Exelon Reports Fourth Quarter and Full Year 2020 Results and Initiates 2021 Financial Outlook

Earnings Release Highlights

• GAAP Net Income of $0.37 per share and Adjusted (non-GAAP) Operating Earnings of $0.76 per share in the fourth quarter of 2020
• Exelon to separate its utility and competitive energy businesses, creating two industry-leading companies
• Exelon introduces 2021 adjusted (non-GAAP) operating earnings guidance range of $2.60-$3.00 per share, reflecting growth in Utilities, offset by impacts of the February severe weather event, lower realized energy and capacity revenues at Generation
• Exelon Utilities project capital expenditures of $27 billion over the next four years to benefit its customers, supporting 7.6% annual rate base growth
• All four utilities ended the year with their best performance ever on customer satisfaction; ComEd and PHI had their best-on-record performances in SAIFI and all utilities ended the year in the top decile
• BGE received the first multi-year plan order from the Maryland PSC approving BGE’s proposed plan for 2021-2023 to recover capital investments and keep customer rates flat for the first year
• Generation’s nuclear fleet capacity factor of 95.4% was the company's second highest ever (owned and operated units)

Exelon Corporation (Nasdaq: EXC) today reported its financial results for the fourth quarter and full year 2020.

“Our financial and operational performance remained solid through year-end, with each of our utilities reporting top-quartile reliability and record customer satisfaction scores, our zero-carbon nuclear fleet achieving a near-record capacity factor and our relationships with retail customers remaining durable as we continue to be a leading provider of clean and sustainable energy solutions,” said Joseph Nigro, senior executive vice president and CFO of Exelon. “We also reached $400 million in cost savings – $150 million more than planned – and reported full-year adjusted earnings above the midpoint of our original guidance range at $3.22 per share. While we are proud of these results, looking ahead we must reckon with the impact of the devastating winter storms that overwhelmed the electric grid and disrupted millions of lives across Texas last week. Though our gas plants routinely plan and train for harsh weather, this was an unprecedented and sustained winter event that caused periodic outages and severe financial impacts. As a result of these and other conditions, we are setting our 2021 earnings guidance range at $2.60-$3.00 per share.”

Fourth Quarter 2020

Exelon's GAAP Net Income for the fourth quarter of 2020 decreased to $0.37 per share from $0.79 per share in the fourth quarter of 2019. Adjusted (non-GAAP) Operating Earnings decreased to $0.76 per share in the fourth quarter of 2020 from $0.83 per share in the fourth quarter of 2019. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 8.

Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2020 primarily reflect:

• Lower utility earnings due to lower allowed electric distribution ROE due to a decrease in treasury rates at ComEd; and unfavorable weather conditions at PECO; partially offset by regulatory rate increases at BGE and PHI; and
• Lower Generation earnings due to lower realized energy prices; a reduction in load due to COVID-19; increased nuclear outage days; and the absence of research and development income tax benefits recognized in the fourth quarter of 2019; partially offset by higher capacity revenues; lower operating and maintenance expense; and unrealized gains resulting from equity investments that became publicly traded entities in the fourth quarter of 2020.

Full Year 2020

Exelon's GAAP Net Income for 2020 decreased to $2.01 per share from $3.01 per share in 2019. Exelon's Adjusted (non-GAAP) Operating Earnings for 2020 remained consistent with 2019 at $3.22 per share.

Adjusted (non-GAAP) Operating Earnings for the full year 2020 primarily reflect:

• Lower utility earnings due to lower electric distribution earnings from lower allowed ROE due to a decrease in treasury rates, partially offset by higher rate base at ComEd; unfavorable weather conditions at PECO and PHI; higher storm costs related to the June and August 2020 storms at PECO, net of tax repairs, and August 2020 storm at PHI; and higher depreciation and amortization expense at PECO, BGE and PHI due primarily to ongoing capital expenditures; partially offset by regulatory rate increases at BGE and PHI; and an increase in tax repairs deduction at PECO; and
• Higher Generation earnings due to lower nuclear fuel costs; lower operating and maintenance expense; and unrealized gains resulting from equity investments that became publicly traded entities in the fourth quarter of 2020; partially offset by a reduction in load due to COVID-19; lower realized energy prices; lower capacity revenues; and increased nuclear outage days.

Operating Company Results 1

ComEd

ComEd's fourth quarter of 2020 GAAP Net Income and (non-GAAP) Operating Earnings decreased to $134 million from $144 million in the fourth quarter of 2019, primarily due to lower allowed electric distribution ROE due to a decrease in treasury rates. Due to revenue decoupling, ComEd's distribution earnings are not affected by actual weather or customer usage patterns.

PECO

PECO’s fourth quarter of 2020 GAAP Net Income increased to $130 million from $118 million in the fourth quarter of 2019. PECO’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2020 increased to $133 million from $119 million in the fourth quarter of 2019, primarily due to favorable volume and an increase in tax repairs deduction, partially offset by unfavorable weather conditions.

BGE

BGE’s fourth quarter of 2020 GAAP Net Income decreased to $77 million from $99 million in the fourth quarter of 2019. BGE’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2020 decreased to $79 million from $101 million in the fourth quarter of 2019, primarily due to increased charitable contributions as a result of a commitment in the fourth quarter of 2020 to a multi-year small business grants program and various other activity, partially offset by regulatory rate increases. Due to revenue decoupling, BGE's distribution earnings are not affected by actual weather or customer usage patterns.

PHI

PHI’s fourth quarter of 2020 GAAP Net Income increased to $78 million from $65 million in the fourth quarter of 2019. PHI’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2020 increased to $81 million from $68 million in the fourth quarter of 2019, primarily due to regulatory rate increases. Due to revenue decoupling, PHI's distribution earnings related to Pepco Maryland, DPL Maryland and Pepco District of Columbia are not affected by actual weather or customer usage patterns.

Generation

Generation's fourth quarter of 2020 GAAP Net Income decreased to $19 million from $397 million in the fourth quarter of 2019. Generation’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2020 decreased to $391 million from $427 million in the fourth quarter of 2019, primarily due to lower realized energy prices, a reduction in load due to COVID-19, increased nuclear outage days and the absence of research and development income tax benefits recognized in the fourth quarter of 2019, partially offset by higher capacity revenues, lower operating and maintenance expense and unrealized gains resulting from equity investments that became publicly traded entities in the fourth quarter of 2020.

The proportion of expected generation hedged for the Mid-Atlantic, Midwest, New York and ERCOT reportable segments as of Dec. 31, 2020, was 94.0% to 97.0% for 2021.

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1 Exelon’s five business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware; and Generation, which consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products and risk management services.

Initiates Annual Guidance for 2021

Exelon introduced a guidance range for 2021 Adjusted (non-GAAP) Operating Earnings of $2.60-$3.00 per share. The outlook for 2021 Adjusted (non-GAAP) Operating Earnings for Exelon and its subsidiaries excludes the following items:

• Mark-to-market adjustments from economic hedging activities;
• Unrealized gains and losses from NDT funds to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements;
• Certain costs related to plant retirements;
• Certain costs incurred to achieve cost management program savings;
• Direct costs related to the novel coronavirus (COVID-19) pandemic;
• Certain acquisition-related costs;
• Costs related to a multi-year Enterprise Resource Program (ERP) system implementation;
• Other items not directly related to the ongoing operations of the business; and
• Generation's noncontrolling interest related to exclusion items.

Recent Developments and Fourth Quarter Highlights

• Planned Separation : Exelon announced on Feb. 24, 2021, that its Board of Directors approved a plan to separate its utilities business, comprised of the company’s six regulated electric and gas utilities, and Generation, its competitive power generation and customer-facing energy businesses, creating two publicly traded companies with the resources necessary to best serve customers and sustain long-term investment and operating excellence. The separation gives each company the financial and strategic independence to focus on its specific customer needs, while executing its core business strategy. Exelon is targeting to complete the separation in the first quarter of 2022, subject to final approval by Exelon’s Board of Directors, a Form 10 registration statement being declared effective by the SEC, regulatory approvals, and satisfaction of other conditions.

• Impacts of February 2021 Weather Events and Texas-based Generating Assets Outages: Beginning on Feb. 15, 2021, Generation’s Texas-based generating assets within the Electric Reliability Council of Texas (ERCOT) market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced periodic outages as a result of historically severe cold weather conditions. In addition, those weather conditions drove increased demand for service, limited the availability of natural gas to fuel power plants and dramatically increased wholesale power and gas prices.
  
  Exelon and Generation estimate the impact to their Net income for the first quarter of 2021 arising from these market and weather conditions to be approximately $560 million to $710 million. The estimated impact includes favorable results in certain regions within Generation’s wholesale gas business. The ultimate impact to Exelon’s and Generation’s consolidated financial statements may be affected by a number of factors, including final settlement data, the impacts of customer and counterparty credit losses, any state sponsored solutions to address the financial challenges caused by the event, and litigation and contract disputes which may result. Exelon expects to offset between $410 million and $490 million of this impact primarily at Generation through a combination of enhanced revenue opportunities, deferral of selected non-essential maintenance, and primarily one-time cost savings.
  
  Generation used a combination of commercial paper and letters of credit to manage collateral needs and has posted approximately $1.4 billion of collateral with ERCOT as of Feb. 22, 2021. Generation continues to believe it has sufficient cash on hand and available capacity on its revolver, which was $2.4 billion as of Feb. 22, 2021, to meet its liquidity requirements.

• Dividend: On Feb. 21, 2021, Exelon’s Board of Directors declared a regular quarterly dividend of $0.3825 per share on Exelon’s common stock for the first quarter of 2021. The dividend is payable on Monday, March 15, 2021, to shareholders of record of Exelon as of 5 p.m. Eastern time on Monday, March 8, 2021. The Board of Directors of Exelon approved an updated dividend policy for 2021. The 2021 quarterly dividend will remain the same as the 2020 dividend of $0.3825 per share.

• Agreement for Sale of Generation’s Solar Business: On Dec. 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable Partners L.P. (“Brookfield Renewable”), for the sale of a significant portion of Generation’s solar business, including 360 megawatts of generation in operation or under construction across more than 600 sites across the United States. Generation will retain certain solar assets not included in this agreement, primarily Antelope Valley. Under the terms of the transaction, the purchase price is $810 million, subject to certain working capital and other post-closing adjustments. The transaction is expected to result in an estimated pre-tax gain ranging from $75 million to $125 million. Completion of the transaction contemplated by the sale agreement is subject to the satisfaction of several closing conditions and is expected to occur in the first half of 2021.

• ComEd Distribution Formula Rate: On Dec. 9, 2020, the Illinois Commerce Commission issued an order approving ComEd’s 2021 revenue requirement. The order resulted in a $14 million decrease to the revenue requirement, reflecting a $50 million increase for the initial year revenue requirement for 2021 and a $64 million decrease related to the annual reconciliation for 2019. The revenue requirement for 2021 and the annual reconciliation for 2019 provide for a weighted average debt and equity return on distribution rate base of 6.28%, inclusive of an allowed ROE of 8.38%. The rates were effective on Jan. 1, 2021.

• BGE Maryland Electric and Natural Gas Rate Case: On Dec. 16, 2020, the Maryland Public Service Commission (MDPSC) approved BGE’s three-year cumulative multi-year plan for 2021 through 2023 to recover capital investments made in late 2019 and planned capital investments from 2020 to 2023. The MDPSC offset the awarded electric and natural gas revenue increases in 2021 with certain tax benefits so customers would see no change in rates. The MDPSC’s order approved an increase in BGE’s electric distribution rates of $39 million in 2022 and $42 million in 2023 reflecting an ROE of 9.5% and an increase in BGE’s annual natural gas distribution rates of $11 million in 2022 and $10 million in 2023 reflecting an ROE of 9.65%. These rates are effective on Jan. 1, 2021. The MDPSC has deferred a decision on whether to use the tax benefits to offset the revenue requirement increases in 2022 and 2023 and BGE cannot predict the outcome.

• DPL Delaware Natural Gas Base Rate Case: On Jan. 6, 2021, the Delaware Public Service Commission approved an increase in DPL’s annual natural gas distribution rates of $2 million with an effective date of Sept. 21, 2020, and reflecting an ROE of 9.6%.

• ACE New Jersey Electric Distribution Base Rate Case: On Dec. 9, 2020, ACE filed an application with the New Jersey Board of Public Utilities (NJBPU) to increase its annual electric distribution rates by $67 million (before New Jersey sales and use tax), reflecting a requested ROE of 10.3%. ACE currently expects a decision in the fourth quarter of 2021 but cannot predict if the NJBPU will approve the application as filed. ACE intends to put rates into effect on Sept. 8, 2021, subject to refund.

• Nuclear Operations: Generation’s nuclear fleet, including its owned output from the Salem generating station and 100% of the CENG units, produced 44,230 gigawatt-hours (GWhs) in the fourth quarter of 2020, compared with 44,647 GWhs in the fourth quarter of 2019. Excluding Salem, the Exelon-operated nuclear plants at ownership achieved a 96.2% capacity factor for the fourth quarter of 2020, compared with 95.0% for the fourth quarter of 2019. Excluding Salem, the number of planned refueling outage days in the fourth quarter of 2020 totaled 57, compared with 64 in the fourth quarter of 2019. There were four non-refueling outage days in the fourth quarter of 2020, compared with eight in the fourth quarter of 2019.

• Fossil and Renewables Operations: The Dispatch Match rate for Generation’s gas and hydro fleet was 98.8% in the fourth quarter of 2020, compared with 98.6% in the fourth quarter of 2019.
  
  Energy Capture for the wind and solar fleet was 94.2% in the fourth quarter of 2020, compared with 96.2% in the fourth quarter of 2019. The lower performance in the quarter was driven by delays in turbine maintenance at some wind sites.

• Financing Activities:
  • On Dec. 18, 2020, ExGen Renewables IV (EGR IV), an indirect subsidiary of Generation, entered into a financing agreement for a $750 million nonrecourse senior secured term loan credit facility scheduled to mature on Dec. 15, 2027. The term loan bears interest at a variable rate equal to LIBOR plus 2.75%, subject to a 1.00% LIBOR floor. Generation used the proceeds to repay EGR IV's Nov. 2017 non-recourse senior secured term loan credit facility and to settle the related interest rate swap.

GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliations

Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2020 do not include the following items (after tax) that were included in reported GAAP Net Income:

Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2019 do not include the following items (after tax) that were included in reported GAAP Net Income:

Adjusted (non-GAAP) Operating Earnings for the full year 2020 do not include the following items (after tax) that were included in reported GAAP Net Income:

Adjusted (non-GAAP) Operating Earnings for the full year 2019 do not include the following items (after tax) that were included in reported GAAP Net Income:

Note:
Amounts may not sum due to rounding.
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT funds, the marginal statutory income tax rates for 2020 and 2019 ranged from 26.0% to 29.0%. Under IRS regulations, NDT fund returns are taxed at different rates for investments if they are in qualified or non-qualified funds. The effective tax rates for the unrealized gains and losses related to NDT funds were 48.4% and 46.1% for the three months ended Dec. 31, 2020 and 2019, respectively; and were 52.1% and 47.3% for the twelve months ended Dec. 31, 2020 and 2019, respectively.

Webcast Information

Exelon will discuss fourth quarter 2020 earnings in conference call scheduled for today at 9 a.m. Central Time (10 a.m. Ea​stern Time).​ The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations .

About Exelon

Exelon Corporation (Nasdaq: EXC) is a Fortune 100 energy company with the largest number of electricity and natural gas customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2020 revenue of $33 billion. Exelon serves approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 31,000 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including three fourths of the Fortune 100. Follow Exelon on Twitter @Exelon.

Non-GAAP Financial Measures

In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses and other specified items. This measure is intended to enhance an investor’s overall understanding of period over period operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentation. Exelon has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon’s website: www.exeloncorp.com , and have been furnished to the Securities and Exchange Commission on Form 8-K on Feb. 24, 2021.

Cautionary Statements Regarding Forward-Looking Information

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties including, among others, those related to the timing, manner, tax-free nature and expected benefits associated with the potential separation of Exelon’s competitive power generation and customer-facing energy business from its six regulated electric and gas utilities. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic, and financial performance, are intended to identify such forward-looking statements.

The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) the Registrants' 2019 Annual Report on Form 10-K in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 18, Commitments and Contingencies; (2) the Registrants' Third Quarter 2020 Quarterly Report on Form 10-Q in (a) Part II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part I, ITEM 1. Financial Statements: Note 14, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants.

Investors are cautioned not to place undue reliance on these forward-looking statements, whether written or oral, which apply only as of the date of this press release. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this press release.

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Paul Adams
Corporate Communications
410-245-8717

Emily Duncan
Investor Relations
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