Summary
This 10-Q filing for Exelon Corporation (EXC) as of September 30, 2015, primarily details the company's market risk exposures and management strategies. Exelon actively manages commodity price risk, interest rate risk, and equity price risk through a comprehensive risk management framework overseen by its Risk Management Committee (RMC). The company employs a range of derivative and non-derivative instruments to hedge its generation portfolio, aiming to mitigate volatility associated with fluctuating energy prices. Specific disclosures cover Generation's hedging activities, proprietary trading, fuel procurement, and the regulatory environments impacting ComEd, PECO, and BGE's cost recovery mechanisms. Of particular note is Generation's hedging strategy, which aims to cover a significant portion of its expected generation over a three-year horizon, with 97-100% hedged for 2015, 81-84% for 2016, and 51-54% for 2017. The company also detailed its credit risk exposures, particularly for Generation, and its collateral management practices. The financial statement section highlights the mark-to-market energy contract net assets and liabilities, with a significant portion of fair value derived from models rather than actively quoted prices.
Financial Highlights
50 data points| Revenue | $7.40B |
| Operating Expenses | $6.20B |
| Operating Income | $1.20B |
| Interest Expense | $243.00M |
| Net Income | $629.00M |
| EPS (Basic) | $0.69 |
| EPS (Diluted) | $0.69 |
| Shares Outstanding (Basic) | 913.00M |
| Shares Outstanding (Diluted) | 915.00M |
Key Highlights
- 1Exelon's Risk Management Committee (RMC), chaired by the CEO, oversees risk management policies and objectives.
- 2Generation's hedging program covers a significant portion of expected generation: 97-100% for 2015, 81-84% for 2016, and 51-54% for 2017.
- 3The company utilizes a variety of derivative and non-derivative instruments to mitigate commodity price risk.
- 4Generation's proprietary trading activities represent a small portion of its overall revenue, with pre-tax gains of $3 million for the nine months ended September 30, 2015.
- 5A substantial portion of Exelon's (and Generation's) commodity contract net assets/liabilities are valued using models (Level 3), indicating less liquid market pricing.
- 6Generation has a significant net exposure of $2,068 million from derivative instruments, normal purchase/sales agreements, and receivables, primarily to investment-grade counterparties.
- 7Exelon manages interest rate risk through a mix of fixed and variable-rate debt and interest rate swaps, with a hypothetical 50 bps rate increase potentially reducing pre-tax income by $3 million.