Exelon Corporation · NASDAQ:EXC
Exelon — Deutsche Bank Energy & Utilities Conference 2007
51 slides from Exelon's conference presentation, May 29, 2007
Slide 1: Value Driven Exelon Corporation
Value Driven Exelon Corporation Deutsche Bank Energy & Utilities Conference Miami, Florida May 30, 2007
Slide 2: Ian P. McLean, President, Power Team
Ian P. McLean Executive Vice President, Exelon President, Power Team
Slide 3: Exelon Investor Relations Contacts
Exelon Investor Relations Contacts Inquiries concerning this presentation should be directed to: Exelon Investor Relations 10 South Dearborn Street Chicago, Illinois 60603 312-394-2345 312-394-4082 (Fax) For copies of other presentations, annual/quarterly reports, or to be added to our email distrib
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statem
Slide 5: The Exelon Companies
'06 Earnings(1): $1,275M '07E Earnings(2): $2,280 - $2,420M '06 EPS(1): $1.88 '07 EPS Guidance(2): $3.40 - $3.60 Total Debt(3): $1.8B Credit Rating(4): BBB+ The Exelon Companies Nuclear, Fossil, Hydro & Renewable Generation Power Marketing '06 Operating Earnings(1): $2.2B '07E Operating Earnings(2):
Slide 6: Q1 2007 Highlights
Q1 2007 Highlights Strong financial and operating results Higher generation margins Increased nuclear output with fewer outage days Offset by lower ComEd results and higher O&M costs across Exelon ComEd completed transition to wires-only business Implemented customer rate relief programs, including
Slide 7: Exelon Vision & Role of Power Team
Exelon Vision & Role of Power Team Power Team creates value by minimizing the downside risk while capturing the upside and translating operational excellence into earnings Exelon Vision Exelon will be the best group of electric generation and electric and gas delivery companies in the United States
Slide 8: Portfolio Management
% Hedged Operating Profit % Hedged Low End of Profit High End of Profit Portfolio Management Flexibility in our targeted financial hedge ranges allows us to be opportunistic while mitigating downside risk Target Financial Hedge (1) Range Target Financial Hedge (1) Range Target Financial Hedge (1) Ra
Slide 9: Power procurement auctions and portfolio characteristics
The transition to power procurement auctions allows Exelon Generation to capture the full market value of its generation portfolio and places more emphasis on hedging and risk management 2007 Expected Total Supply (GWh) 2007 Expected Total Supply (GWh) Nuclear 139,750 Fossil & Hydro 37,500 Forward &
Slide 10: Markets Overview
Markets Overview Fundamentals Reserve Margins Cost of New Entry Full Requirements Costs Capacity Prices Carbon Value
Slide 11: Fundamentals
Fundamentals The overbuild is ending in the Eastern Interconnect New build costs are increasing rapidly and are difficult to project with precision due to limited active construction Cost of New Build Generation Construction (1) Technology EIA ($/KW) S&P ($/KW) Gas CT 428 CCGT 615 700 Pulverized Coa
Slide 12: Full Requirements Cost
Full Requirements Cost New Jersey BGS Auction(1) ATC Forward Energy Price (2) Full-Requirements Costs ($/MWh): The higher full-requirements component is due to increases in costs associated with capacity and congestion (1) For PSE&G. (2) Range of forward market prices that traded during the 2006 and
Slide 13: PJM RPM 2007/2008 & 2008/2009
PJM RPM 2007/2008 & 2008/2009 RPM will have limited impact on Exelon's 2007 earnings due to current contracts and forward sales commitments Eastern MACC 2007/2008 RPM auction: $197.47/MW-day 2008/2009 forward trading(1) : $118.00/MW-day Rest of Market 2007/2008 RPM auction: $40.80/MW-day 2008/2009 f
Slide 14: Carbon Value
Carbon Value Climate change legislation is expected to drive substantial gross margin expansion at Exelon Generation (1) The Energy Information Administration (EIA) valuation of the McCain Lieberman Bill, EIA report number SR/OIAF/2003-02. (2) As of May 21, 2007. (3) The EIA Carbon Stabilization Cas
Slide 15: Exelon Generation Operating Earnings Drivers: Next Five Years
Exelon Generation Operating Earnings Drivers: Next Five Years Exelon Generation is poised for earnings growth over the next five years driven by the end of the IL and PA transition periods and its unique competitive position 2007 Guidance NOTE: See "Key Assumptions" slide in Appendix. (1) Difference
Slide 16: Exelon - Value Driven
Exelon - Value Driven Strong financial and operating performance in 2006 Uniquely positioned generation business, driving continued strong growth through 2011 Managing the transition to competitive markets in Pennsylvania Executing regulatory recovery plan to put ComEd on a path toward appropriate r
Slide 17: Appendix - Financial and Operational Statistics
Appendix - Financial and Operational Statistics
Slide 18: Multi-Regional, Diverse Company
Multi-Regional, Diverse Company Note: Megawatts based on Exelon Generation's ownership as of 12/31/06. Midwest Capacity Owned: 11,389 MW Contracted: 4,791 MW Total: 16,180 MW ERCOT/South Capacity Owned: 2,299 MW Contracted: 2,900 MW Total: 5,199 MW New England Capacity Owned: 622MW Mid-Atlantic Capa
Slide 19: Key Assumptions
Key Assumptions 2005 Actual 2006 Actual 2007 Est. Nuclear Capacity Factor (%)(1) 93.5 93.9 94.0 Total Genco Sales Excluding Trading (GWhs) 194,337 190,680 184,500 Total Genco Sales to Energy Delivery (GWhs) 121,961 119,354 40,500 (5) Total Genco Market and Retail Sales (GWhs)(2) 72,376 71,326 144,00
Slide 20: Earnings Guidance 2007 - 2011
$3.22 $0.78 $0.67 $1.88 $0.60 - $0.65 $3.40 - $3.60 $4.00 - $4.30 $0.10 - $0.20 2006 Operating EPS Actual 2007 Operating EPS Guidance (1) $ / Share ComEd PECO ExGen HoldCo/Other $0.60 - $0.63 NOTE: See "Key Assumptions" slide in Appendix. Earnings Guidance. 2007 - 2011 Exelon Generation ComEd PECO E
Slide 21: 2007 Quarterly EPS Profile
2007 Quarterly EPS Profile Q1 Q2 Q3 Q4 2003-2006 Average 22% 25% 31% 22% 2006 Actual 19% 27% 32% 22% 2007 Estimated 25-27%(1) 21-24% 26-29% 23-26% Quarterly Operating EPS by Percentage of Full Year: Starting this year, Exelon's earnings will have a slightly different quarterly distribution than in p
Slide 22: ComEd
— ComEd. An Exelon Company ff
Slide 23: ComEd 2007 Operating EPS
ComEd 2007 Operating EPS As a "wires-only" company, ComEd is expected to earn less on an operating basis in 2007 than in prior years due to the end of the transition period in Illinois and related transition revenues. The unfavorable ICC Order in the Distribution Case and continued regulatory lag fu
Slide 24: ComEd Operating Earnings: Next Five Years
ComEd Operating Earnings: Next Five Years 2011 (1) 2011 Assumptions (1) Rate base: ~$9.6B Equity (2): ~45% ROE: ~10% 2007 Guidance NOTE: See "Key Assumptions" slide in Appendix. (1) Provided solely for illustrative purposes, not intended as earnings guidance. The earnings figure represents a possibl
Slide 25: ComEd Transmission Filing Summary
ComEd Transmission Filing Summary Filed with FERC on March 1, 2007 Expected to increase average residential customer bill by ~1.5% Filing includes: $147 million increase in annual revenue requirement 11.70% base ROE plus 0.50% adder for RTO participation and 1.50% incentive adder for major system ex
Slide 26: PECO
— => PECO. An Exelon Company ff
Slide 27: PECO 2007 Operating EPS
PECO's operating earnings are expected to decrease slightly from 2006 to 2007 primarily due to increasing CTC amortization 2006 Actual (2) 2007 Guidance (2) $0.67 $451M $(0.07) $0.04 $0.00 $(0.07) $0.60 - $0.65 $400M - $420M RNF O&M CTC Amortization / Depreciation Other PECO 2007 Operating EPS NOTE:
Slide 28: PECO Operating Earnings: Next Five Years
PECO Operating Earnings: Next Five Years 2011 (1) 2011 Assumptions (1) Rate Base: ~$4.7B Equity: ~50% ROE: ~10% 2007 Guidance $400M - $420M PECO is expected to provide a predictable source of earnings to Exelon through the remainder of the transition period ~$235M NOTE: See "Key Assumptions" slide i
Slide 29: PECO Average Electric Rates
PECO Average Electric Rates Energy / Capacity Competitive Transition Charge Transmission Distribution 10.67¢ 11.18¢ 11.18¢ Unit Rates (¢/kWh) (1) (1) Rates increased from original settlement by 1.6% to reflect the roll-in of increased Gross Receipts Tax and $0.02/kWh for Universal Service Fund Charg
Slide 30: Exelon Generation
Exelon Exelwn. Generation ee
Slide 31: Exelon Generation 2007 Operating EPS
Exelon Generation 2007 Operating EPS Earnings growth is driven by the expiration of the below-market ComEd PPA, favorable market conditions, and a contractual price increase in the PECO PPA 2006 Actual 2007 Guidance $1.88 $1,275M $1.73 $(0.13) $0.07 $3.40 - $3.60 $2,280M - $2,420M RNF O&M Other NOTE
Slide 32: Valuing Exelon Generation
Valuing Exelon Generation $ Millions Revenue Net Fuel (2) O&M and Other Expenses EBITDA (3) - Hedged EBITDA (3) - Un-Hedged Hedged - 2007 Un-Hedged - 2007 (1) Mid- Atlantic $2,650 $6,700 Midwest $4,050 ($2,600) $4,100 $4,700 Un-hedged ("Open") EBITDA plus upside from unique competitive position driv
Slide 33: Nuclear Performance - Fuel Costs
Nuclear Performance - Fuel Costs Uranium market prices have increased, but Exelon is managing its portfolio Reduced uranium demand by 25% Contracting strategy protects us and ensures we are significantly below current spot market prices through 2011 Uranium is small component of total production cos
Slide 34: Energy Policy Act - Nuclear Incentives
Energy Policy Act - Nuclear Incentives Production Tax Credit (PTC) $18 per MWh, 8 year PTC for first 6,000 MWe of new capacity Cap of $125M per 1,000 MWe of capacity per year Protects against a decrease in market prices and revenues earned Significantly improves EPS Benefit will be allocated/ prorat
Slide 35: Premier Nuclear Operator
Premier Nuclear Operator EXC (17) ETR (11) PGN (5) CEG (5) SO (6) FPL (6) TVA (5) DUK (7) D (7) Non-Fleet Operated (21) NMC (6) PEG (3) FE (4) Average 93.23 91.88 91.44 90.83 90.45 90.16 90.08 88.53 88.53 87.09 86.8 86.05 79.48 below white bar 92.7 90.6 89.4 86.5 89.3 87.1 87.7 87.2 86.6 85.9 82.9 7
Slide 36: Nuclear Performance - Refueling
EXC TVA ETR CEG PGN FPL SO DUK D FE NMC Non-Fleet Operated PEG 5-Year Average 24 29 29 32 33 34 35 37 38 38 40 43 45 Below Range 22 25 26 25 26 23 30 32 29 24 28 37 26 Range of 1-year Averages 3 8 6 15 12 18 16 12 17 25 36 16 54 Nuclear Performance - Refueling EXC 24 days Refueling Outage Duration (
Slide 37: Current Market Prices
Current Market Prices 2004, 2005 and 2006 are actual settled prices. Real Time LMP (Locational Marginal Price). Next day over-the-counter market. Average NYMEX settled prices. 2007 information is a combination of actual prices through May 21st, 2007 and market prices for the balance of the year. 200
Slide 38: Market Price Snapshot
Market Price Snapshot 1/2/2007 1/3/2007 1/4/2007 1/5/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/16/2007 1/17/2007 1/18/2007 1/19/2007 1/22/2007 1/23/2007 1/24/2007 1/25/2007 1/26/2007 1/29/2007 1/30/2007 1/31/2007 2/1/2007 2/2/2007 2/5/2007 2/6/2007 2/7/2007 2/8/2007 2/9/2007 2/12/2007 2
Slide 39: Market Price Snapshot
Market Price Snapshot 1/2/2007 1/3/2007 1/4/2007 1/5/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/15/2007 1/16/2007 1/17/2007 1/18/2007 1/19/2007 1/22/2007 1/23/2007 1/24/2007 1/25/2007 1/26/2007 1/29/2007 1/30/2007 1/31/2007 2/1/2007 2/2/2007 2/5/2007 2/6/2007 2/7/2007 2/8/2007 2/9/2007 2
Slide 40: Exelon
Exelwn. ff
Slide 41: 2011 Balance Sheet Capacity (Illustrative)
2011 Balance Sheet Capacity (Illustrative) Exelon expects to create substantial incremental balance sheet capacity over the next five years, based on planning assumptions Potential Uses of Balance Sheet Capacity Acquisitions or other growth opportunities Future unfunded liabilities Buffer against po
Slide 42: Projected 2007 Key Credit Measures
Projected 2007 Key Credit Measures With PPA & Pension / OPEB (1) Without PPA & Pension / OPEB S&P Credit Ratings (2) "BBB" Target Range (3) Exelon Cons: FFO / Interest 4.8x 6.2x BBB 3.2x - 4.5x FFO / Debt 24% 32% 20% - 30% Rating Agency Debt Ratio Adjusted Book Debt Ratio: 58% 74% 68% 55% - 45% Gene
Slide 43: FFO Calculation and Ratios
FFO Calculation and Ratios FFO Calculation Net Income Add back non-cash items: + Depreciation, amortization (including nucl fuel amortization), AFUDC/Cap. Interest + Change in Deferred Taxes + Gain on Sale and Extraordinary Items - Transition Bond Principal Paydown = FFO FFO Interest Coverage FFO +
Slide 44: Appendix - GAAP Reconciliation
Appendix - GAAP Reconciliation
Slide 45: GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2000-2002
Slide 46: GAAP EPS Reconciliation 2003-2005
GAAP EPS Reconciliation 2003-2005
Slide 47: GAAP Earnings Reconciliation Year Ended December 31, 2006
GAAP Earnings Reconciliation Year Ended December 31, 2006 (in millions) ExGen ComEd PECO Other Exelon 2006 GAAP Reported Earnings (Loss) $1,407 $(112) $441 $(144) $1,592 Mark-to-market adjustments from economic hedging activities (61) 3 - - (58) Investments in synthetic fuel-producing facilities - -
Slide 48: GAAP EPS Reconciliation Year Ended December 31, 2006
GAAP EPS Reconciliation Year Ended December 31, 2006 ExGen (1) ComEd (1) PECO (1) Other (1) Exelon 2006 GAAP Reported EPS $2.08 (0.17) 0.65 (0.21) $2.35 Mark-to-market adjustments from economic hedging activities (0.09) - - - (0.09) Investments in synthetic fuel-producing facilities - - - 0.04 0.04
Slide 49: GAAP EPS Reconciliation Months Ended March 31, 2006 and 07
GAAP EPS Reconciliation 3 Months Ended March 31, 2006 and 2007 Exelon 2006 GAAP Reported EPS $0.59 Mark-to-market adjustments from economic hedging activities 0.03 Investments in synthetic fuel-producing facilities (0.02) Charges related to now terminated merger with PSEG 0.01 Settlement of a tax ma
Slide 50: 2007 Earnings Outlook
2007 Earnings Outlook Exelon's outlook for 2007 adjusted (non-GAAP) operating earnings excludes the earnings impacts of the following: mark-to-market adjustments from economic hedging activities investments in synthetic fuel-producing facilities significant impairments of intangible assets, includin
Slide 51: Reconciliation of Net Income to EBITDA
Net income (loss) +/- Cumulative effect of changes in accounting principle +/- Discontinued operations +/- Minority interest + Income taxes Income (loss) from continuing operations before income taxes and minority interest + Interest expense + Interest expense to affiliates - Interest income from af
Exelon — Deutsche Bank Energy & Utilities Conference 2007 on 6ix