Exelon Corporation

good morning my name is Carol and I will be your operator today at this time I would like to welcome everyone to the 2018 fourth quarter Exelon earnings call all lines have been placed on mute to prevent any background noise after the speaker's remarks we will have a question and answer session if you would like to ask a question at that time simply press star then the number one on your telephone keypad if you would like to withdraw your question please press the pound key At this time, I would like to turn the call over to Dan Eggers, Senior Vice President of Corporate Finance for Exelon.

Thank you, Carol. Good morning, everyone, and thank you for joining our fourth quarter 2018 earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer, and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, both of which can be found in the investor relations section of Exelon's website. The earnings release and other materials which we discussed during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8 and other SEC filings for discussions of risk factors and factors that may cause results to differ from management's projections, forecasts, and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. I'll now turn the call over to Chris Crane, Exelon CEO.

Thank you, Dan, and good morning, everyone. Thank you for joining us for our year-end 2018 call. Before I begin, I'd like to take a moment to thank our employees and those of other utilities who work during the extremely cold weather to keep our communities safe and warm during the recent polar vortex. Our nuclear plants ran at nearly 100% during the week, The investment and reliability made on our system made a difference, and we had more than 500 crews out restoring service to customers in temperatures that reached a negative 23 degrees without including the wind chill factor. I'll start on slide five. 2018 was a great year for Exelon and its operating companies. We executed on our strategy and delivered on our commitments to customers, communities, and shareholders. We are in a solid position to continue to bring value to our stakeholders in 2019. Our financial performance was strong. Full year gap earnings were $2.07 per share and adjusted operating earnings were $3.12 per share, well ahead of the original guidance range. Joe will walk through the details later in the call. Last year, we shared our goals for 2018, and I'm proud to report we're able to meet those commitments. Utility and generation operations had best performance in multiple categories. I'll get to those details in a few minutes. Last year, Exelon Utilities invested more than $5.5 billion in capital, primarily in infrastructure and technology, to provide a premier customer experience as well as improve reliability and resiliency, which resulted in higher customer satisfaction scores. We're also effective on the regulatory front, completing 13 distribution and transmission cases in 2018. PHI was able to reach constructive settlements in all of its cases, including PEPCO and in Maryland, of PEPCO in Maryland and DC for the first time since 1980s. We share the benefit of tax reform with our 10 million customers returning more than 675 million on an annual basis. Working with stakeholders to realize timely and fair regulatory outcomes helped us fund future investments in our system and continue to improve customer service. On the policy front, The Second and Seventh Circuit Court upheld the ZEC program in New York and Illinois. Although the plaintiffs have appealed to the Supreme Court, we expect these rulings to stand. New Jersey enacted the ZEC legislation, which will start this spring, and we're still focused on preserving nuclear plants in Pennsylvania. The Public Utility Commission of Texas adopted the changes to the ORDC curve earlier this year. We are awaiting a decision from FERC on PJM's Fast Start proposal and on PJM's capacity market reform. And PJM is expected to file its reserve market reforms in coming months. These policies, each in their own way, better compensate our zero-carbon nuclear fleet for the value it provides by addressing flaws in the existing energy and capacity markets. We are growing our dividend by 5% each year through 2020, with the board raising the annual dividend to $1.45 per share on Monday. We're dedicated to corporate responsibility and supporting the communities we serve and an important part of who we are and what we do. As part of our partnership with the UN HeForShe initiative, we held an inaugural STEM initiative leadership academies for teenagers in Chicago and Washington, D.C. 95 girls participated in a week-long program designed to empower them through mentorship and creating opportunities to learn about STEM. We're expanding this program in 2019. And 2018 was another record year for employee volunteerism and contributions. Our employees volunteered more than 240,000 hours last year. on average seven hours per employee and donated nearly $13 million. In addition, Exelon donated more than $51 million to charitable organizations throughout our footprint. We are committed to providing a diverse and inclusive environment for our 34,000 employees. We were named a Best Company for Diversity by Forbes, Slack Enterprise Magazine, Diversity, Inc., and the Human Rights Campaign. We're also recognized for our environmental stewardship. We received a score of A- on both the CDP climate change and water surveys, the highest by any utility for each. We were named to the Dow Jones Sustainability Index for the 13th year in a row. And we had a series of commitments for the 2018 we delivered on. The task is for 2019 is beginning as big, and I will cover those at the end of the call. On slide six, we show the impact that Exelon management model has had on our utility operations. Each of our utilities have materially improved their operations since the merger with Constellation or PHI. To put this chart in perspective, ComEd has improved its overall reliability 60% since 2012. The hard work of our employees and the ability to share best practices across a large platform is paying off. In 2018, all four of our utilities ended up in top quartile for safety or outage frequency performance, with ComEd at top decile and PHI matching its best performance on record. Each utility achieved top quartile on KD, or outage duration, except PICO, which missed top quartile by only one minute. BGE and ComEd performed in top decile. BGE and PECO had top decile performance in gas odor response for the sixth consecutive year, and PHI delivered top decile performance for the second year in a row. This level of reliability just demonstrates that the investments we are making in our system are yielding positive results for our customers. But we still have more to do to confront climate change and our customer demands. Customer satisfaction was top quartile at at least three of the four utilities. ComEd, BGE, and PHI had the best performance on record in call center satisfaction. ComEd and PHI scored in top decile for service level, and BGE and PHI had their best performance on record. Our utilities in the Mid-Atlantic operated extremely well in the face of record-breaking rainfall. DC saw more than five and a half feet of rain, Baltimore six feet, and Philadelphia eight feet of rain during last year. Our safety metrics improved over the year as a result of the actions we're taking to correct course. We will continue to focus on improving our performance in this area. Turning to our competitive business on slide seven, our generation fleet performed very well in 2018, providing an abundance of clean electricity that our country needs. In fact, Exelon generated one out of every nine clean megawatts in the United States, more than twice as many as any other generator. Our best in class nuclear fleet operated very well last year. Our capacity factor was 94.6, exceeding 94% for the third year in a row in five out of the last six years. We generated the most nuclear power ever at 159 million megawatt hours, avoiding more than 82 million metric tons of greenhouse gas emission in 2018. Our average outage duration was 21 days, a new Exelon record, and 13 days better than the industry average. Exelon Power's gas and hydro dispatch match, 98.1%, and wind and solar capture, 96.1%, were better than planned. In October, we acquired the Everett LNG import facility, and in December, we received a cost of service order from FERC or Mystic Unit 8 and 9. which together will allow us to provide fuel security in New England market through May of 2024. Our mystic units were critical in keeping the lights on during the extreme cold temperatures we saw in January and February of last year. At Constellation, our C&I operating metrics remain strong. 78% customer renewal rates, average customer duration of more than six years, and power contract terms of 24 months on average. We continue to see stable unit margins with our power customers and continue to focus on cost is helping us support operating margins. Constellation's strength lies in its durable relationship with its customers. That relationship is more than just power and gas, but is built on Constellation's unique ability to help our customers meet their energy needs, while also reaching their environmental and sustainability goals. Now I'll turn it over to Joe.