Summary
This 10-Q filing for Exelon Corporation (EXC) as of May 10, 2016, provides an update on market risk disclosures. The company actively manages its exposure to commodity prices, interest rates, and equity prices through its Risk Management Committee (RMC). Exelon Generation has substantially hedged its expected generation for 2016, with a significant portion also hedged for 2017 and 2018, mitigating direct commodity price risk. While Exelon Generation engages in some proprietary trading, it represents a small portion of its revenue. The utility subsidiaries (ComEd, PECO, BGE, Pepco, DPL, ACE) generally pass through energy procurement costs to customers, limiting their direct market price risk, though some may share in natural gas cost variations. Credit risk exposure is managed through collateralization and counterparty creditworthiness assessment, with most exposures to investment-grade counterparties.
Financial Highlights
51 data points| Revenue | $7.57B |
| Operating Expenses | $7.10B |
| Operating Income | $483.00M |
| Interest Expense | $277.00M |
| Net Income | $173.00M |
| EPS (Basic) | $0.19 |
| EPS (Diluted) | $0.19 |
| Shares Outstanding (Basic) | 923.00M |
| Shares Outstanding (Diluted) | 925.00M |
Key Highlights
- 1Exelon Generation has hedged 96%-99% of its expected generation for 2016, 69%-72% for 2017, and 37%-40% for 2018, significantly reducing commodity price risk.
- 2The company actively manages market risk through its Risk Management Committee (RMC), which reports to the Board of Directors.
- 3Exelon Generation's proprietary trading activities are a small part of its overall business, with limited Value-at-Risk (VaR) exposure.
- 4Utility subsidiaries generally recover energy procurement costs from customers, limiting direct exposure to commodity price fluctuations.
- 5Exelon Generation has substantial net assets related to mark-to-market energy contracts, with significant maturities in 2016 and 2017.
- 6Credit risk is managed by assessing counterparty credit ratings and requiring collateral; most of Generation's net exposure is to investment-grade counterparties.
- 7A hypothetical 10% increase in interest rates and decrease in equity prices would result in a $470 million reduction in the fair value of Generation's decommissioning trust assets.