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0000950137-06-006192.txt : 200605230000950137-06-006192.hdr.sgml : 2006052320060523172855ACCESSION NUMBER:0000950137-06-006192CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:50CONFORMED PERIOD OF REPORT:20060523ITEM INFORMATION:Regulation FD DisclosureFILED AS OF DATE:20060523DATE AS OF CHANGE:20060523
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:PUBLIC SERVICE ELECTRIC & GAS COCENTRAL INDEX KEY:0000081033STANDARD INDUSTRIAL CLASSIFICATION:ELECTRIC & OTHER SERVICES COMBINED [4931]IRS NUMBER:221212800STATE OF INCORPORATION:NJFISCAL YEAR END:0717
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-00973FILM NUMBER:06862316
BUSINESS ADDRESS:STREET 1:CORPORATE ACCOUNTING SERVICESSTREET 2:80 PARK PLAZA, 9TH FLOORCITY:NEWARKSTATE:NJZIP:07102-4194BUSINESS PHONE:973-430-7000
MAIL ADDRESS:STREET 1:CORPORATE ACCOUTNING SERVICESSTREET 2:80 PARK PLAZA, 9TH FLOORCITY:NEWARKSTATE:NJZIP:07102-4194
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:PSEG POWER LLCCENTRAL INDEX KEY:0001158659STANDARD INDUSTRIAL CLASSIFICATION:ELECTRIC SERVICES [4911]IRS NUMBER:223663480STATE OF INCORPORATION:DEFISCAL YEAR END:1231
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:000-49614FILM NUMBER:06862317
BUSINESS ADDRESS:STREET 1:80 PARK PLAZA T-6STREET 2:`CITY:NEWARKSTATE:NJZIP:07111BUSINESS PHONE:9734307000
MAIL ADDRESS:STREET 1:80 PARK PLAZA T-6CITY:NEWARKSTATE:NJZIP:07111
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:PUBLIC SERVICE ENTERPRISE GROUP INCCENTRAL INDEX KEY:0000788784STANDARD INDUSTRIAL CLASSIFICATION:ELECTRIC & OTHER SERVICES COMBINED [4931]IRS NUMBER:222625848STATE OF INCORPORATION:NJFISCAL YEAR END:1231
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-09120FILM NUMBER:06862315
BUSINESS ADDRESS:STREET 1:CORPORATE ACCOUNTING SERVICESSTREET 2:80 PARK PLAZA, 9TH FLOORCITY:NEWARKSTATE:NJZIP:07102-4194BUSINESS PHONE:973-430-7000
MAIL ADDRESS:STREET 1:CORPORATE ACCOUNTING SERVICESSTREET 2:80 PARK PLAZA, 9TH FLOORCITY:NEWARKSTATE:NJZIP:07102-4194
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:PSEG ENERGY HOLDINGS LLCCENTRAL INDEX KEY:0001089206STANDARD INDUSTRIAL CLASSIFICATION:ELECTRIC SERVICES [4911]IRS NUMBER:222983750STATE OF INCORPORATION:NJFISCAL YEAR END:1231
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:000-32503FILM NUMBER:06862318
BUSINESS ADDRESS:STREET 1:80 PARK PLAZASTREET 2:22ND FLOORCITY:NEWARKSTATE:NJZIP:07102-4194BUSINESS PHONE:973-456-3581
MAIL ADDRESS:STREET 1:80 PARK PLAZASTREET 2:22ND FLOORCITY:NEWARKSTATE:NJZIP:07102-4194
FORMER COMPANY:FORMER CONFORMED NAME:PSEG ENERGY HOLDINGS INCDATE OF NAME CHANGE:19990621
8-K1c05590e8vk.htmCURRENT REPORT
e8vk
New Jersey
001-09120
22-2625848
(State or other
(Commission File Number)
(I.R.S. Employer
jurisdiction of incorporation)
Identification No.)
Newark, New Jersey 07101-1171
New Jersey
001-00973
22-1212800
(State or other
(Commission File Number)
(I.R.S. Employer
jurisdiction of incorporation)
Identification No.)
Newark, New Jersey 07101-0570
Delaware
000-49614
22-3663480
(State or other
(Commission File Number)
(I.R.S. Employer
jurisdiction of incorporation)
Identification No.)
Newark, New Jersey 07102-4194
New Jersey
000-32503
42-1544079
(State or other
(Commission File Number)
(I.R.S. Employer
jurisdiction of incorporation)
Identification No.)
Newark, New Jersey 07102-4194
o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item7.01 RegulationFD Disclosure SIGNATURESIGNATURESIGNATURESIGNATURE
2
(Registrant)
By:
/s/ Patricia A. Rado
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
3
(Registrant)
By:
/s/ Patricia A. Rado
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
4
(Registrant)
By:
/s/ Patricia A. Rado
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
5
(Registrant)
By:
/s/ Patricia A. Rado
Patricia A. Rado
Controller
(Principal Accounting Officer)
6
EX-992c05590exv99.htmDISCUSSION MATERIALS
exv99
Edison Electric Institute
Annual Finance Committee Meeting
New York City
May 24-25, 2006
Exelon Corporation
Public Service Enterprise Group
Discussion Materials
Forward-Looking Statements
This presentation includes forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factorsthat could cause actual results of Exelon Corporation (Exelon), Commonwealth EdisonCompany, PECO Energy Company, and Exelon Generation Company LLC (collectively, theExelon Companies) to differ materially from these forward-looking statements include thosediscussed herein as well as those discussed in (a) the Exelon Companies' 2005 Annual Reporton Form 10-K-ITEM 1A. Risk Factors, (b) the Exelon Companies' 2005 Annual Report on Form10-K-ITEM 8. Financial Statements and Supplementary Data: Exelon-Note 20, ComEd-Note17, PECO-Note 15 and Generation-Note 17, and (c) other factors discussed in filings with theSEC by the Exelon Companies. The factors that could cause actual results of Public ServiceEnterprise Group Incorporated (PSEG), Public Service Electric and Gas Company, PSEGPower LLC, and PSEG Energy Holdings L.L.C. (collectively, the PSEG Companies) to differmaterially from these forward-looking statements include those discussed herein as well asthose discussed in (1) the PSEG Companies' 2005 Annual Report on Form 10-K, in(a) Forward Looking Statements (b) ITEM 1A. Risk Factors, and (c) ITEM 7. Management'sDiscussion and Analysis of Financial Condition and Results of Operations and (2) other factorsdiscussed in filings with the SEC by the PSEG Companies. A discussion of risks associatedwith the proposed merger of Exelon and PSEG is included in the joint proxystatement/prospectus that Exelon filed with the SEC pursuant to Rule 424(b)(3) on June 3,2005 (Registration No. 333-122704). Readers are cautioned not to place undue reliance onthese forward-looking statements, which apply only as of the date of this presentation. None ofthe Exelon Companies or the PSEG Companies undertakes any obligation to publicly releaseany revision to its forward-looking statements to reflect events or circumstances after the dateof this presentation.
Continued strong stand-alone performance at bothExelon and PSEG
Value-added, operationally-driven merger
Progressing towards close in third quarter 2006
Uniquely positioned generation business
Large, low-cost, low-emissions, exceptionally well-run nuclear fleet
Upside from end of below-market contracts in Illinois and Pennsylvaniaand re-pricing of forward market sales
Improving power market fundamentals
Stable growth delivery businesses with improvingoperations in three major metropolitan areas
Strong balance sheet and financial discipline
Experienced management team
Key Messages
Exelon Overview
(1) At 12/31/05; includes long-term contracts and investments in two facilities in Mexico of 230 MWs
Note: See presentation appendix for adjusted (non-GAAP) operating reconciliations to GAAP
Pennsylvania
Utility
Illinois
Utility
Nuclear Generation
Fossil Generation
Power Marketing
Nuclear Capacity: 16,856 MW
Total Capacity: 33,520 MW(1)
~50% of Operating Earnings
Customers
Electric: 3.7M 1.5M
Gas: - 0.5M
ComEd & PECO each contribute
~25% of Operating Earnings
Traditional T&D
Regional Wholesale Energy
2006E Operating Earnings: $2.0-$2.2B
2006 EPS Guidance: $3.00-$3.30
Assets (12/31/05): $42.4B
Note: See presentation appendix for reconciliation of adjusted (non-GAAP) operating EPS to GAAP EPS
1Q 2006 Highlights:
ICC approved ComEdenergy procurement case
Unfavorable weather
Timing-related items
Higher generation margins
Increased nuclear capacityfactor
Year-to-date Results:
10% Annual Growth
2001
2002
2003
2004
2005
Meeting the Financial Challenge
2004A 2005A 2006 Estimate 2007 East 2.78 3.09 3 0.24
$2.78
$3.10
$3.00-$3.30
+ GenerationMargins
+ Weather
+ Load Growth
- - Other
Exelon's EPS Drivers: 2004 - 2007
+ GenerationMargins
+ Load Growth
- - Weather
- - Higher O&M
+ End of IllinoisTransition Period
+ PECO GenerationRate
+ Load Growth
- Inflation
Note: See presentation appendix for adjusted (non-GAAP) operating EPS reconciliations to GAAP
2005 Guidance: $3.00 - $3.15
Strong earnings growth will continue in 2006and accelerate in 2007.
Adjusted (non-GAAP) operating EPS Guidance
2006E 2007E 2008E 2009E 2010E 2011E PECO 40000 40000 40000 40000 40000 0 ComEd 80000 0 0 0 0 0 Market 80000 135000 135000 135000 135000 175000
Market sales
PECO fixed price contract ~$50/MWhr
ComEd
fixed pricecontract~$35/MWhr
GWhrs
Notes: Approximate 25,000 GWhr projected decrease in supply after 2006 reflects areduction in purchased power. Chart representation for illustrative purposes only.
PECO
fixed pricecontract~$45/MWhr
Total Supply including Purchases
Generation Market Opportunity
Maximum allowable Generation share ofComEd auction (35% load cap)
2002 2003 2004 2005 2006E* 2007E* Generation 0.58 0.78 0.93 1.57 1.67 3.21 ComEd 1.13 1.18 1.16 0.77 0.78 0.5 PECO 0.7 0.65 0.69 0.76 0.7 0.65
A further shift in relative earnings contribution from Energy Delivery toGeneration will occur in 2007 when ComEd becomes a pure wires companyand Generation gets a market price for its Midwest production.
Composition of Operating EPS
* 2006: represents mid-point of guidance range. 2007: represents Thomson First Call consensus EPSestimate of $4.36 as of 5/19/06 for Exelon stand-alone, not company guidance. Segment results areillustrative only. Note: See presentation appendix for adjusted (non-GAAP) operating EPS reconciliations to GAAP.
$2.41
$2.61
$2.78
$3.10
$3.00-$3.30
(Illustrative)
Exelon Nuclear's sustained performance isa competitive advantage.
Meeting the Operational Challenge
Range of Nuclear Capacity Factor (2001-2005)
Sources: Platt's, Nuclear News, NRC and Department of Energy
Exelon's performance in cost isconsistently above average.
Meeting the Operational Challenge (Cont'd)
Range of Nuclear Production Cost (2001-2005)
Source: Electric Utility Cost Group
2004 & Q1-Q2 2005
8/31/05:Distribution casefiled
2/25/05:Procurement casefiled
Rates frozen since 1997 and subsequently reduced20%. Expected increase with ComEd's mitigationproposal will bring residential rates no higher than 1995level over 3 years. New rates effective January 1, 2007.
12/16/05: FERCconfirms auctionmeets itsprinciples
1/11/06: Legislativesession began
5/06: Legislativesession ended
1/24/06: ICC votes5-0 for reverseauction
Sept '06: Initialauction to takeplace
3/21-4/14/06:
Hearings scheduled
Meeting the Regulatory Challenge
6/8/06: ALJproposed order
Late July '06:ICC order
Q3-Q4 2005
Q1 2006
Q2-Q3 2006
Fall '06: Vetosession
Dec '04: Post-'06Final ICC StaffReport supportedauction process
ProcurementCase
DistributionCase
LegislativeSession
Q4 2006
PSEG Overview
PSEG Overview
Electric Customers: 2.1M
Gas Customers: 1.7M
Nuclear Capacity: 3,494 MW
Total Capacity: 14,636 MW
Traditional T&D
LeveragedLeases
2006E Operating Earnings(1)(2): $875M - $950M
2006 EPS Guidance:(1)(2) $3.45 - $3.75
Assets (as of 12/31/05): $ 29.8B
Domestic/Int'lEnergy
RegionalWholesale Energy
Includes the parent impact of $(60-70)M
Income from Continuing Operations, excluding merger-related costs
(3) Income from Continuing Operations, excluding merger-related costs of $3Mfor PSE&G and $12M for PSEG Power
2005 Results: $347 M(3) $418 M(3) $196 M
2006 Range: $270M - $290M(2) $500M - $550M(2) $165M - $185M
2005 2006 0.99 0.96 0.8 activity 1.17 0.81 negative activity 0.18 0.03 0.15
Power
Hope CreekOperations $.12
Recontracting &Higher Margins$.13
BGSS ($.11)
MTM ($.09)
New Assets($.03)
O&M ($.02)
AdditionalShares ($.03)
$/Share
Holdings
Prior year gainsEagle Point,MPC, SEGS($.13)
Taxes ($.05)
TIE MTM ($.02)
TIE Ops $.04
Other .01
PSE&G
Weather($.07)
ExcessDepreciationCredit ($.04)
Gas Margin($.02)
O&M& Other($.03)
AdditionalShares($.02)
Year to Date Results - 1st Quarter 2006
2006OperatingEarnings**
2005OperatingEarnings*
* Excludes ($.01) Merger Costs and $.02 Discontinued Operations
** Excludes ($.02) Merger Costs and $.02 Discontinued Operations
..81
2005 Actual Markets Operations New Assets Leases Other 2006 Guidance 2007 2008 West 890 890 1049 1010 966 914 0 0 0 Seminole 159 48 87 33 17 918 1000 1100 NDT 35 Weather
Driven byPowerRecontractingat HigherCommodityPrices
$3.45to$3.75**
$3.65*
PSEG Stand-Alone 2006 Earnings Guidance
More than 10% GrowthEach Year
244MAvg.Shares
253MAvg.Shares
NDT
NormalWeather
*Excludes 14 cents per share of merger costs that are included in Income from Continuing Operations
** Excluding merger costs that are included in Income from Continuing Operations
NYMEX Natural Gas
PJM West RTC
Henry Hub $/MBTU
PJM West RTC $/Mwh
PJM Pricing Environment
Electricity and Natural Gas Forward Price Movements
2003 - 2007
BGS Auction Results
Transmission
Ancillary services
Load shape
Congestion
Risk premium
Capacity
RTC ForwardEnergy Cost
RTC = round the clock
Full Requirements
2003 Auction 2004 Auction 2005 Auction 2006 Auction East 34 37 45.14 67.7 West 21.59 18.05 20.77 34.51
$33 - $34
$36 - $37
$55.59(34 Month NJ Avg.)
$55.05(36 Month NJ Avg.)
$65.91(36 Month NJ Avg.)
$44 - $46
~ $21
~ $18
~ $21
$102.21(36 Month NJ Avg.)
$67 - $70
~ $32
Increase in Full Requirements Component Due to:
Increased Congestion (East/West Basis)
Anticipated Increase in Capacity Markets/RPM
Higher Volatility in Market Increases Risk Premium
Significant Forward Hedging of Nuclear and Coal
Percentages based on PSEG Power assetownership as of March 31, 2006
> 95%
85 - 95%
65 - 80%
2006
2007
2008
% Hedged
0
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COMBINED ELECTRIC & GAS TERRITORIES
ELECTRIC TERRITORY
GAS TERRITORY
KEY:
N
E
W
S
6,400 employees
2 M electric customers
1.6 M gas customers
24/7 operation
2,600 sq miles inservice territory
Serving 6 major citiesand 300 communities
150,000 miles of wire
15,000 miles of pipe
PSE&G Overview
PSE&G Regulatory Filings
Excess Depreciation Credit $64M annual credit expired December 31, 2005 BPU Order Issued February 7, 2006 PSE&G to file 1Q 2006 actual results by June 15, 2006 $5M monthly impact on earnings and cash flowGas Base Rate CaseCurrent rates in effect since January 2002$133 M revenue increase requested3.78% Overall IncreaseRequested ROE 11%Depreciation Increase of $55MSchedule calls for BPU decision in early December
Residential Commercial Industrial Other Sales 14039 24155 6282 377
Residential Commercial Industrial Other Revenue 1644 2055 332 436
Residential Commercial Industrial Other 1453 699 463 1
Residential Commercial Industrial Other 1168 659 461 132
Electric
Gas
PSE&G Revenue & Sales
Gas Residential Bill Comparisons
Electric Residential Bill Comparisons
20,000
4,000
8,000
12,000
16,000
2002
2003
2004
2005
2006
2007
2008
2002 FPAuction
1 Year
170Tranches
2003 FPAuction10months
104Tranches
2003 FP Auction34 months
51 Tranches
2004 FPAuction - 1 Yr.
50 Tranches
2004 FP Auction - 3 Years
51 Tranches
2006 FP Auction Load
54 Tranches
2005 FP Auction Load50 Tranches
2007 FP Auction Load(projected)
Total NJ BGS Load (MW)
New Jersey BGS Auction Structure
EEG Merger Overview
Generation numbers include long-term contracts
Excludes any impact of purchase accounting
(3) Income from Continuing Operations
Combined
The Nation's Premier Utility Company
A "Powerful" Combination
EEG:
Enhanced earnings
Regulatory and market diversity
Increased operating flexibility
Strong, stable cash flow withcommitment to solid investmentgrade ratings
Experienced management team
PSEG Brings
Excellence in transmission anddistribution operations
Expertise in BGS auctiondevelopment and participation
Strong gas LDC experience
Exelon Brings
Premier nuclear operation
expertise
Broad platform for earnings
and cash flow growth
Large merger integration success
BGS = Basic Generation Service
LDC = local distribution company
Market Concentration Mitigation
7/1/05 - FERC issued merger approvalorder
Working with DOJ and NJ BPU
4,000 MW Fossil Divestiture
Must complete within 12 months ofmerger closing
Peaking: 1,200 MW
High Mid Merit: 900 MW
CCGT: 1,200 MW
Coal: 700 MW
Merrill Lynch advising on sale
2,600 MW Nuclear Virtual Divestiture
MDI selected as auction manager
LD product sold as "Eastern NuclearGeneration Aggregate (ENGA)"
PJM Market Monitor 2/9/06 reportconcluded that proposed 6,600 MWdivestiture passes his marketconcentration screens, that are basedon the DOJ merger policy guidelines,for the aggregate energy market
Combined Cycle
Peaking
High Mid Merit
Notes: The above map includes all EXC & PEG fossil assets in PJM-East that wereincluded in Appendix J-12 of Dr. William H. Hieronymus' testimony as part of EXC'sapplication under Section 203. Not all of these plants are necessarily under considerationfor divestiture as part of the mitigation plan. Some of the sites are multi-unit sites; however,on this map, the entire site may have been classified under a single category.
LD product = liquidated damages product
Corporate, Business Services 0.28 Trading 0.13 Fossil 0.1 Nuclear 0.29 Nuclear Production 0.2
20%~$70m
29%~$100m
28%~$100m
Trading
Genco Corp/Fossil
Corporate,BusinessServices
NuclearProductionImprovements
Corp/BSC 0.63 Utility 0.37
43%~$65m
T&DOperations
57%~$85m
Corporate,BusinessServices
13%~$45m
10%~$35m
NuclearCostReduction
Note: Regulated synergies reflect February 4, 2005 testimony.
Unregulated: ExelonGeneration
Regulated: ExelonEnergy Delivery
(70% = $350 million)
(30% = $150 million)
$500 Million of Synergies Beyond Year 1
Synergies are mostly unregulated and backed-up by detailed execution plans
Completed substantially all mergerintegration planning work -prepared to quickly execute
Merger Regulatory Update
Status of major filings/approvals:
FERC order approving merger without hearing issued 7/1/05
FERC approved the application as proposed with no surprises
New merger review provisions in Energy Policy Act of 2005 do not apply
Department of Justice Hart-Scott-Rodino review
The waiting period expired 9/1/05
DOJ review continues
Pennsylvania
PA Public Utility Commission approved settlement on 1/27/06
New Jersey
Schedule revised; hearings concluded end of March
Final NJ Board of Public Utilities' decision expected later; merger closeanticipated in the third quarter 2006
Dec 2004
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Q1 2006
AnnounceTransaction
12/20/04
ShareholderApprovals7/05
FERC,NJBPU,PAPUC, ICC*RegulatoryFilings
2/4/05
File JointProxyStatement
2/10/05
Work to Secure Regulatory Approvals
(FERC, DOJ, ICC*, PA PUC, NJ BPU, and others)
Develop Transition Implementation Plans
CLOSETRANSACTION
Beginning 1/17/05, Implement Nuclear Operating Services Agreement
Q2-Q32006
* Notice filing only
FERCApprovalOrder 7/1/05
Respond toDOJ 2ndRequest
NJ BPUHearingsScheduled
NJ BPU FinalDecisionExpected
PA PUCSettlementApproval1/27/06
Anticipated Merger Timeline
NJSettlementDiscussions
NJSettlementDiscussionsScheduled
Unmatched scale and scope through merger
Strong balance sheet and financial discipline
Stable growth delivery business with improvingoperations
Exceptional generation business uniquelypositioned to benefit from:
improving power market fundamentals
continuing excellence in operations
increasing environmental restrictions on fossil fuels
Experienced management team
EE&G Value Proposition
Appendix -
Additional Information
11,300 MW
5,291 MW
16,591 MW
8,772 MW
Midwest
Owned Generation:
Contracted Gen:
Total Generation:
ComEd PPA Avg Load:
2,299 MW
2,900 MW
5,199 MW
ERCOT/South
Owned Generation:
Contracted Gen:
Total Generation:
10,958 MW
4,414 MW
Mid-Atlantic
Owned Generation::
PECO PPA Avg Load:
25,099 MW
8,191 MW
33,290 MW
Total
Owned Generation:
Contracted Gen:
Total Generation:
Generating Plants %MW
Nuclear 50
Hydro 5
Coal 9
Intermediate 7
Peaker 29
Exelon Energy DeliveryRetail Customers
3.7M Electric in Northern Illinois
1.5M Electric and 0.5M Gas inSoutheastern Pennsylvania
542 MW
New England
Owned Generation:
Note: Megawatts based on Exelon Generation'sownership as of 12/31/05; excludes investments intwo facilities in Mexico of 230 MWs
Exelon is positioned as a multi-regional, baseloadproducer with merchant activity in the South
Our Regional Positions
Expected EPS Drivers
Guidance: $3.00 - $3.30
Notes: See presentation appendix for reconciliation to GAAP reported EPS
2006 Adjusted (non-GAAP) Operating EPS - Stand-alone 2005A Weather GeneratingRNF Load Growth O&M Outages Amort. / Depr. Interest Expense Other 2006 Budget Invisible dataset 0 2.9755 2.9755 3.3289 3.236732 3.222023 3.192536 3.131035 3.131035 0 Green 3.0999 0.1245 0.353419011 0.092167645 0.186595322 0.010930095 0.029486914 0.061501258 0.018965 3.15
2006Estimate
Weather
GenerationRNF
InterestExpense,Net
All Other
2005Actual
Higher generation margins and normal load growth, partially offset by higher O&M costs,
will continue to drive earnings growth in 2006
NuclearRefuelingOutages
Risks andOpportunities
+/- Nuclear Output
+/- Weather
+/- Power Prices
+/- Natural Gas Prices
+/- Economy
$3.00 - $3.30
Depr./Amort.
Inflation: ($0.10)Pension & Benefits: ($0.05)Option Expense: ($0.04)
LoadGrowth
O&M
Exelon Consolidated: FFO / Interest 6.1x BBB 4.5x - 6.5x FFO / Debt 31% 30% - 45%
Debt Ratio 51%(3)
Generation: FFO / Interest 12.7x BBB+ 5.5x - 7.5x FFO / Debt 92% 40% - 55%
Debt Ratio 31%
ComEd: FFO / Interest 3.9x A- 3.5x - 4.2x FFO / Debt 18% 20% - 28%
Debt Ratio 37%(3)
PECO: FFO / Interest 5.8x A- 3.5x - 4.2 x FFO / Debt 23% 20% - 28%
Debt Ratio 51%
(Stand-alone)
Notes: Exelon consolidated, ComEd and PECO metrics exclude securitization debt. See presentationappendix for FFO (Funds from Operations)/Interest and and FFO/Debt reconciliations to GAAP.
(1) Senior unsecured ratings for Exelon and Generation and senior secured ratings for ComEd andPECO; (2) Based on S&P Business Profiles 7, 8 and 4 for Exelon, Generation, and ComEd and PECO,respectively; (3) Reflects $1.2 billion ComEd goodwill write off in 2005
Exelon's Balance Sheet is strong
"A" TargetRange (2)
Projected 2006 Key Credit Measures
S&P Credit
Ratings(1)
ComEd becomes a pure wires business
Returns determined through traditional regulatory processes
Received Illinois Commerce Commission (ICC) approval of reverse auction withenergy cost pass through
- - Rate increase expected on delivery services tariff (DST)
Exelon Generation gets a market price for all its Midwest production
- - Approximately 90 TWh nuclear and 10 TWh coal
- - About 2/3 of which is currently supplied to ComEd at a discount to today'smarket price
Composition of earnings shifts from ComEd to Generation
ComEd is willing to work with stakeholders to mitigate the potentialcustomer impacts of transitioning to market prices for generation
Net Impact on earnings is expected to bepositive for Exelon overall ComEd Genco Exelon Generation Margin - + + DST + N/A + Net Earnings Impact - + +
End of Illinois Transition Period
33% of load
33% of load
33% of load
3 yrs. + 5 mos.
3 yrs.
3 yrs.
3 yrs.
2 yrs. + 5 mos.
3 yrs.
3 yrs.
3 yrs.
17 mos.
3 yrs.
3 yrs.
3 yrs.
3 yrs. >>
3 yrs.>>
Calendar Year
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
PJM Planning Year
(June 1- May 31)
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Transitional contracts shown in black.
17 mos.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
1 yr.
CPP-B
CPP-A
(for customers < 3 MW)
Term Structures for Fixed Price Auctions
ComEd Energy Procurement Plan
Notes: CPP-A is the auction for the annual fixed price product. It is the default service for customers between400 KW and 3 MW. CPP-B is the auction for the blended fixed price products (blended 3-year contracts)applicable to residential and small commercial customers below 400 KW.
Energy/
Capacity
$/MWh
POLR
Price
$/MWh
Variable Costs
Fixed Costs
0
14
27
41
54
68
95
108
1,500 Net MWe
93% Capacity Factor
~$1,580 / kWe
$4.00 / MWh Fuel
~3 years to Permit
~5 years to Construct
Tech. Readiness: Low
500 Net MWe
85% Capacity Factor
~$2,000 / kWe
$2.10 / MMBTU Fuel
~2 years to Permit
~3 years to Construct
Tech. Readiness: High
590 Net MWe
79% Capacity Factor
~$2,200 kWe
$2.10 / MMBTU Fuel
~2 years to Permit
~4 years to Construct
Tech. Readiness: Low
510 Net MWe
90% Capacity Factor
~$700/ kWe
$8.00 / MMBTU Fuel
~1.5 years to Permit
~2 years to Construct
Tech. Readiness: High
Global Assumptions: Costs exclude carbon capture; 40-year plant life; 9% after-tax weighted avg. cost of capital; 40% tax rate; 3% cost escalation.Fixed costs include fixed O&M, capital and return on capital. Variable costs include variable O&M, fuel and emissions costs. Fuel assumptions areIL #6 (coal) and ComEd City Gate (gas). POLR price assumed to be 1.35 x energy + capacity (equivalent to 1.5 x energy only) for base-loadedplants. (1) PJM NiHub forward for Cal 2007 ATC ($46.36/ MWh on 3/08/06).
81
2005 Historical
2007 Forward (1)
Break-Even Price for New Construction - 2006$
Current Market Prices
2004 and 2005 are actual settled prices.
Real Time LMP (Locational Marginal Price)
Next day over-the-counter market
Average NYMEX settle prices
2006 information is a combination of actual prices through April 30, 2006 and market prices for the balance of the year
2007 and 2008 are forward market prices as of April 30, 2006
Targeted capital investment and sound operating fundamentals driving fleetefficiency and reliability
Market-driven investments in plant improvements that increase unit profitability
Material condition improvement resulting in improved unit reliability, heat rate andcapacity
Capitalizing on market opportunities through improved operating flexibility and marketresponsiveness
Application of Management Model has resulted in improved operations; willprovide similar results in the larger PSEG fossil fleet
Exelon Power is well positioned to capitalize onmarket opportunities
Exelon Power Performance - Reliability
Nuclear Performance - Production
Sustained nuclear production reliability
Continued growth in generation output
Consistently high capacity factors
Continued excellence in refueling outageperformance
Exelon Nuclear's sustained reliability is a competitive advantage
Data sources: Nucleonics Week, Electric Utility Cost Group. Exelon data excludes Salem
Exelon capitalizes on its nuclearcost advantage
Consistent improvement inproduction cost
Industry leader in production costby a substantial margin
The size and scale of the fleetenables low-cost generation
Exelon's low-cost nucleargeneration is a competitiveadvantage
Data source: Electric Utility Cost Group
Nuclear Performance - Cost
2004 2005 2006 2007 2008 2009 2010 Contracted 10700 8991 6923 8456 7342 3629 2520 Flexibilities 1810 3517 1707 1571 186 70 Demand 8437 11587 8472 10027 7528 9196 7393
Uranium market prices have increased, butExelon is managing its portfolio
Reduced uranium consumption by 25%
Contracting strategy protects us fromincreases through 2008
Uranium is a small component of totalproduction cost
Expect long-term fundamentals in $20-25range due to new uranium production
Exelon Nuclear is managing fuel costs
Nuclear Performance - Fuel Costs
GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2003-2005
GAAP EPS Reconciliation 1Q 2006/2005
Three Months Ended March 31, 2006 and 2005:
2006 Exelon Earnings Guidance
Exelon's outlook for 2006 adjusted (non-GAAP) operating earningsexcludes mark-to-market adjustments from non-trading activities,income resulting from investments in synthetic fuel-producingfacilities, significant impairments of intangible assets, certainseverance costs, and certain costs associated with the proposedmerger with PSEG. These earnings estimates do not include anyimpact of future changes to GAAP. Earnings guidance is based onthe assumption of normal weather.
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