EXELON CORP EXC

Exelon successfully closed out a busy 2024 regulatory calendar, securing supportive rate case resolutions. This included a final order for Pepco's multiyear plan in D.C., providing $123.4 million incremental revenue and a 9.5% ROE through 2026. PECO's electric and gas rate cases were approved, allowing for a $354 million electric and $78 million gas revenue increase in 2025. The Illinois Commerce Commission also approved ComEd's refiled grid plan, providing approximately $1 billion revenue increase from 2024 through 2027. These outcomes mean nearly 90% of Exelon's rate base has established rate mechanisms through 2026 or 2027, enabling focus on execution and strategic engagement for growing electrification needs.

The company is experiencing significant load growth, particularly from high-density loads like data centers, with its pipeline growing over 2.5x in the last year. ComEd alone secured 15 major projects, attracting an estimated $17 billion in capital investments and creating over 1,000 jobs. This growth drives a projected 1% to 2% load growth over the 4-year plan, allowing for cost distribution over more usage. The updated $38 billion capital plan includes $12.6 billion for transmission, with over 80% of the $3.5 billion increase attributed to incremental transmission capital to support this high-density load and grid modernization. Exelon estimates an additional $10 billion to $15 billion in transmission opportunities within its footprint over the next 5 to 10 years, including over $1 billion for new high-density load not yet in guidance.

Exelon maintains a rigorous focus on cost management, saving customers approximately $550 million in O&M annually compared to inflation-level growth over the last decade. Through 2024, the company executed $100 million in sustainable savings initiatives, contributing to a year-over-year O&M growth of just 0.5%. This discipline, combined with investments, has improved reliability by 35% since 2016, while maintaining customer bill metrics 19% to 21% below U.S. averages. Efforts to support affordability include waiving late payment fees, suspending nonpayment disconnections, and providing $500 million in low-income energy assistance in 2024.

Exelon is actively engaged in Maryland's regulatory processes, including the reconciliation of open multiyear plans and a 'Lessons Learned' process to evaluate multiyear plans. The company advocates for multiyear plans as an effective mechanism for cost recovery and alignment with state policy, expecting outcomes in the first half of 2025. Additionally, Exelon is awaiting a decision on its FERC 205 docket, which seeks clarity on network load and cost allocation, with a decision expected by February 24th. The company supports PJM reforms, noting FERC's recent approvals for shovel-ready projects and surplus interconnection service.

To fund its $38 billion capital plan, Exelon is employing a balanced funding strategy, with 40% of incremental capital funded by equity. This translates to approximately $2.8 billion in total equity needs over the 4-year plan, or about $700 million per year. The plan is supported by $20 billion of internally generated cash flow, $12 billion of utility debt, and $3 billion of holding company debt. The company's commitment to balance sheet strength was recognized by S&P's upgrade of Exelon's corporate credit rating to BBB+ from BBB, with credit metrics anticipated to approach 14% by the end of the forecast period.