Exelon Corporation

Hello and welcome to Exelon's second quarter earnings call. My name is Dani and I will be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. During the presentation, we'll have a question and answer session. You can ask questions by pressing star 1 on your telephone keypad. If you would like to view the presentation in a full screen view, Click the Full Screen button by hovering your computer mouse cursor over the PowerPoint screen. Press the Escape key on your keyboard to return to your original view. And finally, should you need technical assistance as a best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the Help option in the upper right-hand corner of your screen for online troubleshooting. 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, Danny. Good morning, everyone, and thank you for joining our second quarter 2021 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, all 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 Exelon's other SEC filings for discussions of risk factors and other factors, including uncertainties surrounding the plan's separation 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 recommendations between the non-GAAP measures and the nearest equivalent GAAP measures I'll now turn the call over to Chris Crane, Exelon CEO.

Thanks, Dan, and good morning, everybody, and thanks for joining us this morning. We had a good quarter financially and operationally. We made progress on our regulatory and policy objectives as we had stated our desires last quarter. We earned $0.41 per share on a GAAP basis and $0.89 per share on a non-GAAP basis, and Joe of the presentation. As you know, we've been working with our regulators and our policymakers across our six jurisdictions on regulatory mechanisms that would allow us to prudently invest in critical infrastructure to the benefit of our consumers while earning an appropriate return on that used capital. As part of those efforts, the DC Maryland PSCs approved multi-year plans for PEPCO. The New Jersey VPU approved ACE's electric rate settlement, and we received an order in the picogas rate case. It's the first in 10 years. PGM held the first capacity auction in three years. Results were disappointing. but were slightly better than we had anticipated or expected. Congress and the administration continue to work on the infrastructure package, and there is momentum building to preserve the existing nuclear fleet to meet the country's energy and climate goals. The President's budget includes support for existing nuclear plants, and Senator Cardin and Representative introduced legislation to provide $15 per megawatt hour production tax credit to existing nuclear power plants. This legislation would help ensure that the existing nuclear fleet, which provides more than 50% of the nation's carbon-free power, remains in operations and available to meet the country's energy needs while preserving and achieving climate goals. This progress is encouraging. If the PTC is included in the legislation that passes later this year, it will make an enormous difference for climate and for our nuclear plants. Unfortunately, though, that will be too late for the Byron and the Dresden nuclear facilities. Which brings me to Illinois. After many months of very able to reach agreement with the governor and his administration that would provide support to the Byron, Dresden, and Braywood facilities, allowing them continued operation, and LaSalle would also be preserved. Unfortunately, the state leaders and other stakeholders are at an impasse at this point on provisions related to the nuclear regulation nuclear issues in the legislation. There's been no progress towards enacting the legislation since the session ended, and the retirement dates for the plants are now only weeks away. We don't want to close these plants, but we cannot make decisions based off of hope of legislation being passed in the future. We've been doing that since 2016. while significant losses have been incurred. We must act on the economic facts as they exist today, where no legislation has been passed by the General Assembly or signed into law by the governor. Absent legislation, closing the plants is the right economic decision, but not an easy one. The talent, the dedicated employees that work at these plants, our colleagues and our friends, that their jobs support their families and the communities. Premature retirement of these plants is also a loss for the citizens of Illinois. The four plants at Byron, Dresden, Braywood, and LaSalle, which are eight reactors, provide 28,000 direct and indirect jobs, $3.5 billion annually to the Illinois economy, 150 million in Illinois taxes that support the school's public safety and other critical services in the communities that they reside in. Two-thirds of Illinois' carbon-free electricity is greatly at risk with these shutdowns. Once Byron and Dresden retire, it will take many years under the proposed legislation to add enough renewable energy intermittent renewable energy to get back to where Illinois is in terms of clean energy production. In the meantime, more than 100 million metric tons of additional carbon will be admitted over the next decade as a result. I remain hopeful that the outstanding differences can be resolved and a bill will be passed very soon that would allow power to the grid, but time is really running out on that becoming achievable. Moving to operations on slide six, reliability performance remains strong despite the frequent storms and the heat across our service territories. All utilities achieved first quartile operating performance in outage duration and frequency, as you can see by the charts. ComEd delivered top decile performance in outage duration and frequency, while BGE and PHI were top decile for outage duration. Customer operation metrics remained strong across the utilities. BGE, ComEd, and PECO achieved top decile performance in the customer satisfaction industry. On the generation front, our generation fleet performed well during the quarter. Our nuclear plants provided 36.6 terawatt hours of zero carbon generation to the grid, avoiding approximately 20 million metric tons of carbon dioxide. The fleet had a capacity factor of 93.7 for the quarter. Our fossil and renewable fleet operated above plan with power dispatch match at 99.5% and wind and solar energy capture at 96%. Our Texas plants are running as expected, helping to meet the summer loads. Turning to the separation on slide seven, we're making progress against our execution plan and remain on track for first quarter close. The team is working on the organizational and cost structures of each company that will set each business up for long-term success. On the regulatory front, we've received comments in each of the dockets for approval, and the process is moving forward as expected. We remain on track to get the necessary approvals. We will continue to update you on the work as it progresses. Turning to slide eight, we all are very excited at Exelon to announce that Exelon Utilities have set a goal to reduce their operations-driven admission by 50% by 2030 and reach a net zero by 2050. Since our founding, Exelon has been dedicated to be crisis and a leader in providing clean energy to the grid. We were one of the first companies in our industry to commit to reducing greenhouse gas emissions even though our emissions were already ten times lower than our peers. We have met or exceeded our previous three previous goals and Exelon Utility's new goal builds upon our long-standing commitment to to reduce our greenhouse gas emissions. We'll meet these goals through continued modernization of our gas systems, electrifying our light duty fleet, and exploring electricity and other zero carbon alternatives for medium and heavy duty fleet. A focus on energy efficiency and clean electricity for our operations is clearly part of the plan. Investing in equipment and processes to reduce our SF6 insulating gas from our large breakers from our system, exploring and piloting low-carbon fuels and new grid technologies, and advocating for affordable grid decarbonization. In addition, we remain focused on how we can help our customers and communities decarbonize in an equitable way. The utilities will continue to invest in EV infrastructure across our service territories and join the Electric Highway Coalition, which will create a seamless network of charging stations on highway systems covering most of the country. We will invest in robust energy efficiency programs at each of our utilities. This is a continuing endeavor. which will enable customers to have lower emissions profile, use less energy, and save money. In 2020 alone, these programs avoided 8.1 million metric tons of carbon emissions. Advocates for policy that will put our state, we will continue to advocate for policies that will put our states and our communities on a path to a clean energy future while ensuring equitable transitions that benefit everyone in our communities. Before I turn it over to Joe on slide nine, I want to highlight the work we are doing to help transform our communities through our workforce development programs, which you can see narrated on the slide. Diversity, equality, and inclusion is a core value at Exelon. and we are growing a diverse and inclusive, high-performing workforce. We operate in some of the most diverse cities in the country, and we have a responsibility to help address the inequities in our communities. We have more than 100 workforce development programs spanning from middle schools, high schools, and throughout colleges, as well as programs for work-ready, underemployed adults. These programs have already reached more than 22,000 participants. We recently launched the STEM Leadership Academy scholarships that are open to graduates of the program. It ensures that the graduates are debt-free and guaranteed internships with Exelon throughout their college path. I recently awarded scholarships to seven young women to see their faces on how life-changing this was for them and their families. It was quite emotional, not only for the young women, but for myself and the rest of the leadership here at Exelon. We are committed to supporting our communities by investing in education, job training programs, and giving the underserved populations opportunities to grow and succeed. I'll turn it over to Joe now to take our financial update.