Exelon Corporation

Hello and welcome to Exelon's second quarter earnings call. My name is Josh 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 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 Ryan Brown, Vice President of Investor Relations. The floor is yours.

Great. Thank you, Josh. Good morning, everyone. Appreciate you joining us for our 2026 second quarter earnings call. Leading the call today are Calvin Butler, Exelon's president and chief executive officer, and Jeanne Jones, Exelon's chief financial officer. Other members of Exelon's senior management team are also with us today and 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, Ryan, and good morning, everyone. We appreciate you joining us for our second quarter earnings call. Halfway through 2026, Exelon is delivering where it matters most, performing today and preparing for tomorrow. Our utilities are providing safe, reliable service, driving affordability, and investing in the infrastructure that keeps our customers, communities, and economies thriving. This morning, we reported adjusted operating earnings of 43 cents per share, consistent with expectations, and are reaffirming our full-year guidance of $2.81 to $2.91 per share. Operationally We continue to lead the industry with all utilities projecting top quartile reliability and ComEd and PHI projected in the top decile. Those of you who are from Chicagoland know that this has been quite a year for storms. So far this year, ComEd has experienced 16 major weather events, more than it's seen in over two decades, while Illinois has recorded more tornadoes than any other state. Most recently, Monday's severe storms impacted approximately 530,000 customers. Thanks to the extraordinary efforts of our crews and support teams, power was restored to 90% of affected customers within 48 hours. These results reflect disciplined investment in grid resilience and a sustained focus on delivering safe, reliable service for our customers when they need it most. Reliability is about more than metrics. When the grid performs, businesses keep their doors open, hospitals care for patients, and families can count on the power being there when they need it most. In 2025 alone, our top quartile reliability saved customers an estimated $1 billion in avoided outage costs, and annual customer interruptions have declined by nearly 2 million since 2021. and for every $1 million Exelon invests, an average of eight jobs are created or 1.7 million of economic output is generated. We're proud of the indispensable role we play in supporting the communities and businesses that depend on us every day. Now turning to regulatory activity, we remain on track in the PEPCO Maryland and DPL Delaware electric rate cases as well as ComEd's grid plan. Earlier this month, we also filed a rate case at BGE with the decision expected in January 2027. Jeanne will cover the details, but the filing reflects our approach to balancing affordability with the investments required to maintain a safe and reliable grid. To help manage customer impacts, BGE delayed its filing, deferred select projects, and prioritized the maintenance and reliability work The work our men and women perform every day is critical to our communities, and we cannot delay any further. If critical work is deferred for too long, customers ultimately pay the price through more outages, more costly repairs, and higher long-term costs. As demand grows and weather-related stress increases, the need to maintain and strengthen the grid remains. Long-term affordability depends on a strong, resilient system. Across Exelon, affordability and reliability are being addressed together. We manage expenses carefully, deploy capital where it creates the greatest customer value, and support customers through assistance programs and energy savings initiatives. We're also taking steps to ensure growth benefits existing customers rather than burdening them. As new large load customers connect to our system, we are structuring agreements that require real financial commitments tied to the infrastructure needed to serve them. FERC's recent large load dockets reinforce that approach, recognizing the need to protect existing customers while ensuring that large load customers have real commitments behind their projects. This is exactly the principle behind our transmission security agreements. Thank you for joining us. Demand hit a record peak of 168 gigawatts. PJM activated emergency procedures and called on demand response resources to maintain reliability, while power prices surged tenfold from roughly $80 to $800 per megawatt hour. Now the grid held and our teams did their job, but the system should not have to operate this close to the edge. and this is not a one-off event. This pressure is further evidenced by PJM's most recent capacity auction. For the third consecutive auction, prices cleared at the FERC-approved price cap. Even so, the market fell short on PJM's reliability requirement by approximately 6.8 GW, larger than the prior 6.5 GW shortfall, which is the equivalent of roughly seven nuclear reactors of missing supply. Even more telling, only about 525 megawatts of new generation on up rates cleared, indicating that even at the highest allowed price, the market is not attracting the level of new supply the system needs. Absent the FERC approved price cap of $330 per megawatt day, PJM's own simulation shows prices would have cleared at approximately $555 per megawatt day across the footprint and $777 in ComEd, indicating the underlying scarcity is even more severe than the headline price suggests. The July heat event, auction results, and market price signals all point to the same conclusion. Demand is growing faster than supply, and the system is under increasing strain. Our customers should not pay the price of a system that has been allowed to run too thin and they should not have to wait years for solutions that are needed today. That is why Exelon is advocating for an all of the above approach, transmission, demand side solutions, market resources and utility owned generation where it makes sense. We are continuing the dialogue with our states and participating in FERC and PJM processes to advocate for policies that protect customers and help deliver energy reliably and cost-effectively. This is where the Exelon platform matters. Our scale, experience and relationships across multiple states allow us to move from identifying the problems to advancing real solutions. First, transmission. Exelon continues to lead on transmission expansion. because reliability starts with the ability to move power where it is needed most. Transmission helps relieve localized constraints, connect new resources, and strengthen the grid as demand grows. That momentum continues with the recent submission of two additional MISO Tranche 2.1 competitive transmission bids in partnership with Invenergy. We will continue to leverage our scale, expertise, and strong development partnerships to pursue transmission opportunities across and beyond our footprint. Second, utility generated power and storage. We are proposing solutions that give states more control, more certainty, and more direct customer benefits. Utility generated power and storage can add supply, improve reliability, and put downward pressure on long-term costs with the accountability and lower cost capital Utilities are uniquely positioned to provide. This is not about ideology. It is about outcomes, reliable service, lower long-term costs, and greater energy security for customers. For example, during the extreme heat and record demand over the July 4th weekend, an ACE battery storage unit serving a New Jersey Beach community was dispatched to support the grid. That one asset helped maintain reliability during a period of system stress, demonstrating the practical customer and grid benefits these investments can deliver. We've also seen these benefits play out elsewhere. Earlier this month, ERCOT served a record peak demand of more than 91 gigawatts without emergency actions or containment requests. while power prices remained relatively stable at roughly $40 per megawatt hour during the peak hour. Renewables and battery storage played a significant role in meeting that demand while supporting both reliability and affordability. Building on that momentum, we recently announced a significant new 500 megawatt battery storage project in New Jersey. and we continue to see storage as an important tool for customers because it is fast, flexible and targeted. Our battery project has been operating during the July, had our battery project been operating during the July 2nd through July 5th heat wave, ACE customers would have realized approximately $7.5 million of energy cost savings that could have been returned to customers to help offset higher market prices. Storage solutions can provide peak capacity, improve reliability in constrained areas, support affordability, and help states meet their energy goals. The benefits are real, measurable, and already being demonstrated today. Lastly, energy efficiency and virtual power plants. Several of our utilities recently received approval for VPP programs that turn customer-sided resources into grid capacity. That helps reduce peak demand, lowers pressure on the system, and gives customers a direct role in the solution. Taken together, these are all practical solutions. They also are areas where Exelon can deploy capital with discipline and there's a clear customer need and strong execution visibility. We are not waiting for the market to solve this on its own. We are bringing forward actionable solutions that strengthen reliability, improve affordability, and give our states more tools to shape their energy future. Now with that, I'll turn it over to Jeanne to walk through our financial performance and provide additional details on our rate case activity and outlook. Jeanne?

Thank you, Calvin, and good morning, everyone. Today I will cover our second quarter financial results and key regulatory activity, discuss solutions we are advancing to support affordability and resource adequacy, and conclude with an update on our balance sheet and financing progress. Starting on slide five, we present our quarter over quarter adjusted operating earnings walk. Exxon earned 43 cents per share in the second quarter of 2026 compared to 39 cents per share in the same period in 2025. Results were higher by four cents per share year over year, primarily driven by four cents of distribution and transmission rates, net of depreciation and AFUDC, four cents related to last year's customer relief fund and a penny of favorable weather at PICO. This was offset by two cents of higher credit loss expense at BGE and two cents of interest at corporate and PICO. Our second quarter performance is in line with expectations we discussed on the first quarter call and continues to demonstrate the value of discipline execution across the platform. We are delivering on customer focused investments that support top quartile reliability while managing costs and timing items within the full year plan. Looking ahead to the third quarter, we expect earnings to be approximately 27% of the midpoint of our projected full-year earnings guidance range. This expectation contemplates the impact of weather, storms, and the PICO employee strike in the beginning of July, as well as normal weather and storm activity through the remainder of the quarter. As with historical practice, our quarterly shaping guidance also assumes anticipated revenue shaping and timing of costs across the utilities. Combined with results for the first half of the year, we anticipate the fourth quarter to benefit from the absence of one-time 2025 distribution and transmission rates, the unwinding of timing, and disciplined execution of bad debt and storm recovery efforts. We remain on track to deliver full-year operating earnings of $2.81 to $2.91 per share with the goal to be at the midpoint or better. Finally, we reaffirm our expectation to deliver annualized earnings growth near the top end of 5% to 7% from 2025 through 2029, supported by 7.9% annualized rate-based growth, disciplined cost management, and a balanced financing plan that maintains strong investment grade credit metrics. Turning to slide six, I will review the open base rate cases and other regulatory activity across the platform. These proceedings reflect our continued focus on recovering prudent investments that support safe, reliable service while advancing proposals that are responsive to customer affordability and the policy priorities of our jurisdictions. Starting with PEPCO Maryland, where a final order is expected next month for its traditional electric-based rate case, this filing seeks recovery of critical investments that support reliability, accommodate growing customer needs, and strengthen the resiliency of the electric system. while also reflecting the impact of higher financing costs. Projects such as the White Flint substation are tangible examples of work being done to increase capacity, reduce outage risk, and support long-term growth and economic development in the communities we serve. Also in Maryland, BGE filed an electric distribution rate case on July 2nd seeking a $156.1 million revenue requirement increase to recover investments and costs necessary. to maintain a safe and reliable grid under a historic test year. The filing also reflects revised financing and storm restoration costs and includes proposals to establish a storm recovery mechanism and provide customers with additional payment flexibility. A final order is anticipated in January of 2027. In Delaware, Delmarva Power's electric base rate case continues to progress. DPL is seeking a 45.4 million revenue requirement increase to support investments necessary to maintain safe and reliable service, including system upgrades and reliability investments across its service territory. The filing also includes proposals designed to support affordability, including a new income-based rate and a bad debt rider. As permitted by Delaware law, DPL implemented interim rates effective July 9th, subject to refund.

Final order is expected in the third quarter of 2027.

Finally, at ComEd, the grid plan proceeding continues to move forward, with staff and intervener rebuttal testimony filed earlier this month ahead of hearings in August. As a reminder, the plan proposes approximately $15.3 billion of investment from 2028 through 2031 to support reliability, accommodate significant load growth, and advance the objectives of Illinois' energy policy framework. An order is expected by December 15th. Across these proceedings, our approach remains consistent. We are investing to support reliability, resiliency, and customer needs while remaining focused on affordability and cost discipline. While our base regulatory filings remain focused on maintaining safe, reliable, and affordable service, we continue to advance additional solutions to help address growing affordability and reliability challenges, particularly in light of supply constraints highlighted by the recent PJM auction. Turning to slide seven, practical and deployable resources such as storage and virtual power plants can provide capacity, reduce congestion, and help manage price volatility while supporting each state's energy goals. Today, roughly 10 gigawatts of solar and wind across PJM goes unused on any given day. Storage can capture excess generation and shift it to peak demand periods, turning surplus clean energy into reliable, high-value supply. Unlike many traditional solutions that can take five to ten years or longer to develop, battery storage is a faster, scalable, and modular option that can often be deployed within approximately three years, even for large-scale batteries. In New Jersey, Atlantic City Electric, partnered with Invenergy, has advanced a 500-megawatt battery energy storage system using four-hour batteries to target roughly five peak demand days a year in Pittsgrove. The project will be large enough to power approximately 400,000 homes and represents the single largest battery storage installation in PJM. The Pitts Grove Storage Project was submitted in PJM Cycle 1 and represents approximately $1 billion in investments not currently reflected in our plan. Combined with anticipated PJM market revenues, all of which will be returned entirely to customers, federal tax credits, the mitigation of energy and capacity prices, and deferred transmission investment customers will see over $700 million in net benefits after the project is placed into service, importantly, without seeing any customer bill impact until at least 2035. Atlantic City Electric filed a request last week for regulatory approval on the mechanism to recover project costs with a final order anticipated in the first half of 2027. In addition, we are pursuing similar opportunities in Maryland where BGE and PEPCO have submitted battery storage projects as part of the state's distribution-connected storage solicitation, which are currently under commission review. Beyond storage, we are also advancing virtual power plant initiatives across our jurisdictions, which aggregate customer-cited resources to reduce peak demand, support grid reliability, and lower overall system costs. At ComEd, the approval to launch its first scheduled dispatch VPP program is expected to increase the amount of battery storage available across Northern Illinois while providing compensation to participating customers. When paired with existing distributed generation rebates and incentives, the program creates a compelling customer value proposition while helping support the grid. Maryland also recently approved programs to allow a range of customer-sided assets to act as grid assets, and we continue to see momentum in New Jersey and Delaware as policymakers continue advancing distributed energy resource and VPP framework. Together with continued transmission and distribution investments, these solutions provide practical tools to address affordability, reliability, and resource adequacy needs across our jurisdictions. Turning to slide eight, we continue to execute our financing plan in a balanced and disciplined manner. Maintaining a strong balance sheet is core to our strategy and essential to funding the investments needed to deliver safe, reliable, and affordable service for our customers. To date, we have completed approximately 86% of our 2026 debt financing needs, including all expected debt issuances at The Holding Company, Pepco Holdings, ComEd, and BGE, materially reducing our remaining exposure to interest rate volatility for the year. In addition, our pre-assurance hedging strategy continues to provide protection against future rate movements. We have already priced approximately 37% of our planned equity needs through 2029, via forward contracts under our ATM program, having priced all of our needs for 26 and half of our needs for 27. Our credit metric outlook also remains strong with expected average credit metrics of approximately 14% through 2029, supporting the strategic and financial flexibility needed to advance our capital plan and capture additional customer-driven growth opportunities. We remain confident in our ability to deliver value for our customers and shareholders through disciplined execution, a strong balance sheet, and investments that support reliable, resilient, and affordable energy service. I'll now turn the call back to Calvin for closing remarks.

Thank you, Jeanne. I'll close on slide nine. The story is consistent and straightforward, and as I said, we're performing today and actively preparing for tomorrow. Exelon is built for this moment. We have the scale, diversified footprint, operational excellence, and financial discipline to perform in a changing environment. In 2026, we remain focused on deploying approximately $10 billion of capital for the benefit of customers, delivering operating earnings of $2.81 to $2.91 per share, earning a consolidated operating ROE of between 9% to 10%, and maintaining a strong and resilient balance sheet. Just as important, are pursuing growth where it creates real customer value, strengthens the grid, and supports the communities and economies we serve. The environment is changing quickly, but our priorities are steady. We have the people, platform, and experience to navigate complexity, deliver on our commitments, and advance practical solutions for customers. That is why we remain confident in the path ahead. Josh, we can now open it up for any questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions. Our first question comes from Char Perez with Wells Fargo. You may proceed.

Morning, Char.

Morning, Calvin. Morning, Jeanne.

Hey, morning. Morning. Calvin, PJM walked back from the EDC proposal that had the members committee supermajority in its recent letter. Do you feel like where they landed meaningfully addresses the key issues in PJM? Do you have any plans to intervene further with FERC? I mean, it doesn't seem like you're waiting for an outcome here to step in. You proposed the ACP SS development, assuming that wasn't a one-off. So just kind of curious on the recent development. Thanks.

No, thank you, Shari. And you captured it. We are focused on just really providing solutions, but let me first begin by applauding PJM's efforts to address resource adequacy challenges with a sense of urgency and really looking at opportunities to bring new generation onto the system because these are important steps in the right direction, and we do believe that their measures may help address near-term reliability concerns, but they're unlikely to resolve any long-term affordability challenges. Ultimately, what we've always said, and we're very consistent, to really resolve long-term challenges on affordability, you need more generation to be brought online. And we will continue to advocate for several important consumer protections in this effort, and we will continue to engage with PJM. But over the long term, we believe that states should play a central role in resource planning and procurement. and utility-owned generation needs to be part of that mechanism as a cost-effective complement to market-based solutions. And as we've talked about, you know, this is our Exelon promise in action and we will continue to drive this, but it is going to require a partnership and more active engagement with the states. Jeanne, anything you'd like to add?

Yeah, no, I think that covers it. And I think that to your point about real solutions and you noted at Shards that the 500 megawatt battery solution, we've been working on this, we're pleased to see that We got through the filing and we'll work with the commission there. And to your question, no, it's not the only one and we're working on others.

Okay, that's perfect. And then your data center growth slide shows a combined 36 gigs. That's down around 11 gigs from the 43 gigs that you previously cited. Is that simply like a reclassification, refinement of the queue? Any read through there with PGM's current dysfunction, maybe causing some attrition or slow conversion in the pipeline? Thanks.

Yeah, I'll take that one, Char. So I would say you're right, we did update, and I think this will continue to evolve. But I would also say we've always taken, as you know, a measured approach to this data center phenomenon, whether it was our position in the colocation and ensuring fair cost allocation or the development of transmission security agreements. which as you know, never existed in our regions, right? And so we developed those agreements and made them part of our process. In addition to that, we also throughout this have kept our CapEx increases consistent with historical increases and really only putting in capital that was certain and durable. And I think that this update underscores that that was the right approach. The TSAs are doing what they should. As we go through our cluster process, we said, you know, we're gonna study the clusters, We're going to offer the customer a TSA, sign the TSA, and then importantly, put up collateral behind that. And so what this update reflects is we have now weeded out speculative projects, and it gives us proactive insight into what is real. And this is what you want management to do. You want us to provide real and durable growth. And importantly, our $41 billion of capital between now and 2029 remains unchanged due to this update because we have not put in speculative projects. and as I think about that growth, I would just say a couple other things. What's sitting in that 11 gigawatts? We have four gigawatts that have signed TSAs and importantly, they are backed by a billion dollars of collateral. The other seven gigawatts in that high probability is projects that predated this TSA process but are further along and we feel very comfortable that they will continue. And so the 11 gigawatts is significant and we're gonna continue to study the remaining 25 that's on that slide but there is real growth and it goes back to not just being focused on what is real on the T&D growth side but how do we provide those solutions on the supply side to support that growth and that's our first project out the gate is the 500 megawatt battery.

Got it. Perfect. Super comprehensive. Thank you guys. Appreciate it. Thank you, Char.

Thank you. Our next question comes from Jeremy Tunnett with JP Morgan Securities. You may proceed.

Good morning, Jeremy.

Hey guys, good morning. This is actually Aiden Kelly on for Jeremy today. I appreciate the time. I guess maybe just going back to the regulatory front, you know, now a few months since the withdrawal of your PICO rate case, how do you think about the filing case moving forward? It just seems like we continue to see a lot of constructive data points out of the PAPUC. At this point, are there any inflection points you kind of hope to see before filing again? You know, what would encourage you to file this time?

Yeah, thank you, Aidan. I appreciate that. And I think, once again, you captured it well. Let me just begin by saying that we share Governor Shapiro's focus on affordability. And we have analyzed his letter and what his framework is. And I'll ask Mike Innocenzo to jump in there. But let me just begin is that we've been having constructive conversations. with not only the governor, but his staff since day one. And like you said, we're seeing indicators that Pennsylvania is still a solid regulatory framework for us to operate. And they view PICO as a economic partner and job creator in the state. And we recognize also, and they've said it, that Pennsylvania needs financially strong, viable utilities with sustainable investments to encourage that economic growth. But understanding that We will continue to partner, and we believe that investment in our system is required to maintain the reliability and growth that they expect, and we will do that over our long-term planning horizons. So I'm going to give it to Mike to see if he has any detail he wants to share about the governor's conversation.

Yeah, thanks, Calvin. Thanks, Jeremy. I would say, you know, your point about data points, certainly there's the data points, you know, the constructive settlements that have already occurred. Constructive discussions on the active rate cases currently underway. And then it's our discussions, discussions with key stakeholders in Harrisburg, discussions with the governor's office. If you looked at the key points that he's looking for and everybody's looking for, it's making sure that our investments are providing customer value and customer benefits, making sure that there's transparency on the ROE and making sure that we're looking at every lever that we can to address affordability. We think we've addressed that in multiple ways under the existing process as well as others in the state are and we're continuing to work with the governor's office to make sure and the PUC and the statutory interveners like the Consumer Advocates Office, the Small Business Advocates Office, having discussions to make sure that when we file again we're addressing each of their concerns and we feel confident that we'll be back in a way that will be very productive.

Great, appreciate the insight there. And I just want to shift to the transmission front real quick, if I could. You know, to what extent can you tap into your identified 12 to 17 billion upside opportunity? You know, as we kind of think about the next plan, you know, what win rate should we be thinking about as it pertains to upcoming, you know, competitive transmission windows for you guys?

Yeah, so, hey, it's Jeanne. Of the 12 to 17 billion, I'm just going to, I'll hit on a couple things. I'm going to turn it to Kareem. who's head of our transmission and development group. So of the 12 to 17 billion, it is not dependent on one sort of theme. Competitive transmission is one of, I would say probably five, right? So what we wanna do is give an insight into we're spending roughly that amount in our four year period today. And so we see that continuing beyond 2029 driven by existing infrastructure over our 11,000 circuit miles, new business related to the data center pipeline, state policies around additional generation coming online, old generation retiring, the transmission needed to accommodate that, and importantly, competitive transmission. And so maybe I'll let Kareem speak to kind of how we think about that.

Yeah, thanks, Jeanne. And, you know, I agree with everything Jeanne just said. And I would add on competitive transmission, you've seen us be very active over the last 12 to 18 months in PJM and also in other RTOs such as MISO. We're going to continue to do that. And you saw recently that we filed for two projects in MISO, Tranche 2.1 in Iowa, the MARS and the EASL projects. We expect to hear back from MISO in the fourth quarter. And what we would say is we think that we are very well positioned to take advantage of some of these opportunities based on our operational excellence and importantly, our experience with 765 KV lines, so high voltage lines. We're one of very few transmission operators that own and operate those types of lines today. And that's what increasingly more and more RTOs are seeking in their solutions. So I would say I think we are very well positioned to continue to be successful like we were in western Pennsylvania this past PJM window. And you'll see us continue to be active.

Great. Makes sense. Appreciate the time, Dale. I'll leave it there.

Thanks, Nate.

Thank you. Our next question comes from Paul Zimbardo with Jeffries. You may proceed.

Hey, Paul.

Hi, good morning, team.

Good morning.

Thanks for the time. Just to follow up on the last one a little bit, focusing on ComEd, that simulated $777 per megawatt day clear in the last auction, is that a catalyst for unlocking even more incremental transmission and storage investments? I think a lot more compensable at that potential price point, if you could share thoughts. Definitely.

Paul, I think that is probably indicative of what we've been saying, which is we need an all-of-the-above approach. It's probably not just transmission. It's not just battery solutions. It's really all of the above. So transmission, as Calvin mentioned in his pair of remarks, provides the optionality of moving the electrons from where they're being generated to where they're needed. Battery storage is very effective in helping to shave off the peaks and avoid transmission issues. peak pricing and help to insulate customers from that. So from our perspective, you can expect to see us be active in both those fronts as well as others. Really what we're looking for is wherever there's opportunities for us to serve our customers, to help affordability and help reliability, that's where you'll see us be active. And storage and transmission are two examples where we see a lot of benefits there.

Yeah, and that was contemplated already as part of that 12 to 17 when I mentioned kind of are all state-focused solutions. So definitely an opportunity there. We've seen over the last several planning cycles 80 to 100% of our four-year capital increase be in transmission specifically for these issues. The other thing I would say is the state is well aware of this as well. If you look at what was passed in legislation last year, the state not only expanded energy efficiency but also our distributed generation rebate program two programs that are meaningfully helpful for customers but also are treated as regulatory assets that we earn on good for customers and good investments for us they also are going to run a three gigawatt storage procurement this year with I think a thousand of that three gigawatts and a thousand of that will be this year and then importantly they're taking a comprehensive view right they're going to do their first integrated resource planning preview in November of this year. So pleased to see the state focused on this and that there's ways for us to lean in, as Karim said, not just in one area, but transmission, energy efficiency, DG rebate, and supporting through VPPs as well.

Okay, that letter personally makes sense. And then a higher level question, if I could, but I think an important one. Just holistically, it looks like there have been some Thank you, Paul. I would say that comfort is not the word, but focused on execution is the word because it's

We don't actually see it that way because we view that the strength of Exelon's model is that we're not dependent on any single jurisdiction, regulatory outcome or growth opportunity. As you just alluded to, when you think about what we've been able to accomplish with adverse rulings or inaction by some of our commissions, we've met and exceeded expectations that we've shared with you. and that is that diversity of our platform coming to life. I always talk about, and you've heard me say it, Paul, the power of our platform and not having one jurisdiction outweighing what we're able to accomplish and being able to move capital around and put it in place for the benefit of our customers and our communities. So yes, there's single paper cuts, as you referred to, but not one of them are driving the ultimate outcome of Exelon. So when we pulled the Pennsylvania rate case, the PICO rate case, we reaffirmed our guidance. We didn't lower our capital. In 2023, when ComEd disallowed the grid plan, the team got to work, met, and exceeded our numbers because that's what we do, and that's what you should expect us to do. So I appreciate the observation, but we don't see it that way at all.

Okay, no, excellent. Thank you for the answer.

Thank you.

Thank you. And our final question comes from Andrew Weissel with Scotiabank. You may proceed.

Good morning, Andrew. Hi, good morning, everyone.

I want to first ask you to just elaborate a little bit on the Pennsylvania commentary. I don't expect you to get too ahead of the next rate case filing, but how are you thinking about CapEx levels and categories? Are your conversations pointing toward minimizing spending, purely focused on reliability and safety? or I heard you talk about supporting economic development. What does that look like? And that's specifically related to data centers and AI or how are you thinking about that versus affordability other than, you know, how can you help other than the deferred spending that you talked about on the first quarterly call? Any more detailed commentary would be very helpful. Thank you.

No, great question. I'm going to ask Mike, who's serving as the CEO of PICO, to really give further clarification and don't hesitate to If you have any follow-up, don't hesitate to ask, okay, if we don't scratch it.

Thanks, Calvin. Thanks, Andrew. I think you even alluded to it in your question there. It's making sure that we're really clear on areas that have that customer value, and we've heard loud and clear from the folks in the state. Economic development continues to be important to the state, so we'll make sure that our investments are supporting that both on the transmission and on the distribution level. safety, reliability, and resiliency. It is an area that's seen increased storms and emergencies. We know the value that a reliable grid and a safe grid provides. As Calvin mentioned in his opening comments, PECO is a core top performer nationally and is the top performer in the state, so we'll continue to focus on those. Those investments that are aligned with our long-term infrastructure improvement plans, both on the gas and electric side, also taking advantage of the disk and also looking for areas that we can drive affordability through other mechanisms, including just recently PECO was awarded a RISE grant of $50 million for an investment that we'll be making at our gas plant in West Conchahokan. So it's really just making sure that everything that we do is clearly aligned with those key categories, is well communicated and justified, not only through the rate case process, but prior to the rate case process as we go in.

And Andrew, let me just share. I think Mike captured, and I just want to emphasize the point he made, communicating with all stakeholders on what and how we're doing it and the value that we're creating. Our number one priority is always maintaining a reliable and safe system. We're never going to do anything to put that at jeopardy, but we will actively be communicating with all the stakeholders throughout this process.

Okay, great. That's helpful. And you mentioned the disk mechanism. Does that seem like something you'll be leaning on a bit more? That seems to be a theme that we're hearing more of.

Yeah, we have. We've used it over the years already, so we'll continue to do that. But as part of our going forward conversations with the chair of the PUC, we'll be looking for other ways that we can leverage that even further, and that'll be part of our plan going forward as well.

Okay, very good. Then one more if I can. In Illinois, I know that there's the IRP process the state is pursuing. Can you talk a bit about that? Given that the state's in PJM, what exactly is the goal here? Clearly there are issues. You talked about the shortfalls and the high pricing from the auction if there weren't the cap. As far as I can tell, I don't think it's too likely the state will leave PJM soon. I know there's some talk about it. I've heard the name Urquhiel floated around, which is a great name, but I don't know how likely that is. So maybe you could just talk about what the goal of this IRP is and what role you might be playing in that.

Yeah, I think the goal ultimately is what we need each of our states to do is to get a better picture of what do they need from a state perspective in terms of demand versus supply. And it gives them the ability, the ICC and the other agencies working with them, the authority to expand programs based on that analysis. Do we need to expand energy efficiency? Do we need to procure more storage? Do we need to do more in the distributed generation? How do we look at our state emission limits? Things like that. So that is the goal is to say how do we get more control over our own supply and demand situation within the state, which is something we applaud any state doing. We're seeing Maryland study different procurement models. We're seeing Pennsylvania hire an independent consultant to study resource adequacy across all of our states. Governor Sherrill looking at supply solutions. So I think the goal is all of our states who are working very hard with PJM for long-term solutions say, hey, I got to keep all options on the table. And the first thing I need to do is kind of have a good view on what my specific state needs. And we think that's absolutely the right thing to do.

Okay, very helpful. Thank you, guys. Thank you.

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

As always, I just want to say thank you for taking the time to join us for our Q2 earnings call. We appreciate your continued interest and support, and we look forward to sharing further progress in the months ahead. And with that, Josh, this concludes our call.

thanks to all our participants for joining us today this concludes our presentation you may now disconnect have a good day