Exelon’s ability to capture – and share with our stakeholders – the advantages of sustainable business practices is tied inextricably to our economic health. We pursue those practices that improve our financial position while balancing environmental and social needs.
Positioned for Sustained Value
- As of June 30, 2010, our market capitalization was $25.1 billion. Our total return since 2000 remains outstanding—shareholders’ investments increased by about 90% compared to about 60% for the Philadelphia Utility Index, and a negative 5% for the S & P 500.
- “Exelon is as focused as ever on our unique advantages and how we can continue to maintain our role as the premier company in our industry. We will continue to have 2 healthy, self-sustaining delivery companies who are performing very well and we will continue to run the best, lowest-cost and most valuable generating assets in the industry at world-class levels.”
- John W Rowe, Chairman & CEO,
The performance graph illustrates a 5-year comparison of cumulative total returns based on an initial investment of $100 in Exelon Corporation common stock, as compared with the S&P 500 Stock Index and the S&P Utility Index for the period 2004 through 2009.
Expertise in Managing Market Risks
- Our power marketing team has been successful in making the most of Exelon Generation’s outstanding performance, reaping the benefits of a hardheaded approach to risk management. Power Team’s efforts in leveraging markets have been particularly instrumental in securing earnings and cash flow during recent volatile economic times.
- The primary objective of Exelon’s hedging program is to manage market risks and protect the value of our generation and our investment-grade balance sheet while preserving our ability to participate in improving long-term market fundamentals. By design, our hedging program allows us to weather short-term adverse market conditions while positioning us to participate in long-term upside potential.
- Exelon has the best platform for confronting an uncertain future. We have a generation business well positioned to earn a profit even in a difficult and changing market and economic environment, stable and improving delivery businesses and the balance sheet and financial discipline to see us through difficult times. We are committed to preserving and enhancing those advantages to ensure that we protect and grow the value for our customers, employees, investors and the communities we serve.
Competitive Market Advocacy
Exelon continues to be a vocal advocate for advancing competitive markets which bring benefits for consumers as well as support our strategic direction to grow our long-term value.
- In the electricity industry, the introduction of wholesale competition has dramatically improved the performance of the existing generation fleet. A Navigant Consulting study reported efficiency of baseload coal plants in competitive markets has improved by more than 9%. Nuclear capacity factors in those same markets have increased by 12%.
- Competition will bring the financial discipline of the markets to our investment plans and it will help promote the innovation needed to develop newer, more efficient and low-carbon technologies.
Cost Reduction Efforts
- Exelon is responding to today’s challenging environment by driving productivity and cost reductions while maintaining superior operations.
- In 2009, Exelon unveiled a reorganization of its senior executive team and structure to reflect a leaner corporate management model. This initiative and ongoing cuts reflect the need for continued cost management in 2010 through increased efficiency and productivity.
“We are keeping our commitment to you to reduce our operating and maintenance spending and be disciplined about deploying our capital.”
John W. Rowe, Chairman & CEO
Strong Balance Sheet / Credit Ratings
- Exelon has one of the largest, most diverse bank groups in the industry, providing the company with more than $7 billion in liquidity at the close of 2009.
- Exelon protects value by ensuring investment grade credit ratings to help provide commercial business opportunities, manageable liquidity requirements, efficient capital markets access and business and financial flexibility. A non-investment grade rating would significantly limit our owners, lenders and trading counterparties, as well as our strategic options.
- As of last quarter, we are maintaining our dividend of $2.10/share. Dividends are subject to declaration by the Board of Directors.
- We refinanced $1.5 billion of debt at favorable rates in September 2009 that extended the average bond maturity by 6.6 years and lowered our cost of capital by yielding approximately $12 million in expected annual interest savings.
Growing Long-Term Value
Our long-term growth proposition remains the best in the industry. Our nuclear uprate plan provides an attractive growth opportunity, allowing us the potential to add generating output equivalent to one new nuclear unit at about half the cost.
- With the lowest carbon intensity in the sector, Exelon will see an annual upside to revenues from either implementation of climate change legislation or EPA regulation.
- Exelon delivery companies ComEd and PECO will make about $725 million in investments to build smart grid infrastructures in Illinois and Pennsylvania over the coming years. These investments offer the opportunity for both a regulated return on our investment and stable earnings growth.
- As we continue to build healthy, self-sustaining delivery companies, we will rigorously pursue fair regulatory treatment and restored financial health for ComEd and manage PECO’s 2011 transition to competitive markets.
- For instance, legislation was passed in Illinois to enable recovery of uncollectable expenses through a rider beginning January 2010 and retroactive to 2008.