Exelon Corporation

It is now my pleasure to turn today's program over to Dan Eggers, Senior Vice President of Corporate Finance. The floor is yours.

Thank you. Good morning, Ms. Hammer. Good morning, everyone, and thank you for joining our fourth quarter 2019 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 matters 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 8K and Exxon's 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 measure. 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 2019 fourth quarter earnings call. I'm going to start on slide five. On almost all accounts, we had a very good 2019. Exelon utilities and generation remain focused on delivering for our customers and their communities. ComEd had its best performance ever. The nuclear fleet had its best capacity factor, and we delivered financially. As you can read, the full year gap earnings were $3.01 per share, and the non-gap earnings were $3.22 per share above our revised guidance range and midpoint of our original guidance range. Joe will walk you through the financial details later in the call. I want to address the operational details as we go forward. Last year, Exelon Utilities invested $5.5 billion in capital, which is $150 million more than originally planned. These investments were primarily in infrastructure and technology to provide a premier customer experience, improved reliability and resiliency, modernization of our gas system, resulting in the best-ever customer satisfaction at each of our utilities. We had a productive year on the regulatory front. TEPCO DC filed its first multi-year rate case, and Maryland's PFC is moving forward with the multi-year rate plans. We received a constructive settlement at BGE and at ACE. PICO's transmission formula was approved by FERC, and ComEd's formula rate provided the third rate decrease in five years, helping to keep the average residential customer bill flat from where it was a decade ago. On the policy front, the United States Supreme Court upheld the Illinois and New York ZEC programs. New York State Supreme Court affirmed the ZEC program, and New Jersey implemented their ZEC program in the spring. Governor Wolf in Pennsylvania announced plans for Pennsylvania to join RGGI, and the Pennsylvania State Senate passed legislation setting a goal for electric vehicles and deployment. FERC approved PJM's fast start reforms. PJM filed its proposal to reform the reserve market and scarcity rules. We made our commitment to grow the dividend by 5% annually through 2020 with the board raising the annual dividend to $1.53 per share in January. We're good partners also with the communities we serve. Our employees volunteered a record-breaking 251,000 hours in 2019. That's 11,000 more than in 2018. During National Volunteer Week, we sponsored 452 events in 16 states and 128 cities with 5,400 employees, which is another record. In addition, Exelon donated nearly $52 million to charities and organizations throughout our footprint. We are committed to providing a diverse and inclusive environment for our nearly 33,000 employees. We were once again named Best Company for Diversity by Forbes, Diversity Inc., and the Human Rights Campaign. Our total diversity supplier spend exceeded $2 billion for the third straight year, accounting for 27% of our overall supplier spend. Exelon companies continue to prioritize partnerships with local-based diverse businesses by offering development programs. We also continue to be recognized for our environmental stewardship and were named to the Dow Jones Sustainability Index for the 14th year in a row. We are focused on operating at world-class levels, delivering on our strategy and supporting clean energy policies in our state. The hard work and the commitment of our employees to provide safe, reliable power and natural gas to our customers led way to the greatest performance we've had in 2019. We delivered on our commitments to you, our shareholders, but also our employees and our customers and our communities. However, last year was not without challenges, including subpoenas we received from the U.S. Attorney's Office in Northern Illinois. As we've said before, We are limited in what we can share about the investigation. However, I want to reiterate that we are fully cooperating with the U.S. Attorney's Office in taking the situation very seriously. The Board appointed a special committee to provide oversight of the investigation led by outside counsels to determine if any changes are needed to ensure that going forward we operate at the highest possible standards. At the end of our commitments for 2020, turning to slide six, we're committed to operating our utilities at the highest levels for our customers. Since 2016, we have deployed nearly $22 billion across the utilities and plan to invest $26 billion over the next four years. These investments enhance reliability, resiliency, and modernize our electric and gas systems. We've been able to make these needed improvements while keeping the bills affordable. The rates in all our major cities, Baltimore, Chicago, Philadelphia, Washington, are 13% to 18% below the average for the largest US cities and 2% to 7% below the national average. These investments are producing tangible benefits for our customers. Customer satisfaction is the highest level it's ever been at each one of our utilities, reflecting a strong system performance that has come from our investments. Frequency of outages has decreased significantly, down near 50% at ComEd and 30% at PHI. Outage duration has also decreased by 52% and 38% at ComEd and BGE, respectively. 2019 was the best reliability performance for ComEd and the second best for BGE. On the gas side, PECO and BGE have replaced more than 200 miles of cast iron and bare steel mains and nearly 30,000 metallic gas services in 2018. These investments will help our customers' current and future needs while reducing gas leaks and greenhouse gas emissions. Moving to slide seven. Our states are focused on ensuring the electric and the gas systems are ready to meet the changing customer needs, more reliable and resilient, and are prepared for renewables and electric vehicles, and are ready to meet the challenges of climate change. We are working with each state to get the right mechanisms in place to be able to make these needed investments. Our states are providing support through a range of regulatory tools, including Alternate rate making, such as formula rates and multi-year rate plans, as well as tracker mechanisms for reliability and gas infrastructure programs. Turning to slide eight, FERC's recent order on PJM capacity. The governors in Illinois, Maryland, and New Jersey are firmly committed to having their electricity be supplied by 100% clean. These states are leading the way to a clean economy. energy economy, and we share that goal and will work with them to achieve it. Unfortunately, there is a clear conflict between clean energy goals of our states and our customers on one side and the resource decisions being made by PJM and FERC on the other. Unless states take action to protect their clean energy programs, FERC's December order on the PJM Minimum Offer Price Rule, or MOPR, will result in clean resources supported by the states being pushed out of the capacity market only to be replaced by carbon-based generation. This would result in billions of dollars of additional cost for customers and threaten the progress being made in retaining and expanding our clean energy. Our states, as well as many others, oppose FERC's MOPR decision and are evaluating what actions may be necessary in response. We are working with policy makers and stakeholders to protect the clean energy programs from the negative impact of FERC MOPR decision and enable the transition to 100% clean. On slide nine, we show our operating performance for the year. Each utility continues to have outstanding customer operations. All achieved first quartile in performance and service level and abandoned rate. And I mentioned we had our best ever scores on customer satisfaction index with BGE, ComEd, and PICO achieving top decile. And PHI's performance significantly improved in the last three years, missing first quartile by .01 points. Reliability performance was mixed this year due to a very active minor storm season throughout the Mid-Atlantic. For instance, PHI had 32 minor storms for 2019 compared to eight in 2018. Minor storms are not excluded from these calculations. However, ComEd achieved top quartile in both outage frequency and duration, and BGE achieved top quartile on outage duration. Turning to generation on slide 10, our generation fleet performed one of its best years ever, very good in 2019, providing a significant portion of the country's clean energy. Exelon generates 12% or one out of every nine clean megawatts in the United States. Our best in class nuclear fleet operated very well last year. Our capacity factor was 95.7, our highest ever. We generated 155 million megawatt hours, avoiding 81 million metric tons of greenhouse gas emission in 2019. Our average refueling outage duration was 21 days, matching the record set in 2018, and 14 days better than the industry average. Exelon Power's gas and hydro dispatch matched 97.9%. and wind and energy capture at 96.3% were better than planned. Our Constellation business remains the industry leader. A vast majority of our retail business is with CNI customers, where we have the largest retail platform with 25% market share, delivering 154 terawatt hours of electricity and 67 terawatt hours more than our nearest competitor. Our retail operating metrics remain strong, 79% customer renewal rates, average customer duration of more than six years, and power contracts terms of 23 months on average. We continue to see stable unit margins with our power customers. Our focus is on cost and helping support operating margins. Constellation's strengths lies in its durable relationship with our customers. We work with our customers to provide them solutions to meet their energy needs while also reaching their environmental and sustainability goals. We provide our customers with much more than just a commodity. And I'll turn the call over to Joe to review the financials.