01—Abstract
Summary
Summary of the 10-K filed February 9, 2018. Cited figures are marked; the original filing is the authoritative source.
This 10-K filing for Exelon Corporation (EXC) on February 9, 2018, details the company's operations as a utility services holding company.
Exelon is engaged in both energy generation through Exelon Generation Company, LLC (Generation) and energy delivery through its subsidiaries: Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL), and Atlantic City Electric Company (ACE). The company's business model leverages its regulated utility operations for stable earnings and its competitive generation business for free cash flow, which is reinvested in utilities and long-term contracted assets. Key financial highlights from 2017 show a significant increase in net income attributable to common shareholders compared to 2016, largely driven by the inclusion of PHI's operations for the full year and the acquisition of the FitzPatrick nuclear generating station.
The company also announced an updated dividend policy, increasing it by 5%a annually from 2018 through 2020. Exelon's strategy focuses on improving utility reliability and customer experience, alongside pursuing growth opportunities in competitive energy businesses through optimal asset structure and stable revenues. The company anticipates significant future investments in its regulated utility infrastructure.
02—Key points
Key Highlights
- Exelon operates as a utility services holding company with a dual focus on energy generation (Generation) and energy delivery through its six regulated utility subsidiaries: ComEd, PECO, BGE, Pepco, DPL, and ACE.
- The company completed a major merger with Pepco Holdings, Inc. (PHI) in March 2016, integrating its operations and expanding its regulated utility footprint.
- Exelon Generation is one of the largest competitive electric generation companies in the U.S., with a diverse fleet including nuclear, fossil fuels, and renewables, and markets power through its customer-facing business, Constellation.
- The utility subsidiaries are subject to state and federal regulations, with rates and services overseen by various state utility commissions and the FERC.
- The company is investing heavily in its utility infrastructure, with projected capital expenditures of approximately $2.1 billion for Generation and a total of approximately $26 billion over the next five years across its utilities for improvements and modernization.
- Exelon announced an updated dividend policy providing a 5% annual increase for 2018-2020, indicating a commitment to shareholder returns.
- The company is navigating evolving regulatory landscapes, including the impact of federal tax reform (Tax Cuts and Jobs Act of 2017) and state-level initiatives related to clean energy and nuclear plant preservation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 9, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $33.56B$31.37B | +7.0% |
| Operating Expenses | $29.62B$28.11B | +5.4% |
| Operating Income | $4.39B$3.21B | +36.6% |
| Interest Expense | $1.52B$1.50B | +1.9% |
| Net Income | $3.78B$1.12B | +237.1% |
| EPS (Basic) | $3.99$1.21 | +229.8% |
| EPS (Diluted) | $3.98$1.21 | +228.9% |
| Shares Outstanding (Basic) | 947.00M924.00M | +2.5% |
| Shares Outstanding (Diluted) | 949.00M927.00M | +2.4% |
05—Questions
Frequently Asked Questions
What are Exelon's primary business segments?
Exelon operates through two main business segments: Energy Generation (through Exelon Generation Company, LLC) and Energy Delivery (through its regulated utility subsidiaries: ComEd, PECO, BGE, Pepco, DPL, and ACE, which are part of PHI).
What impact did the merger with Pepco Holdings, Inc. (PHI) have on Exelon?
The merger, completed in March 2016, expanded Exelon's regulated utility operations and geographical reach. It led to the integration of PHI's utilities—Pepco, DPL, and ACE—into Exelon's portfolio, contributing to stable earnings and providing a platform for regulated growth.
How does Exelon manage commodity price risk for its Generation segment?
Exelon Generation manages commodity price risk through physical and financial derivative contracts, including swaps, futures, forwards, and options. It aims to hedge anticipated exposures by entering into fixed-price contracts to manage the variability in future cash flows from expected sales of power and gas.
What is Exelon's approach to capital expenditures and investments?
Exelon's utilities are undertaking significant capital investments in infrastructure improvements and modernization, including smart meter and smart grid initiatives, storm hardening, and transmission projects. Generation continues to assess optimal asset structure and explore wholesale and retail opportunities, focusing on opportunities that provide stable revenues and generation-to-load matching to reduce earnings volatility.
06—Continue