Summary
Exelon Corporation (EXC) announced on October 3, 2002, through a note to its financial community, a significant restructuring of its power purchase agreements (PPAs) with Midwest Generation, LLC. Exelon Generation, a subsidiary, exercised termination options on a substantial portion of capacity from Midwest's Collins Generating Station and certain peaking units for the 2003 and 2004 contract years. This strategic move is expected to generate approximately $250 million in estimated cost savings in 2003 relative to the full Midwest contract price, and approximately $130 million in year-over-year savings compared to 2002. While Exelon Generation is releasing over 1,700 MW of capacity from these PPAs, it is retaining significant capacity from other units, including Collins Units 1 and 3, additional peaking units, and a substantial amount of coal capacity from Midwest. This action is part of Exelon's strategy to optimize its supply portfolio and is aligned with its previously issued earnings per share guidance of a 4.5% to 5.5% compound annual growth rate off a 2001 base.
Key Highlights
- 1Exelon Generation exercised termination options on 1,727 MW of capacity from Midwest Generation's Collins and peaking units for 2003 and 2004.
- 2The company is releasing a significant portion of contracted power capacity from these specific agreements.
- 3Estimated cost savings of approximately $250 million are projected for 2003 relative to the full Midwest contract price.
- 4Expected year-over-year capacity cost savings in 2003 compared to 2002 are estimated at approximately $130 million.
- 5Exelon Generation will retain 1,778 MW of capacity from Collins Units 1 and 3 and peaking units, and 4,739 MW of total capacity from three existing PPAs with Midwest.
- 6This action is consistent with Exelon's stated earnings per share growth guidance.
- 7Reliable service to customers in Illinois served by delivery subsidiary ComEd remains a top priority.