|Net Income ($ millions)||$995||$173|
|Diluted Earnings per Share||$1.07||$0.19|
|Adjusted (non-GAAP) Operating Results:|
|Net Income ($ millions)||$605||$632|
|Diluted Earnings per Share||$0.65||$0.68|
"Exelon delivered solid performance for shareholders and customers in the first quarter, achieving record reliability and operational excellence. We marked the one-year anniversary of our merger with Pepco Holdings, successfully executing on merger commitments and integration targets, while delivering tangible benefits to our new customers," said Christopher M. Crane, Exelon President and CEO. “We completed the acquisition of the FitzPatrick power plant, and recently began earning zero-emissions credit revenues in New York, helping to preserve jobs and deliver clean energy across the state. I am proud of the hard work of our 34,000 employees who safely deliver on our commitments to customers, shareholders and communities every day."
First Quarter Operating Results
Exelon's GAAP Net Income increased to $1.07 per share in the first quarter of 2017 from $0.19 per share in the first quarter of 2016. Exelon’s adjusted (non-GAAP) Operating Earnings decreased to $0.65 per share in the first quarter of 2017 from $0.68 per share in the first quarter of 2016.
First quarter 2017 results include $0.09 per share of PHI Adjusted (non-GAAP) Operating Earnings. Adjusted (non-GAAP) Operating Earnings in the first quarter of 2017 reflect the following unfavorable factors:
• Unfavorable impact of declining natural gas prices on Generation's natural gas portfolio
• Unfavorable impact of increased nuclear outage days at Generation
• Lower capacity prices at Generation, and
• Lower realized energy prices at Generation
These factors were partially offset by:
• Higher utility earnings due to regulatory rate increases, and
• Higher revenue at Generation under the Ginna Reliability Support Services
Adjusted (non-GAAP) Operating Earnings for the first quarter of 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) (per diluted share)
|Exelon GAAP Net Income||$995||$1.07|
|Mark-to-Market Impact of Economic Hedging Activities||30||0.03|
|Unrealized Gains Related to Nuclear Decommissioning Trust (NDT) Fund Investments ||(99)||(0.10)|
|Amortization of Commodity Contract Intangibles||3||—|
|Merger and Integration Costs ||25||0.03|
|Merger Commitments (1)||(137)||(0.15)|
|Reassessment of State Deferred Income Taxes||(20)||(0.02)|
|Cost Management Program ||4||—|
|Tax Settlement|| (5 )||(0.01 )|
|Bargain Purchase Gain||(226 )||(0.24 )|
|CENG Noncontrolling Interest ||35||0.04|
(1) Represents a decrease in reserves for uncertain tax positions related to the deductibility of certain merger commitments associated with the 2012 CEG and 2016 PHI acquisitions.
Adjusted (non-GAAP) Operating Earnings for the first quarter of 2016 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) (per diluted share)
|Exelon GAAP Net Income||$173||0.19|
|Mark-to-Market Impact of Economic Hedging Activities||(64)||(0.07)|
|Unrealized Gains Related to Nuclear Decommissioning Trust (NDT) Fund Investments||(31)||(0.03)|
|Amortization of Commodity Contract Intangibles||(12)||(0.01)|
|Merger and Integration Costs||76||0.08|
|Long Lived Asset Impairments||71||0.07|
|Cost Management Program|| 14||0.02|
|CENG Noncontrolling Interest ||11||0.01|
First Quarter and Recent Highlights
• FitzPatrick Acquisition: On March 31, 2017, Generation acquired the James A. FitzPatrick nuclear station located in Scriba, New York for a total purchase price of $293 million. The total purchase price consisted of a cash purchase price of $110 million and a net cost reimbursement to and on behalf of Entergy of $183 million. As part of the acquisition agreements, Generation provided nuclear fuel and reimbursed Entergy for incremental costs to prepare for and conduct a plant refueling outage; and Generation reimbursed Entergy for incremental costs to operate and maintain the plant for the period after the refueling outage through the acquisition closing date. These reimbursements covered costs that Entergy otherwise would have avoided had it shut down the plant as originally intended in January 2017. Generation recognized a $226 million after-tax bargain purchase gain as a result of the FitzPatrick acquisition.
• Generation Renewable JV Transaction: On March 31, 2017, ExGen Renewables Holdings, LLC entered into a sales agreement for 49 percent of the membership interest in its renewable generation portfolio for a purchase price of $400 million, subject to certain working capital and post-closing adjustments. These proceeds, net of approximately $115 million of income taxes on the sale, will be used by Generation to pay down debt and for general corporate purposes. Upon consummation of the transaction, ExGen Renewables Holdings will be the managing member over the joint venture and its renewable generation portfolio. Consummation of the transaction is expected in the late second quarter or early third quarter and is subject to various customary closing conditions, including receipt of regulatory approvals from the Federal Energy Regulatory Commission and Public Utility Commission of Texas.
• DPL Maryland Electric Distribution Rate Case: On Feb. 15, 2017, the MDPSC approved an electric distribution rate increase of $38 million based on an allowed ROE of 9.6 percent. The new rates became effective for services rendered on or after February 15, 2017.
• DPL Delaware Electric and Natural Gas Distribution Rate Case: On May 17, 2016, DPL filed applications with the DPSC requesting increases of $63 million (which was updated to $60 million on March 8, 2017) and $22 million to its electric and natural gas distribution rates, respectively, each based on a requested ROE of 10.6 percent. On March 8, 2017, DPL entered into a settlement agreement with the Division of the Public Advocate, Delaware Electric Users Group and the DPSC Staff in its electric distribution rate proceeding, which provides for an increase in DPL electric distribution rates of $32 million based on an allowed ROE of 9.7 percent. On April 6, 2017, DPL entered into a settlement agreement with the Division of the Public Advocate and the DPSC Staff in its natural gas distribution rate proceeding, which provides for an increase in DPL natural gas distribution rates of $4.9 million based on an ROE of 9.7 percent.
• Pepco Maryland Electric Distribution Rate Case: On March 24, 2017, Pepco filed an application with the MDPSC requesting an electric rate increase of $69 million based on a requested ROE of 10.1 percent. Pepco expects a decision in this matter in the fourth quarter of 2017.
• ACE Electric Distribution Rate Case: On March 30, 2017, ACE filed an application with the NJBPU requesting an electric distribution rate increase of $70 million, based on a requested ROE of 10.1 percent. ACE currently expects a decision in this matter in the first quarter of 2018.
• Hedging Update: Exelon’s hedging program involves the hedging of commodity risk for Exelon’s expected generation, typically on a ratable basis over a three-year period. Expected generation is the volume of energy that best represents our commodity position in energy markets from owned or contracted generating facilities upon a simulated dispatch model that makes assumptions regarding future market conditions, which are calibrated to market quotes for power, fuel, load following products, and options. The proportion of expected generation hedged as of March 31, 2017, was 97.0 percent to 100.0 percent for 2017, 60.0 percent to 63.0 percent for 2018, and 30.0 percent to 33.0 percent for 2019. The primary objective of Exelon’s hedging program is to manage market risks and protect the value of its generation and its investment-grade balance sheet, while preserving its ability to participate in improving long-term market fundamentals.
• Nuclear Operations: Generation’s nuclear fleet, including its owned output from the Salem Generating Station and 100 percent of the CENG units, produced 43,504 gigawatt-hours (GWh) in the first quarter of 2017, compared with 44,802 GWh in the first quarter of 2016. Excluding Salem, the Exelon-operated nuclear plants at ownership achieved a 94.0 percent capacity factor for the first quarter of 2017, compared with 95.8 percent for the first quarter of 2016. The number of planned refueling outage days in the first quarter of 2017 totaled 95, compared with 70 in the first quarter of 2016. There were 8 non-refueling outage days in the first quarter of 2017, compared with 10 days in the first quarter of 2016.
• Fossil and Renewables Operations: The dispatch match rate for Generation’s gas and hydro fleet was 99.1 percent in the first quarter of 2017, compared with 93.5 percent in the first quarter of 2016. Energy capture for the wind and solar fleet was 95.7 percent in the first quarter of 2017, compared with 96.2 percent in the first quarter of 2016.
• Financing Activities: