What is the primary reason for the decrease in net income compared to the prior year's quarter?

The primary reasons for the decrease in net income were unrealized mark-to-market losses on unsettled contracts, unfavorable weather conditions, higher operating and maintenance expenses (including those related to stock compensation due to the adoption of SFAS No. 123-R), increased depreciation and amortization, reduced earnings from synthetic fuel investments, a gain recorded in the prior year from the sale of Sithe Energies, and increased interest expense due to debt issued for pension contributions.

What is the status of the proposed merger with PSEG?

As of April 25, 2006, all material regulatory actions required to complete the merger have been completed, with the exception of approvals from the New Jersey Board of Public Utilities (NJBPU) and the U.S. Nuclear Regulatory Commission (NRC), and a review by the U.S. Department of Justice (DOJ). Exelon expects to complete all regulatory reviews and close the merger in the third quarter of 2006.

How are ComEd and PECO managing their power procurement post-2006?

ComEd's power procurement plan for post-2006 was approved by the Illinois Commerce Commission, authorizing a reverse-auction competitive bidding process to procure power, with costs recovered from retail customers without markup. While ComEd generally supports this, it has appealed the prudence review requirement. PECO's operational and procurement strategies are detailed within its segment reporting, impacted by Pennsylvania's restructuring settlement and PJM transmission.

Are there any significant regulatory or environmental issues impacting the company?

Yes, Exelon is facing several regulatory and environmental developments. ComEd is involved in appeals regarding its new power procurement process in Illinois and is opposing legislation that could extend its retail rate freeze. Additionally, Exelon and Generation launched an initiative to assess and minimize the risk of tritium discharge from its nuclear fleet in response to detections at three Illinois stations; however, current testing indicates no health threat to drinking water.

EXC 10-Q Quarterly Report Q1 FY2006 — Revenue, Net Income, EPS

Summary

Exelon Corporation reported a net income of $400 million for the first quarter of 2006, a decrease from $521 million in the same period of 2005. This decline was attributed to several factors, including unrealized mark-to-market losses, unfavorable weather, higher operating and maintenance expenses (partially due to the adoption of new stock-based compensation accounting standards), and increased interest expenses. These were partially offset by improved margins in Generation's wholesale market sales and increased electric revenues at PECO due to rate increases. The company continues to progress towards its proposed merger with Public Service Enterprise Group Incorporated (PSEG), with most regulatory approvals secured and an expected closing in the third quarter of 2006. Exelon also met its capital resource requirements through internally generated cash and secured new credit facilities totaling $1.95 billion for its ComEd and Generation subsidiaries.

Key Highlights

1Net income decreased by $121 million to $400 million ($0.59 EPS) in Q1 2006 compared to Q1 2005 ($521 million, $0.77 EPS) primarily due to mark-to-market losses and increased operating expenses.
2The proposed merger with PSEG is nearing completion, with all material regulatory approvals secured except for NJBPU and NRC; closing is anticipated in Q3 2006.
3ComEd secured a $1 billion revolving credit facility, and Generation secured a $950 million bilateral credit facility, enhancing liquidity.
4Illinois Commerce Commission approved ComEd's power procurement plan for post-2006, utilizing a reverse-auction process, though appeals are pending.
5Operating revenues increased by $300 million year-over-year, driven by higher wholesale market sales and regulated rate increases at PECO and ComEd, despite unfavorable weather conditions.
6Adoption of SFAS No. 123-R (Share-Based Payment) led to increased operating and maintenance expenses due to stock compensation costs.
7Exelon continues to experience decreased earnings from investments in synthetic fuel-producing facilities due to the phase-out of tax credits.

EXELON CORP Quarterly Report for Q1 Ended Mar 31, 2006

Summary

Key Highlights

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