Exelon Corporation

Hello, and welcome to Exelon's third quarter earnings call. My name is Gigi, 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 11 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 Andrew Plenge, Vice President of Investor Relations. The floor is yours.

Thank you, Gigi, and good morning, everyone. We're pleased to have you with us for our 2023 third quarter earnings call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer, and Jean Jones, Exelon's Chief Financial Officer. Other members of Exelon's senior management team are also with us today, and they will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information, can be found in the investor relations section of Exelon's website. We would also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements which are subject to risks and uncertainties. You can find the cautionary statements on these risks on slide two of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent gap measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin Butler, Exxon's president and CEO. Thank you, Andrew, and good morning, everyone.

We appreciate you listening to our third quarter earnings call. Despite a historically mild first nine months of the year and pressures from storms in August and September, we delivered earnings right in line with the expectations laid out in our last earnings call. For the quarter, as you can see on slide four, we earned 70 cents per share on a gap basis and 67 cents per share on a non-gap basis. With the critical summer season behind us, we have narrowed our guidance range to 2,032 cents to 2,040 cents per share for 2023. Jean will talk more about our results for the quarter and expected financial performance for the balance of the year. Operational performance across the platform remained very strong in the third quarter. With storms that brought 110-mile-per-hour wind gusts and 29 major event days that impacted almost 1.3 million customers, we not only kept our financial plan on track, but we also continued our track record of top quartile reliability performance. And we continued to make progress in safety and customer satisfaction. The third quarter also brought continued execution of key milestones in our six active base rate cases underway in Illinois, Maryland, Delaware, New Jersey, and the District of Columbia. Beginning with ComEd, we received a proposed order from the ALJ on its multi-year rate and grid plans on October 23rd. We're encouraged that the proposed order recognizes that meeting the ambitious electrification and decarbonization goals set by Illinois' groundbreaking Climate and Equitable Jobs Act will require ComEd to make significant investments, and it largely follows an investment plan that has alignment across a broad group of stakeholders. But the order does not recognize a fair cost of financing that investment. It provides a return on equity that is well below the national average. It does not recognize the significant investment we have made in our pension, which supports ComEd's employees and has saved customers almost $1 billion to date with its returns and continues to generate savings for our customers. And it does not allow for prudent capitalization of the business, as it caps equity ratios below an appropriate level. So we are disappointed with elements of the proposed order. But we expect the Commission will consider the full record developed when writing its final order, and we continue to make our case with stakeholders. As a reminder, we expect to receive the final order in mid-December. As it pertains to BGE, all parties have filed their briefs, and we now await a final order from the Maryland Public Service Commission expected on December 14th. We have put forward a strong investment plan to address the needs of our customers that is aligned with the state's ambitious goals to advance the energy transformation. We remain optimistic that the Commission will reach a constructive outcome that appropriately supports our customers and the state's goals laid out in the Climate Solutions Now Act. As you will hear from Jean, we also made progress in the Atlantic City electric rate case where a stipulation of settlement awaits final approval. The Delmarva power and light electric rate case is progressing as well, along with the PEPCO DC and PEPCO Maryland multi-year rate plans. On our longer-term outlook, we continue to reaffirm our existing guidance. We expect to be at the midpoint or better of our 6% to 8% annualized earnings growth ranges and to grow the dividend in line with those earnings. The capital we are investing across our jurisdictions to support the needs of our customers in their energy transformation is what drives that growth. On Tuesday, PJM selected project proposals submitted for the Competitive Transmission Proposal Window 3. Exelon's proposed transmission projects were among a set of solutions to maintain reliability in the Maryland, Pennsylvania, and Virginia areas driven by significant load increases in Northern Virginia. Specifically, PJM has recommended a suite of solutions that include a scope of work for Exelon that is estimated to cost approximately $850 million, with portions assigned to VGE, PICO, PEPCO, and Delmarva Power. As this spend is weighted toward the back end of the decade, with expected completion dates of 2029 and 2030 that extend beyond the current guidance range, it provides another good indication of the trends in place and degree of work that the grid will require well into the future. I'll also note two additional exciting developments this quarter that support our jurisdiction's energy goals. First, ComEd, PECO, and PEPCO were part of two coalitions receiving Hydrogen Hub awards in our service territories. These projects will go a long way toward accelerating access to clean and affordable hydrogen to meet the nation's ambitious carbon reduction goals and creating thousands of clean energy jobs in Exelon service territories. Second, the U.S. Department of Energy recommended two of Exelon's submissions in the Grid Resiliency and Innovation Partnership Program for negotiation of a final award. totaling $150 million across our ComEd and PECO utilities. ComEd will direct its $50 million award to enable customers and partners to deploy next generation technologies for growing solar installations and electric vehicles. And PECO is leveraging its $100 million award to enhance resiliency in vulnerable areas of PECO service territory that are susceptible to severe weather events. When combined with the middle-mile grants that BGE and ComEd were awarded by the National Telecom and Information Administration, Exelon Utilities are approaching $200 million in total of federally funded IIJA grant awards this year, not to mention the amounts directed towards its jurisdictions through vehicles like the EPA's Clean School Bus Program. The federal support is critical to supporting an affordable, and equitable transition. The need for transmission expansion, the investment in new energy supply, and the ever-increasing need for a more resilient grid all highlight the impact that an economy that is increasingly dependent on electricity will have on our investment plan. The energy transformation will last decades, not years, which is why we're confident that investment opportunities will continue to strengthen and lengthen our rate-based growth. We look forward to incorporating these updates into our annual financial update on the fourth quarter earnings call next February. I'll now speak to our operating performance in the third quarter on slide five. Reliability remains outstanding. All four utility operating companies had top quartile performance in both reduced outage frequency and shortened outage duration. ComEd operated in the top decile for both metrics. In fact, ComMed and PHI again achieved best on record outage frequency and duration performance, which makes for the third quarter in a row for those two operating companies. Performance like this is particularly impressive when you consider the level of storm activity we experienced this quarter, which is a testament to the investments we're making in the system and the talented, dedicated employees working the system. As an example, in just one damaging storm, BGE crews replaced 32 miles of wire and 82 transformers, and they did it 36 hours faster than historical models predicted was possible. That commitment to operational excellence across the Exelon franchise is a key part of what makes us who we are. And our gas operations are keeping pace. All three gas utility operating companies, again, continue to perform at top decile levels for gas odor response. And as it pertains to customer satisfaction, while three of our utility operating companies continue to benchmark in the second quartile, PECO has progressed to the first quartile. Our improved benchmarking performance at PECO reflects the benefits of those efforts. And all utility operating companies did see increases in their scores. But as we have mentioned, overall satisfaction has been affected by inflation and sunsetting pandemic-era relief relevant to the benchmark year. The headwinds facing our customers are real, which is why we are focused on ensuring customers are aware of their options to manage their energy use and reduce their bills. We look to build on increasing satisfaction levels into 2024. Last, we saw improvement in our safety performance benchmark at PHI versus the second quarter. We continue to focus on the areas of underperformance and implement utility-specific action plans to address the higher OSHA rates. And you can see that with PHI scores, where our efforts to reinforce procedures, situational awareness, and crew communication has yielded results. And we are also continuing in partnership with the industry to drive a more sophisticated discussion and set up tools around safety to focus employees on which behaviors will most impactively improve safety and ensure we do our most important job, making sure each employee returns home safely after every shift. I assure you that we will continue to push for excellence across all areas of our operations as we close out 2023. I will now turn it to Jean to review our financial performance and regulatory updates.