How does Exelon manage its exposure to commodity price fluctuations?

Exelon Generation actively manages commodity price risk through a combination of derivative and non-derivative contracts, including forwards, futures, swaps, and options. They aim to hedge anticipated exposures, with a significant portion of expected generation hedged for the next three years. The utility subsidiaries generally pass through commodity costs to customers, limiting their direct exposure.

What is the financial impact of a decrease in energy prices on Exelon Generation's unhedged positions?

According to the filing, a hypothetical $5 reduction in the annual average energy price would result in an estimated $15 million increase in pre-tax net income for 2017 on unhedged positions. However, for 2018 and 2019, this price decrease would lead to estimated pre-tax net income decreases of $350 million and $665 million, respectively, indicating material future exposure to price declines.

How is credit risk managed for derivative and marketing activities?

Exelon manages credit risk by assessing counterparties' creditworthiness and utilizing collateral. Exelon Generation's net credit exposure as of March 31, 2017, was $1,457 million, with the vast majority ($1,457 million) with counterparties rated investment grade or internally rated as investment grade. Collateral, including cash and letters of credit, is also used to mitigate credit exposure.

What is ComEd's exposure to derivative liabilities?

ComEd recorded a regulatory liability of $282 million as of March 31, 2017, related to its mark-to-market derivative liabilities with Exelon Generation and unaffiliated suppliers. These liabilities are associated with floating-to-fixed energy swap contracts.

EXC 10-Q Quarterly Report Q1 FY2017 — Revenue, Net Income, EPS

Summary

This filing from Exelon Corporation (EXC) provides an update on market risk disclosures for the quarter ending March 31, 2017. The company actively manages commodity price risk through hedging activities, with a significant portion of expected generation hedged for 2017 and 2018. Exelon Generation utilizes derivative and non-derivative contracts to mitigate price fluctuations. While proprietary trading is conducted, it represents a small portion of overall revenue and had immaterial gains/losses in the period. The utility subsidiaries (ComEd, PECO, BGE, Pepco, DPL, ACE) have limited direct exposure to commodity price risk as energy procurement costs are generally recoverable from customers with no mark-up or through regulatory mechanisms. These subsidiaries do not engage in speculative trading. Credit risk is managed through collateral and counterparty credit assessments, with a focus on investment-grade counterparties for Generation.

Financial Highlights

51 data points

Beta

Revenue

$8.75B

Net Income

$990.00M

0.1% Net Margin

EPS (Diluted)

$1.06

Total Assets

$117.07B

Cash & Equivalents

$609.00M

Free Cash Flow

-$935.00M

Financial Statements

Beta

Revenue	$8.75B
Operating Expenses	$7.67B
Operating Income	$1.31B
Interest Expense	$363.00M
Net Income	$990.00M
EPS (Basic)	$1.07
EPS (Diluted)	$1.06
Shares Outstanding (Basic)	928.00M
Shares Outstanding (Diluted)	930.00M

Key Highlights

1Exelon Generation has hedged a substantial portion of its expected generation: 97%-100% for 2017, 60%-63% for 2018, and 30%-33% for 2019, mitigating commodity price risk.
2The impact of a $5 reduction in annual average energy price on Generation's unhedged positions is estimated at a $15 million pre-tax income increase for 2017, but significant decreases of $350 million and $665 million for 2018 and 2019, respectively, highlighting future exposure.
3Proprietary trading activities by Exelon Generation resulted in immaterial pre-tax gains, with a daily Value-at-Risk (VaR) of $0.3 million for the quarter.
4Utility subsidiaries (ComEd, PECO, BGE, Pepco, DPL, ACE) generally recover energy procurement costs from customers, significantly limiting their direct exposure to commodity price volatility.
5ComEd recorded a regulatory liability of $282 million related to mark-to-market derivative liabilities with Generation and unaffiliated suppliers.
6Exelon Generation's total credit exposure for derivative instruments and other contracts, net of collateral, was $1,457 million as of March 31, 2017, with the majority (95%) with investment-grade counterparties.
7The fair value of Exelon's mark-to-market energy contract net assets was $528 million as of March 31, 2017, with the majority maturing within 2017 (gross $337 million).

EXELON CORP Quarterly Report for Q1 Ended Mar 31, 2017

Summary

Financial Highlights

Key Highlights

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