What is the primary driver behind the year-over-year decrease in net income for the Energy Delivery segment in Q2 2005?

The primary driver for the decrease in net income for the Energy Delivery segment in Q2 2005 was higher purchased power prices for ComEd, effective January 1, 2005, associated with its power purchase agreement with Generation. This was partially offset by higher revenues due to favorable weather, lower interest expense, and decreased operating and maintenance expenses.

How is Exelon managing its exposure to commodity price risk, particularly concerning synthetic fuel tax credits?

Exelon's synthetic fuel-producing facilities generate tax credits that are subject to a phase-out based on crude oil prices. Exelon estimates that tax credits will not phase out in 2005 based on current prices. However, if crude oil prices increase significantly, the company could face substantial reductions in tax credits and net income, potentially leading to an estimated after-tax non-operating loss of $70 million per year if completely phased out. Exelon has entered into derivatives to hedge a portion of this commodity exposure.

What is the status of the proposed merger with PSEG?

The proposed merger with PSEG has made significant progress. The Federal Energy Regulatory Commission (FERC) approved the merger on June 30, 2005, with a market concentration mitigation plan. PSEG shareholders approved the merger on July 19, 2005, and Exelon shareholders approved the issuance of Exelon shares for the merger on July 22, 2005. These approvals indicate a strong likelihood of the merger proceeding.

Are there any significant regulatory or legal proceedings that could materially impact Exelon's financial performance?

Yes, Exelon is monitoring regulatory developments concerning Seams Elimination Cost/Charge Adjustment/Assignment (SECA) rates, which are subject to refund and surcharge and have an uncertain outcome that could materially affect ComEd and PECO's financial condition. Additionally, in Illinois, ComEd is involved in regulatory proceedings regarding post-2006 retail rate structures, which could have a material effect on its results.

EXC 10-Q Quarterly Report Q2 FY2005 — Revenue, Net Income, EPS

Summary

Exelon Corporation's (EXC) second-quarter 2005 report shows a slight decrease in diluted earnings per share for the three-month period ($0.76 vs. $0.78 in the prior year), primarily impacted by an asbestos-related reserve and planned refueling outages. However, for the six-month period, diluted EPS saw an increase ($1.53 vs. $1.40), driven by higher wholesale sales margins, favorable weather, and unrealized mark-to-market gains. A significant development is the progress made towards the proposed merger with PSEG, with key regulatory and shareholder approvals advancing. The company also continued to manage its portfolio by divesting non-strategic assets, such as the sale of Sithe, while focusing on operational efficiency and strategic investments. Financially, Exelon utilized internally generated cash for its capital resource requirements. The company also completed a significant $1.7 billion senior debt issuance to repay existing term loans. Regulatory matters, particularly concerning transmission rates (SECA) and forward-looking retail rate structures in Illinois, remain areas to monitor for potential impacts on financial performance. The company's outlook for the remainder of 2005 is influenced by factors like synthetic fuel tax credit phase-out risks and ongoing strategic initiatives, including the PSEG merger.

Key Highlights

1Diluted EPS for Q2 2005 decreased slightly to $0.76 from $0.78 in Q2 2004, but increased for the six-month period to $1.53 from $1.40.
2Significant progress on the proposed merger with PSEG, with regulatory (FERC) and shareholder approvals moving forward.
3Completed the sale of its investment in Sithe for approximately $65 million in cash distributions, deconsolidating $820 million in debt.
4Issued $1.7 billion in senior debt to repay existing term loan agreements, optimizing the company's debt structure.
5Energy Delivery segment net income decreased by $85 million YoY for Q2, primarily due to higher purchased power prices for ComEd.
6Generation segment net income increased significantly by $118 million YoY for Q2, driven by higher margins on wholesale sales and favorable decommissioning trust fund investments.
7A reserve of $43 million was recorded for estimated future asbestos-related bodily injury claims.
8Exelon's interests in synthetic fuel-producing facilities contributed $29 million to net income in Q2 2005, with ongoing monitoring of tax credit phase-out risks due to crude oil prices.

EXELON CORP Quarterly Report for Q2 Ended Jun 30, 2005

Summary

Key Highlights

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