Exelon Corporation

Hello, and welcome to Exelon's third quarter earnings call. My name is Justin, 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 Emily Duncan, Vice President of Investor Relations. The floor is yours.

Thank you, Justin. Good morning, everyone, and thank you for joining our third 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 this 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 the call. Please refer to today's 8 and Exelon's other SEC filings for discussions of risk factors and other factors, including uncertainties surrounding the plan 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 reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. I'll now turn the call over to Chris Crane, Exelon's CEO.

Chris Crane Thanks, Emily, and good morning, everybody. Emily, thank you for putting a hedge on everything we're about to say. We had a good quarter financially and operationally and had several very positive developments during the quarter. I'm starting on slide five. Um, we earned a dollar 23 per share on a gap basis and, uh, a dollar nine on a non gap basis. And Joe will get into those details, Illinois, passed at the last minute, a landmark clean energy legislation, which makes the states a national leader in clean energy. Illinois will achieve 100% carbon-free by 2045 by preserving the plants and adding tens of thousands of jobs. And we thank Kathleen Barone and her team and many others for the work they've done. As a result, we have reversed the retirement decision on Byron and Dresden. Our Illinois plants will continue to provide good paying jobs, economic support to the communities, and zero carbon energy to the citizens of Illinois. We've begun to fill the 650 vacant positions And we'll be investing more than $300 million in our plants over the next five years to catch up on what we pulled back from during the unknown period. The legislation also includes the provision that would transition the utilities out of the formula rates into a new multi-year performance-based rate framework. In August, we completed the put transaction and acquired EDF's portion of the CNG nuclear plants, adding 17 terawatts to our own zero, admitting nuclear generation. We did receive a grant from the U.S. Department of Energy to explore the potential benefits of on-site hydrogen production at our nine-mile point in New York. and we continue to believe that there's a very strong future for hydrogen. Hydrogen will be key in helping the nation address the climate crisis, and the nuclear plants can play a vital role in its production with its heat and capabilities. We're partnering with Neil Hydrogen and the national labs to demonstrate the integrated production storage and use of hydrogen on site to prove its commercial viability. Operations are expected to begin in 2022. On the regulatory front, Delaware PSC issued a constructive order in our Delmarva rate case. Last quarter, we announced our path to clean and our net zero goal for the utilities. So we continue to strive to meet what our customers desire and our regulators desire. Each utility is building upon existing work and supporting a path to clean that aligns to the goals that are needed for their local jurisdictions and stakeholders. An example is PECOS Climate Solution It's a five-year action plan that will fill PEPCOs that will fill with the DCPSC's request last month. This filing outlines 62 different programs to help enable the district's roadmap toward decarbonization. Another example of helping our communities to meet their goals is through our energy efficiency programs. which are some of the nation's largest. Joe will talk about them in his remarks. We're committed to serving our communities and helping to drive equity and positive change. Last week, we launched a $36 million racial equity capital fund to expand access to capital from minority-owned businesses so they can create jobs and grow their businesses and reinvest in the neighborhoods and the communities that we serve. It's the first of a kind in our sector. In addition, we partner with the UNCF to launch a $3 million Exelon fund for corporate scholarship program to provide scholarships and internships that create opportunities for students attending historically black colleges and universities that reside in the communities that we serve. Finally, we're closely watching the work in Washington on the infrastructure build back better agenda. The legislation will help us address climate change crisis through incentivizing clean technologies and infrastructure investments to make the grid more resilient and ready for clean energy technologies. It is clear from the proposal that the administration and Congress recognize the critical importance of maintaining the existing nuclear fleet to ensure that the nation can cost-effectively address climate change, and we're confident that when the legislation does pass, it will include a production tax credit for the existing nuclear. Moving on to slide six to our operations, reliability remains incredibly strong. All the utilities are delivering at top decile outage frequencies and first quartile in outage durations. BGE, PECO, and PHI were top decile for gas odor responses, which is very critical for us as we continue to defend gas as a bridge source to the future. Customer service is top notch with BGE, ComEd, PECO achieving top decile and PHI top quartile. On the generation front, fleet performed well during the quarter, even in the face of uncertainty in Illinois. Our nuclear plants produced 40.5 terawatts of zero carbon generation, avoiding approximately 21 million tons of carbon dioxide that would be generated otherwise. The fleet had a 96% capacity factor over that period of time. and we're very proud of their operations with the uncertainty they faced. On slide seven, the progress and separation, we continue to make progress on separating the businesses into two independent Fortune 200 companies. FERC approved the separation in August And in September, we received a private letter ruling from the IRS confirming the tax free nature of the separation. The process for the NRC and New York PSC approvals are moving forward as expected and remain on track. Last week, the New York PSC staff held the first meeting of settlement negotiations. This is an important step in the process. and we've asked for authorization from the Commission by December 16th on their scheduled meeting date. We have named the CEO of each company as well as their direct reports and will continue the staffing process over the course of the next few weeks and months to be ready for the close in the first quarter of next year. Joe Dominguez and I are both excited to lead our companies into the next chapter. Exelon will continue to be one of the nation's premier customer focused energy delivery companies with more than 10 million customers. Joe's the right person to lead Constellation will be America's leading clean energy company producing 12% of the nation's clean energy and nearly two times more than any other clean energy company out there. We remain focused on setting each business up to be successful for the long term. Joel, I'll turn over to you for the financial update.