Exelon Reports First Quarter 2019 Results

Earnings Release Highlights

• GAAP Net Income of $0.93 per share and Adjusted (non-GAAP) Operating
  Earnings of $0.87 per share for the first quarter of 2019
• Exelon and subsidiaries upgraded by S&P and Fitch on successful
  execution of utility growth strategy
• Supreme Court upholds the legality of the ZEC program in Illinois and
  New York
• New Jersey BPU voted to grant ZECs to Hope Creek and Salem 1 and 2
• Strong utility operations with every utility achieving top decile
  CAIDI performance

CHICAGO–(BUSINESS WIRE)–Exelon Corporation (NYSE: EXC) today reported its financial results for
the first quarter of 2019.

“Delivering clean energy to address climate change while meeting the
needs of our customers and the communities we serve continues to drive
Exelon’s business results. Our electric and gas companies earned top
marks on key customer satisfaction and operating metrics, while our
nuclear generation fleet had its best quarterly capacity factor in 10
years,” said Christopher M. Crane, president and CEO. “The Supreme Court
declined to hear cases disputing Illinois’ and New York’s Zero Emissions
Credit programs, preserving these states’ emissions-free nuclear power
plants and the economic and environmental benefits they provide. We
marked the anniversaries of our mergers with Constellation and Pepco
Holdings, which not only have improved service for our customers but
also increased our regulated business mix and provided more stable
earnings.”

“Exelon made a strong start to 2019, with adjusted (non-GAAP) operating
earnings this quarter above the midpoint of our guidance range, at $0.87
per share,” said Joseph Nigro, Exelon’s senior executive vice president
and CFO. “Our strategy to invest in advanced technology and
infrastructure to grow our regulated business continues to prove
successful and, in recognition of this, both S&P and Fitch upgraded
Exelon’s credit ratings.”

First Quarter 2019

Exelon’s GAAP Net Income for the first quarter of 2019 increased to
$0.93 per share from $0.60 per share in the first quarter of 2018.
Adjusted (non-GAAP) Operating Earnings decreased to $0.87 per share in
the first quarter of 2019 from $0.96 per share in the first quarter of
2018. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP)
Operating Earnings, refer to the tables beginning on page 5.

The Adjusted (non-GAAP) Operating Earnings in the first quarter of 2019
reflect lower realized energy prices and the absence of the revenue
recognized in the first quarter of 2018 related to Zero Emissions
Credits (ZECs) generated in Illinois from June through December 2017,
partially offset by increased capacity prices at Generation. On the
utility side, the Adjusted (non-GAAP) Operating Earnings reflect higher
utility earnings due to regulatory rate increases at PECO, BGE and PHI
and lower storm costs at PECO and BGE.

Operating Company Results¹

ComEd

ComEd’s first quarter of 2019 GAAP Net Income and Adjusted (non-GAAP)
remained relatively consistent compared with the first quarter of 2018.
Due to revenue decoupling, ComEd’s distribution earnings are not
affected by actual weather or customer usage patterns.

PECO

PECO’s first quarter of 2019 GAAP Net Income increased to $168 million
from $113 million in the first quarter of 2018. PECO’s Adjusted
(non-GAAP) Operating Earnings for the first quarter of 2019 increased to
$169 million from $114 million in the first quarter of 2018, primarily
due to regulatory rate increases and the absence of the March 2018
winter storm costs.

BGE

BGE’s first quarter of 2019 GAAP Net Income increased to $160 million
from $128 million in the first quarter of 2018. BGE’s Adjusted
(non-GAAP) Operating Earnings for the first quarter of 2019 increased to
$161 million from $129 million compared with the first quarter of 2018,
primarily due to regulatory rate increases and the absence of the March
2018 winter storm costs. Due to revenue decoupling, BGE’s distribution
earnings are not affected by actual weather or customer usage patterns.

PHI

PHI’s first quarter of 2019 GAAP Net Income increased to $117 million
from $65 million in the first quarter of 2018. PHI’s Adjusted (non-GAAP)
Operating Earnings for the first quarter of 2019 increased to $118
million from $65 million in the first quarter of 2018, 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 first quarter of 2019 GAAP Net Income increased to $363
million from $136 million in the first quarter of 2018. Generation’s
Adjusted (non-GAAP) Operating Earnings for the first quarter of 2019
decreased to $294 million from $474 million in the first quarter of
2018, primarily due to lower realized energy prices and the absence of
the revenue recognized in the first quarter of 2018 related to ZECs
generated in Illinois from June through December 2017, partially offset
by increased capacity prices.

The proportion of expected generation hedged as of March 31, 2019, was
90 percent to 93 percent for 2019, 64 percent to 67 percent for 2020 and
38 percent to 41 percent for 2021.

___________

¹Exelon’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.

Recent Developments and First Quarter Highlights

• Credit Ratings Upgrade: On March 1, 2019, S&P upgraded Exelon
  and all its subsidiaries by one notch. Exelon’s issuer credit rating
  was raised from BBB to BBB+. On March 14, 2019, Fitch Ratings upgraded
  the senior unsecured rating for Exelon from BBB to BBB+ and the senior
  unsecured ratings of PECO and BGE to A- from BBB+. In addition, Fitch
  upgraded PECO’s first mortgage bonds from A to A+ and BGE’s first
  mortgage bonds from A- to A. Both agencies noted that their upgrades
  reflect Exelon’s solid 2018 financial results, which demonstrated
  successful execution of its value proposition to grow the utilities
  and harvest free cash flow from Generation to support that growth. S&P
  and Fitch were encouraged by Exelon’s discipline and commitment to
  delivering on its long-term strategy to maintain strong operational
  and financial measures, succeed in the execution of ZECs, improve
  operations and regulatory framework at PHI, and focus on utility
  growth. This strategy has led to a meaningful reduction in overall
  business risk by changing the long-term earnings profile outlook of
  the Company to become more regulated.
• New Jersey Board of Public Utilities (NJBPU) Awards ZEC Payments:
  In 2017, Public Service Enterprise Group Incorporated (PSEG) announced
  that its New Jersey nuclear plants, including Salem, of which
  Generation owns a 42.59 percent ownership interest, were showing
  increased signs of economic distress, which could lead to early
  retirement. PSEG is the operator of Salem and has the decision-making
  authority to retire Salem. In 2018, New Jersey enacted legislation
  that established a ZEC program that provides compensation for nuclear
  plants that demonstrate to the NJBPU that they meet certain
  requirements, including that they make a significant contribution to
  air quality in the state and that their revenues are insufficient to
  cover their costs and risks. On April 18, 2019, the NJBPU approved the
  award of ZECs to Salem 1 and Salem 2. Assuming the New Jersey ZEC
  program operates as expected, Generation no longer considers Salem to
  be at heightened risk for early retirement.
• Supreme Court Upholds Illinois and New York ZECs: On April 15,
  2019, the U.S. Supreme Court denied the plaintiffs’ petition seeking a
  review of circuit court decisions in Illinois and New York related to
  ZECs. The U.S. Supreme Court decision affirmed the right for states to
  create climate and clean energy policies.
• ComEd Distribution Formula Rate Filing: On April 8, 2019, ComEd
  filed its annual distribution formula rate update with the Illinois
  Commerce Commission (ICC). The ICC approval is due by December 2019
  and the rates will take effect in January 2020. The filing request
  includes a total decrease to the revenue requirement of $6 million,
  reflecting an increase of $57 million for the initial revenue
  requirement for 2019 and a decrease of $63 million related to the
  annual reconciliation for 2018. The revenue requirement for 2019 and
  annual reconciliation for 2018 provide for a weighted average debt and
  equity return on distribution rate base of 6.53 percent inclusive of a
  requested ROE of 8.91 percent.
• ACE New Jersey Electric Distribution Base Rate Case: On March
  13, 2019, the NJBPU issued its order providing for a net increase to
  ACE’s annual electric distribution base rates of $70 million (before
  New Jersey sales and use tax) and reflecting a ROE of 9.6 percent. The
  new rates were effective April 1, 2019.
• Nuclear Operations: Generation’s nuclear fleet, including its
  owned output from the Salem Generating Station and 100 percent of the
  CENG units, produced 45,715 gigawatt-hours (GWhs) in the first quarter
  of 2019, compared with 46,941 GWhs in the first quarter of 2018.
  Excluding Salem, the Exelon-operated nuclear plants at ownership
  achieved a 97.1 percent capacity factor for the first quarter of 2019,
  compared with 96.5 percent for the first quarter of 2018. The number
  of planned refueling outage days in the first quarter of 2019 totaled
  74, compared with 68 in the first quarter of 2018. There were no
  non-refueling outage days in the first quarter of 2019, compared with
  six in the first quarter of 2018.
• Fossil and Renewables Operations: The Dispatch Match rate for
  Generation’s gas and hydro fleet was 97.8 percent in the first quarter
  of 2019, compared with 98.1 percent in the first quarter of 2018.
  Energy Capture for the wind and solar fleet was 96.5 percent in the
  first quarter of 2019, compared with 95.2 percent in the first quarter
  of 2018.
• Financing Activities:
  • On February 19, 2019, ComEd issued $400 million aggregate
    principal amount of its First Mortgage Bonds, 4.00 percent Series
    126, due March 1, 2049. ComEd used the proceeds to repay a portion
    of its outstanding commercial paper obligations and for general
    corporate purposes.

GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliation

Adjusted (non-GAAP) Operating Earnings for the first 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 first quarter of 2018 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 fund
investments, the marginal statutory income tax rates for 2019 and 2018
ranged from 26.0 percent to 29.0 percent. Under IRS regulations, NDT
fund investment 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 fund investments were
45.4 percent and 40.3 percent for the three months ended March 31, 2019
and 2018, respectively.

Webcast Information

Exelon will discuss first quarter 2019 earnings in a one-hour conference
call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time).
The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.

About Exelon

Exelon Corporation (NYSE: 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 2018 revenue of $36 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 32,000 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 more than two-thirds 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. The Company 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 May 2, 2019.

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. The factors that could cause
actual results to differ materially from the forward-looking statements
made by the Registrants include those factors discussed herein, as well
as the items discussed in (1) the Registrants’ 2018 Annual Report on
Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
and (c) ITEM 8. Financial Statements and Supplementary Data: Note 22,
Commitments and Contingencies; (2) the Registrants’ First Quarter 2019
Quarterly Report on Form 10-Q (to be filed on May 2, 2019) in (a) Part
II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial
Information, ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations and (c) Part I, Financial
Information, ITEM 1. Financial Statements: Note 16, Commitments and
Contingencies; and (3) other factors discussed in filings with the SEC
by the Registrants. Readers are cautioned not to place undue reliance on
these forward-looking statements, 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.

Contacts

Robin Gray
Corporate Communications
202-637-0317

Emily
Duncan
Investor Relations
312-394-2345