Summary
This filing from Exelon Corporation for the quarter ended March 31, 2010, primarily details the company's market risk disclosures, focusing on commodity price risk, credit risk, and interest rate sensitivity. Exelon actively manages its exposure to fluctuations in commodity prices through hedging strategies involving derivative instruments, aiming to mitigate volatility in its generation and utility operations. The company's risk management committee (RMC) oversees these activities, reporting to the Board of Directors. The report highlights the substantial hedging of future energy generation, with percentages hedged for 2010, 2011, and 2012 being 95%-98%, 79%-82%, and 48%-51% respectively. It also provides details on the mark-to-market valuation of energy contracts and the associated net assets and liabilities across its segments, with Generation holding significant net assets and ComEd facing net liabilities, largely due to intercompany derivative contracts. The company emphasizes its robust control environment over financial reporting and notes that risk factors remain consistent with those disclosed in its 2009 Annual Report.
Financial Highlights
47 data points| Revenue | $4.46B |
| Operating Expenses | $3.06B |
| Operating Income | $1.40B |
| Interest Expense | $177.00M |
| Net Income | $749.00M |
| EPS (Basic) | $1.13 |
| EPS (Diluted) | $1.13 |
| Shares Outstanding (Basic) | 661.00M |
| Shares Outstanding (Diluted) | 662.00M |
Key Highlights
- 1Exelon actively employs derivative instruments, including forwards, futures, swaps, and options, to hedge commodity price risk in its Generation segment, aiming to mitigate exposure to market fluctuations.
- 2As of March 31, 2010, Exelon Generation had hedged a significant portion of its expected generation: 95%-98% for 2010, 79%-82% for 2011, and 48%-51% for 2012.
- 3The company's mark-to-market energy contract net assets and liabilities show a total net asset position of $1,127 million as of March 31, 2010, with Generation holding a substantial net asset of $2,373 million and ComEd a net liability of $1,235 million, largely due to intercompany swap contracts.
- 4Exelon Generation also engages in proprietary trading of energy derivatives, which represents a small portion of its overall revenue, with a reported pre-tax gain of $6 million for the quarter.
- 5The company is exposed to counterparty credit risk, particularly with its derivative instruments and fuel procurement contracts, and manages this risk through counterparty approval processes and collateral arrangements.
- 6Generation holds a significant amount of cash collateral ($1,431 million) from counterparties, partially offset against its derivative positions.
- 7Exelon's management, including principal executive and financial officers for Exelon and its subsidiaries, concluded that disclosure controls and procedures were effective as of March 31, 2010, with no material changes in internal control over financial reporting.