The operator introduces the call and hands it over to Andrew Plenge, who introduces the Exelon executives and reminds listeners of the cautionary statements and non-GAAP measures. Calvin Butler then discusses the company's third quarter earnings, which were in line with expectations despite mild weather and storm pressures.

The company has adjusted its guidance range for 2023 and has seen strong operational performance despite challenges from storms. They have also made progress in their active base rate cases and received a proposed order from the ALJ for their multiyear rate and grid plan. While the proposed order recognizes the need for significant investments, it does not fully recognize the costs and returns for the company and they are disappointed with certain elements. The company will continue to make their case with stakeholders.

The company expects to receive a final order from the Maryland Public Service Commission in mid-December regarding their investment plan to address the state's energy goals. They are optimistic about a positive outcome and have also made progress in other rate cases. They reaffirm their existing guidance for earnings and dividend growth. PJM has selected Exelon's proposed transmission projects to maintain reliability in certain areas, with an estimated cost of $850 million.

The article discusses how Exelon's spending on grid infrastructure is indicative of future trends and the need for a more resilient grid. Additionally, the company has received federal funding for projects that support the nation's carbon reduction goals and create clean energy jobs. This funding is crucial for facilitating the transition to a more electricity-dependent economy.

The energy transformation will take decades to complete and we are confident that investment opportunities will continue to strengthen and lengthen our rate base growth. Our utility operating companies have had top quartile performance in reduced outage frequency and shortened ops duration, with COMED and PHI achieving best on-record performance for the third quarter in a row. Despite a high level of storm activity this quarter, our investments in the system and dedicated employees have led to impressive performance. Our gas operations are also performing well, with all 3 gas utility operating companies in the top decile for gas response. Customer satisfaction has been affected by inflation and the end of pandemic relief, but PECO has progressed to the first quartile in benchmarking performance.

In the third quarter of 2023, Exelon's adjusted operating earnings were $0.67 per share, which is a decrease of $0.08 per share compared to the same period in 2022. This represents 28% of their expected full year earnings, in line with their previous expectations. The company remains focused on improving customer satisfaction and safety performance, and is also making progress on their financial and regulatory goals.

The company's earnings in the third quarter were lower compared to the same period last year due to various factors, including weather impacts, higher interest expense, and timing of O&M tax and distribution formula rates. However, they were partially offset by higher distribution and transmission rates, as well as other factors. The company is narrowing its EPS guidance range for the full year and remains on track to deliver earnings within expectations. Their goal is to achieve the midpoint or better of the guidance range.

The company is reaffirming its growth targets for the next few years and is on track with all 6 open distribution rate case proceedings. Key developments include receiving intermediary testimony and filing a rebuttal for DPL Delaware's proposed rate increase, a stipulation of settlement in Atlantic City Electric's case, and an adjusted procedural schedule for Pepco's DC rate plan filing. The company is confident in its ability to provide safe and reliable service while also supporting clean energy goals and customer affordability.

Pepco and BGE are in the process of filing their second multiyear rate plan with the Public Service Commission of the District of Columbia and the Maryland Public Service Commission, respectively. Both companies are expected to receive intervenor testimony and hold evidentiary hearings in March 2024, with final orders expected by mid-2024. In Maryland, BGE's hearings have already taken place and a final order is expected by December 14. ComEd's multiyear rate plan proceeding is also ongoing, with an administrative law judge issuing a proposed order on October 23. The focus for all companies is on balancing state energy goals with affordability and customer interests.

The ALJ's proposed order does not adequately consider the cost of financing for ComEd's infrastructure investments to meet clean energy goals. However, ComEd remains confident in its requests for ROE, capital structure, and return on pension assets. The process is ongoing, with upcoming opportunities for ComEd to present evidence and advocate for its position. The final order is expected in December, and ComEd is maintaining positive relationships with stakeholders to support the state's energy transformation.

In the third quarter, the company has continued to invest in projects that will benefit customers and support clean energy and climate goals. They are on track to invest $7.2 billion by 2023 and have completed a transmission upgrade project in Maryland that will improve reliability and withstand severe weather conditions. The project, which cost $40 million, included upgrading transmission lines and installing new steel poles to replace old wooden ones. These upgrades are expected to prevent outages and benefit over 13,000 residents in Sirk County, Maryland.

The company's transmission rebuild project has helped decrease electric outage frequency by 30% for DPL Maryland customers in the last 5 years. This is part of their broader effort to modernize and strengthen the energy grid across all service areas, in response to the growing demand for renewable energy and electrification. The company also plans to provide a financial update in February 2024 and maintains a strong balance sheet with a projected cushion above credit downgrade thresholds. However, the impact of the corporate alternative minimum tax on repairs is still uncertain.

The company has completed its planned debt financing for 2023, reducing earnings volatility. They continue to manage interest rate volatility through hedging and regularly assess their plans for future issuance. They plan to issue $425 million of equity by 2025 and maintain a strong balance sheet while supporting their 6-8% annualized earnings growth rate. Operational excellence is their foundation and they were recently awarded for their reliability.

The award recognizes the hard work and dedication of ComEd's operating team and their commitment to providing customers with a reliable grid. The COO, Terry Donnelley, will be retiring at the end of the year and will be replaced by David Perez. The company is focused on completing rate cases and believes that parties involved have a shared interest in reaching outcomes that align with the state's energy policy and equity goals. The approval of the electric multiyear plans is a key moment for Illinois to advance its clean energy goals. The company remains confident in meeting its financial guidance and is on track to invest in capital and earn a consolidated ROE in the 9% to 10% range.

The paragraph discusses the responsibility of Exelon as a premier transmission distribution utility to its customers and communities. It mentions their involvement in the Clean Energy to Communities program, grants awarded to nonprofit organizations, and the Pepco capital grid project. The Exelon team is focused on serving the greater purpose of leading the energy transformation and meeting the expectations of the investment community. The paragraph ends by thanking the audience and opening the floor for questions.

James Kennedy from Guggenheim Partners asked about the ALJ order in Illinois and the prospects for the commission considering the full record. Calvin Butler, CEO of ComEd, stated that there is precedent for the commission to make departures from the ALJ's decision and that the record will be considered by the full commission. He also mentioned that this is the first time the commission is considering a multiyear rate plan and grid plan in relation to the state's goals. Gil Ciona, CEO of ComEd, added that there are still 4 other milestones in the process and they are confident that the evidence supports ComEd's requests. They expect the commissioners to make adjustments and corrections before issuing a final order.

David Arcaro asked about the timing of the CapEx spending for the selected transmission projects and whether there are any future opportunities for bidding in the PJM market. Calvin Butler answered that the spending will start soon and David Velazquez, who oversees the transmission strategy group, will provide more details.

David Velazquez discusses the potential for growth and earnings in their transmission buildout, which will not only improve reliability but also connect renewables to the grid. He explains that they have a robust plan in place, with projects such as brand insurers and Dominion expected to be in service between 2028 and 2030. He also mentions that they are constantly looking for opportunities to add value for customers, including through offshore wind and addressing load growth in their regions.

The company has received federal grants for hydrogen hubs and is looking at various opportunities for transmission investments. They plan to finance the increased CapEx through a balanced approach of internal cash flows, debt, and equity, in order to maintain their targeted balance sheet cushion and meet their earnings growth goals.

The company is expecting exciting incremental transmission opportunities and has plans to reinvest internal cash flows back into the business. They will provide a full update on their investments at the end of the year and will also factor in cost savings from the separation process. The company aims to maintain a balance between funding new capital and maintaining a cushion on their balance sheet while still hitting their earnings target. The estimated bill CAGR for Illinois ComEd customers is between 4-5% and the company plans to use this headroom to invest and improve the state.

The speaker discusses the differences between the ALJ's 9.28% ROE and staff's 8.91% ROE for ComEd, as well as the proposed equity ratio. They also mention the ongoing debate about the return on pension assets and the importance of presenting evidence to the commission to support their position. The speaker believes that by articulating the benefits for all customers and aligning with the state's goals, they will ultimately reach a favorable outcome.

The speaker discusses the details of a filing that will be presented to the commission on November 8, and mentions the possibility of using an ATM for equity. They then thank the participants for joining and conclude the call.

This summary was generated with AI and may contain some inaccuracies.