Exelon Corporation · NASDAQ:EXC
Exelon — Berenson and Wall Street Access Midwest Seminar (April 2007)
47 slides from Exelon's conference presentation, Apr 11, 2007
Slide 1: Value Driven
Value Driven John F. Young Executive Vice President, Finance and Markets, and Chief Financial Officer Berenson and Wall Street Access Midwest Seminar Chicago, Illinois April 12, 2007
Slide 2: 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 3: 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 4: The Exelon Story - Value Driven
The Exelon Story - Value Driven Premier U.S. nuclear generator uniquely positioned to capture market opportunities through operational and commercial excellence Primary source of Exelon's value going forward ~9% annual operating EPS growth since inception Continued strong growth trend through 2011 S
Slide 5: The Exelon Companies
'06 Earnings(1): $1,275M '07E Earnings(3): $2,280 - $2,420M '06 EPS(1): $1.88 '07 EPS Guidance(3): $3.40 - $3.60 Total Debt(4) : $1.8B Credit Rating(5): BBB+ The Exelon Companies Pennsylvania Utility Illinois Utility Nuclear, Fossil, Hydro & Renewable Generation Power Marketing '06 Earnings(1): $528
Slide 6: 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 possible
Slide 7: PECO
— => PECO. An Exelon Company ff
Slide 8: 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 ~$235M NOTE: See "Key Assumptions" slide i
Slide 9: Exelon Generation
Exelon Exelwn. Generation ee
Slide 10: Exelon Generation Operating Earnings Drivers: Next Five Years
Exelon Generation Operating Earnings Drivers: Next Five Years Exelon Generation is poised for earnings growth over the next five years driven by the end of the IL and PA transition periods and its unique competitive position 2007 Guidance NOTE: See "Key Assumptions" slide in Appendix (1) Differences
Slide 11: New Jersey BGS Auction Results
New Jersey BGS Auction Results(1) ATC Forward Energy Price (2) Full-Requirements Costs ($/MWh): Higher full-requirements component 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 2007 auctions. The 200
Slide 12: 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) The EIA Carbon Stabilization Case (Case 4) dated March 20
Slide 13: Exelon
Exelwn. ff
Slide 14: 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 Exe
Slide 15: Strategic Direction - Protect Today's Value
Strategic Direction - Protect Today's Value Competition has significantly reduced wholesale prices, improved operating performance and spurred growth in energy supply Deliver superior operating performance Keep the lights on Continue nuclear excellence Support competitive markets Maintain/bolster PJ
Slide 16: And Grow Long-Term Value
And Grow Long-Term Value Exelon is finding ways to advance an environmental strategy that also complements our business strategy Take the organization to the next level of performance Foster positive employee relations Require accountability for results and values Acquire, develop and retain key tal
Slide 17: Our Vision, Goals and Values
Exelun. our vision Exelon will be the best group of electric generation and electric and gas delivery companies in the United States - providing superior value for our customers, employees, investors and the communities we serve. our goals > Keep the lights on and the gas flowing > Run the nuclear f
Slide 18: Appendix - Financial and Operational Statistics
Appendix - Financial and Operational Statistics
Slide 19: 2006 Highlights
2006 Highlights Solid financial results Higher generation margins Strong nuclear and fossil performance Offset by higher O&M costs First IL power auction declared successful ComEd ring-fencing completed Distribution rate case and rehearing results Residential rate phase-in plan approved by the ICC 2
Slide 20: 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 21: 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 22: 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 23: 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 24: 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 Consensus (1) 20% 26% 31% 23% 2007 Estimated 24-27% 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
Slide 25: 2003-2006 Quarterly EPS
2003-2006 Quarterly EPS Q1 Q2 Q3 Q4 2003 23% 24% 31% 22% 2004 22% 25% 31% 22% 2005 22% 24% 31% 23% 2006 19% 27% 32% 22% 2003-2006 Average 22% 25% 31% 22% 2007 Estimated 24-27% 21-24% 26-29% 23-26% Quarterly Operating EPS by Percentage of Full Year:
Slide 26: 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 27: 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 28: 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 29: ComEd Rates are Lower than Most US Cities
ComEd Rates are Lower than Most US Cities Source: Edison Electric Institute
Slide 30: ComEd Rates Comparable to Midwestern Cities
ComEd Rates Comparable to Midwestern Cities Source: Edison Electric Institute
Slide 31: ComEd Rates Remain Below 1995 Levels; Other Commodities Have Risen
ComEd Rates Remain Below 1995 Levels; Other Commodities Have Risen Source: Edison Electric Institute
Slide 32: Rates Are Going Up in Regulated States
Rates Are Going Up in Regulated States Source: Edison Electric Institute
Slide 33: 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 34: Rate Design Docket (No. 07-0166)
Rate Design Docket (No. 07-0166) Key Dates Docket Initiation - March 2 Status Hearing - March 14 ComEd Informational Testimony - April 3 Ameren Informational Testimony - April 3 Workshops - Ameren - 11 a.m. April 11 (Springfield Location TBD) Workshops - ComEd - 11 a.m. April 12 (Chicago Location TB
Slide 35: 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 36: 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 37: 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 38: 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 settle prices 2007 information is a combination of actual prices through 3/31/07 and market prices for the balance of the year 2008 is forward
Slide 39: 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 40: 2007 Exelon IR Calendar
2007 Exelon IR Calendar Second Quarter April 25: 1Q Earnings Release May: EEI Finance Committee Meeting Highlighted Topics 1Q performance Operating Company updates Market fundamentals IL update Third Quarter July: 2Q Earnings Release Fourth Quarter October: 3Q Earnings Release November: EEI Financia
Slide 41: Appendix - GAAP Reconciliation
Appendix - GAAP Reconciliation
Slide 42: GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2000-2002
Slide 43: GAAP EPS Reconciliation 2003-2005
GAAP EPS Reconciliation 2003-2005
Slide 44: 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 (61) 3 - - (58) Investments in synthetic fuel-producing facilities - - - 24 24 Charges associated with now terminat
Slide 45: 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 (0.09) - - - (0.09) Investments in synthetic fuel-producing facilities - - - 0.04 0.04 Charges related to proposed merger with PSEG
Slide 46: 2006 Results and 2007 Outlook
2006 Results and 2007 Outlook Exelon's 2006 results and outlook for 2007 adjusted (non-GAAP) operating earnings excludes the earnings impacts of the following: mark-to-market adjustments from non-trading activities investments in synthetic fuel-producing facilities certain costs associated with the
Slide 47: 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
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