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 1 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 Andrew Plenge, Vice President of Investor Relations. The floor is yours.

Thank you, Gigi. Good morning, everyone. We're pleased to have you with us for our 2024 third quarter earnings call. Leading the call today are Calvin Butler, Excellence President and Chief Executive Officer, and Gene Jones, Excellence Chief Financial Officer. Other members of Excellence 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 GAAP 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, Exelon's President and CEO. Thank you, Andrew, and good morning, everyone.

We appreciate you joining us for the call and are pleased to be reporting a performance, keeping us on track for another year of consistent and stable performance. We reported gap earnings of 70 cents per share and operating earnings of 71 cents per share above the expectations shared on our second quarter call. We delivered another strong quarter of operations despite significant storm activity in July with top quartile or better outage performance across the board. We have also made considerable progress on our 2024 regulatory calendar since the second quarter call. First, ComEd has now received its proposed order and its refiled multi-year rate plan. The order serves as another positive data point that ComEd has filed a compliant plan that appropriately balances the state's desire to continue to deliver reliable and affordable power while making progress on its ambitious energy goals. We now await the Commission's final order, and we look forward to regaining the momentum in establishing Illinois as a clear leader in the energy transition. We also reached settlements with key parties in our PECO gas and electric rate cases, which were recommended for approval by the administrative law judges presiding over this case. We appreciate the parties' interest. to maintain and improve safe and reliable service for PECOS customers, playing a key role in the state's economic development efforts. In the District of Columbia, we continue to anticipate an order by the end of the year, laying the groundwork for continued investment to support a climate-ready grid and the district's clean energy goals. Finally, in September, Maryland initiated a lessons learned proceeding on multi-year plans, completing its hearings earlier this month. In those hearings, each of our Maryland utilities provided an extensive record of the ways in which multi-year rate plans are able to address the demands of a 21st century grid. And we are appreciative that a number of stakeholders, including large customers, chambers of commerce, and contractors, filed their support of the constructs. But we also acknowledge ways in which we can address certain stakeholder concerns with the goal of continuously improving on the foundation of transparency and accountability on which the framework is built. A grid of the future cannot rely on the rate-making of the past, and ensuring we have alignment and transparency around our investment plans is critical to meeting our state's energy goals, allowing us to execute as efficiently and effectively as possible on behalf of all of us. We remain optimistic that we'll find alignment on a solution that can give us all the confidence to keep Maryland moving forward. Let me now turn to our operating highlights for the quarter. On slide five, you can see that we are achieving first quartile performance across most of our key indicators for safety, reliability, and customer satisfaction. In both outage frequency and outage durations, continued to perform at top decile levels. And that's despite the powerful storms that swept the Chicago area in July and the significant mutual assistance extended throughout the quarter for Hurricane Sparrow and to lead with Hurricane Milton following directly afterwards. The storms that hit Illinois were record-breaking by a variety of measures. In just two days, the Chicagoland area experienced double the number of tornadoes that it sees in an average year. And then some of those same crews, along with those at BGE, PECO, and our PEPCO Holdings Utilities, were part of more than 500 field and support personnel to aid in restoring service to customers in Florida, Georgia, and West Virginia after a very challenging hurricane season. I do want to take a moment to personally thank our employees for their continued focus and dedication. The ability of our utilities to keep for the critical investments need to maintain reliability and resiliency as it pertains to safety after three quarters of benchmarking against serious injury performance we now have all four utility operating companies in top quartile safety of our employees contractors and customers is always our highest priority finally on customer satisfaction Performance has improved since last quarter, with BGE now operating in second quartile alongside Pepco Holdings. Both utilities remain focused on initiatives to further improve performance, including enhancing customer communications, streamlining new business processes, and additional customer service representative trainings. Now it's my pleasure to turn the call over to Gene to cover our financial and regulatory update. Gene?

Thank you, Calvin, and good morning, everyone. Today, I will cover our third quarter financial update, along with our financial and regulatory outlook for the remainder of 2024. I will also spend some time highlighting a transmission project at Delmarva Power, which is helping to modernize the grid and accelerate an opportunity to save money for our customers. Starting on slide six, we present our quarter-over-quarter adjusted operating earnings walk. For the third quarter of 2024, FoxLong earned 71 cents per share compared to 67 cents per share in the third quarter of 2023, reflecting higher results of 4 cents per share over the same period. Earnings are higher in the third quarter relative to the same period last year, driven primarily by 4 cents of timing at ComEd on its distribution earnings. After removing the timing at ComEd across Exelon, we earned $0.03 of higher distribution and transmission rates, net of associated depreciation, which was offset by $0.03 of higher interest expense. After accounting for the timing at ComEd, driven in part by expensive mutual assistance provided to non-Exelon utilities, we delivered earning results in line with the guidance we provided in our prior quarter call. Our year-to-date performance underscores our ability to deliver strong financial results despite mild weather and heightened storm activity throughout the year. As we close out the year in the fourth quarter, we remain on track to achieve operating earnings of $2.40 to $2.50 per share. Our fourth quarter guidance assumes the reversal of ComEd distribution earnings timing, fair and reasonable outcomes for PEPCO DC's multi-year rate case, as well as the BGE and ConMed reconciliations and normal weather and storm activity. In addition, we reaffirm our long-term annualized operating earnings per share guidance range of 5 to 7 percent through 2027 with the expectation to be at the midpoint or better of that growth range. Turning to slide 7, as Calvin highlighted, we have made meaningful progress in our distribution rate cases across our jurisdictions. approaching the final milestones for ComEd's, PECOS, and PEPCO DC's open rate cases. We also filed a historical test year gas distribution rate case in Delaware. I'll begin my remarks by providing an update on this most recent filing, followed by status updates on the remaining rate cases anticipated to reach resolution this year. On September 20th, Delmarva Power filed its gas distribution rate case seeking approval of a proposed $35.6 million revenue increase, exclusive of the transfer of $6.4 million of the distribution system improvement charges. The filing represents Delmarva Power's work since its last gas rate adjustment filing in 2022 and reflects investments that help ensure customer reliability and improve service and safety, including work to inspect and proactively maintain natural gas mains, replacing aging cast iron and bare steel pipes, and replace and upgrade equipment at our Wilmington LNG facility. The filing also requests the adoption of a weather normalization rider, which will offer customers more bill predictability as seasonal temperatures grow increasingly volatile. Continuing with Pepco Holdings, on August 30th, Pepco and other parties filed final briefs on Pepco's Climate Ready Pathway DC multi-year plan. which outlines the investments we will make to support a climate-ready grid and enable cleaner energy programs and technologies. The plan also enhances the reliability, resiliency, and security of the local energy grid and expands affordability assistance for PEPCO's customers across the District of Columbia. We now await the DC Public Service Commission's final order, which we anticipate before the end of the year, and look forward to continuing the important work needed to enhance customer reliability advancing economic and work development, and further supporting the district goals to be carbon neutral by 2045. Turning to Pennsylvania, administrative law judges have issued recommended decisions in the PECO gas and electric rate cases, and we are pleased with their recommendation that the Pennsylvania Public Utility Commission accept both settlements filed in August. The proposal for PECO's electric rate case allows for a $354 million revenue requirement increase excluding a one-time credit of $64 million in 2025. On the gas side, the ALJs proposed a $78 million revenue requirement increase in 2025. While the ALJs ruled against the addition of a weather normalization adjustment, we have filed an exception to address the adjustment, which will now go for commission review and consideration. The adjustment, which has been approved for all other major Pennsylvania gas utilities, is intended to reduce the inherent volatility in customer bills and PECA's recovery of distribution revenue. We expect the Commission to issue its final orders by the end of December. Lastly, at ComEd, on October 18, the administrative law judges presiding over the case issued a proposed order on the revised grid plan, for which we expect a final order from the Illinois Commerce Commission in December. The proposed order recommends the Commission approve the revised grid plan and associated adjusted revenue requirements for 2024 through 2027 with a $637 million revenue requirement increase and a $3.9 billion rate-based increase, with new rates in effect in January 2025. As a reminder, this construct allows for the recovery of currently incurred investments up to 105% of the approved revenue requirement and provides that certain investment categories, such as storms and new business, are excluded from the 105% threshold. We are appreciative of the hard work put in by all parties to craft a compliant and balanced grid plan, which has resulted in strong alignment up through the proposed order, and we look forward to the Commission setting the path for the next three years of investments during a critical time in the industry. With final orders anticipated to be issued for ComEd, PECO, and PEPCO DC by year end, Approximately 90% of our rate base will have established rates or known rate mechanisms in place through 2026 or 2027, allowing us to focus on plan execution and the strategic discussions required to support growing electrification needs and the necessary expansion of clean, reliable generation in our states. As always, additional details on the rate cases can be found on slides 20 to 30 of the appendix. That brings me to slide eight, where I want to take a moment to highlight an example of the work we've been doing to modernize the transmission system. Earlier this year, Delmarva Power began work to rebuild the Vienna to Nelson 138 KV transmission line, a 14-mile circuit that extends from the Vienna substation in Dorchester County, Maryland, to the Nelson substation in Sussex County, Delaware. The project replaces over 100 wooden, 60-year-old structures with steel poles and upgrades our equipment to 230 kV standards. The new infrastructure will also be able to withstand winds over 110 miles per hour, is constructed above flood zones, and includes an underground transmission lead-in, enhancing overall system resilience. Currently, the project is on track to be placed in service nearly two years ahead of schedule in December. Completion of the project will enable the Indian River 410 megawatt coal-fired generating unit to retire, eliminating the collection of the RMR and saving nearly $100 million across 551,000 customers in that two years, which is over one and a half times greater than the installed cost of the project that would be collected over decades. Alongside lower bills, these customers will also experience better system reliability and resiliency from the elimination of capacity constraints. The project also emphasizes our commitment to workforce development, with $13.5 million of the spend on the project with diverse suppliers, supporting local economic growth, and partnership with the jurisdiction we serve. These efforts highlight our dedication to enhancing customer value while fostering local economic growth, and they are a testament to our strategic efforts to maximize the impact of our investments. Modernizing the energy grid while mitigating resource adequacy constraints and supporting state goals to decarbonize. The project also highlights the power of our platform to efficiently execute on capital plans for the benefit of our customers. This is just one example of the $9.7 billion we have in our capital plan for electric transmission investment through 2027. And it highlights why transmission will continue to be an area of significant opportunity to support our customers going forward. Finally, I will conclude with updates on our financing activity on slide 10. We continue to project a cushion of approximately 100 basis points on average over the planning period for our consolidated corporate credit metrics above the downgrade threshold of 12% specified by S&P and Moody's, demonstrating our commitment to maintaining a strong balance sheet. And while we continue to advocate for language that incorporates the corporate alternative minimum tax and the final treasury regulations, Recall that our plan incorporates the assumption that the final regulations will not allow for repairs, consistent with the proposed guidance released in September. If implemented in a way that mitigates the cash impact, we'd expect an increase of approximately 50 basis points to our consolidated metrics on average over the plan, putting us in the higher end of our targeted 100 to 200 basis points of cushion over the planning period. From a financing perspective, we have successfully completed all of our planned long-term debt financing needs for the year, with PICO raising $575 million in the third quarter. The strong investor demand we continue to see for our debt offerings is supported by the strength of our balance sheet and by the lowest attributes of our platform. investor confidence in our offerings, along with our pre-issuance hedging program positions as well as we continue to seek out the most efficient ways to finance the energy transformation for our customers and investors. We've also successfully completed our planned $150 million of equity issuances for 2024 via our ATM. There has been no change in our guidance to issue a total of $1.6 billion of equity from 2024 to 2027 to fund our current $34.5 billion capital plan with the remaining balance expected to be issued radically from 2025 to 2027, approximating $475 million on an annual basis. Thank you, and I'll now turn the call back to Calvin for his closing remarks.

Thank you, Jean. As you can see, we've come a long way toward delivering on our priorities and commitments for 2024, with the team highly focused on continued execution and operational excellence as we approach the final months of the year. We have maintained top quartile performance despite a tremendous amount of storm activity this year. The bar keeps getting set higher and we keep meeting it. We are approaching final orders for ComEd and PECO with path towards reasonable supportive outcomes in both, covering approximately 50% of our rate base with another approximately 40% covered by known or established rate making processes as far out as 2027. And we appreciate Maryland acting quickly to address its lessons learned process so that we can agree on an approach that allows all stakeholders input into how customer dollars should be invested to meet the state's energy goals. We are on track to invest $7.4 billion of capital in 2024 for the benefit of our customers and earn a fair return on equity in our targeted 9% to 10% range, with our planned financings for the year already complete. This will allow us to deliver in the $2.40 and $2.50 operating earnings guidance range that we laid out at the beginning of the year. And most importantly, we have maintained our steadfast commitment to customer affordability, both through constant vigilance in developing and adopting cost-saving measures, as well as in our legislative and regulatory advocacy during a very dynamic time in the industry. As the largest utility by customer count, serving some of the largest cities in this country, our primary mission is to provide reliable, resilient, and affordable power to everyone equitably. The ability to invest in the grid is integral to that mission. It, of course, supports reliability, where demands continue to increase due to more severe weather, increased electrification, and an evolving generation supply mix. And those demands have only been amplified by the growth of artificial intelligence. At the beginning of this year, we indicated that we had six gigawatts of high probability data center load in our territories. That's now at 11 gigawatts, which is indicative of the incredible opportunity this sector has ahead. But investing in the grid can also The transmission project that Gene highlighted is just one example of many where our grid investments can create savings for our customers. The importance of the grid reinforces the value of coordinated, thoughtful, and efficient investment, and thus the benefit of transparent, forward-looking planning and rate making. It also underpins our policy advocacy. It has driven our focus to Co-located load arrangements do not compromise reliability or avoid the cost of relying on the grid. And it's why we are actively engaging with peers and policymakers on how our state and PJM can ensure generation continues to be as reliable and as affordable as possible. All of our actions are focused on enabling the necessary investment in a grid that we all rely on. and that is indispensable to the economic vitality of our jurisdictions, and the impact of that partnership is clear. In September, Site Selection Magazine named Con Ed and PICO two of the top 20 utilities in economic development in the country, their 10th and 14th time receiving that award, respectively. Two weeks ago, the District of Columbia's Chamber of Commerce named PEPCO its Business of the Year. And Exelon Utilities were just named as recipients of three more awards under the DOE's Grid Resilience and Innovation Partnership Program, bringing our total direct funding under that program to $330 million. Again, we have the honor and the privilege to serve over 10.5 million customers, and they are counting on us to dependably deliver safe, resilient, and affordable power during this energy transformation. Gigi, we are now ready for any questions from the audience.

Thank you. If you would like to ask a question, simply press star 1-1 on your telephone keypad. Our first question comes from the line of Nick Campanella from Barclays. Hey, good morning. Thanks for taking my questions.

Hey, I just wanted to address up front because I know we've gotten some questions just, you know, you previously said midpoint or above for 24. Is that kind of still the case today and how should we kind of think about that?

Yeah, Nick, good question. So we, you know, we started that language as part of our long-term guidance when we were, you and the combination of the years may be different, and we give you where we end up in the year. But over that time period, right, as always, we aim for midpoint or better. And I would say for the current year, that also continues to be our goal, right? When we give you a guidance range, our goal is always to be at the midpoint or better. And so I just, yeah, that's how we're still thinking about it and what we're still working towards. The last two years, That's what we've done and we're working hard to make sure that we continue that trend.

Okay, great. Thanks for that clarification. It's been a few months since we've had the PJM auction. I'm sure you've had some more time to digest it. There has been discussion potentially in the legislative arena to address solutions for new generations. You know, as you kind of flip the script into 25, I heard your comments on, you know, focusing more on strategic initiatives. How does this kind of play out in your mind? You know, what would you be kind of advocating for specifically to, you know, fix the bill issue that's kind of growing in PJM? Thank you.

No, Nick, thank you. This is Calvin. Let me just, I'll approach this a couple of ways, Nick, and you make sure you let me know if I get directly to your question. First off, I do believe, we believe, that PJM's request to delay the capacity auction does reinforce the concerns over whether increasing prices are efficiently addressing our electricity demand needs and sends a clear message that reform is definitely needed. So that was the first step in an acknowledgment that something has to be different. And I do appreciate PJM's leadership to put forward interconnection in various capacity market reforms. And it's just another example that the PJM stakeholder process is just not working. And we will continue to support them as well as other federal and regional agencies to get that done. So that's first and foremost. And it would not surprise you that as a T&D-only company, not owning generation, our voice is unique in this discussion. And we've been working with all of our governors and regulatory bodies on how to address this issue and what needs to be done. And I think you've seen the magnification of this issue, Nick, with the letter that the governors most recently sent to PJM stating that something needs to be done, not tomorrow, but today. And we want to be part of that solution, and we will be part of that solution. And one of the things we are always focused on, and I think we start with this, Nick, it's all about reliable, resilient, and affordable energy. What can we do to be part of that mix to ensure that takes place? And as I said in my opening remarks, everything we do is about providing that in an equitable manner to all of our customers across the footprint. And we will continue to work with that. And I think we're seeing that momentum going. Now, people are talking about whether you're re-regulating generation and so forth. If that's part of the solution, we'll be at the table to figure out how that happens. But we're not advocating for that. What we're advocating for is reliable and affordable energy. And that's our foundation of what we're talking about.

I certainly appreciate that. And I think that's just the direction that we all want to see it going. But I guess people just, you know, I think we all acknowledge it takes a long time to facilitate this new build that could potentially supplement this higher demand outlook. And I guess just as you look at the build trajectory, do you still kind of feel comfortable with the rate-based growth that you've outlined? you know, across your jurisdiction, specifically in some of those ones like BGE and otherwise? Thank you.

I do. I do. Because if you want to accomplish that goal of what we were just talking about, reliable and resilient, you can't do it without investing in the grid. Matter of fact, Nick, I would tell you that there's a cost of not making these investments because all of our jurisdictions have a clean decarbonization goal to it. And you know you can't get there without investing smartly in transmission. And you've seen the weather conditions that all of our jurisdictions are facing. I talked about Illinois with the number of tornadoes. If you even take a look at what Jean's transmission project that she highlighted, it's the conversion of wooden poles to steel poles because of the wind pressures that all of our systems are under. So you can't get there without the investment. What we have to do is make sure it's smart investment Because I believe the cost of not doing it is far outweighs the cost of just systematically doing it. But that goes into how we work with those regulatory bodies in ensuring that the conversations are happening up front and not after the fact. And that's why I'm leaning into the multi-year plans, because whether you like them or not, if you're not having thoughtful and proactive conversations, it becomes more expensive on the back end. So to your direct question, yes. The grid investments are needed, and yes, they will need to continue. We just have to work with everyone to make sure we're doing it in the right way. Colette, do you have anything you'd like to add to this?

Thank you, Calvin. And Nick, good morning. Colette Honorable here. I'm EPP of Public Policy and Chief External Affairs Officer. I would add to Calvin's comments that And you've heard him allude to the fact that we are unique. We are the nation's largest utility. We are a pure transmission and distribution energy delivery company, and that gives us a lot of optionality. It gives us the ability to be strong partners with policymakers, with members of the legislature, with our regulators to help find and support the solutions that our customers need. So while we will continue to be focused on the fundamentals reliability, affordability, resilience, and being a leader in the clean energy transformation. We also are leaning into PJM, for instance, on fashioning solutions that help us do this work more efficiently and more quickly. For instance, PJM has been focused on ways to find reforms to help us either get more generation, more transmission. We support a shovel-ready construct where we are looking at how we can move these projects through the queue more quickly to help with the addition of new generation. We will also continue to be a leader in the PJM stakeholder process on a number of pricing reforms. So we applaud the effort of the governors in elevating the capacity auction issue as one that needs attention from everyone right now, and we'll continue to be a leader in that regard.

Thank you, Collette. And I think, Nick, to your direct question on how we're engaged with PJM, today all of our CEOs of our operating companies are participating in the PJM meeting that's taking place right now. and they're engaged in that because we know that their voice matters, and they're sitting there representing their jurisdictions in a very proactive way.

Hey, thanks for all those thoughts, and we'll see you in Florida here shortly. Thank you again.

Looking forward to it.

Thank you. One moment for our next question. Our next question comes from the line of Julienne de Moulin-Smith from Jeffries, LLC. Julian, good morning.

Hey, good morning. Thank you, team. Thank you, operator. Appreciate it. So a couple things real quickly here. First off, starting with Maryland here, I mean, I know you gave some commentaries in the prepared remarks, but just at the end of the day, you know, even if you didn't have an additional multi-year plan as it's restructured today, I mean, how would that change your plan, right? I mean, it just ultimately falls back to more discreet spending plans, but does that change anything in aggregate, if you will?

Yeah, let me jump in there first, Julie, and then I'll turn it over to Gene. Let me just be very clear. The multi-year plan was only implemented, I think, in 2020. So we've been operating in Maryland with traditional rate making well beyond before then, and the organization was doing well. When I was CEO of BGE, we were filing annual rate cases, and we were being effective in getting it done. What we have shared, and I continue to share, is that the NYP is the best way to go because of the transparency and the affordability piece. Because what we do well is we effectively build things and keep things in line, and working with the stakeholder process in a collaborative manner allows that to happen and ensures everyone's goals are met. So to your direct question, we will continue to advocate for it, but we know how to move forward on traditional rate-making if that's what they require. It would not be... something that we will ever say is the best thing for that state to do, but it is something that we're prepared to do, and we will reallocate our capital when it comes to other jurisdictions because we have to continue moving forward. So we're not going to miss a beat, but it will require us to reassess where we go and how we invest capital across our systems. We've demonstrated that we know how to do that. When you look at what happened in Illinois, in 30 days we reallocated capital to other parts of the system, and we'll continue to look at those issues. Gene?

Yeah, I think that's right. I mean, I think if you look at all of these proceedings coming to conclusion here in the fourth quarter, whether it's, you know, comments grid plan, the Maryland lessons learned, we're getting our DC order, that's the benefit of having the size and scale, right? We get to then, you know, reflect kind of the new investments related to those orders, but then also layering capital where we know we need to invest. When you saw our last four-year update, we went up $3 billion over a four-year period, I think 90% of that was transmission. There's a lot of transmission work we need to do. So we'll manage all of that. We'll manage the portfolio, and we'll meet our jurisdictions where they are.

Yep, absolutely. Thank you guys very much for the details there. Appreciate it. And Gene Calvin, can you speak a little bit to the transmission backdrop? I mean, you referenced in the remarks again this 9-7 number. But as I look at it, clearly it seems like there's a number of leading indicators that would suggest that number could go materially higher, right? We've seen some sense of the PGM-RTEP thus far related. We've also got MISO really pushing a much more expansive program conceivably that could weave into your plan as well. Pennsylvania also. Do you want to speak a little bit to each one of those and just how that fits against what you have at least currently stated as last updated at 9-7?

Yeah, I think at a high level, right, you're going to see that trend continue, the increasing need for more transmission investment. I think there's at least three themes there, probably several more, but there is just core work across our jurisdictions that we need to do for reliability, resiliency. We talked about, and Calvin reiterated, right, that even in the Delmarva project we just talked about, the system needs to be modernized against the increasingly volatile weather. So whether it's wood-to-steel poles, elevating substations for flooding, making sure they can withstand hurricane, you know, Category 4 winds. All of that security is becoming increasingly important for substations. So that's just core work across our four operating companies we know we have to do. And that's continuing to increase. I would say a second key theme is the changing generation mix. You've got retirements. We talked about the Indian River RMR today. That transmission was to replace that and save our customers money. Brandon Shores is another one. And so you've got retiring generation, which needs to have investment and transmission to accommodate that. But then you've got new generation. When you look at them in Atlantic, right, Maryland, New Jersey, Delaware, you add up the goals in the states there, you're looking at, you know, maybe 20 gigawatts of offshore wind. We're not going to build that offshore wind, but we will build the transmission to support that new generation, and we're excited about that, right? We all know we need more generation, and we need all types of generation. So that's, you know, another key theme, the changing generation mix. And then, of course, right, the theme of new load. When we updated that capital plan that I mentioned, the $3.9 billion of it was transmission, $700 million was in COMET, right? And COMET is where we are increasingly seeing that data center growth. You heard Calvin talk about going from 6 gigawatts of high probability to 11 gigawatts just this year alone. The work we need to do to accommodate that high-density load continues, not only in ComEd, but across PJM, right? Last year, we talked about the billion dollars for the R-TEP Window 3. related to Northern Virginia data centers. So I think that increasingly becomes a trend. What's not in our plan, you mentioned PJM's window one this year. We think there's opportunity there, probably more in the couple hundred million size. But then outside of PJM, MISO is doing its tranche too. That is another potential opportunity for us that's not in the plan. There are pieces of the solutions that cross in our territory. and MISO has indicated a willingness to work with PJM operators. So I think no shortage of opportunities, a lot of strong themes, which just kind of continue to build that momentum for more investments. And what we love about them is often those investments help save our customer money when you think about the alternatives.

Completely appreciate it, guys. Thank you so much. Thank you, Julie.

Thank you. One moment for our next question. Our next question comes from the line of Char Purrezza from Guggenheim Partners.

Hey, Char. Morning, morning. Morning. So, Calvin, you guys made a series of 205 filings in late August, sort of seeking to clarify the tariff treatment of network load. Can you just talk a little bit more to what specifically drove those filings? within your service territories and what you see as kind of the pathway forward? Procedurally, what are the pathways?

Absolutely. So let me just be very concise, try to anyway, Char, because there's been a lot of activity and to frame it on the why and the what, right? So first off, as you know, the regulatory conversation was initiated when individuals AEP and ourselves really jumped in and protested the talent ISA, which in its most recent amendments was the first time declaration that the co-located load was not network load, which implies that it will bear no share of the cost of services associated with being part of the grid. Now, we are happy that Burke stepped in. and really initiated a technical conference with the commissioners, as you know, Char, which will begin on November 1st. So that's a big step because we do not believe that policy should be determined by one-off contracts. And therefore, our voice, even though it was not in our service territory, we saw something's beginning and we needed to say we have questions and we need to get clarity. We filed our 205s for each of our utilities with the goal of having guidelines so that the rules of the road going forward are clear. And we needed that because we were being asked to do things that were contrary to the support and the reliability of the grid. And we could not have the cost, the potential cost shifting to other customers. So what we were doing in those 205s is saying, hey, give us clarity. Answer the question sooner rather than later so we know how to proceed. And that was the purpose of them, and that's why we did them. And Collette, please.

Thank you. And, Sharpe, to your question about the 205, so following the intervention in the TALEN ISA docket and now that FERC has set the technical conference, as Calvin said, we certainly applaud that. It's a welcome development, but the outcome and timing of the process is still uncertain. We don't know what will happen as a result of the technical conference, and we still need clarity as we engage with a number of our large load customers. And to be clear, as Calvin mentioned, ComEd and PECO in particular, two of the site selection utilities, we are seeing a lot of activity. And so we need clarity sooner rather than later that will aid us and moving ahead with confidence, and so that all of the parties know the rules of the road. So we filed those 205s for each of our utilities with the goal of having guidance from FERC by early December.

And as you know, thank you, Collette, as you know, in the technical conference, FERC did not have a timeline in which they must act. So this, asking for the summer ruling by December, early December, was really the catalyst to say, look, let's get that clarity so we can all move forward. Got it.

Yeah, you pressed it in a little bit. Okay, got it. And then just help with any work in Illinois regarding the CMC roll-off. The curves have come off a bit, which is good, but I guess is the IPA kind of taking the lead here?

Yeah, so I'll turn it over to Jean as the former CFO of ComEd because she's intimately involved with this. Jean?

I mean, I would just bucket it in the same way I think about all of our jurisdictions, right? The sooner we can get to solutions around securing reliable solutions generation at affordable prices the better and so I think what's been you know while the affordability issues from the capacity auction are a bad thing right a good thing is that the conversations are starting earlier because of that right there's a recognition across all of our states including Illinois that we need to come up with solutions to address that so we have those through 27 as you as you mentioned but those conversations are starting now and to make sure that customers have safe, reliable, and affordable generation in the state of Illinois.

Got it, got it. And then just real quick, real quick one. It's just on the resource adequacy side, Calvin. I mean, all the wires companies are kind of highlighting this consensus that there's resource adequacy issues, but I don't know if there's a lot of alignment on how to solve it. Your peers, I mean, your one peer just a minute ago talked about regulated generation. Your other Pennsylvania peers talking about regulated generation. They've been talking about it for months, but you're not advocating for it. So I guess timing's kind of tight to get something solved. It doesn't appear there's a lot of alignment. I guess, are you aligned with the other wires companies or is there different pathways?

Great question, Char. And I would tell you there is alignment around reliability and resiliency and affordability. So Resource adequacy, in my view, is a subset of that because what we're all focused on, we wouldn't be having this conversation if we weren't concerned about the reliability of the grid overall. Because when you have a breakdown in... enough generation to provide power on the coldest days or the hottest days. That is the reliability of the system. And what we talk about in terms of the wire companies is that we're going to be the ones that our regulators and our legislators come to and say, what's going on? So we have to answer that question. So therefore, when you look at potential solutions, as I stated earlier, is that a possibility? Sure it is. But we're having those conversations, and I'm not saying that that's – I don't believe that's the only solution. the options are and what can we do sooner rather than later to ensure that the system upholds its obligations forming at the peak demands that it's required. And that's how we're approaching. So we are aligned that it's an issue. There's multiple scenarios in which it could play out, but we're part of that discussion as an industry, and we're approaching it with all of our stakeholders. address this issue across the country because at different jurisdictions it's different and I can even look at our six jurisdictions they all have different needs and I can't pretend that one solution will solve all of their needs but we have to be at the table and we are okay that is perfect thanks guys I'll see you in a little bit appreciate it thank you thank you one moment for our next question

Our next question comes from the line of Steve Fleischman from Wolf. Hey, Steve. Good morning.

Yeah, hi. Good morning. Thanks. So just, I guess just kind of following up on a little bit of the co-location debate. So, you know, the governor of Pennsylvania seems pretty proud of both the Three Mile Island and the, you know, the co-location deal with Susquehanna when they filed, highlighted that when they filed the letter to FERC. And so I guess just do you have a sense where the governor of Pennsylvania is on the issue? And I guess bringing up governors, kind of Illinois too, on this issue and where they lay out and what happens once we get an outcome?

Okay, I'll jump in. Thank you. And once a million as well. I will never pretend to speak for either of our governors, Governor Shapiro or Governor Pritzker, but I can tell you the conversations that have been had. I think both of them go into reliability and affordability is the utmost concern they have for their states. That's one. Two, when you look at the three months, he should be proud of that. We're bringing new generation into the I think that is a wonderful example of how we can move forward in looking at data center load, bringing that online, bringing new generation online is a wonderful mix. What he's also, I've heard him say, is that he's very excited about the economic development and the job that will be created from the Susquehanna deal. Is he concerned about the cost shifting and the affordability piece for everyone else? Absolutely. And what he is saying and what I've conveyed to him and I've shared with you is that we are not against co-location. We just believe everyone should pay their fair share of utilizing the grid, period. And therefore, we believe it's not that they shouldn't do it, it's how they do it that matters. And that is where our conversations was leaning in with each of our governors. But I do know what the premise of them, they want economic development. They want reliable power and they want affordable power for everyone. So now it gets into the details, and that's what we've committed to working with everyone to ensure that it happens. Mike, anything you'd like to add?

I think you said it well. I would just, you know, there's nothing in our position that is opposed to where our governor is on that. I think everything that we've done with our position on co-location, our investment in the grid, is supported where he is on safety, reliability, and economic development.

Okay. Thank you. One other question just on the PJM transmission issue. Jean, I think you mentioned maybe a couple hundred million incremental opportunities from the pending, I guess, the filings recently made. Was that?

Yeah, we're talking about the ARTEP window one. Yeah.

And there were, there was a group of utilities that made filings together. I mean, obviously you have a huge footprint, so maybe that is not really needed given your scale, but just Did you consider that as well?

Yeah, sure. We always do, right? We're always looking at what is the best way, right? You go back to the pinnacles that Calvin talked about, reliable, resilient, affordable. If there's a way to partner with other utilities to do that, for our customers, we're always open to that.

Okay. Okay. Thank you.

Thank you, Steve.

Thank you. One moment for... Our next question. Our next question comes from the line of Ross Fowler from Bank of America.

Morning, Ross. Morning, Calvin. Morning, Jean. Just a couple for me, not to beat the dead horse here, but to go back to PJM capacity for a second. Obviously, a lot of stakeholder discussions are happening now. PJM, presumably, they've asked to delay the auction until next June. We'll see what folks says to that. Is there enough discussion going on right now? I mean, a lot of the solutions that are being talked about would require legislative change in various states within PJM. Should we or are we at the point? I mean, from my perspective, time is of the essence, but are we at the point in those discussions where we should see legislative efforts push forward in the 2025 legislative sessions or are we not quite there yet?

I think the governor's letters identify loss, the sense of urgency that needs to take place. And I think this, the call today and what happens I think from now to the end of the year will be a key indicator of what the states may take on for the 2025 legislative session. I don't think, I think it's too early to say the what and the how, but I do believe fire has been lit. And I do believe these discussions over the next 60 days are going to be key as to how the governors continue to lean in on this very important issue.

Thank you for that, Kelvin. And then back to the ISA, obviously now we've got a process at FERC. You know, we'll see what they say as you move this forward through the 205s. But I guess the way I see it, there's two issues, right? One is cost allocation, which I think you've been pretty clear about in your filings. The other is reliability. So as you said, you're not protesting the ability to do it. It's just how and where and why, like with the mechanics of it. So maybe give us a little color on what those mechanics look like. Is cost allocation really just about paying for great upgrades around substations and other things to actually co-locate something somewhere? or is it more an argument that they really are on the grid and they need to pay some sort of ancillary services to the grid? And then the second one, part of the question is for PJM, they don't, in my mind, they don't really do a reliability study, right? They do a capacitance study to make sure that if you co-locate something somewhere, the amperage and voltage of the grid can stay up so it still works, but that's not the same thing as reliability. So is there a push in these discussions from your perspective add something around reliability because, you know, if we keep taking plants off the grid one, two, three, four, five, there is a reliability issue that is out there somewhere as we continue to do this. Maybe contextualize that for us.

Yeah, so let me just say this, Russ. I think you said it well, but I'm going to turn it over to Mike in the sense of our chief operating officer, and then he and Gene will answer this in more depth for you.

Yeah, I think you captured it really well. I mean, it really falls in three buckets. It's reliability, That's resource adequacy and it's rate design. These investments, whether you put them before the meter or you put them behind the meter, are going to have an impact on the grid. They're going to take ancillary services off the grid. They're going to potentially require upgrades for the existing facility. And they're certainly going to have an impact on, as they take power off the grid, they're going to certainly put themselves in a situation where it may require future upgrades for the grid. Our whole position has just been You know, if they can co-locate, if they can get in there quick and get in there doing what they want to do, we support that. We just want to make sure that it has the appropriate transparency on what they're doing. We want to make sure that we have the appropriate studies done to make sure that we're addressing resource and reliability and adequacy currently. And we also want appropriate rate design to be able to cover for those costs either now or in the future.

Yeah. This is what we've laid out. We've laid it out in the proceedings. Our position hasn't changed. We've never been against co-location. We are excited about the opportunity for all of this growth in our sector. Reliability should be studied the same way any other large loads are or loss of generation. All of that gets studied for reliability of the grid. Rate design, we've already laid out the costs associated. It's not zero, right? It's not zero. So that's clear. And so getting clarity for working with our states. We have riders today we could use for high-density load that could be used tomorrow. And then the third is resource adequacy, which, again, it doesn't matter where it's located, right? We all know we need more generation and we need more transmission to accommodate all this new load. but we're ready to move forward. We have processes today that address all of those three buckets. Let's use those processes, let's move forward, and let's continue to grow this economy and grow jobs, and let's move forward. That's what we're looking to do.

And Ross, it's important to note that we have conversations on a daily, if not weekly basis, with all the largest data center developers. And to a T, They have said it's very important to work with our utilities across the country to put mechanisms in place to ensure reliability and resiliency of the grid. No one has said anything but that. And I just wanted to let you know and others know that we're remove barriers to ensure the economic development in our jurisdictions occur. And the fact that we've been recognized for that and we have six gigawatts, now potentially 11 gigawatts in Illinois and across our jurisdiction, is an indicator that we're on the forefront of making this a reality. So I appreciate the question.

I appreciate that, Calvin. And then just maybe one on the sort of jurisdictional stuff here. Clearly FERC has a just and reasonable rates mandate, which gets into the cost allocation discussion. But we've gotten a lot of questions around, you know, reliability is ultimately PJM's responsibility. So how does that interplay of reliability work between FERC and PJM as we walk through the ISA filings? Collette, please.

Thank you. Yes. And, Ross, thanks for the question. And forgive me if I'm going to sound like a lawyer and a technical person here.

Go ahead.

Under the Federal Power Act, FERC has the mandate to oversee the reliability of the grid. And we think about PJM, they're like the air traffic controller for this region. Yes, they oversee that reliability function. But reliability, we are front lines on reliability, and that's why you've seen us really owning our duty here and stepping in to lead on these critical issues of policy. We are in an unprecedented time in this sector. So FERC has a duty in particular as it relates to wholesale matters, transmission matters, and FERC has the sole jurisdiction over generation interconnection service agreements. So what's interesting about our framework in the U.S. is there are some aspects of this work and reliability that resides with the federal government and some that resides with the state. So we need this policy setting from FERC. And then as you heard Jean mention, where this is going to play out is at the retail level. Generation is actually regulated at the state level. And when Gene referenced these riders that we have, we already are using those with large load customers. We already have riders that are utilized for large industrial and commercial customers to take into account their uniqueness and how they utilize the services of the grid. But to Gene's point, they're not paying zero because they are connected to the grid and rely on the grid. So I hope that wasn't too much in the weeds for you.

No, no, that's fine. So basically we're dealing with three layers here. FERC has to set sort of an overall policy position. PJM has to sort out what that means in context, and then we're going down to redesign at the state level to finally sort it out, if that makes sense. Exactly. Correctly. Okay.

All right. Thank you.

Thank you. Appreciate you, Russ.

Thank you. At this time, I would now like to turn the conference back to Calvin Butler for closing remarks.

Thank you, Gigi. And just let me begin by just thanking everyone for all of your questions and your interest in Exelon and also your support. I can't recall a more exciting time in this sector, and I'm just pleased to say that the Exelon team is leading the way, investing capital in a way that meets all of our stakeholders' shared interests, including yours as investors. We look forward to seeing all of you, if not just many of you, at EE. in-depth discussions on where we're going and why we're taking the positions we are and how we're leading this energy transformation. Gigi, with that, that concludes the call.

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.