What is Exelon's primary strategy for managing commodity price risk in its Generation segment?

Exelon's Generation segment actively uses a combination of non-derivative and derivative contracts (forwards, futures, swaps, options) to hedge anticipated exposures. This hedging strategy typically covers expected generation on a ratable basis over a three-year period, with a high percentage of expected generation hedged for the near term (98%-101% for 2014).

What are the key risks associated with the pending merger with PHI?

The key risks include difficulties in satisfying closing conditions, potential delays in regulatory approvals, the possibility of imposed conditions that could be burdensome or detrimental to the combined company, and the risk of Exelon paying a significant reverse termination fee (up to $180 million) if regulatory approvals are not obtained or if Exelon breaches certain obligations. There's also the risk of integration difficulties and failure to realize expected synergies, as well as potential adverse impacts on share price and future financial results if the merger fails.

How does Exelon manage interest rate risk?

Exelon manages interest rate risk by using a mix of fixed-rate and variable-rate debt. They also utilize fixed-to-floating interest rate swaps, often designated as fair value hedges, and may use interest rate derivatives to lock in rates for future financings, typically designated as cash flow hedges.

What is the impact of equity price fluctuations on Exelon's nuclear plant decommissioning trust funds?

Exelon's nuclear decommissioning trust funds hold equity securities that are exposed to market price fluctuations. A hypothetical 10% decrease in equity prices, holding other variables constant, would result in an estimated $599 million reduction in the fair value of these trust assets.

EXC 10-Q Quarterly Report Q3 FY2014 — Revenue, Net Income, EPS

Summary

This 10-Q filing for Exelon Corporation as of September 30, 2014, primarily details the company's market risk exposures and management strategies, particularly concerning commodity prices, interest rates, and credit. Exelon's Generation segment actively hedges a significant portion of its expected generation to mitigate commodity price volatility, with 98%-101% hedged for 2014 and substantial coverage for 2015 and 2016. The company also engages in limited proprietary trading, which has generated modest gains. The filing also highlights the ongoing merger with PHI, detailing potential risks and regulatory hurdles associated with its completion, including conditions that could adversely affect the combined entity or lead to termination fees. While the primary focus is on market risk, the filing also touches upon regulatory matters for its utility subsidiaries (ComEd, PECO, BGE) regarding cost recovery for energy procurement. The company confirms the effectiveness of its disclosure controls and procedures. Investors should pay close attention to the progress and potential impact of the PHI merger, as well as Exelon's strategies for managing commodity price fluctuations in its generation business, as these are key drivers of financial performance and potential risks.

Financial Highlights

49 data points

Beta

Revenue

$6.91B

Net Income

$993.00M

0.1% Net Margin

EPS (Diluted)

$1.15

Total Assets

$85.26B

Cash & Equivalents

$2.76B

Free Cash Flow

$279.00M

Financial Statements

Beta

Revenue	$6.91B
Operating Expenses	$5.51B
Operating Income	$1.74B
Interest Expense	$247.00M
Net Income	$993.00M
EPS (Basic)	$1.15
EPS (Diluted)	$1.15
Shares Outstanding (Basic)	861.00M
Shares Outstanding (Diluted)	863.00M

Key Highlights

1Exelon's Generation segment has hedged 98%-101% of its expected generation for 2014, 86%-89% for 2015, and 55%-58% for 2016, indicating a strong strategy to mitigate commodity price risk.
2The company engages in proprietary energy trading, which resulted in pre-tax gains of $43 million for the nine months ended September 30, 2014.
3Exelon's risk management is overseen by a Risk Management Committee (RMC), which reports to the Exelon Board of Directors' Risk Oversight Committee.
4The pending merger with PHI is a significant event, subject to various regulatory approvals and customary closing conditions, with a potential termination fee of up to $180 million for Exelon under certain circumstances.
5The company is actively managing interest rate risk through a combination of fixed-rate and variable-rate debt, and the use of interest rate swaps.
6Generation's decommissioning trust funds are exposed to equity price risk, with a hypothetical 10% decrease in equity prices potentially reducing trust asset values by $599 million.
7Disclosure controls and procedures for Exelon and its subsidiaries were deemed effective as of September 30, 2014.

EXELON CORP Quarterly Report for Q3 Ended Sep 30, 2014

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions