move we Exelon every QX of is on call do Joe ComEd the EPS. a reference the that, relates once on basis and that just

is basis The the down points So for curve down for on revised XX-year and approximately weighted that forward average versus example, XX approximately XX-year basis XX/XX. with XX our points the treasury see guidance. you XXXX is

I capex projects corporates said, benefit that liability plan. as The the and would say customer plan, of though improve that's the only we've consumer the in one the experience. identified piece

given that for we have period, a investment to get We work that to find liability we we'll that through as hard time experience and continue seen the at customer additional closer improve to we to forward. continue an in move as need

Greg Gordon

All I a topic, the right. last And Chris, my know it's difficult question, investigation.

that the you've we information so looking can when get this Anne we with retirement potentially can acted can other What Pramaggiore, they've how at you resolve resolve they and about that are or investigation? this? is the timeline us that the the it between disconcerting tell of they're that you and parties public and need, all What can subpoena now way very gotten kind this The disclosures. second comfortable comfortable of you

Chris Crane

going grand-jury it's we not a The this is There we point. the set to attorneys and us, independent There's learn by cooperate. the and at not provide the can details our a grand-jury investigation we'll lot with doing on. set correct. continue investigation from of by passing and -- that outside Anything government timeline here. full our or cooperation the said, on cooperation, government practices cooperation very But with and will we're immediately And open is lobbyists some take illegal legal our judgment the of contract action on I is past imperative not anything like or is consultants.

So all. a expect at it I these our impede don't things take while. can will business

Going focused. that the ball, the things efficiency time. that the they're say is forward driving of are same team the lot articles. improving getting on a There The is keeping very on there eye that speculation management news out driving reliability the people in operations, while There's best. to is speculating at the

can time ball can't keep So it's eye -- little it able a we're now, on the bit the actions cooperate, color we for any and continue speak we'll to on we comes just corrective we've have But taken. there. when to continue process, to go our provide that to continue more

Operator

Thank you.

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

Julien Dumoulin Smith

include that to up can I'll on team. details And the follow a them of process morning, as talk today. here. good Hey to few Hey, function a perhaps the two together just of wanted we

legislation -- Clean whether next more and importantly this or the headlines Coalition it Jobs where stands the I of year. know just today. First year some happens legislative the around

conversation framing unrelated, how and at that as talk related, realities? year? to It I'd today to seems that wanted extension the make of front I somewhat the conversation separately at just the some how we're given understand we And next curious of on ComEd want through position sure be but least would you Just process the well? then franchise

Chris Crane

Jobs is Sure, the I'll you with legislation with conversations, and a to the still know let one Dominguez and of very of Clean stakeholders. so to the is strategy I'll first that's Joe very the there's structured part. in coalition of speak There the cover the path second we're us lot just there not an as about the one did still him as negotiations, body, you some is many conversation a with different somebody And to cover for conversation is when close talk continue, The part but And active is there those to a Coalition, organization. and clean labor. coalitions, members hundred involved, people publication, coalition. jobs we'll the

evolve conversations are leadership to continuing legislature to things in and So with take the are continuing place.

Joe if she not it's in or working the more don't of the and to the what sure stalled doing economic support I'll also we're what a meantime, going XXX% fashion. wants to side Joe. stopped make protecting done is doing the that. significant have a Generation is Kathleen the doing the first and turn to to anything add deal it not part So Governor get or with. State wants Kathleen consumers to like we're but to part for -- path to to parties a I'm is to to XXXX the most And only wants, clean what over by in

Kathleen Barron

lobbying that thing rallying news same the fact old an the talking PJM address away that not to the clean noted. money right we is plants are is the The that this. the that mentioned ambition, market $X the coal around that's is this billion this, center piece The year important and that rather about than of needs fact be also will clean over question, folks the If that energy Julien. CJC bill. something essential toward it would and it's a that And investing happen is do should that goals. state's add I I in capital state's the energy story and that to change the policy to FRR achieving because only it's send

XXX Chris both the piece the get in will it's stakeholders to to to said, path obviously and clean other about its the committed, that's all agreement bill all others that energy we as that's goals take way CJC, Now and that states there stakeholders that to there goal. together deliver affordable achieve legislation is not of elements from are the to why going with a are working to of

Chris Crane

Joe?

Joe Dominguez

good Julien morning. Great,

level, explaining that me agreement use Let to most use off basic us the we its their fee for schedule start for is. and an our the At city it's away just right franchise to right what pay in infrastructure the order procedures agreement away. that for sets

talking We've fees interconnect up granular open are things how been a I'm you for put negotiations to the in the about of of with are city a the a her sorted those There pause now. the agreement the detail. I'm negotiations in granular kind times we're pleased in is, that So operations time. new street some out being right that new mayor's what those for progress kind and here place, team are now making many with franchise what was that was while business, race could in was

are or end an potential XXXX. of outcomes terminate could year, party the at or the an end to three at have that Either the this of next The city the end they ComEd here. year to There scheduled agreement negotiate. at continue come to is option to agreement of end calendar the

schedule but and to of we year, negotiate it to agreement our we by we're will path a shut obviously does be a electric will that'll and will issue the our quite elects a procedures but to the out agreement agreement. the providing doesn't do a the code of stop service municipal and not Then this we reach city notice at successful the It's drop franchise If continuing the not we not to of of continue activities. reach and continues add of will reach If negotiate down our resolution. said its resolution. can't is new if fee year we'll we're the on and just our resolution. negotiations and little end if a like the city that at we city the to get termination continue I process year-to-year bit we're governed by terms a work, the right As until now terminate end

Chris and but Greg bit I'd bears of discussion some of entire like And talked on provide about kind that's morning. performance, little So think don't a to it the it. you if context mind, this Julien, I additional the outline our

quartile. ComEd at arguably the about the reliability first in actually history We decile company. class. best track best in deliver our on are and first performance We talk to being We're in of

which result comes closest As the utility for, energy we resources. large carbon deliver XX%. context, customers that that put we've policies, next of about at the of the to into a good XX% advocated zero is from To

well as spend diversity have none. with women program second year owned supplier this of XX% by businesses color that of We veterans. to people and a as our is is

lower lay all in cities. been track for are things, important we've it. cases under result the Today, on our of being in last for to as consequence Chris a of of things utilities our as than we're doing have humility it's platform law, are performing understand today. large just best learnings best have rates are we'll But deliver one context that at ever our invest about claim customer for affordable lot And shareholders to XX% we it the a of cases. of the two satisfaction of who of all add to decreases of with doing the talking right. the American seen. all America. average this smart the We investigation rates. we're And And all in of a rate some grid the out could I Four that talked nine the certainly, and about including of

Chris Crane

Joe. Thanks,

Julien Dumoulin Smith

Excellent. that. Guys, appreciate I

Operator

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

Steve Fleishman

Yeah. morning. Hi, good

of And one rates, now formula legislation actually the really as is these guess, ROE Quad. few from example and right struggle over the the on things gotten on mentioned. for been the if with we last benefit has and, really you've gotten low Clin years. Joe ZECs And guess I then I any disclosures what So you've the that just also,

of get but think been just losing money a didn't I plants if those have would you So lot them.

from an this any you this of give that out lot what it's a because from investor legislation value standpoint I So of clear value gotten maybe guess, kind you've really just not at period? could over risk of color just some is of

Chris Crane

-- we in of rate is the process Well, value cases. the consistency the the

done. XX-year and are that to negotiation that a the We tied was was

process, it control we and and format XX-year, litigating what period, you're can't the with the done. and of an We get of that. of regulatory we've ask and extended but improved XXX% cases that's right you the not value at the history it I consistency the the efficiency When over has something how If you creates of there's the predictability. can and ask rate the control a in productivity or the process the regulatory of regulatory look think XX.X% lot of system

have community them and also cash than Clinton the cash, meaningful a the cities save plants for providing Quad it more those units. saving just in very is resolved issue profitable have flow quickly. that it but losing would we to As and from shut been down and did would It's state it's

We're down. either will FRR secure the through process those on that the or four we in working sites on would other shut legislation plants the state

should been the the of great ability but right. great But view a just to say in and forward, I in case, understand capital. there to of do been of the that, can consistency -- or ROE, interest low deal a you interest that persist have would we your question we deal is we low point stay to historical invest going So with the you point what has and that than if what time It's a and tell anything, that's we'll your take. rate, but rates could got action I watch to happened sentiment more haven't not

and return. a to money returns money. -- to able They bit have lower capital able consistently invest to little for predictably and We legislative efficiency earn predictably be a been but and to may be get a the on through return been invest reliability we're able able the terms needed

if of but disallowances low low to than , the that's our in above an back still process then So some having happened having more damning that's huge, ROE the rate in go much a what's and money a capital. ROE and was regulatory historically you risk at XX-year investing getting jurisdictions our cost of

Steve Fleishman

And kind nuclear them, way that. a money-losing the any This sense, there -- on the premature, ended respect sense just to question us be you am just you're it what of with having but nuclear plants other shut do? Got their get a then you assuming they're Yeah. I plants. could give to one may if is of the that referring own X to would -- too, up

Chris Crane

from We don't plants market projected the market response evaluate response shutting down. the --

do at on forward what's and and the So credit the and forward sheet evaluate metrics earnings current and performance financial is what the balance see flow look projected free we then the the based happening. curves of cash the to

lack change PJM to be very the to and pull losing of being FRR. out have forward that of wants the being sites with openly state what at process versus inefficient state ourselves current marginal and auction at wants current into the able way capacity the And so four the cash the we in to go and market to maintain energy discussed PJM -- able needs get sources is the clean a by it to legislation with at the that forwards are there by future to looking managed best They're earnings.

that's So the situation.

tell point amounts with forward the think the for need to can legislation these than are environmental evaluate an continuing some you and perspective. others I this numbers, at dire Now, I loss and move we state the to but that economic don't the yet. prevent more from perspective to announcing We're we're from

Steve Fleishman

Thank you.

Operator

you. Thank

ahead. Morgan is Byrd Stanley. Stephen Please response next from from go Your

Stephen Byrd

you to more in is to back the any internal terms for or at about public that Board targeted special deliverables of there or updates and the go any the of investigation. mentioned wanted purposes? reports respect committee Just made Illinois the Are to with point be that eventually will

Chris Crane

let I'll Bill answer that.

Bill Von Hoene

needed. own should this. have is committee continue part Hoene. that's particular to There independent regular deliverable process their will directors in undertaking just that. Von no you the Bill as of as such counsel. anticipate it's circumstances Steven, out The that of It's special They meet of periodically

So foresee. no particular deliverable should you

Stephen Byrd

there in states terms or Illinois of your focused the solely elements the business scope And involved? is Understood. knowledge, or this to on of of other the investigation, are

Bill Von Hoene

We're that that. by our been has what been at you the liberty subject matter about about investigation reported I talk reported particulars seen has of the to us you've but and the of in and matter not subject case, the to refer

Stephen Byrd

fair. just just of that's the And investigation. terms -- No, in then Yeah. the of lastly scope

with beginning high policy I think be the would at announcements And at think at I of individuals terms or seen cooperate investigations. investigations? I presume there approach you the how had we I a cooperate the think are with not that there employees of employed firm level, mentioned. about two to policy we've is assume should Exelon just is the cooperation from in who sort you Chris four mentioned, do not

Chris Crane

That's their our for they're if is participate expectation executives the behavior. to and employment manner all expectation all the based is ethical that's in expectation. Yeah, is Peoples having providing whatever cooperation and but requested on information to, total employees record, or discussions. full

Operator

you. Thank

Mehta from Your is next from Citigroup. Praful response

Praful Mehta

morning. Good Hi.

region focus on like bit, power side comparing the QX I generation the as maybe wanted little looks and higher. a and just every So it to prices power QX prices go

a was now for However, is bit came and cost volatility cutting there also XXXX. talked margins and in about lower lower given so your little as you of

to volatility wanted business, element enough context that generation just new of understand would bit it curves reserve should is seems itself like the generation if a how now stability the think in could just about a need little the think we How you of think consider. the margins And aren't about to So we how we really give business? helpful. PJM, on the be you also more that in us business should about

Chris Crane

Jim Joe McHugh into Let and more me starting detail. go have

Joe Nigro

to O&M we Constellation and perspective from us of find an generation to And both to as investment -- continue -- work we've continue new well our producing what generation seen if I we customer-facing What capital electric continues. some deliver about and is, what assets Praful. hard challenges it reduce cost it's Obviously, you've what Good our our have to and markets structure business of still we business, to businesses think generation been as do. done think the with that's the our you you'll see ways morning. and strategy intrinsic done business. power that I think the -- our

the industrial what second to of that of into a think trying piece company. gets strategy as we're accomplish the I

are being see how to done flows that on see to will at and sheet to the balance manage our Generation our investing in return the is we continue to value as and how Exelon work to free cash You cash being being flow back continue generated we we That continue you Generation we're shareholders. business. that of we utilities, to continue generated -- the that's do hard transform

some the as is So in state, business other the cost that last evolve by obviously, legislation depending and in our is certain work usual of elements at we continue cutting dictated to then talked the there piece with of to business we'll questions, outcome about remarks this and prepared under need on so our hard exercising as scenarios, we've outcomes. be would that Illinois, to announced other clearly that'll

Ken Cornew

generation Cornew. add strategy of I'll particularly comment. Hey, also -- generation continues and to be I of about just side to clean changed. differently more Ken Generation and not a the has it's than that. comment operator can any that company on our our business. premier the solutions customers I'd for Praful, We be customer other a nuclear little think provider like a Jim And wouldn't a

Jim McHugh

to I customer-facing the it's that optimization expectation business the to which the been we important strongly view business, a where the lower volatility stable we've point, more new that in happening we margins around demanding solutions very we're our performing business think leads the is good in in product which more. markets. while, who What's -- customers business our customer-facing there end are The business assets markets value that's enhancements well are note has side targets for see of going generation the product the in that stability. create for in our as businesses the actually new targets of actually, both to on reduced and as new put my of wholesale our still hedge so businesses disclosures, value from Yeah, an and the really

customer-facing have We XX% from run performing the the an come gross will XX% still businesses environment that are that new business in stable strongly. our to margin of we where

from the based price smaller we in this a that demand activity. expectation policy margins supply growth and disclosures on more those optimization are generations would We numbers volatility portion natural this the and that's So like number we an come overall of have our the gross PJM of environment where gas lowering in stack forward and markets to adding our like markets in strong low low see being stack, just PJM. to happen

we're for model this to think less and business the to match here our that is to able risk that's So Generation company. shift business focus can costs our I a I that provide customer-facing We new reduce stable. business environment an more think really environment

Praful Mehta

you. color. Got That's super thoughtful and helpful

in quick appreciate that. just investigation, call, the I time. mentioned I terms the guess the you follow-up take as of So it could it or take earlier some federal long on could a time

happens Do Illinois of time So of making is what on How kind delayed legislation reason do What refueling still you still timing them? it from does run units? is -- to expect decide take nuclear still perspective? Do do you the kind you your if of that. you continued a or kind linked decision that for around you wait? with some and

Chris Crane

the generation there garner path refine from to of of legislation. got stakeholders in PJMs going will legislation by will the to ability the and investigation in the of see any to doesn't response. the reality Well don't -- reason legislation expectation if the as of happen there will our we've PJM trend. market there till nothing start those we legislation probably what of you've in is load plants won't and and the today, with Because seen down. a run is That's are shut we first some we quarter coalition together the Both the the us to Spring. tied support auctions, order group lack withhold If go large has or see the the for order Right megawatts and forward. something a if clearing auction, FERC to forwards which forward to sometime now, a linked that been enable in run to FERC see a legislative

capacity get as sheet for and by We further for we It's and revenue years going as damage of the of is So able we without resolution the management sit and right and being very build and do and the low damage thing debt path The felt the the unrecoverable. responsibility are reactors will situation up lack can't take. team and sheet that's complete sit and and bleed not HoldCo to Genco. the eight strong balance one forward. that cash they forwards to and now. are market create balance around the very If the a uneconomic damage is actions being here those cohesive

Praful Mehta

helpful. very so Understood. much. That's you Thank

Operator

remarks. Thank over to call and you. now back closing will the Crane, turn I President CEO Chris for

Chris Crane

thank behind participating put actions the And in right necessary to and I us. the but everybody for want assured, we rest call that now, understand that we can't we're everything all today just are the I answer questions. taking to ensure can this

So you. thank call. the out that, I'll close With

Operator

for you call, Thank now you concludes conference may us disconnect. This joining today. today's

Exelon (EXC) 31 Oct 192019 Q3 Earnings call transcript