Exelon Corporation

Hello and welcome to Exelon's second quarter earnings call. My name is Dilem and I'll 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 1 on your telephone keypad. If you'd 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 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 Jean Jones, Senior Vice President of Corporate Finance. The floor is yours.

Thank you, Dilem. Good morning, everyone, and thank you for joining our second quarter 2022 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 8 and other SEC filings for discussions of risk factors and other 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. We've scheduled 45 minutes for today's call. I'll now turn the call over to Chris Crane, Exxon's CEO.

Thanks, Jane, and good morning, everyone. Thanks for joining us. Before I get into the quarter, I want to spend a minute talking about the Inflation Reduction Act, a bill that's being considered in Congress. We appreciate those who have been working to position the United States as a leader in clean energy future and combating climate change. The bill extends tax benefits for familiar renewable technologies like solar and wind. It creates new ones for clean energy sources like nuclear and hydrogen. It also focuses on energy efficiency, electrification, and very importantly, equity. These aspects of the bill will enable this transformation for customers while building a domestic clean energy sector. However, the bill also proposes a corporate minimum tax that could undermine the benefits of those incentives and slowly investment needed to make this transformation. The lower cost of clean energy technology and efficiency investments will be offset by higher taxes on companies making investments. With this language currently proposed, we and other utilities could face an increase in cash tax. While the bill has yet to pass and specifics could change, as currently drafted, we could see an impact of incremental cash tax of approximately $300 million per year starting in 2023. The higher tax would ultimately limit our ability to invest in infrastructure needed to accommodate the clean energy needs our customers want and our jurisdictions are pursuing. But the situation remains very fluid. We continue to monitor the bill closely as it moves toward a vote in the Senate and beyond. In the meantime, we're working to advocate for language that better aligns the incentives to achieve what we all want, a cleaner, resilient, reliable, and affordable grid. We're not getting a grill today. Turning now to the quarter, our first one since separating on February 1st, we continue to execute on our plan, focusing on operational and financial excellence to serve our customers in our communities while supporting their environmental and social equity needs. We earned 47 cents per share on a GAAP basis and 44 cents per share on a non-GAAP basis. We continue to expect our full-year results in line with the 218 to 232 range we provided on our analyst day. We've updated on previously announced plans to financing a small portion of our $29 billion capital investment program with equity. Joe will provide additional details on our financing plan along with his commentary on the quarterly results. We're on track to limit the number of rate cases we have this year. In May, Delmarva Power Maryland filed its first multi-year plan covering investments from 23 to 25 period. The filing highlights improvement in Delmarva's reliability and customer service in Maryland, 21 marked its second straight year of record-setting outage frequency performance. We look forward to building on the successes of the multi-year plans we have in place and leverage the lessons learned to deliver value for Delmarva Power of Maryland customers. In Illinois, ComEd continues to work on a new rate setting process, including proposed performance metrics. We expect a final order by the end of the third quarter. In addition, on July 1st, ComEd filed its first beneficial electrification plan with the Illinois Commerce Commission as required by the CEJA. ComEd proposes spending approximately $300 million from 23 to 25. The plan is designated to reduce barriers to beneficial electrification, including barriers to electric vehicles like adoption of costs and charging availability. And the plan approaches and emphasizes equity and environmental justice as we implement. Our plan will ensure ComEd's investment strategy delivers on the CEJA's groundbreaking environmental and social equity goals. As a reminder, Comet's first distribution rate case under the new rate case structure will be filed in early 2023 for rate effective in 2024. And of course, we continue to support our communities and provide transparency We recently published our ninth annual corporate sustainability report, our first as a T&D only utility. It details all the ways in which Exelon is a responsible steward of the energy transition and delivers sustainable value for our jurisdictions. For instance, there's many programs going on 180 young women in urban centers. I've been joining each of the three academies to talk with the participants. In May, the Exelon Foundation selected nine young women that have graduated from our STEM program academies to receive a scholarship for the college education, totally speak to them directly, and tell them what they have just achieved. So I kind of broke down when I did it, but it was really powerful. The report also highlights 20 million climate change investment initiatives, a program that supports startups with potential to have wide-scale impact on climate change risks. In mid-July, Exelon and Exelon Foundation third round of the program. It's a 10-year program. These companies' business models address climate-related products in services like EV charging, repair, carbon accounting platforms, and other focus areas. We're very proud of the work that all our employees do every day to support the customers and the communities. and you can find all the details in our sustainability report. Switching to slide five, let me talk about our operational performance for the quarter. We continue to provide safe, reliable service for our customers. From a reliability perspective, we've seen improvement from the first quarter. We now are in top quartile for outage duration across all jurisdictions, and ComEd and PHI scored in the top decile. ComEd delivered its best KD performance on record despite severe storms in June. We met the restoration targets early, restoring 80% of 125,000 impacted customers in less than a day. And ComEd's distribution automation investment avoided almost 70,000 additional customer interruptions. Our outage frequency performance remains at top high levels, with ComEd achieving top test. On a safety front, PHI improved to top quartile, but we did have a slip at PECO into the second quartile. We're doing additional training to address the primary drivers of the underperformance at both PECO and BGE. As always, safety remains our number one priority. BG, ComEd, and PECO continue to earn top quartile customer satisfaction performance through the second quarter. And lastly, we maintain the top decile performance in odor response across our three gas utilities. PHI continues its streak of perfect execution, responding to all gas odors reported in less than one hour. for the first half of 2022. And this is very important for us to maintain confidence in the system, our gas distribution system, that we can find, fix, and repair anything that comes up. So it's really good to see. And now let me turn it over to Joe, and he can provide the financial update.