Andrew Plenge:

Thank you, Gigi. Good morning, everyone. We're pleased to have you with us for our 2024 second quarter earnings call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. Other members of Exelon's senior management team are also with us today, and they will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information can be found in the Investor Relations section of Exelon's website. We would also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements, which are subject to risks and uncertainties. You can find the cautionary statements on these risks on Slide 2 of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin Butler, Exelon's President and CEO.

Jeanne Jones:

Thank you, Calvin. And good morning, everyone. Today, I will cover our second quarter financial update, along with the outlook for the second half of 2024 and our progress on the rate schedule and highlight two projects that demonstrate the breadth of our opportunities associated with growing load and infrastructure demand. Starting on Slide 6, we show our quarter-over-quarter adjusted operating earnings lock. As Calvin mentioned, Exelon earned $0.47 per share in the second quarter of 2024 versus $0.41 in the second quarter of 2023, reflecting higher results of $0.06 per share over the same period. Earnings are higher in the second quarter relative to the same period last year, driven primarily by $0.06 of higher distribution and transmission rates associated with incremental investments and completed rate cases net of associated depreciation. And $0.03 of favorable weather, partially offset by $0.03 of higher interest expense due to higher levels of debt at increased interest rates. As Calvin mentioned, we delivered earnings results above the guidance we provided in our prior quarter call due to favorable weather conditions, early execution of our weather and storm recovery plan and timing of ComEd’s distribution revenues. Operating earnings of $1.16 per share through the first quarter of 2024 reflects 47% projected full year earnings, which is in line with how we’ve affirmed through the first half of 2023. As we look ahead to next quarter, we expect a relative EPS contribution in the third quarter to be largely in line with prior year at approximately 27% of the midpoint of our projected full year earnings guidance range. Our outlook for the second half of 2024 assumes fair and reasonable outcome for Pepco DC’s multiyear plan rate case and the BGE and ComEd reconciliation, and it incorporates July weather and storm activity with the same geothermal conditions for the balance of the year. On a full year basis, we remain on track for operating earnings of $2.40 to $2.50 per share in 2024, and we reaffirm our long-term annualized operating earnings per share guidance range of 5% to 7% and through 2027 with the expectation to be at the midpoint or better of that growth range. Turning to Slide 7, as Calvin highlighted, there have been some important regulatory developments across our utilities that I will review, beginning with ComEd. Coming out of two rounds of staff and intervener testimony, we are encouraged by the support that ComEd revised grid plan is compliant with the requirements of the Climate and Equitable Jobs Act. And that it represents an appropriate balance between affordability and supporting the state’s clean energy goals. With our proposal representing an average annual increase to the total residential customer bill of only 1.8% through 2027 relative to December’s final order. ComEd filed its Solar Parties [ph] testimony with the Illinois Commerce Commission on July 31, marking the end of rebuttal [ph] testimony and another key milestone in the procedural process. The company and parties to the case had into evidentiary hearings in mid-August, followed by the briefing process in September and a proposed ALJ order in mid-October. A final order is expected in December 2024 for rates that will go in effect by the start of 2025. Turning to Pennsylvania, on July 16, PECO filed its rebuttal testimony with the Pennsylvania Public Utility Commission in support of both its electric and gas distribution rate cases ahead of the hearings in early August. The cases are following the expected schedule with orders anticipated from the PAPUC before the end of 2024. Moving on to Pepco Holdings on July 30 to DC Public Service Commission held legislative style of hearing to re-hear oral arguments from key stakeholders and Pepco DC on its pending multiyear re-plan filing. We are committed to working with DC towards their goals to meet their energy transformation aspirations, having at the commission’s direction provided an extensive lessons learned from the first MYP and supplemental testimony detailing each of the benefits as well as enhancements and modifications to improve the MYP framework. Based on the latest procedural schedule, which concludes with the post-hearing brief in late August, we anticipate a final order in the fourth quarter of this year. I'll close by providing an update on the Pepco Maryland final order we received on June 10, which adopted a one-year plan with a total revenue increase of $44.6 million and a 9.5% ROE. We appreciate the ability to file for new rates effective at the end of the one-year plan and the ability to reconcile eligible costs in excess of those approved. And while we were disappointed not to receive rates over the full period requested, we remain committed to engaging with the Maryland Public Service Commission on its lessons learned process, which we anticipate will commence next year. As Calvin noted, we believe strongly in the merits of the multiyear plan framework, and we embrace the opportunity to discuss ours and other stakeholders' learnings after 3.5 years operating under that construct, where we've consistently delivered above average reliability under below average rate. In the meantime, Pepco is requesting that the commission rehear and reconsider certain aspects of their decision, including some of that Fed proposed for removal from the plant. As always, we advocate for transparency, accountability and alignment in the rate making constructs in our jurisdictions and are prepared to work with each to ensure just and equitable energy transformation for all. More details on the rate cases can be found on Slides 20 to 30 of the appendix. On Slide 8, we highlight two projects that showcase the power of our footprint and platform to attract and meet a variety of low growth opportunities. This growth is driven by continued momentum around AI-driven data center demand, onshoring of energy intensity industries and overarching economic development, electrification and decarbonization trends. In June, ComEd joined Compass Datacenters to launch one of the largest ever Illinois data center projects, bringing over 1,000 construction jobs to the nearly 200-acre former Sears headquarters campus. The project helps ComEd further advance economic development in the area and is a great illustration of why Northern Illinois ranks within the top five in the nation for data centers and is a top attraction for other high-density load customers. With ComEd having 25 years of experience working with data center customers and recognized for its best nation reliability last year, companies in energy-intensive industries are drawn to the region due to strong infrastructure, ideal climate conditions, access to talent and affordable rates for all customers, supported by our ability to deploy investment in an efficient manner. This growth in high-density load, not just in data centers, but also in solar panel production, EV battery manufacturing, hydrogen production, quantum computing and other industries is one of several drivers for why our transmission spend increased by 45% in our four-year plan as discussed in the Q4 call and shown again on Slide 13 of the appendix. It also drove a significant update in new business in our refiled grid plan, with final spend eligible for full reconciliation under the multiyear plan framework. Supporting this development ensures the economic vibrancy of our communities. As last year alone, ComEd was part of securing 15 new commercial projects that are set to add over 4,000 jobs and more than $8.6 billion of local investments. Shifting the focus to Maryland, BGE is playing a crucial role in transforming the Baltimore Peninsula into the city's newest and largest mixed-use community. The area which will benefit from multiple new or rebuilt substations will help to release capacity constraints and provide grid resilience to both new and existing customers. Accommodating 100 megawatts of load and supporting the connection of distributed solar and EV charging stations. The 235-acre project will result in new and redeveloped mixed-use and residential buildings and host the new Under Armour global headquarters, playing a central role in the revitalization of South Baltimore. As the largest transmission and distribution utility in the country by customer account, we are an integral partner to areas like Baltimore City for revitalization and economic development, addressing aging infrastructure challenges, the need for new development and electrification and the capacity constraints from increased load. At these two projects highlights, we are uniquely positioned to support our jurisdictions to meet load growth demands in an equitable manner, no matter where the load is located. We operate in six utilities across seven jurisdictions, including FERC, are a leader and operator in the sector and provide a world-class customer experience with bills and rates below national averages. Beyond our size, scale and operational excellence, we have one Exelon platform to unify our utilities that allows us to support customers at a national level, identifying attractive locations to support incremental load in states of progressive clean energy policies. The momentum around new business in our jurisdictions continues to be very strong, a testament to the power of Exelon's platform. I will conclude with a review of our balance sheet activity on Slide 9. As a reminder, we continue to project to have approximately 100 basis points of cushion on average for our consolidated corporate credit metrics above the downgrade thresholds of 12% specified by S&P and Moody's, demonstrating our commitment to maintaining a strong balance sheet. And while we await specific guidance on implementation of the corporate alternative minimum tax, I'll remind you that our plan incorporates the assumption that the regulations will not allow for repairs. If implemented in a way that mitigates the cash impact, we'd expect an increase of approximately 50 basis points to our consolidated credit metrics on average over the plan, likely putting us in the higher end of our targeted 100 to 200 basis points of cushion. From a financing perspective, we successfully raised $1.6 billion for ComEd and BGE in the second quarter, now having completed 90% of our planned long-term debt financing needs for the year. The activity to-date, along with our pre-issuance hedging program, positions us well for the balance of the year and beyond. We continue to see strong investor demand for our debt relative to the sector, which is proof of the strength of our balance sheet and our value proposition as the premier T&D utility with low-risk attributes. There has been no change in our guidance to issue $1.6 billion of equity from 2024 to 2027 to fund our estimated $34.5 billion capital plan in a balanced manner. We continue to expect to issue approximately $150 million this year, and the balance rapidly over 2025 to 2027, approximating $475 million annually. We will update you as we make progress on that plan. Thank you. I’ll now turn the call back to Calvin for his closing remarks.

Operator:

Thank you. [Operator Instructions] Our first question comes from the line of Shar Pourreza from Guggenheim Partners.

Shar Pourreza:

Good morning, Calvin. Hey, Jeanne. Good morning, Jeanne. So Calvin, just coming off sort of this blowout PJM capacity print, we’ve heard some of your peers yesterday kind of highlighting that they’re talking to their state policymakers on solving this kind of resource adequacy issue. I guess, what conversations are you having either in Illinois, Maryland or Pennsylvania on the backdrop at this point? And do you think we can see merchant new entry all states have to step in? Thanks.

Jeanne Jones:

Yes. No, I think I’d just reiterate, right, it obviously signals to your point, Shar the need for more generation. We’ll see what happens on the merchant side, but there’s also the need for more transmission. Calvin talked about the work we’re doing on the brand insurers. We’re going to continue to lean in on that, we think there are some cost-effective solutions there. But there’s also an expansion of kind of what we do today in terms of things to help our customers manage their affordability. So for example, energy efficiency. We’ve been doing energy efficiency in ComEd in 2008, and we hit a milestone this year where we marked $9 billion in customer savings, since 2008. That's remarkable, right? That work needs to continue to expand and get smarter and better as more demand comes on the grid, and we're leaning into that. We also hit a milestone of hitting a 1 gigawatt of distributed generation under our rebate program in Illinois this year. So we're going to continue, as you mentioned, having those discussions with our policy makers, what else can we do there, good for customers, good for investment, brings down and addresses the competing demand because we want to bring that demand, right? We want that demand to come. We just need to manage the other side of it, which we're excited to do, and we've done before, and we'll keep doing. And then on top of that, we're going to continue to focus on what we can control, and that includes our O&M, continuing to manage that historically been at that 2%, projecting to be at that 2% when – our customers are facing power price increases went well above that and then just normal inflation. So we're doing a good job there. We'll continue to lean in there. But I think, look, it's meaningful and I think it opens up opportunities to provide solutions, and we look forward to doing that.

Shar Pourreza:

Got it. And then I think some of us have covered the space long enough to kind of remember LCAP, MCAP, 11 years ago, 12 years ago. And that obviously was struck down by the courts. Are you looking at a state mechanism to potentially own like peaking assets in rates? Is that what you're referring to?

Shar Pourreza:

Okay. Perfect. And then just on the Susquehanna protest, just lastly here. It's obviously a focus, FERC is slated to act shortly. I guess, assuming the amendment is not set for paper hearing. How do you want FERC to resolve kind of the broader issue, kick it back to the RTO, start an NOI for an eventual [indiscernible] just any thoughts there? Appreciate it.

Shar Pourreza:

Got it. All right, perfect. Thank you guys. Much appreciate it. Talk to you soon.

Operator:

Thank you. [Operator Instructions] Our next question comes from the line of David Arcaro from Morgan Stanley.

David Arcaro:

Hey, good morning. Hey, thanks for taking my questions. Wondering if you could give a broad perspective on what you're seeing in terms of state support for attracting data centers. It sounds like you had some encouraging things to say. Just are you seeing any evidence of pushback in any areas or the opposite? Are there incremental signs that some of the key states, I'm thinking Illinois, Pennsylvania continue to be supportive of bringing that industry to the state.

Mike Innocenzo:

Yes. I think we've seen no shift. I think our states and across all of our jurisdictions continue to see the opportunities created by data centers. for jobs, economic development and continue to be very supportive, but also continue to be very engaged in the process to make sure that it's done in a thoughtful way where it's fair and equitable cross.

Calvin Butler:

Not to tell you what I have our CEO, and what I'm going to do is ask because I think we see the most activity right now, as you alluded to, it's happening in Illinois. I'm going to ask Gil Quiniones, he's ComEd President and CEO, to provide more color. And then for Carim, and/or David Velazquez, Tyler Anthony, if you guys have anything to add, please don't hesitate. Gil?

Calvin Butler:

Any other CEOs have anything you'd like to add?

Calvin Butler:

Yes.

Dave Velazquez:

And Dave Velazquez for PECO in Pennsylvania, is beginning to see increased interest whether there are a couple of hundred to several hundred megawatts and a number of those are in engineering studies already and probably the next few months have had a few more entering engineering studies as well.

David Arcaro:

Okay, great. Thanks for the input across the board. Very helpful.

Operator:

Thank you. [Operator Instructions] Our next question comes from the line of Steve Fleishman from Wolfe.

Steve Fleishman:

Hey good morning, thanks. So just on – I guess, first on Illinois. The – you mentioned these agreements with some parties in the grid plan. Could you talk to kind of what parts of the grid plan they've been – they've kind of agreed to. And also just I guess the difference between – what we've seen is the commission kind of ignore staff and ALJs and other things, but does it make a difference if there's actually like settlements as opposed to just views – yes. Thanks.

Gil Quiniones:

No, I think that – you've said it correctly that these agreements signify progress towards the specific items that the commissioners cited in their final order. So there are two areas. One area is compliance and policy issues, and these agreements basically codify alignment in those policy and compliance issues. Now the rate case really is more on investments and cost benefit, and we're narrowing our differences in that area, too, leading up to the evidentiary hearing, as Jeanne mentioned, which will be on August 14 to August 16.

Steve Fleishman:

Okay. Just one clarification. So I think there's – I don't know there's like 11 metrics that need to be met. So could you just maybe tie in the answer of what's agreed upon to those metrics? Like there’s an agreement on the 11 metrics? Or – is it kind of more of a broad – yes.

Steve Fleishman:

Yes.

Steve Fleishman:

Okay. And I guess one other question related to the – I guess, co-location issue. Some of the other distribution utilities, including PPL itself obviously support the filing as it is. And PPL, I guess, found it in the interest of their customers, the update. So I guess I would be interested in did you pursue kind of trying to resolve this issue directly before you made this filing, to see if there was a win-win. Yes.

Colette Honorable:

Thank you. Colette Honorable, I'm EVP of Public Policy and Chief External Affairs Officer. Steve, I appreciate the question. I will partly add to Calvin's comments. We are very open to working with anyone on these ratemaking issues. And this is what we are speaking about. We appreciate that PPL has a different perspective here. The reason we got involved was because of the broader policy implications. And we need to prefer to provide that guidance through policy. That will help all of us. And most importantly, it will help us understand the impacts of these sorts of transactions on all PJM customers. And so we look forward to the dialogue and discussion will continue to remain engage at FERC with all stakeholders and most of all, our customers because as it has been demonstrated here this morning, we will continue to provide strong solutions for our large load customers, but that work has to be done in consideration of the cost impact, the affordability impacts for all customers and then ultimately, reliability.

Calvin Butler:

Thank you, Steve.

Calvin Butler:

Good morning, Paul.

Paul A. Zimbardo:

Hi. Good morning, team. And thank you for focusing so much on affordability. I want to continue that a little bit. Just after the PJM auction, if you have a rough view on what the customer bill impacts could be across the footprint, like BGE, in particular. And if you're going to kind of use this to advocate for acceleration of transmission procurement in the region?

Paul A. Zimbardo:

Okay. Great. And I know everyone's focused on for [indiscernible]. I was hoping the related but different topic in Maryland, like Senate Bill 1, the co-location study. Just what are your legislative priorities there? And if you could give any additional context. I know there's been some strong comments filed by parties? Thanks.

Paul A. Zimbardo:

Great. No, thank you very much and thank you for keeping us all on the edge of our seats in the Dog Days of the summer.

Jeanne Jones:

Welcome back, Paul.

Operator:

Thank you. Our next question comes from the line of Anthony Crowdell from Mizuho.

Anthony Crowdell:

Hey, good morning, team. Just a couple quick ones, I guess. If I could follow up on Steve's question on the FERC, the ISA proceeding, and just one is, do you have any idea if the commission wanted to hold hearings, the timing that would occur before a decision?

Anthony Crowdell:

Got it. And then the filing was made in conjunction with AEP. I'm curious on how do you, or how just how did they get, or how did they sign on? Did you solicit other utilities? And some decide, AEP decided to sign on and others did not. Or I'm just curious, I understand that this is not about co-location, it's about rate design. It was actually struck me that more utilities than sign on. And I guess that's the root of my question.

Anthony Crowdell:

Great. And switching gears, my last question refers to Slide 8, and you talk about all the opportunity in Illinois. I guess, given the low ROE that you received from the last rate case, would most of your investment or all your investment be focused on transmission, like, I guess, is there reluctance to maybe do distribution investment Illinois, given the lower returns that they're awarding?

Anthony Crowdell:

Great. Thanks for taking my questions.

Jeanne Jones:

Thank you, Anthony.

Calvin Butler:

Thank you, Gigi. And as always, thank you guys for your interest and participation in our earnings call. As always, we remain open to answer any questions and just get feedback with you throughout the day or follow-up to this. So I just wanted to say how much appreciation from the team at Exelon. We appreciate your interest in the company and just engaging with us. So with that, Gigi, this concludes the call.

Calvin Butler:

Thank you, Jeanne. I will close on Slide 10 by reminding you of your 2024 -- of our 2024 business priorities and commitments and the unique power of our platform.

Operator:

[Operator Instructions] Our first question comes from the line of Jeremy Tonet from JPMorgan Securities, LLC.

Calvin Butler:

The short answer is yes. And I would tell you that we continue to see significant activity around high-density load growth in general. As we discussed in our -- as recently as our Q4 2023 earnings call, we have high probability of load growth, not only in Illinois, but Pennsylvania.

David Velazquez:

This is Dave. Just to add that we have continued to see different businesses, including some interest from data centers in the PECO territory and we have the infrastructure to be able to support that both on the generation side and also have the transmission infrastructure, again, would have to be reinforced in certain places to be able to serve those loads.

Calvin Butler:

And the key to your question for me is that the utilities in all of our jurisdictions, we will be a partner in economic development, identifying areas and opportunities to put the assets of our jurisdictions in play. Thank you for the question.

Calvin Butler:

Great question, and Dave is going to take that.

Carly Davenport:

Just wanted to ask on ComEd. Just as you think about getting the timing to getting clarity around the grid plan refiling? Obviously, the rehearing was resolved sooner than anticipated as you highlighted. Is there any potential for that refiling resolution to also come sooner? Or do you think it's really a December event?

Gil Quiniones:

No. I think -- just a couple of important things to note. On its own accord, the ICC voted on an interim order to say that they will decide on this by December. And subsequent to that, the administrative law judge on April 11, set forth the procedural schedule to guide it for a decision in December of this year.

Jeanne Jones:

Carly. No, I think getting that corporate financing done was important, and we had also pre-issuance hedge, a significant portion of that as we always do heading into the year. So that's why we give you the sensitivity on an open year, it's about $0.01 absent any hedges. So we've really -- we work hard leading into the year to mitigate it and then getting it done early in the year, leaves -- any amount that isn't hedged sort of takes that risk off the table.

Calvin Butler:

Let me just always say thank you for joining today and for your interest in Exelon. Always appreciated you taking the time and asking questions, and we look forward to connecting with all of you over the next several months. And with that, Gigi, that concludes today's call.

Andrew Plenge :

Thank you, Gigi, and good morning, everyone. We're pleased to have you with us for our 2023 fourth quarter earnings call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. Other members of Exelon senior management team are also with us today, and they will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information can be found in the Investor Relations section of Exelon's website. We'd also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements, which are subject to risks and uncertainties. You can find the cautionary statements on these risks on Slide 2 of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin Butler, Exelon's President and CEO.

Jeanne Jones:

Thank you, Calvin and good morning everyone. Today, I will cover our fourth quarter and full year results, key regulatory developments in Illinois and across the platform, and provide annual updates to our financial disclosures, including 2024 guidance. Starting on Slide 7. As Calvin noted, we delivered strong financial results for the second year in a row despite the historically mild weather impacting our non-decoupled jurisdictions. For the fourth quarter, Exelon earned $0.62 per share on a GAAP basis and $0.60 per share on a non-GAAP basis. For the full year 2023, we earned $2.34 per share on a GAAP basis and $2.38 per share on a non-GAAP basis, results that are at the top end of our narrowed guidance range, and represent almost 6% growth off the midpoint of the 2022 guidance range. Throughout the year, we benefited from a higher earned ROE at ComEd, primarily due to rising treasury rates, impacting ComEd's distribution ROE as well as favorable depreciation of PECO relative to expectations. Additionally, the ruling in December on BGE's reconciliation from its first multiyear plan approved recovery for over 90% of the requested 2021 and 2022 amounts and established a precedent to record a portion related to the 2023 reconciliation, which is expected to be determined in a future proceeding. These benefits, coupled with our ability to manage our plans across the platform, allowed us to mitigate nearly $140 million of weather and storm challenges relative to prior year, along with the labor strike in New Jersey that occurred late in the year, driving contracting costs up year-over-year. In a year in which we faced multiple headwinds, we delivered on our goal to achieve earnings in the top half of our guidance range. Quarter-to-date and year-to-date drivers relative to prior year are detailed in the appendix on Slides 30 and 31. Turning to our outlook for 2024, we are initiating adjusted operating earnings guidance of $2.40 to $2.50 per share, with BGE and PEPCO entering the next cycles of their multiyear plan, 2024 earnings are expected to grow approximately 4% relative to the midpoint of our 2023 original guidance range. Compared to our last update, the reduction in expected year-over-year earnings growth is driven solely by the December 14th rate order issued by the Illinois Commerce Commission and ComEd multiyear rate plan. which we were only able to partially mitigate in 2024 with cost management, redirected investment to serve our customers, and margin we had built up in the plan. Outright rejection of the grid plan, the challenging financial support for our net distribution investment in the December order, and uncertainty around the amount of spend ComEd will be able to recover has caused us to dramatically reduce the originally planned level of distribution investment in Illinois this year. Until there is resolution on the grid plan, our 2024 plan has been risk-adjusted for the overall uncertainty and prudently assumes earnings at ComEd consistent with the December rate order. While the rehearing on the interim revenue requirement is expected to provide additional cost recovery and so grid plan approval, we have not assumed this as our base case. Therefore, despite the uncertainty that remains at ComEd, we expect our 2024 range to cover a range of possible outcomes, from not receiving any rate relief relative to the final order to the prospect that we receive an approval of our revised grid plan. The uncertainty in Illinois will further cause volatile quarterly earnings shaping in 2024, both due to the significant rework of ComEd's operational plan in 2024, as well as due to the fact of the prospects for the rehearing and revised grid plan processes to impact ComEd expected revenue requirements. We currently expect to realize approximately 29% of full year earnings in the first quarter, which accounts for the December rate order ComEd, seasonal weather patterns and the completed rate cases at our other utilities. Moving to Slide 9. I would like to take a moment to step through the regulatory developments in Illinois since receipt of the ITC's final order in mid-December. First, starting with the application for rehearing on December 22, and ComEd acted swiftly to request the commission correct fundamental, legal and evidentiary errors around four primary issues with the final order. Return on equity, capital structure, return on pension assets and the basis of the ordered revenue requirement across all test years that was adopted absent an approved grid plan. At an open meeting on January 10, the ICC granted one portion of ComEd's application. Directing that 150-day rehearing process reconsider the year-over-year revenue requirement increases absent an approved grid plan. While ComEd anticipates that the revenue requirements will be further updated upon approval of our revised grid plan, the rehearing order due on June 10 is expected to reset interim rates for 2024 at the discretion of the commission. Immediately following the open meeting on January 10, ComEd filed with the Third District of Appellate Court, and appeal of the three other elements of the ICC's final order on which rehearing was denied. While there is no set schedule or deadline for an appeal conclusion, we will seek to move expeditiously through the core process. Separately, as directed in the final order, ComEd will file a revised grid plan by March 13. ComEd has fully reengaged staff and all parties to the proceeding to align on the appropriate adjustments to the revised grid plan to fully address the concerns expressed by the commission. We continue to believe significant investment is needed to support Illinois' clean energy goals and desire to promote economic element in the state, a fact acknowledged by all stakeholders. But the revised grid plan we expect to file will reflect the significantly below average financial support provided in the final order and address the commission's feedback to further prioritize affordability. We simply cannot invest at the same pace under an ROE that does not fairly recognize ComEd's cost of financing to do so, especially in the current interest rate and inflation environment. There is no statutory deadline action on the revised grid plan. However, final order stated that the commission appreciates urgency of having a compliant grid plan in place, and is eager to move forward with the grid plan that satisfies the statutory requirements for approval. And so we are optimistic for resolution by year-end. In response to the challenging rate order, our long-term guidance reflects a $1.25 billion reduction in ComEd distribution capital expenditures over the three-year period spanning 2024 to 2026 relative to our Q4 2022 disclosure update. This updated investment outlook for ComEd distribution business includes reductions agreed to with stakeholders, leading up to last October's per quarter. Along with additional reductions to result in a plan that further balances priorities across our stakeholders. As I will discuss later, around our long-term outlook, our guidance has accounted for the possibility that substantially more capital is removed from the plan as a result of the process, despite significant broad-reaching support for our investment strategy. On Slide 10, we provide our updated outlook for CapEx and rate base, covering 2024 to 2027. We plan to invest $7.4 billion in 2024 and a total of $34.5 billion over the next four years, an increase of $3.2 billion or over 10% from the prior planning period. So we reduced ComEd's distribution capital plan by over 18% in response to the final order, the multi-decade energy transformation continues to gain momentum, and we see no shortage of needs to invest for our customers across all of our service territories and an ability to do so at a reasonable cost. We are the largest transmission and distribution utility in the country by customer count, and we have the privilege and responsibility to serve many major densely populated areas. We operate six utilities across seven jurisdictions, including FERC. And beyond our industry-leading size and scale, we are also one of the best operators in this sector, providing a world-class customer experience for reliability at very competitive rates. Given the power of this platform, our updated four-year capital plan includes $3.2 billion of additional capital, net of the adjustments to common distribution to serve our customers. Included in that increase is $1.5 billion of incremental transmission capital over the 2023 to 2026 period, since our last disclosure update. Addressing the significant need for high-voltage investments to support federal, state and customer goals on renewable energy and electrification. $725 million of that increase is projected at ComEd for data center and other high intense new load growth, along with increasing renewables and retirements of older fossil fuel generation is driving increased transmission investment needs. The balance of the additional transmission largely relates to the two large transmission projects discussed on prior earnings calls. The RTEP reliability Window 3 projects awarded by PJM to mitigate reliability challenges driven by incremental data center demand in the region and the other assigned due to the retirement of the brand insurance coal plant. While some of the transmission capital at ComEd is expected to go in service during the guidance period, very little of the transmission spend for the large East Coast project is reflected in the updated rate base outlook. Brand Insurance is expected to go into service in 2028, while the RTEP Window 3 project will be in service closer to 2030, providing line of sight to strong rate base growth beyond the current guidance window. We continue to expect there will be transmission opportunity across our service territories, associated with the same drivers underpinning these projects, high-density, localized load growth, traditional fossil fuel plant retirements increased renewables, not to mention from our extremely well-positioned footprint on the Mid-Atlantic Coast for offshore wind interconnection. To further put our competitive position into perspective, all but one mile of those two large transmission projects is expected to occur on our existing rightways. We expect to remain active in seeking additional opportunities to lead in this space. And as always, we will only include spend in our plan that is identified and expected to proceed tied to the needs of our jurisdictions. In total, our capital plan updates are expected to result in an increase to rate base of 7.5% over the next four years on a compound annual growth basis to $74 billion. This growth adds approximately $18.5 billion to rate base from 2024 through 2027 and reflects a shift in the mix of our total capital growth portfolio by 2% from distribution to transmission since the last disclosure update despite a significant portion of the transmission capital added, not yet placed in service. Exelon's transmission rate base growth recovered through FERC formula rate provides a stable and predictable financial profile. As clean energy and electrification continue to grow, our transmission strategy is designed to adapt to this new paradigm, while continuing to operate the transmission system at world class levels. Moving to slide 11. One way to ensure sustainability of our capital growth profile is to continue delivering superior value as efficiently as possible to our customers and communities. And as one Exelon, we are building from a strong foundation. Our history of steady cost discipline, while delivering a premier experience for our customers has positioned us very well, as you can see in the chart on the right. Exelon's investment in grid modernization has enabled an approximate 40% increase in reliability performance across the platform, whether based on outage frequency or outage duration, while maintaining average electric rates 17% below the top 20 metropolitan cities in the United States. More simply put, when a dollar is placed in our hands to invest, our customers entrust us to create value through reliable, affordable service. Had our adjusted O&M costs growing in line with historical annualized inflation rate of 3.5% from 2016 through 2024, they would have increased by approximately $1.2 billion. Instead, we are projecting a 2.4% CAGR for the same period, eliminating $400 million of customer rate increases that would have occurred without our intentional focus on driving efficiencies. And while 2024 is expected to grow at a higher rate, one key driver is the number of significant back office and operational IT system investments whose savings will be monetized over a longer period of time, as I'll discuss in a minute. In addition, upon aligning with several of our jurisdictions on the spending programs associated with advancing their state's energy goals and priorities, through the recently approved rate cases, we are anticipating some catch up to meet the levels of service and investment agreed upon with our jurisdictions. However, we expect to maintain an annualized growth rate of approximately 2% through 2027, a below inflation level that is expected to result in – to our customers over $400 million lower than they otherwise would have been. Our expectation is to limit the annualized O&M growth rate to approximately 2% over the long-term and maintain our competitive position with rates among those that are the lowest in the nation will improve our customers' experiences. In fact, our multiyear plan rate structures allow us to quickly flow any benefits back to customers. Let me take a moment to highlight a few ways in which we continue delivering value for our customers. First, as Calvin mentioned, a permanent team has established in 2023 to continue efforts to standardize and streamline the structure and operations of the organization. Ensuring all of our efforts are coordinated with the sole purpose of serving our customers and communities in an efficient and superior manner. Second, we have several initiatives underway to upgrade major enterprise resource planning, customer billing and automated work order systems expected to create work efficiencies, some of which I mentioned are driving our spend in 2024. Third, we are standardizing storm response protocol to increase rolled transparency and accountability and emergency events, mitigating cost risk and improving restoration performance in the future. Fourth, we are delivering a framework to migrate from a preventive maintenance, asset management strategy to an automated condition-based maintenance strategy in our transmission operations. And lastly, we are streamlining processes and leveraging technology, particularly in the call center and field for increased efficiency and responsiveness to our customers. To ensure that R&R remain strong and we can invest at the levels our jurisdictions want, we are committed to leveraging our size and scale as one Exelon to manage costs across our operating companies and deliver affordable rates for our customers. Turning to slide 12. With $34.5 billion of projected capital spend driving 7.5% rate base growth and with continued focus on earning ROEs of 9% to 10%. We are initiating an annualized operating earnings growth target of 5% to 7% through 2027 from our 2023 guidance midpoint of $2.36 per share. The lower growth outlook from what we previously laid out is not a decision we took lightly, but as a result of the challenging rate case outcomes and decelerated piece of investment in Illinois. As you heard from Calvin, Illinois is only one jurisdiction in which we operate. We are continuing momentum in our other jurisdictions as the second multiyear plans at Pepco progressed in line with our expectations, as PECO anticipates filing in the first half of this year, consistent with our general two to three-year rate case cadence and does all of our utilities execute on the robust transmission strategy and cost management initiatives outlined on the prior slide. Accordingly, we are confident that our earnings CAGR will be at midpoint or better of the 5% to 7% range over the 2023 to 2027 period and in future updates. Even with the process in Illinois remaining uncertain, our earnings growth guidance is resilient and account for the possibility that limited progress is made in Illinois, and we need to significantly reduce investment in common distribution further. We also continue to project an approximate 60% dividend payout ratio of operating earnings, with the dividend growing in line with our long-term earnings target. We announced today an expected annualized dividend of $1.52 per share in 2024 which is over 5.5% higher than the 23% dividends. Maintaining our commitment to transparency and predictability, we have provided year-over-year drivers contributing to the expected annual growth in our earnings through 2027 on slide 13. While there is variability in the year-over-year growth over the four year time period, the business drivers provide transparency into our expected 5% to 7% growth through 2027. Including an expectation to deliver every year after 2024 within the 5% to 7% range, if not above. I will conclude with a review of our balance sheet activity on slide 14. As you have heard from us before, maintaining a strong balance sheet is core to our strategy, and we closed out another year with credit metrics comfortably exceeding S&P and Moody's downgrade thresholds of 12%. Similar to the first two years since operation, over the guidance period, we project to continue to have approximately 100 basis points of cushion on average for our consolidated corporate credit metrics above the threshold specified by the agencies. While the final rate order issued by the commission in Illinois negatively impacted our future cash flow outlook, we have largely mitigated those impacts through cost management and curtailment of distribution capital spend at ComEd, while ensuring we maintain a safe, reliable growth for customers. As we identify new investments in the plan, we are funding in a prudent manner by incorporating an incremental $1.3 billion of equity to ensure we maintain our previous commitment on pushing and keep us on a path to 13% to 14% consolidated credit metrics over time. As our consolidated spend profile has shifted more towards transmission, the cash generated from these longer-dated investments is expected to follow the earnings largely beyond the guidance period and further strengthen our credit metrics over time. Additionally, I'd remind you that our plan continues to incorporate the assumption that the corporate alternative minimum tax will not allow for repairs. If implemented in a way that mitigates the cash impact, we'd expect an increase of approximately 50 basis points to our consolidated credit metrics average on average over the plan, which would provide incremental cushion. From a financing perspective, we expect the $34.5 billion capital plan to be supported by $19 billion of internally generated cash flow. $10 billion of debt at the utilities and $3 billion of debt at the holding company with the balance funded with a modest amount of equity. In the fourth quarter of 2023, we completed $142 million of equity via our ATM and expect $150 million to be issued in 2024. And as mentioned, to fund the robust $3.2 billion of incremental capital opportunities while maintaining a strong balance sheet, our financing plan includes $1.3 billion of additional equity that we expect to issue over the 2025 through 2027 period. The incremental equity funds 40% of the incremental capital investments over the four-year plan and represent slightly more than 1% per year of Exelon current market cap. As we work with our jurisdictions and identify needs for further investment of utilities, we anticipate that any incremental capital investment will be funded by no more than approximately 40% equity. I want to close by reiterating our confidence in investing an estimated $35 billion of capital across our diversified platform from 2024 to 2027, driving 5% to 7% earnings growth from 2023 to 2027 with an expectation of midpoint or better and maintaining a strong balance sheet while doing so. Thank you. I'll now turn the call back to Calvin for his closing remarks.

Operator:

Thank you. [Operator Instructions] Our first question comes from the line of Shar Pourreza from Guggenheim Partners.

Calvin Butler :

Good morning, Shar.

Shar Pourreza :

Good morning. Calvin, starting with Illinois, I mean the team has had a few months now to digest the order. You're not alone in facing sort of that disorder from the ICC. I mean, both the electric and gas guys have throttled investments and they've laid off workers. I guess what did you guys miss heading into that final order? But really more importantly, why is this current distribution spend now appropriate? Is it a floor kind of positioned for upside in Jeanne's comments for 2024 kind of broad with upside and downside. So just trying to handicap the path forward with this new guidance. Thanks.

Jeanne Jones:

Yes. I'll just update. I think I'll address Shar's second part of that question. So 2024 to your point, Shar, we've provided a guidance range with a midpoint that assumes the 12-14-2023 order. We have the rehearing process going on, which is about an interim revenue requirement while the grid plan is being approved. And then we have the grid plan process, which will kick off and we filed that on March 13. Depending on those outcomes, there could be upside to the 2024, if we get an interim revenue requirement or a grid plan move, but the midpoint assumes the December order. Now beyond 2024, we did approve the -- or sorry, we did assume that the grid plan would be approved. It is a great plan that, as Calvin mentioned, is focused on safe, reliable operations and alignment on the progress in CEJA it's lower, right? We're not going to be able to make as much progress on CEJA just given the unfavorable economics. But we do want to make progress and we will. Now there is not a set time line for the commission to opine on the grid plan. But we are, as I mentioned in my prepared remarks, we are optimistic it gets done this year. The commission stated that in their order in December that they understand the sense of urgency. And so while it does assume that the grid plan is approved, 2025 to 2027, we are prepared if we cannot get alignment to make further reductions and still deliver.

Calvin Butler:

Thank you.

Nicholas Campanella:

Good morning, everyone. Thanks for taking my questions. So I guess just to, kind of, clarify on the CapEx plan. I mean the plan is $3 billion can change higher, to your point. I guess your 2026 rate base does seem like it is lower, though plan-over-plan. So I guess, could you just help us clarify what's maybe driving that? I know there's probably some moving pieces in the starting point for ComEd rate base, but yes.

Nicholas Campanella:

That's helpful. I appreciate that. And then, I guess, maybe you can help us understand on the financing, really not much equity to do in 2024. Just where does your balance sheet stand for 2024 relative to the agency minimums? And just what's the feedback been from the agencies on this new plan and maintaining the stable outlook? Thanks.

Nicholas Campanella:

Thank you.

Calvin Butler:

Hey, Steve.

Calvin Butler:

Yes. No, thank you, Steve. I'll start with this, and then I have with me Gil Quiniones, who's the CEO of ComEd to really be in here as well. My view on this settlement, as I mentioned, Gil and his team are engaged with the stakeholders. We may read some settlement in discussions with stakeholders about what they're looking for, and we would submit it to the commission. But I think overall, a settlement in principle on the rate case, I think, is unlikely. The process will continue to play out. And the fact that, we are in the midst of a pending proceeding, we cannot speak directly nor should we, with the commissioners themselves. So our view of what they -- where they stand came in the form of their December 14 order, and we have a clear understanding. But what we can do and what we are doing is engaging with staff. Consistently talking again as we did for the last two years. We're back reengaged in that process. And what we are providing them and sharing with them and then I'll turn it over to Gil is under the tenets of the Climate and Equitable Jobs Act. The need to align policy and practice, what the law says and what we need to do to carry it out seek some alignment between the legislative body and the commission to accomplish the shared goals of all of us. And that is our conversation from day one, and that will continue to be based on the feedback that they've given. Gil, anything you want to add?

Steve Fleishman:

Okay, great. Thank you.

Operator:

Thank you. Our next question comes from the line of Julien Dumoulin-Smith from Bank of America.

Julien Dumoulin-Smith:

Hey good morning team. Hey great. Appreciate it. Just wanted to follow-up real quickly on some of the Nick's cash questions real quickly. Can you guys comment a little bit? I mean, FFO looking through the four-year window here, a little bit better than the prior plan. And that's in spite of obviously some of the rate base dynamics, et cetera, but it looks like a $2 billion bump to CFO there helps the balance sheet. But can you talk about that a little bit further here? And then also maybe if you can to elaborate on some of the earlier questions, I mean, where do you guys overall within the plan? I know that you articulated here given years up and down. But overall, are you in the lower end or the midpoint, if you will, of the updated EPS?

Jeanne Jones:

Yes. And then Julien -- we do also continue to show you, Julien, in the year-by-year, which gets you to that midpoint or better. So, again, there will still be some years above the range, years within the range, all within the range, but some different points to get you to that mid-screen or better, as Calvin mentioned, that side continues in the deck. On the balance sheet, I guess, I would characterize a little bit different. I think we're consistent with where we were. So, we had expected to be at the 100 basis points of cushion. We expect to continue to contain that 100 basis points. We largely mitigated the ComEd order through our own internal levers. And then as we layered in the capital to maintain that cushion, we funded it in a balanced way by layering in that 40% of every new dollar of equity.

Jeanne Jones:

We are assuming the authorized, yes, for each of the jurisdictions on the cap structure.

Calvin Butler:

Thank you, Julien.

Ross Fowler :

Good morning, Calvin. Good morning, Jeanne. So I want to acknowledge before I ask my question, that there is upside to the unit process, but I wanted to spend a minute on, Jeanne, I think what you talked about is the downside to the forecast and the risks in Illinois versus the plan. You did a great job mitigating some of that today with the transmission CapEx to replace sort of the distribution CapEx. But that was a lot of brownfield transmission that we've been talking about for a while and even that is sort of back-end loaded in the forecast and greenfield would presumably take even longer. So maybe you can continue to do that if there's downside to distribution CapEx in that ComEd in the plan, but what are the other levers that you could pull here? Is that lower equity as CapEx declines? Is that lower O&M? How do I think about what levers you have at your disposal to sort of offset that downside risk should that be out coming Illinois?

Calvin Butler :

Yes. And if I can just add, Ross, I think on what's critical, what Jeanne has said is that understanding Illinois is just one of our many jurisdictions in which we operate and what we continue to demonstrate in terms of the value of Exelon is our scale and size and the jurisdictions and the opportunities that exist across our platform. We always talk about the power of the platform, and you saw it flexed in 2023, and you'll see it flexed over our long-range plan from 2024 to 2027. So Illinois is a focal area. And as I shared with you, it's a priority for all of us. I know Gil and his team are fixed on it, but we have other businesses that we will continue to run and as always, manage our costs and to ensure that we do it in a very pragmatic basis. Thank you for the question.

Operator:

Thank you. At this time, I would now like to turn the conference back over to Calvin Butler, Exelon's President and CEO, for closing remarks.

Operator:

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.

Andrew Plenge:

Thank you, Gigi, and good morning, everyone. We're pleased to have you with us for our 2023 third quarter earnings call. Leading the call today are in Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. Other members of Exelon's senior management team are also with us today and they will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information can be found in the Investor Relations section of Exelon's website. We would also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements, which are subject to risks and uncertainties. You can find the cautionary statements on these risks on Slide 2 of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin Butler, Exelon's President and CEO.

Jeanne Jones:

Thank you, Calvin, and good morning, everyone. Today, I will cover our third quarter financial update, along with the outlook for the balance of 2023 and our progress on the 2023 rate case schedule. I will also highlight a recently completed transmission rebuild project by Delmarva Power & Light designed to further improve reliability for our customers in Eastern Maryland. Starting on Slide 6, we show our quarter-over-quarter adjusted operating earnings. As Calvin mentioned, Exelon earned $0.67 per share in the third quarter of 2023 versus $0.75 in the third quarter of 2022, reflecting lower results of $0.08 per share over the same period. Results of $0.67 in the third quarter represent 28% of our expected full year earnings, which is right in line with the expectations provided on the prior earnings call. Earnings are lower in the third quarter relative to the same period last year, driven primarily by $0.07 from the impact of weather and storms and summer activity returning to normal in '23, $0.04 of higher interest expense due to the rise in interest rates and higher levels of debt at the holding company and at some of our utilities and $0.03 of O&M tax and distribution formula rate timing expected to reverse in the fourth quarter. This was partially offset by $0.05 of higher distribution in transmission rates associated with incremental investments, net of depreciation as well as the $0.01 up carrying costs related to the carbon mitigation credit balance at ComEd. Despite the summer storms and mild weather impacting our nondecoupled jurisdictions, we have delivered year-to-date earnings each quarter in line with indications and we continue to offset the weather headwinds with a combination of O&M levers across the platform, higher treasury rates impacting ComEd's distribution ROE, favorable depreciation of PECO and the full year earnings impact of the carrying costs associated with the CMC regulatory asset balance. With one quarter remaining in the year, we are narrowing our 2023 EPS guidance range to $2.32 to $2.40 per share from $2.30 to $2.42 per share. Our full year guidance accounts for the absence of proactive derisking that occurred in the fourth quarter of '22, the reversal of year-to-date O&M tax and distribution formula rate timing and the anticipated onetime impact in December of BGE's reconciliation for the 2021 and 2022 under recovery. Through continued increase in rate base as we deploy capital for the benefit of our customers, along with managing work plans across the platform, we remain on track to deliver earnings within expectations. Recall, our goal is the way to achieve the midpoint or better of the guidance range. Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of 6% to 8% from 2021 and 2022 guidance and plans through 2025 and 2026, respectively. Again, our expectation is to be at the midpoint or better of that growth range. Turning to Slide 7. As Calvin mentioned, we continue to execute in all 6 open distribution rate case proceedings this quarter, in line with the established procedural federal. Each rate case remains on track, and we are approaching the final key milestones in December, ComEd and BGE's multiyear rate plan rate cases. Let me begin with key developments since the last call. First, DPL Delaware received intermediary testimony and filed a rebuttal supporting the key elements of the company's proposed electric distribution revenue requirement increase of $39.3 million. DPL Delaware will continue to establish that the proposed plan is necessary to continue providing safe and reliable service, meet customer expectations and support Delaware clean energy goals while balancing customer affordability. A final order is expected in the second quarter of 2024. Second, we are pleased with the progress in Atlantic City Electric's distribution rate case with the stipulation of settlement in place, the procedural schedule was suspended in early September. On October 21, ACE filed a stipulation of settlement with the New Jersey Board of Public Utilities. And on October 24, the administrative law judge presiding over the case recommended the settlement with all parties be approved. ACE anticipates final approval of the settlement from the BPU in the fourth quarter. Next, the procedural schedule in Pepco's DC multiyear rate plan filing has been adjusted to accommodate the commission's request for supplemental testimony from Pepco. Similar to the commission's request from its personal plan, this directive provides Pepco the opportunity to demonstrate the benefits afforded by multiyear rate plans relative to traditional rate making. Pepco now expects to receive intervenor testimony on December 11, and evidentiary hearings will take place in March 2024, with the final order expected from the Public Service Commission of the District of Columbia by mid-2024. While still in the discovery phase of its second multiyear rate plan filing, Pepco Maryland continues to detail for its proposed investment plan designed to advance the state's climate and clean energy goals. Upcoming milestones include intervenor testimony expected to be filed by the Maryland Public Service Commission staff on December 15 and the evidentiary hearing set to begin in March 2024. Briefs will be filed in April of '24, and and we expect a final order by June of 2024. Additionally, in Maryland, evidentiary hearings were conducted and brief filed in September and October, respectively, as part of BGE's pending multiyear electric and gas rate case. The hearings allow parties to share perspectives on the proposed investments, their alignment with the goals of the state and how best to balance the state's goals around the energy transformation, affordability and customers' interest. As expected, the Maryland Commission continues to prioritize safety, reliability and affordability. And it is also focused on addressing the goals of the Climate Solutions Now Act. We continue to believe BGE's proposed investment plans are well suited for Maryland to meet its aggressive clean energy goals in an affordable manner. The proceeding is expected to run its full course with the final order expected from the commission by December 14. Moving on to ComEd's multiyear rate plan proceeding. As you heard from Calvin, the administrative law judges presiding over a case issued a proposed order on October 23. While the ALJ's proposed order recognizes that ComEd must undertake significant infrastructure investments to meet the state's clean energy goals, it does not fairly recognize ComEd's cost of financing to do so, especially in the current interest rate environment. We continue to believe the evidence on record supports ComEd's requests on ROE, capital structure and a return on its pension assets, among other factors, to provide a clear path in achieving a cleaner energy future for our customers and communities in Illinois. But while we are disappointed in the proposal, let me remind you that this is just another data point in the process and is nonbinding on the commission. Given the number of variables that play in the transition to a multiyear plan, our current plan contemplates a range of fair and reasonable scenarios in the final order to achieve the state's aggressive decarbonization and electrification goals. We look forward to the remaining steps in the process, including filing briefed on exception by November 8, reply briefs on exception by November 20 and participating in oral arguments, which we anticipate will occur in late November. Each of these avenues will provide ComEd the opportunity to demonstrate the facts on key elements that are supported on the record and advocate for our position, which we continue to believe are in the best interest of customers and aligned with the state's energy policy goals. A final order is expected at the last scheduled ICC meeting of the year on December 14, but due no later than December 20. Relationships across our jurisdictions remain constructive, and we remain steadfast in our engagement with key stakeholders across the regulatory bodies, the state legislators and the communities to support our shared interest in the energy transformation. As a reminder, by next year, we expect to have a resolution on all 4 of the ongoing multiyear rate plans in Illinois, Maryland and D.C., which will support their respective clean energy and climate goals while balancing customer affordability and equity. More details on the rate cases can be found on Slides 20 to 26 of the appendix. Moving to Slide 8. During the third quarter, we continue to deploy capital for the benefit of our customers and are on track to invest $7.2 billion expected for 2023. These investments are designed to deliver answers to an expanding set of needs for tomorrow's spread

Operator:

[Operator Instructions]. Your first question comes from the line of James Kennedy from Guggenheim Partners.

Calvin Butler:

Yes. First off, James, thank you for your question. And there is precedent. The record is going to be considered by the full commission. But the commission definitely has leeway to look at the record separately, taking an advisement what the ALJ has said. But also keep in mind, this is the first time that this commission has come together under a multiyear rate plan and grid plan to consider how ComEd's proposals meet the state's goals. So I do -- they do know there's a difference in opinion on how to approach this. And I think they will take that all in consideration because we have 3 new commissioners And they will lean into this discussion and look at what they need to do to achieve the state's goals, which are very specific. And I have Gil Ciona, the CEO comment with me. Gil, anything you'd like to add?

Jeanne Jones:

Does that answer your question, James?

Jeanne Jones:

Yes. No, everything we've given you assumes that we pay, the corporate alternative minimum tax. And so regardless of how that turns out, our commitment is to do the 425 million between now and 2025. So that doesn't change regardless of the outcome here.

Jeanne Jones:

Yes. There are two similar numbers, but two different projects.

David Arcaro:

Maybe on that same topic, with the transmission projects that has selected. Could you elaborate a bit on which year the CapEx would start to flow into the spending plan? And also, just as you think about PJM and potential competitive opportunities going forward, are there future opportunities that you plan to bid into also?

David Velazquez:

So David, this is Dave So on the transmission projects, like, to give you a sense, we have brand insurers, which was the project we talked about by last quarter, which has an in-service date in the end of 2028. So you think about cash flows there, and again, you have to recognize we're in preliminary engineering yet, so this is liable to move a little bit. But I figure typically like in the last couple of years, '27, '28, you spent somewhere around 40% to 50% of that expenditure. And then leading up to it starting next year, you'd slowly ramp into it. In the first 3 years, you'd spend somewhere again between 50% and 60% of the project. And the Dominion, which has an in-service date part of it in '29, part of it is '30, I think you'd see a similar profile where in the last couple of years, you probably see around 40% to 50% of the expenditures and 3 or 4 years leading up to that. So some of this will be within the current period and some of it will be after the current period. And I think on the broader question, as Calvin has said, there's a lot of opportunities out there. We look at every single competitive window that PJM puts out there and make decisions whether we think we can add value for our customers by presenting proposals and we will continue to do that. I think also there's other opportunities out there. Offshore wind is one. In Maryland, the commission has to issue a solicitation to help bring on some of the additional megawatts by July of next year. We continue to see a lot of load growth in our regions around data centers. There's also some hydrogen hubs that have been awarded grants from the federal government in our territories. We also continue to see some generation retirements PJM recently announced retirement of a Wagner unit -- large Wagner unit in BGE's territory. So there's a lot of different opportunities that we're looking at out there to continue to, again, for our customers and for public policy goals continue to invest in transmission.

Jeanne Jones:

Yes, it's Jeanne. I think it's how we've always thought about it. We rolled out the $31 billion on our last call. We talked about financing in a balanced approach with internal cash flows and a mix of debt and equity. And so I think to the extent we continue to see more and more work, which we know there will be. We'll finance it in a way that maintains that cushion on the balance sheet that we target, but also ensures that we meet our 6% to 8% earnings growth.

Paul Zimbardo:

And thank you for laying out all those transmission opportunities. Just as we think about the roll forward, not the current plan, you've been very clear, but the roll forward with these incremental opportunities, is there a good way to think about financing those incremental CapEx? Is it kind of like a 50-50 mix? Or should we be thinking of something different?

Paul Zimbardo:

Okay. Understood. And then shifting topics a little bit. Do you have an estimate for what the Illinois ComEd customer bill CAGR is like the next 5 years -- for your rate case and then I know there's the carbon mitigation credit that rolls off. So just curious how the bill trajectory is.

Paul Zimbardo:

Yes. Just overall, like, again, you're only part of the bill, like what an overall ComEd customer bill trajectory looks like over the next 5 years?

Calvin Butler:

But it's important to note, Paul, that ComEd starts below the national average in terms of overall rates. So as I like to think of the headroom within that utility to invest and move the state forward exists. One, because of the carbon mitigation credits, but also because they start from a position of strength and having some of the lowest rates in the country. I think it's roughly 23% below large city national average. That's where ComEd's in

Aidan Kelly:

It is actually Aidan Kelly on for Jeremy. Just one quick question going back to ComEd. Curious how do you reconcile the differences between the ALJ's 9.28% ROE and staff's 8.91% ROE as well as the proposed equity ratio? And then could you just talk more about where the ultimate return on pension assets debate stands?

Aidan Kelly:

Appreciate the color there. And then just 1 quick question unrelated on the $425 million equity, would you consider ATM or follow-on there?

Operator:

I would now like to turn the conference back to Calvin Butler, President and CEO, for closing remarks.

Operator:

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.

Andy Plenge:

Thank you, Gigi and good morning everyone. We are pleased to have you with us for our 2023 second quarter earnings call. Leading the call today are Calvin Butler, Exelon’s President and Chief Executive Officer and Jeanne Jones, Exelon’s Chief Financial Officer. Other members of Exelon senior management team are also with us today and they will be available to answer your questions following our prepared remarks. Today’s presentation, along with our earnings release and other financial information can be found in the Investor Relations section of Exelon’s website. We would also like to remind you that today’s presentation and the associated earnings release materials contain forward-looking statements, which are subject to risks and uncertainties. You can find the cautionary statements on these risks on Slide 2 of today’s presentation or in our SEC filings. In addition, today’s presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It’s now my pleasure to turn the call over to Calvin Butler, Exelon’s President and CEO.

Jeanne Jones:

Thank you, Calvin, and good morning, everyone. Today, I will cover our second quarter financial update along with the outlook for the second half of 2023, our progress on the 23 rate case schedule, and I’ll also highlight an ongoing project that exemplifies our commitment to delivering sustainable value as the premier T&D energy company by modernizing critical infrastructure in the Philadelphia area. Starting on Slide 6, we show our quarter-over-quarter adjusted operating earnings. As Calvin mentioned, Exelon earned $0.41 per share in the second quarter of 2023 versus $0.44 in the second quarter of 2022, reflecting lower results of $0.03 per share over the same period. Results of $0.41 in the second quarter were right in line with the expectations provided in the prior earnings call. Earnings are lower in the second quarter relative to the same period last year, driven primarily by $0.04 of higher interest expense due to the rise in interest rates and higher levels of debt at the holding company and at some of our utilities as well as $0.03 of unfavorable weather at PECO. This was partially offset by $0.03 of higher distribution and transmission rates associated with incremental investments net of depreciation as well as a $0.01 of carrying costs related to the carbon mitigation credit balance at ComEd. Despite another quarter of mild weather impacting our non-decoupled jurisdictions, we delivered earnings results exactly where we said. Through the first half of 2023, operating earnings are $1.11 per share, reflecting 47% of the projected full year earnings. This is in line with how we performed through the first half of 2022. Looking ahead to next quarter, we expect a relative EPS contribution in the third quarter to be approximately 28% of the midpoint of our projected 2023 operating earnings guidance range. Recall that Q3 2022 saw strong growth from $0.04 of higher rates and effect with PECO’s electric rate case in year one of its current rate cycle as well as $0.03 of realized 30-year treasury rate uplift on ComEd’s formula rate distribution ROE and another $0.03 of distribution formula rate timing at ComEd. While the fundamentals underpinning the earnings remaining this year, we expect third quarter ‘23 results to be lower. Net distribution and transmission growth will be offset by higher interest and we also expect some timing of O&M and taxes. For the fourth quarter of ‘23, we expect year-over-year earnings growth to benefit from the absence of proactive derisking that occurred in the fourth quarter of ‘22, the expected reversal of the O&M and tax timing and the anticipated onetime impact of BGE’s reconciliation for the ‘21 and ‘22 under recovery of its first multiyear plan. As we do not receive the final order on the reconciliation for BGE until December of ‘23, we cannot record BGE’s earnings associated with the reconciliation until that time. In line with discussion on the first quarter earnings call, we expect the $0.07 of unfavorable weather experienced year-to-date to be offset with the combination of O&M levers across the platform, favorable depreciation at PECO and the full year earnings impact of the carrying costs associated with the CMC regulatory asset balance. On a full year basis, we continue to reaffirm our 2023 EPS guidance range of $2.30 to $2.42 per share. Through a continued increase in rate base as we deploy capital for the benefit of our customers and strong cost control across the platform, we remain on track to deliver earnings at the midpoint or better of our guidance range. With several months of weather and storm exposure remaining, you can expect we will manage utility work plans to deliver earnings within expectations. Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of 68% from 2021’s and 2022 guidance midpoint through 2025 and 2026, respectively, with the expectation to be at the midpoint or better of that growth range. Turning to Slide 7. As Calvin mentioned, there have been some important developments on the regulatory front. Since the last earnings call, there was one new rate case filed, so I’ll provide a status update on each of the six current open proceedings, starting with the most recent filing. On May 16, Pepco Maryland submitted its climate ready pathway, a 3-year multiyear plan application to the Maryland Public Service Commission. Pepco is requesting a $213.6 million revenue increase over the April 2024 and to December 2027 period, inclusive of a proposed 9-month extension reflecting an ROE of 10.5%. The filing outlines investments the company expects to make to support a climate-ready grid and enable cleaner energy programs and technologies that support Maryland’s goal to reach net zero emissions by 2045. As an example of the $150 million of climate solution programs that Calvin mentioned are included in Pepco’s proposed plan, more than half are dedicated to incentive for approximately 10,000 equipment electrification conversions for customers transitioning to cleaner technologies like heat pumps in the building sector. Another key category of spend is dedicated to enhancing reliability, resiliency and grid security through the installation of more modernized equipment that automatically detect system issues, reinforces the grid against more severe weather and protects the grid from potential physical or cyber threats. Overall, these investments are anticipated to inject more than $1.42 billion into the local economy and support more than 11,000 full-time jobs. For the last 3 years, spanning 2020 to 2022, Pepco has reported the best reliability performance of any electric distribution utility in the state of Maryland, a true testament to the company’s commitment of powering a cleaner and brighter future for its customers and communities. Equally as important as reliability, Pepco is focused on keeping affordability front and center for our customers. The multiyear plan includes the acceleration of tax benefits to serve as a bill offset as well as efforts to increase participation in energy assistance and energy efficiency programs, which in 2022 alone provided approximately $23 million to Pepco Maryland customers. An order is expected by June of 2024. Let me also remind you of the other electric distribution rate cases in progress. First, Delmarva Power Delaware has revised a revenue request for a $41.8 million increase based on an updated test period in the electric rate case and, as permitted by Delaware law, implemented full proposed rates on July 15 subject to refund. A decision is expected in the second quarter of 2024. Similarly, ACE revised their revenue request for a $93.6 million increase based on an updated test period, with the final order expected in the first quarter of ‘24. Additionally, after an 8-month receiving, the New Jersey Board of Public Utilities approved a 4-year capital tracker at ACE called Powering the Future, which accelerates the portfolio of projects totaling $93 million designed to enhance reliability and resiliency for customers, advance New Jersey’s energy master plan goals and sustained economic growth in the region. Next, ComEd and BGE surpassed two key milestones in their multiyear plan rate cases, having received intervener testimony and filed their rebutals to support the key elements of the company’s initial proposals earlier this year. As discussed on prior earnings calls, both plans outline the investments needed to provide essential service to customers while meeting the clean energy and equity goals of their respective states. In both the ComEd and BGE multiyear plan rate cases, evidentiary hearings are scheduled to begin in late August with briefs to follow before final orders are expected in December. Lastly, Pepco received a procedural schedule from the Public Service Commission of the District of Columbia in its second multiyear rate plan filing. Upcoming milestones include intervenor testimony expected to be filed by the DC Public Service Commission staff on October 16 and evidentiary hearing set to begin in January of 2024 with final briefs in March of 24. Relationships across our jurisdictions remain constructive, and we are working together with our regulators, states and communities through every step of the process to reach our shared goals. As Calvin mentioned, by next year, we expect our resolution on all four of the ongoing multiyear rate plans in Illinois, Maryland and D.C. and a clear path forward to supporting clean energy and climate goals in an affordable and equitable manner. More details on the rate cases can be found on Slides 20 through 26 of the appendix. Moving to Slide 8. During the second quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $7.2 billion guidance for 2023. These investments in energy infrastructure are vital to maintaining the high standard of service that we have in serving our customers while preparing the grid for the clean energy transformation and increasing levels of electrification. Today, I’ll talk about how PECO is partnering with the community to build a new 69-13kV substation in Philadelphia at the Civic Terminal Yard and neighboring property. PECO’s commitment to building for the new civic substation began in 2019. This $130 million project includes installation of insulated switchgear and modifications to 4 69-kV and transmission lines into civic substations that will allow for the retirement of 2 69-kV transmission lines currently running under the [indiscernible]. The new substation is expected to increase distribution and transmission reliability through the reconfiguration of the lines and increased flood resiliency in the low-lying areas surrounding the substations, where access has been restricted in the past following heavy thunderstorms. It will also enable PECO to relieve low constraints, supply additional capacity to the University City area and better serve critical customers on the west side of the river. Once it’s fully energized, which is expected by the second quarter of ‘24, the Civic substation will be PECO’s newest and most modern insulated substation. While traditional open-air substation construction would have required 5 to 7 acres of land, the upgraded electrical that meant associated with the insulated substation allows PECO to build on less than a 2-acre plot of land. That represents a 60% to 70% reduction in required land use. Since project inception, PECO has partnered with its customers, government agencies and other local utilities to ensure construction of the Civic substation has a minimal impact to the city of Philadelphia, the surrounding customers and on the environment, protecting the nearby waterway and riverbank. With vital customers in the area such as the Children’s Hospital of Philadelphia, the University of Pennsylvania Hospital and the Philadelphia Veteran Affairs Medical Center, operational excellence is imperative. As an Exelon utility, PECO is ready to deliver it. Turning to Slide 9. I will conclude with a review of our balance sheet activity. As a reminder, we continue to project 100 to 200 basis points of cushion on average over our guidance period for our consolidated corporate credit metrics above S&P and Moody’s downgrade thresholds of 12%, demonstrating our commitment to maintaining a strong balance sheet. If the corporate alternative minimum tax is not mitigated through an inclusion of repairs in its calculation, we anticipate being at 100 basis points or the lower end of that range. We continue to await specific guidance on the corporate alternative minimum tax implementation and are hopeful to have resolution by year-end. In the meantime, the Department of Treasury issued a notice granting deferral of estimated tax payments associated with the corporate alternative minimum tax until 2024, which points to the appreciation that more guidance is required for implementation. From a financing perspective, we successfully raised nearly $1.3 billion for BGE and PECO in the second quarter, which completes all of our planned debt financing needs for 2023. The strong investor demand we continue to see for our debt offerings is supported by the strength of our balance sheet and by the low-risk attributes of our platform. In line with the last earnings call, there has been no change in our guidance to issue $425 million of equity at the holding company by ‘25. We will continue to update you as we make progress on the plan. Thank you. And I’ll now turn the call back to Calvin for his closing remarks.

Operator:

Thank you. [Operator Instructions] Our first question comes from the line of David Arcaro from Morgan Stanley.

Calvin Butler:

David, good morning.

Calvin Butler:

Yes, David, thank you. This is Calvin. I would tell you that they are proceeding as planned. And the teams have provided their responses, and as Jeanne mentioned, we’re going through the process. But we have with us both Gil Quiniones, President and CEO of ComEd; and Carim Khouzami, President and CEO of BGE, who can – I will ask them to just kind of take your time and walk you through some of the highlights of each and what you can expect moving forward. I’ll start with Gil of ComEd.

Calvin Butler:

Carim?

Calvin Butler:

And David, I would just add to that, both plans were built on helping the states meet their environmental and climate goals as well as economic development and job creation opportunities. So the stakeholder process, I don’t want to underrepresent because both companies have been very engaged in that process and meeting with all stakeholders. So again, proceeding, it’s a process that will play itself out. But we expect orders for both companies by the end of the year.

Calvin Butler:

No, great question, David. We expect to see them both fully through and recognizing that, as Carim mentioned, first time for the reconciliation process in Maryland. And it’s the next 3 years, we will see it through and let it play out. And for Gil, moving from the formula rate to a 4-year multiyear plan, it’s important that everyone feels that they have had a chance to voice their opinions and that stakeholder process is critical to that. So we do see it playing out all the way to the end of the year.

Calvin Butler:

Thank you.

Calvin Butler:

Good morning, James.

Calvin Butler:

Good.

Calvin Butler:

Thank you, James. First off, it is all additive to the current plan. We do not have any of that, as we’ve conveyed to you previously, we were never going to put anything that we were striving to get until we want it. So that’s important. I have with us today David Velazquez, our EVP of Operations, to provide additional oversight or insight into this because David oversees our transmission strategy across Exelon. So David?

Calvin Butler:

Thank you, David.

Calvin Butler:

Yes. Right now, it’s status quo. You can appreciate the team has been very involved in the franchise. And with the new Mayor coming in line, he is assembling his team. Gil and the ComEd team have been working very closely with him on several issues. And really, what we are talking about is that we had come to an agreement with the livelihood [ph] administration earlier this year, as you know, on that franchise. And the parameters of that proposal, we have discussed with you on previous calls. But at this time, the Mayor and I think the team is looking at those provisions and trying to make it his own, this administration’s own. Gil, would you have anything else you would like to add there?

Calvin Butler:

And that’s very important for us. And in addition, I just want to recognize that Gil has been partnering with them. He was just recently named to the Environmental Justice Transition Subcommittee for this Mayor. So, the team has plugged in with the administration, and more of why that’s important is they are understanding what their priorities are as a new administration. And I think that will play directly into the new franchise agreement.

Operator:

Thank you. [Operator Instructions] Our next question comes from the line of Paul Zimbardo from Bank of America.

Paul Zimbardo:

Hi. Good morning team. Thank you for the time.

Paul Zimbardo:

First, I just wanted to get a little bit more clarity. If you could briefly comment on that SEC matter that you disclosed in the earnings results that you just out, does this fully resolve that legacy SEC investigation?

Paul Zimbardo:

Okay. Great. Yes. I just wanted to clarify that’s original stream.

Paul Zimbardo:

Okay. Great. And then second, just as we think about the long-term, I know you reaffirmed that expectation midpoint or better 2023 plus, just interest rates keep ticking up stubbornly like 50 basis points even since the last update. Could you discuss some of the areas of offsets, whether cost or otherwise, to kind of combat those higher parent costs? Thanks.

Jeanne Jones:

Yes, I think that’s well said and all of that helps to reduce the O&M and preserve the cash, which minimizes the amount also that we need to finance in terms of our investments, so getting that cash and redeploying it back into the business. The only other thing I will add is on the interest rates, how we do as a whole – at the operating companies, we are stepping into new – sort of new rate cases, so the ability to recover the incremental interest there is important. But at the parent company, we do engage in reinsurance hedging and so being able to lock in with certainty ahead of time heading into a year what that interest expense is, is important. So, we will continue those practices that helped us heading into ‘23, and you can expect us to do that for future issuances as well.

Calvin Butler:

Thank you, Paul.

Unidentified Analyst:

Hi. Good morning. This is actually David Kelly [ph] on for Jeremy. Just wondering, would you be able to outline your current credit metrics relative to thresholds and plan targets? And how could this ultimately contribute to your 425 remaining equity?

Unidentified Analyst:

Appreciate the color. I will leave it there. Thanks.

Operator:

Thank you. [Operator Instructions] Our next question comes from the line of Carly Davenport from Goldman Sachs.

Calvin Butler:

Good morning.

Calvin Butler:

So initially, we have always maintained a philosophy that we will drive O&M costs below the rate of inflation. Now that was over the traditional rate of inflation that we have been experiencing over the last several years, keeping that around 2% to 2.5%. And as I mentioned, we are trending strong and keeping or meeting our objectives of doing so. And that has always been our benchmark. The CEOs who are sitting around the table, we talk about keeping our O&M flat and seeing what levers are driving it to possibly go up, which allows us that flexibility when you have unseasonally warm winters or anything else in PECO or the like, we got 75% of our rate base, our 73% is decoupled. So, a lot of the weather impacts that you are talking about really focus on PECO primarily as the largest utility that’s done. Having said that, we will continue to manage those costs. We never take our foot off the gas in doing so. Jeanne?

Carly Davenport:

Got it. That’s helpful. Thank you. And then just on the corporate minimum tax. I know you mentioned expecting to at least get kind of preliminary clarity there by the end of this year. But is there any color that you can share maybe from your discussions around the temperature on the tax repairs deduction and getting the gating factors to that being included?

Carly Davenport:

Awesome. Appreciate that. Thank you.

Durgesh Chopra:

Hey guys. Good morning. We are close to the hour here. Thanks for giving me time.

Calvin Butler:

Good morning.

Jeanne Jones:

Yes. I think as Gil mentioned, still more to come. We are still putting forth a strong argument around our proposed ROE. As you mentioned, they did not change their position. It appears to be sort of this continuation of the formula, which [indiscernible] was clear that the sunset of the formula rate was required. So, our filing offers an ROE that we feel appropriately reflects the actual cost of equity, taking into account the current market conditions. So, we will continue to work through that process. I think there is that data point and then there is the Electric Proxy Group, which is also another data point in the staff testimony. So, we will continue to work through that with them, but no changes as of this point.

Calvin Butler:

Yes. I would tell you that one of the, I would say, advantage is of being of our scale and our platform is that we are able to leverage the size to not only access our current suppliers, but identify new ones. So, directly to your question, we have not seen a shortage in our transformers. We have not seen a shortage in workforce or any other things that are impacting us executing on this capital plan. Now, what we do pay attention to, as new businesses coming online, our ability to give that online in the timeframe that some of our customers are looking for because that wasn’t part of that initial planned work. So, we stay on top of that and working with our supply organization. But to-date, we are not experiencing those same issues that others made.

Durgesh Chopra:

Got it. Thanks again guys.

Operator:

Thank you. At this time, I would now like to turn the conference back over to Calvin Butler, Exelon’s President and CEO, for closing remarks.

Operator:

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.

Andrew Plenge:

Thank you, Gigi. Good morning everyone. We are pleased to have you with us for our 2023 first quarter earnings call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. Other members of Exelon's senior management team are also with us today and will be available to answer your questions following our prepared remarks. You may have seen that we issued our earnings release this morning, our release along with the presentation being used for today's can be found in the Investor Relations section of Exelon's website. As a reminder, the earnings release and other matters that we will discuss during today's call, contain forward-looking statements and estimates that are subject to various risks and uncertainties. As a result, actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. You can find in today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts and expectations. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Both the appendix of our presentation and our earnings release contain information for reconciliations between the GAAP measures and the nearest equivalent GAAP measures. We've scheduled 45 minutes for today’s call. And it is now my pleasure to turn the call over to Calvin Butler, Exelon's President and CEO.

Jeanne Jones:

Thank you, Calvin and good morning, everyone. Today I will cover our first quarter financial updates and progress on our 2023 rate case schedule, and I'll also highlight the ways in which our utilities are advancing a smarter, stronger, and cleaner energy grid to better serve all customers. Starting on slide six, we show our quarter-over-quarter adjusted operating earnings plan [ph]. As Calvin mentioned, Exelon earned $0.70 per share in the first quarter of 2023 versus $0.64 in the first quarter of 2022, reflecting growth of $0.06 per share over the same period. Variance in [ph] growth was driven primarily by $0.10 of higher distribution and transmission rates associated with investments and completed rate cases, including the uplift from higher treasury rates, impacting ComEd's distribution hourly. We also benefited $.03 from the rehearsal of other one-time items from 2022, including the discontinued operations adjustment from the separation and the customer refund in Illinois. These items were partially offset by $0.05 of lower earnings due to the sustained warmer than normal temperatures throughout the winter, impacting our non-decoupled jurisdictions in Pennsylvania and Delaware, as well as $0.02 of higher interest expense due to the right interest rates and higher levels of debt at the holding company. There was also $0.70 per share in the first quarter reflects an approximate 30% contribution of the midpoint of our projected 2023 operating earnings guidance range. Historically, we have earned on average 28% of full year earnings in the first quarter. Heading into 2023, we expected Q1 to be a slightly ahead of historical pattern due to the completion of rate cases at PHI and Pepco, rising treasury rates impacting income as are we relative to 2022 and the absence of the one-time item from separation. However, we are also seeing -- we were also seeing the impact of unfavorable weather at Pepco and DPL Delaware. While the weather tempered some of that upside, we still delivered earnings ahead of expectations due to timing at PHI and the recognition of carrying costs related to the carbon mitigation credit balance by ComEd. Looking ahead to next quarter, after factoring in some PHI year-over-year timing items, the relatives EPS contribution in the second quarter is expected to moderate at approximately 17% of the midpoint of our projected full year earnings guidance range. The combination of Q1 and Q2 will result in achieving approximately 47% for projected full year earnings through the first half of 2023. This puts expected results for the first half of 2023 in line with how we performed last year, delivering 48% of our full year earnings in the first half of 2022. On a full year basis, we expect the $0.05 of unfavorable weather experience in the first quarter to be offset with a combination of O&M levers across the platform, favorable depreciation at Pepco, and the full year earnings impact of the carrying cost associated with the carbon mitigation credit regulatory asset balance. With this continued increase in rate base as we deploy capital for the benefit of our customers and our disciplined approach to cost management, we remain on track to deliver expected earned returns at the utilities within our 9% to 10% targeted range by year-end, and affirm our full year operating earnings guidance of $2.30 to $2.42 per share in 2023. In line with past practice, we would not expect to visit protected 2023 guidance until the third quarter and recall, our goal is always to achieve the midpoint or better of that range. Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of 68% from 2021 and 2022 guidance midpoint through 2025 and 2026, respectively, with the expectation to be at the midpoint for better of that growth range. Turning to slide seven. As Calvin mentioned, there have been some important developments on the regulatory front since the last earnings call. Let me start by reminding you of two electric distribution rate cases in progress. First, Delmarva Power Delaware has revised a revenue request for a $47.8 million increase based on an updated test period in its electric distribution rate case, both full proposed rates going into effect on July 15th subject to refund. We expect a decision in the second quarter of 2024. Additionally, as discussed previously, ComEd filed its electric distribution multi-year rate plan in January, and we expect intervening testimony due from the Illinois Commerce Commission staff on May 22nd, and evidentiary hearing to be held in late August as the next key milestone. A final order in the ComEd will say [indiscernible] case is expected no later than December 20th. ComEd also filed its 2022 formula rate reconciliation seeking recovery of $247 million in rates effective January 1st, 2024. A key driver at the increase is the impact of US Treasury yields starting to increase from their depressed levels experience during the COVID-19 pandemic, which as you'll recall was reflected in 2022 earnings. First statute in order is expected on the reconciliation by December 17th. Since the last earnings call, there were three numerous cases were filed. First on February 15th, Atlantic City Electric filed a distribution based rate case with the New Jersey Board of Public Utilities seeking a revenue increase of $105 million, reflecting an RV of 10.5%. The filing supports critical investments to enhance service and deliver safe, reliable, and sustainable energy for customers through key programs, including the company's EV Smart Electric Vehicle Program and deployment of the Smart Energy Network Program, which I will highlight later in the presentation. Because of these sustained efforts to modernize the energy grid, eight customers experience the most reliable energy service ever in 2022 with the lowest frequency of electric outages on record. As permitted by New Jersey Law, ACE may implement full proposed rates on November 17th, subject to refund, and a final order is expected in the first quarter of 2024. Next, BGE filed its second multi-year plan with the Maryland Public Service Commission on February 17th, which we provided preview into on our fourth quarter earnings call. Covering the year 2024 through 2026, the multi-year plan details how BGE will invest nearly $2.3 billion annually in the electric grid and natural gas system and nearly $400 million total in electric vehicle and building efficiency programs. These investments will inject nearly $36 billion into the local economy and support an estimated 72,000 jobs as indicated in a study performed by Caldwell [ph] University. Importantly, BGE's infrastructure plan includes more than 300 projects and maintenance programs designed to continue meeting customers' needs, and lay the foundation for the state of Maryland to reach its goal of net-zero emissions by 2045 and order is expected on the proposed plan in December, 2023. As CF noticed, we also requested that the commission provide an order on the proposed reconciliation of 2021 and 2022 costs totaling $77 million of under recovery in parallel with the order on the second multi-year plan. That brings me to slide eight where I want to take a moment to highlight Pepco DC's Climate Ready Pathway multi-year plan that was filed with the Public Service Commission of the District of Columbia on April 13th. Pepco is requesting $190.7 million revenue increase over the 2024 to 2026 period to recover planned capital investments that are intended to enhance the reliability, resiliency, and security of the local energy grid, and to further support the district's goal to be carbon neutral by 2045, one of the most ambitious climate goals in the nation. Specifically, this will be done through investments in equipment and infrastructure that will enable the integration of more renewable energy, such as solar. They will also help customers access and adopt cleaner energy technologies like electric vehicles, and they will allow Pepco to manage load to ensure the electric service customers depend on is available when they need it. As the many maintenance programs included in Pepco's proposed multi-year plan, one involves replacing nearly 24 miles of aging power cables with newer and more modern cables so that all customers experience high quality of service and high reliability. It is the customers and communities that are at the forefront of Pepco's Climate Ready Pathways plan with a central focus on improving the social equity and advancement of affordability of electric service. As part of that commitment, the company is hoping the plan filing proposes several measures to address affordability, including expanding enrollment for the Residential Aid Discount program to include any customer who qualifies for any low income program in the district, as well as enhancing the Arrearage Management Program [ph]. Expansion of these programs would help to further extend the reach of valuable energy assistance, which in 2022 alone provided approximately $21 million to nearly 30,000 Pepco customers in DC or on average $700 per customer. Pepco's multi-year plan comprehensively work to keep service affordable, foster a cleaner energy future, and improve reliability, resiliency, and security through significant investments. This influx of resources directed toward accommodating the next phase of DC's energy transformation is expected to inject more than $580 million in the local economy and support more than 3,800 full-time jobs. An order is requested from the DCPSC by February, 2024, based on a proposed 10-month procedural schedule. All our ongoing rate cases are proceeding in line with expectations and you can find further detail on slide 20 through 24 of the appendix. Moving to slide nine. During the first quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $7.2 billion commitment for 2023. These investments in energy infrastructure are vital to maintaining the high standard of service that we have in serving our customers while also preparing the grid for the clean energy transformation. Today, I would like to talk about how Atlantic City Electric is enhancing the customer experience in South Jersey through the Smart Energy Network program, the last major initial smart meter deployment program planned for Exelon utilities. Smart meters are foundational to a smarter power grid. They enable customers to better understand real-time energy usage in homes and businesses, and they provide enhanced information to make our systems more efficient and resilient. With a broad installation, beginning of September of 2022, ACE employees and their contract partners have been steadily upgrading approximately 30,000 meters per month, and all 568,000 meters are expected to be replaced by mid 2024. When fully installed and operational, the Smart Energy Network is expected to deliver $416 million in operational and customer benefits over the next 15 years. Most notably, these benefits include the ability to restore power faster and more efficiently. And they provide tools that help customers use less energy and save money, as well as a reduced need for estimated billing and the capability to provide more detailed outage information when outages occur. They also allow for better integration of new clean energy technologies, including solar, which has experienced the highest penetration in ACE's territory relative to all of our other jurisdictions at approximately 25% of net peak demand. To put a stand of benefits into perspective on an annual basis, ACE expect to eliminate 134,000 truck loads, reduce major store operations and cost by 10% and save $4.5 million in annual contracted meter reading costs. The Smart Energy Network is a critical step in advancing a cleaner energy future for South Jersey and helping the state meet its climate goals. Leveraging expertise from its sister utilities, ACE is committed to using its collective resources to ensure all customers realize the full benefits of this meter upgrade initiative. This is the power of Exelon platform. As shown [ph] a discussion on our balance sheet on slide 10, as you remember on our last earnings call, we project 100 to 200 basis points of cushion on average over our guidance period for our consolidated corporate credit metrics above S&P and Moody's downgrade thresholds of 12% over the guidance period, demonstrating our commitment to maintaining a strong balance sheet. If the corporate alternative minimum tax was not mitigated through an inclusion of repairs in its calculation, we anticipate being at the lower end of that 13% to 14%. We continue to await guidance from the treasury, which we are optimistic they will issue before year-end. And we remain encouraged by the engagement they have in understanding how its implementation can impact energy infrastructure providers like Exelon. From a financing perspective, we have successfully raised $2.5 billion at corporate and approximately $2 billion for ComEd and the PHI entities. Today we have completed over 80% of our planned 2023 long-term debt financing needs. This positions us well for any unexpected market volatility in the balance of the year. We continue to see strong investor demand for our debt offerings, which is a testament to the strength of our balance sheet and to our value proposition as a premier T&D utility with low risk attributes. To reiterate our equity needs, there has been no change in our guidance to issue $425 million of equity as a holding company by 2025. We'll continue to update you as we make progress on that plan. Thank you, and I'll now turn the call back to Calvin for his closing remarks.

Operator:

Thank you. [Operator Instructions] Your first question comes to the line of Shar Pourreza from Guggenheim.

Calvin Butler:

Good morning, Shar.

Shahriar Pourreza:

Good morning. So, hey, guys. Just if we could maybe start with Illinois. I mean, we obviously saw the trial outcome last night. Realize you guys have taken a lot of steps since 2020 to improve, but any sort of high level read-throughs to the regulatory construct at this point, or anything remaining for ComEd from a legal or even judicial standpoint. Thanks.

Jeanne Jones:

Yeah. Thanks Calvin. And good morning, Shar. So, as Calvin mentioned, the deferred prosecution agreement, and this resolved our matter with the Department of Justice. But there have been a couple things that we've outlined in our 10-Ks and Qs that were legal matters surrounding the events leading to the DoJ [ph]. And I'll just touch briefly on those. And again, these will all be disclosed when the Q comes out and they continue to be updated and you'll see it when the Q comes out later today. But we did have a security suit derivatives and derivative suits and consumer fraud suits. And then, there was the FCC investigation, so just checking through those. The security suit was filed in 2019, and there's a next court status for that, that's late June. So based on recent development, we have booked a probable loss in this matter of $173 million, but that is expect to be fully recovered by insurance. So there's no earnings or cash impact from that. There are three derivative suits pending, including 1021, and there were a couple new ones filed in April and May of this year. They all assert similar claims and there's no updates from a financial perspective on those. But I would remind you that that one is a little bit different in that any amount recovered were resolved in cash receipt to the company and those types of lawsuits. And then there were three consumer fraud cases filed, two of which have been dismissed, and we just argued our motion to dismiss the remaining case in late April. And then lastly, the FCC investigation continues -- to continue to cooperate fully. But no update on that. And so, that's just kind of a status update, but again, we give kind of a play-by-play the Q for those. And so maybe I'll turn it over to Gil to talk through the multi-year plan.

Shahriar Pourreza:

Perfect. And then, just lastly, Maryland, obviously Calvin set a pretty aggressive offshore wind target last month, 8.5 gigs by 2031. As I guess as we look at the plan today, could we see incremental transmission opportunities at Delmarva, I guess put differently? What do you embed in plan at this point? Thanks guys.

Shahriar Pourreza:

Perfect. And as we're thinking about transmission opportunities, yes, correct.

David Velazquez:

Shar, just to add. Yeah. We do think that there the potential for incremental opportunities on transmission there. We've not included anything in the current plan for opportunities that are there. And the way the legislation reads by the beginning of July in 2025, the JSC or the PSE will direct PJM to issue kind of a competitive transmission solicitation for the transmission that's needed to support the offshore wind.

Calvin Butler:

Thank you, Shar.

Operator:

Thank you. One moment for our next question. Our next question comes from the line of Paul Zimbardo from Bank of America.

Calvin Butler:

Good morning, Paul.

Jeanne Jones:

Yeah. I'll hit on it. And then Calvin feel free to add too. So when you think about the $0.05, it's a combination of levers. And I'll start with what we did to sort of enter this year in a conservative and substantial matter. So we -- you may remember we had some weather and storm favorability last year and we did some derisking at the end of the year to help us in 2023 and beyond. And so that's helpful heading into the year. Second, if you think about where other volatility lies in interest rate exposure, we've really mitigated that risk by having completed our sole corporate financing in the first quarter. So locking that in, and you can see that in the sensitivities in our exact, we have no exposure really on that. And then as you talked about, right, we do have leverage across the business. It would be more focused on areas that hit the bottom line, but then remember at the corporate entity, dollar saved soldier down to all the areas as well. And so it'll be a combination across the platform. In addition to that, as I mentioned we do see some favorable depreciation at Pepco relative to expectations. And then finally, we had -- if you think about the $0.05 in totality, we had a penny of the favorability from the carbon mitigation credit deposit rate on that reg asset. On a full year basis, that's probably going to be about $0.03. So when you put all that together, pure line of sites offsetting the $0.05 and feeling good about the rest of the year and delivering in the range at midpoint or better.

Calvin Butler:

Hey, Shar, you cut out midway through your question. Would you mind repeating that please? I mean, Paul.

Jeanne Jones:

Yeah.

Jeanne Jones:

Yeah. Thanks Kelvin.

Jeanne Jones:

So the $700 million is what we've applied for, so it's a really competitive process. So it's hard to estimate what portion of that we'll get, but what I can tell you is we haven't factored it in. So if there's -- we're not expecting any meaningful impact to rate base to finance needs, we're reaffirming everything. And then we'll continue to update that -- update you on that as that progresses.

Paul Zimbardo:

Yes. No, I know you are. Thank you both very much. Appreciate it.

Operator:

Thank you. One moment for our next question. Our next question comes from the line of Steve Fleishman from Wolfe.

Steve Fleishman:

Hey, good morning. Good morning, Calvin. So just on the Illinois, I guess we're going to get the recommendation soon on the multi-year, the new framework. So obviously, things like capital structure and ROEs and I assume rate base are the key variables. Are there any other -- and then I guess maybe incentives, are those kind of the key issues to monitor in the recommendations or any other things that we should be watching for?

Gil Quiniones:

I think you've pretty much captured. Those are the items that we anticipate. Parties are going to be to be interested in.

Jeanne Jones:

Yeah. It's kind of like true.

Jeanne Jones:

Yeah.

Steve Fleishman:

Okay. And the -- I guess my other question, the carrying charge or recovery on the CMC deferral, this is just CMC cost that you're not yet recovering in rates that you're earning a carrying charge on?

Steve Fleishman:

Okay. And then finally on the IRS implementation of IRA and the minimum tax, is there any -- has there been any developments or sense of outcome there? I guess on the -- I guess particularly the repair tax issue or just kind of sitting and waiting?

Steve Fleishman:

Okay. Great. Thank you.

Calvin Butler:

Thank you, Steve.

Calvin Butler:

Morning, Dave.

Calvin Butler:

Yeah. David, thank you for the question. I think, as I said in my opening comments, the transition of leadership and commissioners is part of the process, and so we are really engaging with all stakeholders in a very collaborative process to move forward. But directly to your question, the Governor Pritzker did accept the resignation of Chair Solinsky [ph] and has nominated the incoming first Doug Scott, who as you know, used to be the former Chair of the commission and was very instrumental in the drafting and creating of the Climate Equitable and JOBS Act. And there has been communication, but the communications have been around moving the state's goals forward, and we have heard nothing to date that is taking, that are derailing those efforts. And as Gil alluded to earlier Jeanne, we're still expecting a final order on comments for your multi-year plan by December 20th. So also along with the new chair, they're getting a couple of new commissioners and again, that process continues to move forward.

Jeanne Jones:

Yeah. So on the -- on ComEd, the reconciliation they filed is for the 2022 -- under the 2022 formula rate. So this is a reconciliation that has been going on for 10 years. So I think that that one is a little bit more straightforward. And as I mentioned in my prepared remarks, part of that is just the cash collection of the true up on the treasury rates under the formula rate. You set the rate based on prior year treasuries and then you can recognize it in earnings, but then you true it up in rates later. So that one's pretty standard in the sense that it's been going on and it's sort of clear. The BGE one though is the first reconciliation under multi-year plan in Maryland. And so this will be the first time we're going through it. But there's a framework there to work through. And so that's -- but that order will come in December of this year as well. And I think it's important for this year, but I think it's really important in terms of kind of what you mentioned, right, setting the precedent going forward so that we know what is recoverable, what's not. And you get into a place where you can say, okay, if there's a variance here, I can put up a receivable or reg asset or conversely, if we do well, we put up a liability and we'll get that back to customers. So I think going through that will be helpful as it has been. We've seen in ComEd, once you get through it the first time is very helpful going forward.

Calvin Butler:

Thank you, Dave.

Calvin Butler:

Good morning, Jeremy.

Calvin Butler:

Morning.

Calvin Butler:

Yeah. So great question. And with me, the room, I have Carim Khouzami who's the CEO of BGE. But let me take the initial piece and then I'll turn it over to Carim and see if he has any additional information. So just like Illinois, Jeremy, we're having a transition of a chair of our commission as well as a couple of Governor Moore appointees. Governor Moore has taken a very aggressive position to continue to push decarbonization and transportation electrification throughout the state of Maryland, really rivaling it with California and Illinois and alike and moving forward. Having said that, there is an alignment with the jurisdictional goals of what BGE is doing as well as Pepco Maryl. The gas portfolio within our business is -- we believe it's critical to the long-term decarbonization of the industries as we are going through the process of replacing the gas infrastructure within Maryland. We continue to reduce greenhouse gas emissions in that effort. And we've attacked it as a portfolio approach because reliability of the system and affordability for our customers is critical in our endeavors. So we have communicated that with the state. BGE has been very involved in those conversations, and I'll let Carim just take it a step further if he choose.

Jeremy Tonet:

Got it. That's very helpful there. And then, just pivoting to results in, just a smaller question overall, but I was hoping you could illuminate a little bit of color on the GAAP to non-GAAP reconciliations there as far as the change in environmental liabilities and the change in perk audit liability, if just a little bit more color on what those items were.

Jeanne Jones:

Yeah. Sure. So on the environmental liabilities, that's a -- the PHI is a legacy issue where we continue to update estimates for remediation of that. So we just slightly increased the reserve there. On the ComEd item, ComEd and on the perk audit had an audit began in 2021. We got draft findings earlier this year. And just based on ongoing discussions, we booked about $15 million of a probable loss. So that's ongoing. But that's kind of the nature of the two. And infrequent unusual as we carver them out from an operating perspective.

Jeanne Jones:

Thank you.

Operator:

Thank you. At this time…

Operator:

Yes, that was the last question. And at this time, I would like to turn the conference back over to Calvin Butler for closing remarks.

Calvin Butler:

Thank you, Gigi. And I just want to take a moment to say thank you for joining us today. I appreciate your engagement and all your questions. And with that, it concludes the call. Have a great day.

Andy Plenge:

Thank you, Gigi. Good morning everyone and thank you for joining our fourth quarter 2022 earnings conference call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team, who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Exelon's website. The earnings release and other matters, which we will discuss during today's call, contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We've scheduled 60 minutes for today’s call. I'll now turn the call over to Calvin Butler, Exelon's President and CEO.

Jeanne Jones:

Thank you, Calvin, and good morning, everyone. I'll start by sharing my own excitement about closing out our first year as the new Exelon. As proud as I am of what we accomplished in 2022, I'm even more excited about our future. Our utilities serve the homes of more than 10 million customers, customers that include our employees, our families, hospitals, schools, and businesses.

Calvin Butler:

Thank you, Jeanne. Before turning it over for questions, I will end with the focus of what’s ahead for 2023. Operations and safety continue to be foundational. Maintaining reliability for our customers, while operating safely is non-negotiable. We’ll deploy $7.2 billion of capital, ensuring we make the necessary progress to meet the reliability and technology needs of tomorrow’s grid. Indeed, as many of you saw last week, the FBI announced it had interrupted a plot to damage Maryland’s power grid. The need to enhance the physical and cybersecurity of the grid has never been greater. The industry has made it a priority. The partnership between the industry and the government is key to our defences and on behalf of our employees and our customers we greatly appreciate the vigilance and dedication by the FBI and U.S. attorney for the District of Maryland in protecting our nation’s critical infrastructure. Thank you. Despite the urgency, investing capital efficiently will ensure we are making returns on our investments in line with those allowed by our jurisdictions, earning ROEs in the 9% to 10% range. As a result, we expect to deliver on our earnings guidance for 2023, maintain our focus on a strong balance sheet and execute on a number of rate cases this year to sustain operational and financial performance in the future. As we deliver on this plan, we will continue to focus on the value we are providing our customers. This includes not only continuing to advocate for policies that keep the customers as top priority, but also continuing to evaluate our own business to find efficiencies as a more focused transmission and distribution only utility. Like 2022, we have a lot we want to accomplish in 2023. But we again, expect to be successful because that’s what we do. And we know that’s what you expect from the premier, transmission and distribution company one that’s deploying $31 billion of capital for our customers with rate-based growth and ROEs resulting in 6% to 8% earnings and dividend growth and a total shareholder return of 9% to 11%. As always, thank you for your time and support. And we’ll now take your questions.

Nick Campanella:

Hey team. Thanks.

Nick Campanella:

Thanks for taking my question here. Good morning. Good morning. I think in your prepared remarks, you said you’re going to include the CMAT as a deferred tax asset. And just – can you just give us more color on what’s informing your position on regulatory treatment here? And then separately, it sounds like the CMAT is not included in the FFO to debt metrics. You’re at the bottom of the 13% to 14%, but where did you kind of shake out in 2022? Thanks.

Jeanne Jones:

Yes. No, I think that’s well said. As Calvin said, we’re still working on the tax repairs deduction and without specific language in the regulations, we continue to assume the higher cash tax burden, but you do – by having the deferred tax asset at the operating companies, you do earn on that in rate base. So that provides a little bit of sort of offset over time as that rate base builds. We also, so all of the cash taxes are included in our forward-looking guidance from both an EPS and a credit metric perspective. And we continue to reaffirm the 6% to 8% on the EPS side. And then as it relates to the balance sheet, we are still expecting to be at that 13% to 14%. And so with the inclusion of the higher cash taxes or said another way, without the repairs deduction, we expect to be closer to that 13%. If we are able to include the tax repairs deduction, we’d be at the higher end of that 13% to 14%. So, we’ll continue to work with treasury on that, and we’ll continue to focus on our cost management and cash management to continue to increase that cushion.

Jeanne Jones:

Yes. So we typically don’t give specific years. The rating agencies will publish that. We ended the year above our downgrade threshold. I think, as you think about credit metrics, the way we look at it and the way the agencies do is over a three-year, four-year time period because of the different moves in cash from a regulatory perspective. So, I’ll give you a couple of examples. While we’ve benefited from the higher ROEs [at ComEd] (ph) on the earnings side, we can recognize that the cash collections on that come through the reconciliation. So for example, in 2022, right, we had the higher earned ROEs, we won’t collect that until 2024. So it’s important for us to look at it on an average basis so that you capture those timing differences. The other aspect I’ll mention is, as I talked about in my prepared remarks, ComEd elected to defer some of the rate increase in 2024 to 2026. So again, looking on it over that time period is important because without it, you’re missing some of the cash timing. And that’s why we look at it on that average basis.

Jeanne Jones:

Yes, we want to retain the flexibility just given varying market conditions, but we do still have our $1 billion ATM, so we can leverage that as needed to dribble it in as you suggest.

Calvin Butler:

Thank you, Nick.

Steven Fleishman:

Yes, good morning. Thanks for all the…

Steven Fleishman:

Good morning, Calvin. Jeanne, thanks for all the clarifications on guidances. Don’t have to ask all sorts of midpoint or median or other type questions this time.

Steven Fleishman:

So just on Slide 16, I guess the one thing that’s interesting is just for PECO, in the 2023 kind of second year of a rate year, it was a – it’s a down versus 2022, but in 2026 second year it’s kind of more flattish or yellow arrow. Is that just that PECO had this return to normal weather and storms and other stuff that is an issue 2023 versus 2022, and that’s pretty much it, but like otherwise would be kind of the normal course.

Steven Fleishman:

Okay. Okay. And then just on the topic of the – on Illinois, could you give us maybe some sense of when we’re going to get information on the process, on the recommendations and other stuff on the multiply year kind of timing?

Gil Quiniones:

Hi, Steve. So there is a tentative schedule set. And in May, we expect the testimony of the interveners to be submitted in August, evidentiary hearings will commence. And again, the – after that all the way to the required schedule is for the ICCR regulators to make their final determination before December 20 of this year.

Calvin Butler:

So that [Indiscernible] calendar, Steve, any additional questions on that?

Calvin Butler:

No, I would anticipate on this - this would be fully litigated Steve, because, as we talked about, as I talked about in my comments, it’s been a very engaged stakeholder process. And if I was the commission in this, I would make sure that we have a forum for everyone to be heard and we wouldn’t rush to the final outcome because this will put Illinois on a path to decarbonize like no other state except for maybe California. And it’s in a very aggressive approach and the legislation is comprehensive and ComEd being the largest utility in the state I think they need to make sure that all voices are heard and the stakeholders are engaged throughout.

Calvin Butler:

Thank you.

Operator:

Thank you. One moment for our next question. Our next question comes from the line of David Arcaro from – or Morgan Stanley. Your line is now open.

Calvin Butler:

Good morning, David.

Jeanne Jones:

Good morning.

Calvin Butler:

No, if I understand the question, David, PECO is a very well run utility and operating at a high level. And because they have taken the option on the three-year forward-looking test year process, it is one that the regulatory agency understands, one with the company has deemed it is the best value for our customers. And although they have the option to file an additional alternative rate mechanism, we’ve stuck with this course. And we are also looking at to your point, how can we balance the earnings over the course of the three years where it’s more linear and process and the teams continue to work on that. We continue to look at other options, but have chosen to stay the course of where we are at the present time. And Mike Innocenzo, the CEO of PECO is here with us right now. Mike, would you have anything to add with that?

Jeanne Jones:

David, I think the – so tapping off of that. On PECO, I would look you to Slide 16. So there is the second year of PECO in 2023. But to your point, beyond 2023, we expect to be within or above the range. And so, while you have PECO in 2023, there’s a couple other factors impacting 2023 that don’t carry forward. Unlike, our assumption that PECO continues on this three-year rate case cycle. There’s a couple other things that are unique to 2023 that I’ll just highlight. One is, as we’ve talked about, we’re not yet through the reconciliation processes in Maryland and D.C. for the first multi-year plans. Once we get through that, the alignment between rate-based and growth and earnings growth is strengthened. So that’s number one. The second is in 2023, we have the D.C. stay out provision. So they’re still on 2022 rates. And so as we get out of that and move towards 2024, you’re going to have new rate cases, new multi-year plans for 2024, 2025, 2026. Starting in 2024, so that starts again to strengthen the earnings power there. And then on top of that, ComEd is moving to its multiyear plan. And so as you go through 2024 you start to see again three of our four operating companies on multiyear plans with reconciliations, strengthening that alignment between rate base growth and earnings growth. And then you've got PECO with that variability that Calvin and Mike touched on. So that's why, if you look forward, 2023 is a little bit different than 2024, 2025, 2026, and I think Slide 16 really helps lay that out.

Calvin Butler:

Did it answer your question, David?

Calvin Butler:

Absolutely. A couple of things. As we've been highlighting to you in our previous earnings call, we understood and have a clear understanding of what the City of Chicago was striving for. And I think the proposal that ComEd has presented in partnership with the Mayor outlines the goals of decarbonization, equity and workforce development. Within that ComEd over the course of the last couple of years as they've been negotiating this and putting this in place, understood the dollars in which they would do and what we would commit to as a company. Exelon, ComEd and alike and shareholder commitment to this effort because we value the partnership. So what has been outlined from the Mayor really is essence of all of that in terms. Gil, as I mentioned, is here to talk about some of the details, but what we have laid out is that this process goes to the Rules Committee this month with the city. And from there, it will go to a committee of jurisdiction. And we're confident that, as they begin to do an analysis of what we're proposing, it will meet the aspirations of the city and achieve those goals overall. So on the financials, I'm going to turn it over to Gil to kind of walk you through what that is.

Jeanne Jones:

And all of that's baked into the guidance that we've provided.

David Arcaro:

Okay. Understood. Great. Thanks so much.

Operator:

Thank you. [Operator Instructions] Our next question comes from the line of James Kennedy from Guggenheim Partners.

Calvin Butler:

Thank you, James. Good morning.

Calvin Butler:

Yes. James, great question, but I'll be honest with you. When we look at our interactions and engagement with regulatory bodies, we anticipate turnover. And that is exactly why – although we have regular conversations about the process and what we're proposing, our real engagement happens with our stakeholders, the stakeholders, our customers, residential, commercial and industrial. As I outlined in terms of ComEd even filing, I think there were over 45 stakeholder meetings, presentations over and over 1,000 different people attended these. So although the commission turnover is something that we deal within all of our jurisdictions, if we're doing this right, and I think we are. We're meeting the policy expectations of each of our jurisdictions, aligning our filings with those policies and engaging stakeholders at the grassroot level, the commission turnover should not be that big of a deal. So that's how we approach it in not only Illinois but in each of our jurisdictions.

Jeanne Jones:

Yes. Great question. So for – you’re right, so for 2021 to 2022, we did see a little bit higher O&M. We had projected at Analyst Day to be up around a $100 million year-over-year due to certain IT investments, another infrastructure, cybersecurity work that was occurring in this year. But in addition to that, there were a couple other items at the end of this year or that impacted 2022. First was we have some onetime cost associated with the implementation of the Climate and Equitable Jobs Act at ComEd. So that’s reflective there. In addition to that, as I mentioned in the prepared remarks, we did some derisking this year. So we took advantage of the opportunity from some of the tailwinds related to the ComEd ROE and favorable weather conditions to get some work done this year, including corrective maintenance and veg management, but also some customer assistance and community support initiatives. So all in all that, that sort of gets you to the higher O&M for 2022. And then you asked about how to think about it going forward. I think the, our goal is to keep O&M as low as possible. You can see 2022 to 2023 is only a 1% increase and our long-term CAGR since 2016 has been about 1.7%. So our goal is to keep that as low as possible.

Calvin Butler:

Thank you.

Durgesh Chopra:

Hey good morning team. Thank you for taking my questions. Jeanne, just a quick clarification on the $850 million - $875 [ph] million in CapEx which is sort of in the, I guess in the 2023 or the prior four years. Is that all in Illinois? Is that Illinois distribution?

Durgesh Chopra:

Got it. But most of it is in Illinois. And that is included in your, the multiyear rate filing?

Durgesh Chopra:

Okay, thanks. And then just, I think this is back to you, but and I appreciate this is going to be difficult, but pretty sizable increase in CapEx that is great to see, and the equity didn’t move. Can you share any thoughts as we think about, sort of when you update your CapEx plan for future years, how should we think about equity needs? I’m thinking sort of 2027 and beyond. Are those going to be modest given that, you’re kind of trending upwards in your FFO to debt metrics?

Durgesh Chopra:

That’s helpful. Thank you very much.

Operator:

Thank you. I would now like to turn the conference back to Calvin Butler, Exelon’s President and CEO for closing remarks.

Operator:

Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.

Andy Plenge:

Thank you, Chris. Good morning everyone and thank you for joining our third quarter 2022 earnings conference call. Leading the call today are Chris Crane, Exelon’s Chief Executive Officer; and Jeanne Jones, Exelon’s Chief Financial Officer. They’re joined by Calvin Butler, Exelon’s President and Chief Operating Officer, who will join Chris, Jeanne and other members of Exelon’s senior management team to answer your questions following prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Exelon’s website. The earnings release and other matters, which we discuss during today’s call, contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today’s material and comments made during this call. Please refer to today’s 8-K and Exelon’s other SEC filings for discussions of risk factors and other factors that may cause results to differ from management’s projections, forecasts and expectations. Today’s presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We’ve scheduled 60 minutes for today’s call. I’ll now turn the call over to Chris Crane, Exelon’s CEO.

Jeanne Jones:

Thank you, Chris. And good morning everyone. Today will cover our third quarter results, completed an upcoming rate case activity, and then as Chris noted, provide further clarity on our earnings growth trajectory and potential balance sheet implications of the corporate minimum tax. On Slide 6, we show our quarter-over-quarter adjusted operating earnings. Exelon’s continuing operations earned $0.75 per share in the third quarter of 2022 versus $0.53 per share in the third quarter of 2021. As a reminder, the prior year third quarter reflects an $0.08 per share discontinued operations adjustments for certain corporate and overhead costs, previously allocated to generation that are required by accounting roles to be presented as part of Exelon’s continuing operations. These costs were paid for by generation and they are not indicative of our corporate overhead post separation. Excluding this $0.08 adjustment, Exelon third quarter results were $0.14 per share higher than the third quarter of 2021. The earnings growth was driven primarily by higher distribution rates associated with incremental investments and completed rate cases relative to third quarter 2021. The impact of higher treasury rates on ComEd’s distribution ROE, the absence of summer storm activity and distribution formula rate, timing at ComEd. This was partially offset by depreciation and amortization and higher interest expense on debt at the holding company. Year-to-date, results in drivers from the prior year are detailed on Appendix 540. Turning to the full year, we are narrowing our 2022 EPS guidance range to $2.21 to $2.29 per share from $2.18 to $2.32 per share. At Analyst Day, we told you we expected to earn 28% of our full year earnings in the first quarter, 20% in the second quarter, and 32% in the third quarter, or about 80% of full year earnings by the end of the third quarter. Delivering year-to-date earnings of $1.84 per share puts us slightly ahead at 82% of the midpoint of our revised guidance range, which considers the impact of higher treasury come on the distribution ROE, the absence of storms and our continued disciplined approach to cost management. These benefits are partially offset by higher financing costs at corporate and the businesses along with one-time items occurred in the first quarter. We are delivering on our financial commitments and are confident we will be within our revised guidance range at year-end. Moving to Slide 7. Looking at our utility returns on a consolidated basis, our trailing 12-month ROE as of the third quarter has improved to 9.3% and is back within our 9% to 10% targeted range. The 50 basis point increase from last quarter is in line with expectations as timing of equity infusions from the first half of the year are offset by the earnings growth in the second half of the year. As discussed on previous calls, we expect a trailing 12-month ROE to remain in our 9% to 10% target range at year-end. Our focus continues to be delivering strong earned returns at the utilities, which sustain the investment we make on behalf of our customers. Turning to Slide 8. There were some important developments in our open distribution rate case proceedings this quarter. Our successful execution builds momentum into 2023 when several jurisdictions expect to file a multi-year plans. Let me begin by highlighting key developments in the 2022 rate cases. On October 12, the Delaware Public Service Commission approved Delmarva Power settlement agreement without modification for its gas distribution rate case. The settlement was for a $13.4 million increase in distribution rates, which includes the transfer of $5.8 million of revenues from the distribution system improvement charge capital tracker into base distribution rates, reflecting an ROE of 9.6%. As permitted by Delaware law, Delmarva Power implemented full allowable rates on August 14, subject to refund. Additionally, on October 27, the Pennsylvania Public Utility Commission issued an order approving the joint petition for settlement in PECO’s GAAP rate case including an annual natural gas distribution revenues increase of $54.8 million beginning January 1, 2023. We also have two rate cases pending final orders. Notably, Delmarva Power reached a settlement on the majority of key elements for its first electric distribution multi-year plan with the Maryland Public Service Commission, including a cumulative revenue increase of $28.9 million beginning in 2023 through 2025, reflecting an ROE of 9.6%. The ability to reach this settlement is a testament of the many benefits of this progressive rate design, including customer rate predictability, ease of regulatory burden and transparency into future system investments at our utilities. We expect a final order from the commission by year-end. Lastly, we expect a final order on ComEd’s final distribution formulary update in the fourth quarter. More details on the 2022 rate cases can be found on Slides 18 through 22 of the appendix. Turning to 2023 rate filings. ComEd continues to prepare for a new rate filing in January of 2023. Throughout 2022, ComEd has been working with stakeholders on the performance metrics proceeding. On September 27, the Illinois Commerce Commission issued its order approving the performance and tracking metrics plans, which includes seven performance metrics with a total value of plus or minus 32 basis points. The order paves the way for ComEd’s first multi-year plan filing in January 2023 for rate effective 2024 to 2027. Details of the filing will be shared on our fourth quarter call. The multi-year plans across our East Coast jurisdictions have enabled investments necessary to improve reliability and customer service. They’ve modernized the distribution system and supported state environmental goals that have served our customers and communities well. Building on this momentum, we anticipate filing second multi-year plan at BGE in the first quarter, at Pepco Maryland in the second quarter and at Pepco DC in the first half of 2023. Additionally, we anticipate filing the first multi-year plan reconciliation with BGE expected to file in the first quarter of 2023. Our first multi-year plan reconciliation is an important milestone that helps us throughout variances from the costs we filed as part of the multi-year plan in early 2020. Importantly, this reconciliation process will also provide our first opportunity to understand how the process will be implemented for any potential cost variances in future multi-year plans. As you can see, next year, we’ll be busy on the regulatory front, but we are excited for the transparency and stability the multi-year plans will continue to provide our customers and stakeholders. Relationships across our jurisdictions will be constructive, and we are working together with our regulators, speeds and communities to support their clean energy and chemical. As Chris noted, this year’s federal legislation only bolsters support for and the affordability of the transformation of our energy economy. The multi-year plans provide a great structure to align on the pace and the progress of that transformation. As a reminder, we expect nearly 100% of our rate base growth will be covered by alternative recovery mechanisms, such as the multi-year plan by the end of our planning period. Moving to Slide 9. As Chris described, we are confident that $29 billion of investments we are making on behalf of our customers will result in expected rate base growth of 8.1% and 16% annualized earnings growth from 2021 through 2025. We have noted that our business model does include some variability in year-over-year earnings growth due to the timing of rate cases, largely driven by Pennsylvania, which generates strong returns that support the continued need to invest for the benefit of our customers. In addition, for 2022 and 2023 at ComEd, we’re exposed to the 30-year treasury rate before making the transition to a more traditionally set return on equity. We’ve attempted to provide investors with additional information on the year-over-year variability with the building blocks of our earnings growth trajectory. As defined in the chart, the gray arrows represent implied 6% to 8% CAGR pass from the 2021 guidance mid-point of $0.02 per share as disclosed at Analyst Day through 2025. While the [indiscernible] illustrates expected year-over-year growth percentages from the prior year relative to the 68% range each year. Getting to the growth drivers, starting with 2023, we have already mentioned ComEd in its exposure to the 30-year treasury rate. Although current forward imply we should see some good upside to its ROE, we’ll need to monitor the impact through 2023, which remains fully exposed to market move. People will be in year two of its existing electric distribution rate per year cycle and as a result, is expected to have lower year-over-year earnings assuming normal weather. PECO’s earnings should be positively impacted by new GAAP rates, transmission and its distribution system improvement charge tracker, which provides a mechanism for recovery on distribution investments made between rate cases. Weather and store normalization will also be a factor in the PECO’s decoupled and we are modestly benefiting from weather to date. Like all companies, we face challenges from higher financing costs and inflation, which we are working hard to offset through productivity initiatives, investments in technology and by leveraging our size and scale. Reconciliation processes in 2023 in Maryland and DC will help establish precedent for future cost recovery under the multi-year plan. Lastly, at corporate, we will see increased costs as we continue to refinance our remaining floating rate from the separation as well financing the investment needs of our utilities at the current higher rates. As we do have the utilities, we continue to challenge our corporate center to reduce costs. For all these reasons, 2023 is expected to be below the lower end of the 6% to 8% growth range based on our outlook as of September 30. In 2024, we expect to be in the range as we enter the next cycle of our BGE and PECO multi-year plan, which allow us to align with stakeholders for the next three-year phase of the clean energy transition. PECO is expected to be in its third year of its existing electric distribution rate impacting year-over-year growth. Then with an expected rate case filing for PECO electric in 2025 and the rest of our utilities growing generally in line with the rate base investments, we expect to be above the upper end of the 6% to 8% range in 2025. The combination of growth across these years should put us squarely in the 6% to 8% range on an annualized basis for the 2021 through 2025 planning horizon. You can expect us to initiate 2023 guidance and provide a roll board of CapEx, rate base and financing plans as we normally do on our fourth quarter earnings call. Turning to Slide 10. Exelon remains committed to maintaining a strong balance sheet and a battered credit ratings continue to be a top priority. Our long-term corporate consolidated credit metric outlook remains strong for both S&P and Moody’s, regardless of the outcome of the corporate minimum tax. If the corporate minimum tax is enacted as written in the Inflation Reduction Act, the exposure tax on balance sheet is approximately $200 million per year as is posted in our August 8-K filing. We are working with the industry and remain optimistic that this impact can be mitigated. Even if unmitigated, as Chris noted, we expect to observe the cash impact on our balance sheet with cushion above our downgrade thresholds and we expect to be in our targeted 13% to 40% average range over the planning horizon without a need for incremental equity beyond the previously announced $1 billion commitment from 2022 through 2025. As a reminder, we issued $575 million in equity in August through a onetime offering and lease the remaining $425 million over the 2023 through 2025 period. Our commitment to a strong balance sheet is a top priority to ensure we can make the investments needed on behalf of our customers. I want to close by reiterating our confidence in investing an estimated $29 billion of capital from 2022 to 2025 driving 68% earnings growth from 2021 to 2025 and a strong balance sheet. This remains the case regardless of whether the corporate minimum tax is mitigated. Thank you. I will now turn the call back to Chris for his closing remarks.

Operator:

Thank you. [Operator Instructions] Our first question will come from Ross Fowler of UBS. Your line is open.

Jeanne Jones:

Yes, yes. You’re thinking about it right. And I’ll just reiterate that the shareholders [ph] represent year-over-year growth from the prior year. So the way you walked through it is right. And then what we’ve tried to do is not give you a specific number for every year, but sort of narrow the outcome based on the building blocks below the CAGR line. So you can see the combination of growth over those years, puts us squarely in the 6% to 8% commitment 2021 through 2025.

Jeanne Jones:

Sure. Yes. So, I think three questions there. First, when we think about mitigation, there is working with EEI and the industry on the regulation. So that certainly would be a meaningful mitigation there if the regulations are written in a way that allows for certain deductions that we’ve previously had. But I would also say, as you know, right, we will look internally to do what we can, mitigate anything that we can on our end. But it’s a combination of those factors, but that’s right, the 60 basis points to 70 basis points that we put on the slide is the unmitigated whether through the regulations or internally the most conservative impact. I think your second question, I’m forgetting, but the third question was if the regulations do mitigate it or if it’s a 60 basis points to 70 basis points go away are we still committed to the $425 million that we are. So, we’re not – we don’t expect to do any more than the $1 billion we announced. As you know, we’ve already done the $575 million and then the remaining $425 million will execute between 2023 and 2025. The timing of the regulation.

Jeanne Jones:

Yes. So it would be helpful to have them by the first quarter. Obviously, that would be when we make our first payment that would be helpful, and we’ve sort of signaled that, that would be helpful, but we really can’t control. And we should know more next year, the sooner the better, obviously. But we’re still working through that. There are obviously the treasury is obviously still working through that.

Operator:

Thank you. One moment please for our next question. Our next question will come from Paul Zimbardo of Bank of America.

Jeanne Jones:

Yes. I think we always seem to be solidly in within the range, right? But we haven’t given you sort of where with it. But what we’ve tried to do is show you that if you look at the year-over-year growth, and you look at the drivers below it that we are confidently reaffirming our 6% to 8% 2021 through 2025.

Jeanne Jones:

Yes. I think it’s – I think you’re thinking about it right. We are affirming we don’t need more than the $1 billion that we mentioned after analyzing the unmitigated impact. We can – again, whether it’s unmitigated through EEI or internally, we can absorb that on the balance sheet, stay above our downgrade threshold without incremental equity and then be within our 13% to 14% over the planning price.

Jeanne Jones:

Thanks, Julien.

Steve Fleishman:

Hi good morning. Chris, I also want to give you the best wishes and hope your health gets better and just recognize – just I know we’re seeing it more through a different stock right now with CEG, but just the turnaround in nuclear that you help kind of make happens pretty remarkable. So congrats on that. Just on the – I guess, Jeanne, just on the first question on the nonlinear growth. I think from the very beginning when you gave the guide of the new Exelon, you did kind of – you did say that it wasn’t going to be linear and may not be in the range each year. So just now that you’re giving this incremental information, is it pretty consistent where it would have been if you had just given this at the beginning of the year, just reflecting this PECO rate cycle for the most part? Or are there other like big changes that have occurred?

Steve Fleishman:

Okay. Second question is, I think some people are trying to take those each year number from the Slide 9 and kind of taking, even though it’s an estimate to kind of adding that up. And when you do that by 25, you kind of maybe get to the lower half of the 25 range. Is that not what you should do because there’s estimates are just how – how should we take that?

Steve Fleishman:

Okay. And then just on the, going back to the alternative minimum tax, I think one of the big issues of focus with treasury is the repairs tax and whether that could get included. If you could get the repairs tax addressed as part of this, would that – would that cover most of this $200 million because some companies are actually assuming that it will get fixed?

Steve Fleishman:

It would, okay.

Steve Fleishman:

Okay.

Steve Fleishman:

Okay. Great. Thank you very much.

Operator:

Thank you. One moment for our next question. Our next question will come from David Arcaro, Morgan Stanley. Your line is open.

Gil Quiniones:

This is Gil Quiniones, CEO of ComEd. We have to had a constructive relationship with stakeholders and other parties here in our jurisdiction. And what you will see from us is that our plans will squarely align with the goals of the Climate Equitable Jobs Act, and generally the energy environmental and economic policies of this state, so that will be our plan and as was noted in the earlier remarks, the details of such we will share in our next earning call.

Calvin Butler:

Good morning. This is Calvin. We’re always looking at ways to operate our business more efficiently and manage our costs because that’s our responsibility in delivering that value to our customers. And as we’ve talked about previously, affordability is a driving factor as we operate in all of our jurisdictions. And just remember, PECO is one of our highest – is our highest earning utility in the fleet and one of the highest earning across the country. And the constructive regulatory environment within Pennsylvanian is something that we’ve come to build on and have that relationship – collaborative relationship with the regulators. So as we continue to manage across our platform, we will always look at costs within the operating units as well as at the corporate center; so to answer your question directly, yes.

Operator:

Thank you. One moment – just a second for our next question. Our next question will come from Jeremy Tonet, JPMorgan. Your line is open.

Calvin Butler:

Good morning Jeremy.

Jeanne Jones:

Sure, yes. So I’ll take that. As Calvin mentioned, I think the first and foremost is our continued focus on cost management. So we continue to do that. I think the other thing is we’re also looking to manage interest rate volatility. So when you think about our long-term financing, we use tools there like creation, hedging to dollar cost average into the long-term rates before the issuance on our short-term debt. We’ve got interest rate caps that protect against the upside but also retain the benefit should rates fall. So we’re doing all the things we can to control costs heading into 2023. And then in addition to that I think you asked about where we marked that, I think in the footnote it says as of 9.30 [ph], so we marked comment to the 9.30 rate for 2023 there.

Jeanne Jones:

Yes. I would say there – the categories are somewhat consistent, but they’re also different enough, right? I don’t think you can back cast it. But what I would say is under the formula rate, one piece that’s very different as there was only downside risk and so we only had penalties under the formula rate. What’s constructive about this new path going forward is we now have the opportunity to do better. And as you heard Chris say, ComEd performing the best it ever has in its 100 years of operations. And so we’re excited about that. I think the other thing about the multi-year plan is the upfront alignment around the investments. And that was also there in the formula rate where we agreed that there would be grid modernization required and smart meters. And when you look at the results of that ComEd improve the reliability at 82%. So we like the ability to align upfront and we like the ability to get recognized should we perform well, which ComEd has done.

Jeremy Tonet:

Got it. That’s helpful. I’ll leave it there. Thanks.

Calvin Butler:

Thank you.

Michael Lapides:

Thank you very much and Chris, obviously wish you well, wish you the best physically. Can – a cost question. When you benchmark yourselves whether benchmarking T&D, O&M or benchmarking at the corporate center, and I’m sure you still do a lot of that. Where do you think you do not score in the first quartile? Meaning from a cost management perspective? Where do you think whether it’s transmission, distribution, customer service, customer accounts or corporate G&A, where do you think the greatest opportunity set, not in the near term, but over a three to five, three to seven year period is to get more efficient? Like can you just kind of point directionally at where the opportunity sets may lie?

Calvin Butler:

And Michael, what that jumps I’ll add to you is that in 2022, after the split, had a lot of talent go over to the other side to Constellation, and we continue to maintain our operational performance and metrics and continue to – at that time, it was one, keeping your O&M flat to below the rate of inflation and each of our operating companies continue to do that. And our corporate center stepped up because one of our commitments, and it continues to be one of our commitments when we announced the split that we would not let our corporate services ride as a result of that. And we were spending so much of that building over to the other side of the business. And we ended the year on the split to go back to our commissions and we met that regulatory compact. And that’s what I’m protest teams and the leadership and how they continue to dive in. And as I said earlier, costs will always remain a focus of ours and under Chris’ leadership, what you’ve seen is that Exelon has continued to raise the bar and meet that challenge. And I commit to you and we commit to you leadership team will continue to do that.

Calvin Butler:

Yes. We have and we continue to look at that. We are consolidating our control centers across our fleet. We continue to look at how in this new hybrid work environment in some of our areas, what does that mean for office space. And as part of our real estate portfolio and supply chain, we continue to drive those costs out of our business. But as we’ve said, affordability is going to remain a focus, and we’re going to look at every opportunity we have to drive that. And I’ll turn it over to Chris.

Michael Lapides:

Got it. Thank you.

Operator:

Thank you. This concludes today’s conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.

Jeanne Jones:

Thank you, Dillan. Good morning, everyone, and thank you for joining our second quarter 2022 earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer; and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Exelon's website. The earnings release and other matters which we discuss during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts and expectations Today’s presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We set about 45 minutes for today’s call. I’ll now turn the call over to Chris Crane, Exelon CEO.

Joe Nigro :

Thank you Chris and good morning, everyone. Today, I will cover our second quarter results, our quarterly financial updates and highlight several ways in which our utilities and power and economic health and wellbeing the diverse communities in which we serve. I'll begin on slide 6 where we show our quarter-over-quarter adjusted operating earnings waterfall. Exelon continuing operations were at $0.44 a share in Q2 this year versus $0.36 a share in Q2 of last year. As a reminder, the prior year second quarter reflects a $0.09 impact for discontinued operations adjustment for certain corporate overhead costs that were previously allocated to our generation segments that are required by accounting rules to be presented as part of Exelon’s continuing operations. As a reminder, these costs were paid for by generation and are not indicative of our corporate overheads post operation. Additional information including the full year impact of the discontinued operations adjustments on 2021 results can be found in the recast 10-K and which we filed on June 30. Excluding the $0.09 impact quarter-over-quarter of the discontinued operations accounting adjustment for service company allocations, Exelon’s second quarter results were a $1.00 lower than the second quarter of 2021. We did benefit from higher distribution rates associated with completed rate cases, including higher Treasury rates impacting Commonwealth Edison's distribution returns. But this was offset by higher depreciation and amortization, bad debt, timing of other costs utilities, and the impact of rising rates on the debt at the holding company. As Chris mentioned, we continue to reaffirm our 2022 EPS guidance range of $2.18 to $2.32 per share. Our year-to-date operating earnings results of $1.08 per share, are exactly in line with the historical percentage of full year earnings, in which we outlined at Analyst Day. Growth for the balance of the year will occur primarily in Q4, as we continue to realize the benefits of higher distribution and transmission revenue, including the net impact of higher Treasury's on ComEd. It will also include the absence of unfavorable weather and storms from a previous year, and the timing of taxes and O&M spend that impacted us in the first two quarters of this year. Any updates to guidance will be provided on our next call for Q3. Moving on to slide 7, looking at our utility returns on a consolidated basis, we expect to be in our consolidated 9% to 10% target by year end. As of the second quarter our trailing 12- month ROE of 8.8% was slightly below our targeted range. As we discussed on our last call, the timing of equity infusion supporting capital investments across all utilities outpaced the higher earnings, driven primarily by distribution and transmission rates. We remain focused on delivering stronger returns at the utilities, which the semi investment we make on behalf of consumers. Turning to slide 8, it was another quiet quarter on the regulatory front, with one notable rate case development. On May 19. Delmarva Power filed its first multiyear plan with the Maryland PSC, the third of its kind in the state proceeded only by its sister utilities of BGE and PEPCO. The filing outlines the company's plans to invest hundreds of millions of dollars in the local energy grid and other customer experience improvement during the three year period from 2023 to 2025. As we've noted before, the multiyear plans approach allows us to align with all stakeholders where the company is focusing its investments. Among the hundreds of projects, the plan specifically includes investments in the electric distribution system to continue to improve reliability and customer service, advanced technologies to modernize the distribution system and provide tools to assist customers in managing their usage. We expect an order by the end of the year. We also have three vacations that are still in progress. Delmarva, Delaware has a gas case with rates going into effect on August 14, subject to refund and an expected decision in the first quarter of ‘23. Additionally, we expected decision on the PECO gas case in the fourth quarter this year, and our ComEd’s final formula rate filings in December. Each case is proceeding in line with our expectations. Overall, we are pleased with the progress in advancing progressive regulatory designs that benefit our customers ease regulatory burden and improve visibility for our utilities. As a reminder, we expect nearly 100% of our rate base growth will be covered by alternative mechanisms by the end of our planning periods. And more details on the rate cases can be found on slide 18 to 21, in the appendix of our earnings presentation. On slide 9, I want to spend moment discussing the work that our utilities do to partner with local state and federal agencies, as well as community groups to ensure we are maximizing opportunities for our customers to benefit from the various build assistance programs available to them. With the challenges presented in the last couple years by the pandemic, and recent inflationary pressures on customers, there have been increases in the funding available to support our most vulnerable customers. For instance, the LIHEAP program it run since 2017 by $400 million to $3.8 billion in total. However, the percentage of households taking advantage of this assistance has remained flat nationwide, implying additional opportunity to support our customers that has gone untapped. Our utilities with their capabilities around billing and customer service, have stepped up to this challenge, looking for innovative ways to support the governmental agencies and ensure more eligible customers are taking advantage of the programs available. And I'd like to touch on just a couple of examples. ComEd introduced the Community Energy Assistance Ambassador program, whereby it offered employment to over 100 local residents to serve as trusted partners to educate customers about financial assistance, as well as energy efficiency. With support from these ambassadors, ComEd was able to expand its reach into hard to engage communities, distribute more than 11,000 Energy Efficiency kits and connect customers to a record $146 million in financial assistance, representing a 95% increase in the number of grants customers received relative to 2020. Of the PHI utilities, ACE Delmarva and PEPCO also took advantage of local outreach strategies, leveraging a data driven approach to ensure they were targeting the highest opportunity areas. Furthermore, they also partnered closely with the relevant governmental agencies to identify and reduce logistical pain points, around applications, eligibility verification and disbursement. These efforts resulted in customers securing $125 million of energy bill assistance, an increase of 70% from 2012. I can say similar approaches were also employed at our PECO, BGE operating companies, and Exelon efforts across all utilities resulted in over $450 million of funding, making its way to more than 650,000 customers, which lowers arrearages and bus bills for all consumers. This level of funding represents a 22% increase in the assistance we were able to connect to our customers relative to the prior year. In fact, these efforts were recognized by EI who selected Exelon as an Edison Awards finalist in 2022, specifically for the innovative ways we helped our customers obtain this assistance. Connecting customers to financial support is just one of the ways in which Exelon is ensuring its customers are making the transition to a cleaner and more resilient grid in an affordable and equitable manner. If I move on to slide 10, during the second quarter, we continue to invest capital for the benefit of our customers and are on track to meet our $6.9 million commitment in ’22. These investments will improve reliability, and resiliency, enhance service for our customers and personally prepare the grid for a clean energy future. Today, I would like to talk about the impressive effort led by BGE to replace a half century old underground underwater circuit nearing the end of its useful life in the heart of Baltimore Harbor. BGE’s Key Crossing Reliability initiative installed a double circuit 230 KV overhead electric transmission lines across the two mile wide Patapsco River. Proactive outreach and early engagement of stakeholders significantly reduced permitting durations and allowed BGE to incorporate feedback into the project's design. That benefit benefiting both BGE and its customers. To reduce durations allowed overhead construction to begin in May of 2020 and complete 15 months early. The transmission monopoles were installed, including two of the tallest towers on the continent, which contemplated adequate clearance for cargo and cruise ships entering the Port of Baltimore today and into the future. Rate reliability improvements stemming from the key crossings initiatives were made possible by the estimated 300 to 350 talented women and men who contributed to this project and all the constituents engaged in this -- 0:24:28.9 .each fader have BGE opted to replace the segment with overhead transmission lines, because the environmental impact was minimal, and it was cost effective and better supported the Port of Baltimore shipping operations, while having the greatest potential for local and domestic job creation. This project perfectly embodies our mission of providing clean, reliable, affordable and innovative solutions to all our key stakeholders. Lastly, I want to provide an update on our balance sheet, which we committed to keeping strong to support the investments made for the benefit of our customers and communities. As we announced in February of 2021, and reaffirmed as recently as last quarter’s call, we plan to issue $1 billion of equity in the holding company by 2025 as part of a balanced funding strategy. We are establishing a $1 billion ATM program. And we plan to issue $500 million of equity in 2022 leveraging either the ATM program or at one time offering or some combination of both methods. We will complete the remaining $500 million in 2023 to 2025. And we commit to continuing to update you as we make progress on these points. Beyond our equities complaints, as we noted in the first quarter, we have completed our long-term debt financings at corporate for the year, there is no change to our expectation and our consolidated corporate metrics will average 13% to 14%. At both S&P and Moody's over the 2022 to ‘24 period. And with a number of financings completed this quarter at our utilities, we continue to benefit from robust demand for that debt backed by extremely strong credit ratings that are operating. As you've heard from Chris, we are monitoring the Inflation Reduction Act, and its potential impact on cash [Inaudible] and tax. We will continue to update you on that as we can. Thank you, and I'll turn back the call to Chris for his closing remarks.

Operator:

[Operator Instructions] Our first question comes from the line of Shahriar Pourreza from Guggenheim Partners.

Chris Crane:

Yes, I'll take the first half and let Joe take the second half. We have been working with our Head of Federal Regulatory Affairs, Melissa Levinson, who's in a room here. I’ll ask her if she wants to add anything after I speak. We have done significant amount of outreach, not only as a company, but as an industry to make sure that the message is heard that there is a technical fix that there's a potential or other methods. But I don't think we all know enough. Now, it's very fluid. As you talk to the senators, they're getting up to speed as we're getting up to speed. So it came quick, it came out of the closet. And we have to continue to dive in with the EI and as company to communicate the unintended consequences of where we're at. Melissa, anything else?

Chris Crane:

Did I misspeak on the technical fix?

Chris Crane:

Thanks Melissa. Joe?

Shahriar Pourreza:

No, sorry, Joe, you go, please.

Shahriar Pourreza:

Got it. And then just lastly, Joe, a little bit of confusion, I guess, this morning around the language around the equity plans for ‘22. I guess what a sort of the puts and takes of doing it via the ATM versus just a pure block, I guess. What are you trying to walk through? Why not just do an ATM? Thanks.

Operator:

Our next question comes from the line of Paul Zimbardo from Bank of America.

Joe Nigro :

Yes, we, as I said this is obviously a very fluid situation and we're not ready to commit to either of those. It's all gets tied up. And if this were to pass in its current form this would all get tied up in our end year planning process. What I can say, though is, on the Analyst Day, we committed to use 16% earnings CAGR through 2025. And we're still committed to that.

Joe Nigro :

Yes, no, in our plan, we don't embed any incremental benefits from performance.

Calvin Butler:

We are. So as you mentioned, we've been working with stakeholders and filed our performance based metrics outline and goal, which would add if ComEd is able, we were confident to sit back and afford reliable and electricity to the customers, as well as helped the state achieve its goals. The reliability metrics, as outlined could add 60 basis points.

Operator:

Our next question comes from the line of Steven Fleishman from Wolfe Research.

Chris Crane:

Yes, Joe, you want to --

Chris Crane:

There's cost cutting, there's adjustment and project schedules, there's multiple ways to avoid any impact on our metrics. And that's what we'll be focused on when we figure out where this thing is going. What we've heard is, by the end of the week, potentially over the weekend, things could happen. And once we get the final, we'll be able to evaluate, and we can put the numbers in and start to see what we can do for mitigation. But we want to keep our capital spending plan where it's, our growth where it's at for reliability, and affordability, while we're maintaining a system that will take on the renewable. So there's a few balls in the air that we'll have to juggle, but we would rather have the fix to the bill. So we're not having to juggle this, but we'll see how we prevail as an industry as we go forward.

Joe Nigro :

Yes, I think, Steve, a couple of reasons. This is the first window we have open post separation. We had to file the updated 10-K at the end of June, which we did, and then we went into blackout. So, as we previously disclosed, we executed some short-term debt, at the time of separation that we're now planning to use the equity to pay down and that's all part of the balanced funding strategies, to continue to support the balance sheet. We went through an evaluation of the type of equity issue and as I said earlier, it’s still very fluid due to changing market conditions and we want to maintain as much flexibility as we can and that's why we're saying we're putting an ATM in place. But we do have the flexibility to do this one time only.

David Arcaro:

Hi, thanks so much for taking my question. Could you maybe just speak to as you look out over the EPS growth forecast period, your current thoughts on maintaining that linearity of annual kind of cadence and achieving the growth each year through the forecast?

David Arcaro:

Okay, got it. Thanks. That's helpful. And on the just the, are we, so ticked down slightly in this quarter, could you just refresh us on the confidence level of net rising in the back half of this year? And then any latest thoughts as to when you might be able to achieve something in the middle, like 9.5% ROE level as you look out in the forecast?

Chris Crane:

The key on this is the rate cases, as Joe said, and we've seen downward pressure in other jurisdictions on that 9.5% to 10%. So we have to work through that and explain with the higher interest rate environment. We need to be able to move that back up as we're working through our rate cases. So it's reversing the trend of what we've seen in the industry to accommodate the interest rate rise and it's very quick to come down when interest rates come down. It's a crawl back when interest rates go back up. But that's what we're focusing on.

Operator:

Our last question comes from the line of Durgesh Chopra from Evercore.

Joe Nigro :

I think there's a lot of variables that go into that equation, or maybe we, given the size of our enterprise, and the number of operating companies we have, obviously, there's a lot of things that move around in a given year with taxes. I mean, we see that each and every year, and then quite frankly, each and every quarter. So this is very fluid, the situation we're dealing with as blow smoking. Chris alluded to here, there's still -- we still go to get to the goal line on this and see where it plays itself out. I'm not going to sit here and commit you to say it's going to do this or do that. We're giving you an indicative view what we think that impact looks like over, our planning horizon that we've disclosed.

Chris Crane:

Yes, thank you all for joining the call today. We look forward to continue to execute on a plan. And with that I'll close up the call and thank you for your continued support.

Jeanne Jones :

Thank you, Olivia. Good morning, everyone, and thank you for joining our first quarter 2022 earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer; and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Exelon's website. The earnings release and other matters which we discuss during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We've scheduled 45 minutes for today's call. I'll now turn the call over to Chris Crane, Exelon's CEO.

Joe Nigro :

Thank you, Chris, and good morning, everyone. Today, I'll cover our first quarter results, as Chris mentioned, our quarterly financial updates, and as he noted, highlight several areas in which our utilities are making investments for the benefits of our customers. If I start on Slide 6, we show our quarter-over-quarter adjusted operating earnings walk. Exelon's continuing operations earned $0.64 in Q1 of 2022 versus $0.55 in Q1 of '21. Let me start by reminding you the impacts to Exelon's financials following the separation. As disclosed in our 8-K issued on February 25, beginning with the 10-Q to be filed today for the first quarter of 2022, we are presenting our former Generation segment as discontinued operations for the 1-month period in 2022 prior to the separation and for the 3 months ended March 31, 2021. Financial results for the utilities in the holding company are reported as continuing operations. As a reminder, accounting rules require that certain corporate overhead costs previously allocated to generation be presented as part of the Exelon's continuing operations. I want to note that these costs were paid for by generation and they are not indicative of our corporate overhead post separation. The impact of this business services company allocation adjustment to Exelon's continuing operations is $0.09 for the first quarter of '21 and $0.02 for the one month in 2022 on an after-tax basis. You will continue to see this adjustment for '21 as we present prior year quarters. However, this adjustment only impacts Q1 for 2022. Excluding the $0.07 quarter-over-quarter impact of the discontinued operations accounting adjustment for BFC allocations, Exelon's first quarter results were $0.02 higher than the first quarter of '21. The improvement from '21 was primarily driven by higher transmission and distribution rates associated with completed rate cases, partially offset by depreciation and amortization and stores at the utilities and the impact of rising interest rates on debt at the holding company. Our operating earnings results of $0.64 for the first quarter were in line with the percentage of full year earnings we shared with you in the January 2022 Analyst Day presentation. Turning to our full year outlook. We reaffirm our 2022 earnings guidance range of $2.18 to $2.32 per share. While we have benefited from rising treasury rates on ComEd's distribution return on equity, like most companies, we were also impacted by higher interest expense in our debt, in particular at our holding company. As we normally do, we will update guidance on our Q3 call. As a reminder, we have committed to a long-term operating earnings growth target of 6% to 8% through 2025, off the midpoint of guidance for '21 communicated on the Analyst Day. Moving to Slide 7. Looking at our utility returns on a consolidated basis, we expect to be in our consolidated 9% to 10% target range by year-end. As of the first quarter, our trailing 12-month return on equity of 8.9% dipped slightly below our range. Despite higher earnings driven primarily by distribution and transmission rates, the earnings were outpaced by timing of equity infusions across all our utilities to support capital investments. We remain focused on delivering stronger returns at the utilities which sustain the investment we make on behalf of our customers. Turning to Slide 8. There were some important developments on the regulatory front since the beginning of the year. First, on January 14, Delmarva Power filed an application with the Delaware Public Service Commission seeking a $14.5 million increase in gas distribution base rates, reflecting an ROE of 10.3%. Delmarva Power customers continue to benefit from the major enhancements that are being made to the local natural gas system. Key projects to strengthen and create additional capacity in the company's natural gas delivery system have also been critical to meet growing load. As permitted by Delaware law, Delmarva Power will implement full allowable rates on August 14, subject to refund. Second, Delmarva Maryland received a final order for its distribution electric rate case on March 2. The Maryland Commission approved the proposed settlement order by the Chief Public Utility Law Judge that recommended a $12.5 million increase in annual electric distribution rates, reflecting an ROE of 9.6%. Third, on March 31, PECO filed a gas distribution rate case with the Pennsylvania Public Utility Commission. PECO is seeking a revenue increase of $82 million to support significant investments in critical infrastructure which will modernize and enhance the natural gas system and allow us to continue delivering safe and reliable natural gas service and reduce methane emissions. In addition, the filing proposes enhanced energy efficiency and customer safety programs, increase customer assistance with additional low-income funding and the continuation of small business grant program. We expect an order in the fourth quarter of 2022. Finally, ComEd filed its annual distribution formula rate update with the Illinois Commerce Commission on April 15, seeking a $199 million increase to electric distribution base rates that resulted in a $2.20 increase in the average monthly residential bill starting January 2023. While ComEd is requesting a delivery charge increase, there will be offsets. Specifically, when taking into account higher energy prices based on the recent procurement auction and forwards, offset by lower capacity prices, the carbon mitigation credits and accelerated tax benefit, we currently estimate a net reduction to the average monthly residential bill. ComEd's residential customer rates next January are expected to be at least 10% below the average of rates in the 10 largest U.S. metropolitan areas. In its formula -- in its final formulary filing, ComEd's request supports investments needed to sustain the record level reliability performance for residential and commercial customers and helps advance the goals of the Climate and Equitable Jobs Act passed in Illinois to address climate change, create clean energy jobs, ensure equity and prioritize a just transition to a green economy. We expect to receive an order by early December. We continue to have constructive regulatory relationships across our jurisdictions and are working with our regulators, our states and our communities to support their clean energy and climate goals. As a reminder, we expect nearly 100% of our rate base growth will be covered by alternative recovery mechanisms by the end of our planning period. More details on these rate cases can be found on Slides 17 through 20 of the appendix. Slide 9 provides an update on how Exelon's utilities are working with key stakeholders to help our customers and jurisdictions achieve their decarbonization goals reliably, affordably and equitably. Electric vehicle adoption is unquestionably a key enabler for reducing emissions as the transportation sector currently represents about 1/3 of total U.S. greenhouse gas emissions. Our jurisdictions alone are targeting 4.2 million electric vehicles on the road over the next 25 years, a twentyfold increase relative to the number of EVs in our service territories as of the end of 2021. Given our competitive rates, Electric vehicles also provide our customers the ability to save money. Using the Department of Energy's e-Gallon calculation, the annual cost of an electric vehicle is approximately $1.30 per gallon compared to the price of gasoline at $4.30 per gallon. On average, customers in Exelon service territories could save more than $1,000 per year in fuel cost by switching to an EV. Utilizing Exelon's EV time of use rates could offer an additional 11% savings per year. And while we recognize there are adoption costs and other barriers to entry, we value the role we play in bridging social equity gaps. Working with our jurisdictions, we bridge those gaps through programs like those authorized in the Climate Solutions Now Act in Maryland, which allows utilities to partner with local school boards and offer up to $50 million in rebates to incentivize the purchase and operation of electric school buses. And the benefits are not inclusive to EV buyers. As more energy use applications leverage the grid, fixed costs will naturally be lower for customers who have not yet made the switch to electric vehicles. As our states make this transition over the coming decades, Exelon is poised to support our customers through investments such as upgraded distribution circuitry, substations and ultimately transmission. Transforming the grid over this period to meet the increased standards required by EVs, along with other expanded and innovative uses of the grid, will require significant investment. Our Path to Clean encourages customers and communities to reduce their emissions through access to clean energy solutions. When establishing our goals, the focus was not solely on the environment, but also on equity, affordability, reliability and sustaining our communities. The role we are playing in the transformation of the transportation sector is a great example of this commitment. Moving to Slide 10. During the first quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $6.9 billion commitment for 2022. These investments will improve reliability and resiliency, enhance service for our customers and prepare the grid for a clean energy future. As we have done on past earnings calls, I'd like to feature 2 projects within our portfolio of utility investments. The first is Pepco's Harvard substation rebuild. This substation is part of a larger capital grid project and is currently under construction with expected completion in 2023. This $220 million project will renovate aging infrastructure originally installed over a century ago to improve grid reliability and resiliency. The rebuild also expands regional transmission capacity, supporting future load growth in Washington, D.C. The second project is ComEd's $39 million Project Goldframe. ComEd completed it last fall, 3 months ahead of schedule, to meet the customers' accelerated project timeline. To service new load obligations at the data center and the surrounding area, ComEd installed a new 138 kV substation and associated equipment, including an indoor control building, 15 138-kV circuit breakers, 4 capacitor banks and transmission line extensions to the DeKalb area in Illinois. This was the first large-scale project resulting from the passage of Illinois Data Center Tax Incentive Program in 2019. It also likely creates additional renewable energy projects in the state as 100% of customer usage will be offset by wind and solar contracts. Both contracts or both projects are great examples of how we are connecting our customers and communities to affordable, clean and resilient solutions while enabling economic growth and local job creation through these modernization investments. These projects in their own right have significant economic and social benefits to our customers and communities served. However, combined, they represent less than 1% of Exelon's projected capital spend from 2022 to '25. This puts in perspective the scale and the impact of our investments. Moving on to Slide 11. As you've heard us say at Analyst Day, our consolidated corporate credit metrics are anticipated to average 13% to 14% at S&P and Moody's over the 2022 to '24 time period. And overall, maintaining a strong balance sheet to firmly supporting investment-grade credit ratings remains core to our strategy and who we are. From a financing perspective, we successfully completed a $2 billion corporate debt offering in the first quarter, which completes our long-term debt financing needs at corporate for the year. This inaugural offering as a new company garnered significant interest from investors, enabling a very strong execution that was a true testament to the strength of our balance sheet and our new platform. And finally, there has been no change to -- in our guidance to issue $1 billion of equity at the holding company by 2025. Thank you, and I'll now turn the call back to Chris for his closing remarks.

Operator:

[Operator Instructions] And our first question coming from the line of Paul Zimbardo from Bank of America.

Chris Crane:

Joe, you want to take that?

Paul Zimbardo:

Okay. Great. That's helpful. Does seem positive. And then the other, I know you said no changes to the equity issuance expectations. Just if you could discuss the approach to the timing and methodology, maybe a block or ATM, just given the appreciation of just Exelon but the utility sector broadly.

Chris Crane:

Yes. And I think the key, Joe, on that is watching the solid balance sheet metrics and ensuring that we continue to focus on that.

Operator:

Our next question coming from the line of Steven Fleishman from Wolfe Research.

Joe Nigro:

Yes, Steve. Thanks for the question. You're right the way -- I mean if you talking about the performance of the business in the first quarter and removing the impact of discontinued operations, it was $0.66. When you compare that to Q1 for '21, the equivalent number would be $0.64. You're also right, the impact in Q1, because we have to recast the whole quarter, was $0.09. But because we closed the separation February 1, it's in only a 1-month impact in '22. We would expect that 1 month to effectively drag into the comparisons that you see in '23 next year because of the month of January of this year.

Chris Crane:

It's a little lumpy. But as the rate cases go through, we expect the improvement to go within our range of 9% to 10%, and we just have to execute on the plan. So 8.9 right now should come up, Joe, within a few quarters, and we'll be within our range of desire.

Operator:

Our next question coming from the line of Jeremy Tonet from JPMorgan.

Chris Crane:

Joe, are you going to cover that?

Jeremy Tonet:

Just as far as Illinois ratemaking process progressing in the transition to its new multiyear framework, any color you could share there on the progress.

Jeremy Tonet:

Got it. That's very helpful. And just with the new look Exelon here, just wondering how do corporate cost efforts currently stand since the separation? Are they tracking your expectations at this point? And do you have any sense for upside opportunities and potential magnitude of cost savings over time now post separation here?

Operator:

Our last question coming from the line of Durgesh Chopra with Evercore.

Chris Crane:

I wouldn't say it's the third quarter, Calvin. It's at the end of 2023 that would be finalized, but we did put in our input for the metrics, the operational metrics to ensure the customer satisfaction. But your time line, Calvin.

Calvin Butler:

Right. So the performance metrics, as we've outlined, as you hit, Chris, the 8 performance metrics that they're looking for and we're currently -- it's outlined by the statute, by the law, and Gil and his team are working to drive what those are and give an agreement and alignment to how we move forward. But yes, we think within that, we know within the filing, [both] will all be locked down and our filing will take place in the first quarter of 2023.

Joe Nigro:

9/30 this year.

Durgesh Chopra:

Perfect. Guys, I appreciate you clarifying that. So in the third quarter, we'll know what those metrics are and that will dictate your filing in the first quarter of 2023.

Joe Nigro:

Correct.

Chris Crane:

Yes, one of our jurisdictions have a different focus and we're trying to work through those. But we do see, and I'll let Calvin speak to it, we do see a potential upside in the demand required to support the EVs. And for us, it's the infrastructure costs that we have to put in, changing voltage levels up from 41 60 to 13 8 to ensure that you've got not only the distributed generation, but you can service the EV demand. And working in the different jurisdictions on how that is framed is important. Calvin, I don't know if you want to add anything there.

Durgesh Chopra:

Got it. for taking time to answer my question. It sounds like a significant infrastructure opportunity for you guys as it is for the utilities and some of the states here moving faster than others in your territory.

Jeanne Jones :

Thanks, Chris.

Operator:

Ladies and gentlemen, thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.

Emily Duncan:

Thank you, Justin. Good morning, everyone, and thank you for joining our third quarter 2021, earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer, and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team, who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with this presentation, all of which can be found in the Investor Relations section of Exelon's website. The earnings release and other matters which we discussed during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements, based on factors and assumptions discussed in today's material and comments made during the call. Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors, including uncertainties surrounding the planned separation that may cause results to differ from management's projections, forecasts, and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. I will now turn the call over to Chris Crane, Exelon's CEO.

A - Joe Nigro:

Thank you, Chris. And good morning, everyone. Today I will cover our third quarter results, our quarterly financial updates and our hedge disclosures. I will also provide an update on our full-year 2021 guidance. Turning to Slide 8 first, we earned a $1.09 per share on a non-GAAP basis for the quarter. Exelon Utilities delivered a combined $0.66 per share net of holding Company expenses; and this was primarily driven by above-normal summer weather in our non decoupled jurisdictions, along with strong operational performance and the impacts of distribution rate cases. ExGen earned $0.44 per share in the third quarter. Generation and Constellation both performed well during the quarter. We continue to make progress on levers we identified to mitigate the Texas loss, and we expect it will take the full year to realize all of the savings. Realized gains in our decommissioning trust funds partially offset the unrealized losses from our Constellation technology venture investments, which are mark-to-market in every quarter until realized. At our holding Company, we benefited from expected income tax favorability in the third quarter. And as a reminder, our holding Company incurred $0.12 per share drag in the first quarter, associated with how consolidated full-year tax expenses are booked due to the impact of the losses incurred at ExGen and Texas. The remainder of the first quarter drag is expected to reverse in the fourth quarter, and is not expected to impact our full year results. Turning to guidance, we are narrowing our 2021 EPS guidance range to $2.70 to $2.90 per share, from $2.60 to $3 per share previously. Our updated guidance considers reversal of the retirements of the Byron and Dresden nuclear stations, as well as execution of the EDF put, and our continued additional disciplined approach to cost management. We are delivering on our financial commitments and are confident, we will be within our revised range at year-end. On Slide 9, we show our quarter-over-quarter earnings walk. The dollar per 9 -- $9 per share in the third quarter of this year was $0.05 per share higher than the third quarter of 2020. Exelon Utilities inclusive of holding Company earnings, we're $0.08 per share higher compared to last year. The earnings growth was driven primarily by higher transmission and distribution rates associated with completed rate cases relative to the third quarter of 2020 and higher treasury rates on ComEd's distribution ROE. This was partially offset by costs related to the remnants of Hurricane Ida that swept through the PECO's service territory in our early September. The partial reversal of the first quarter tax expense at corporate also drove favorability relative to last year's results. ExGen's earnings were down $0.03 per share compared with last year, and the decrease was due to net unrealized and realized losses on Constellation venture investments, lower capacity revenues, primarily in PJM, and more planned nuclear outage days. This was partially offset by realized gains in our nuclear decommissioning trust funds and higher ZEC revenue, due in part to increase volumes resulting from fewer planned refueling outages, and ZEC pricing in New York. Moving to Slide 10, looking at our utility returns on a consolidated basis, we continue to meet our consolidated 9% to 10% target with a 9.3% trailing month -- trailing 12-month ROE as of the third quarter. Earned ROE dipped modestly by 10 basis points since last quarter. Despite higher earnings driven primarily by distribution and transmission rates, the earnings were outpaced by increased equity infusions in cross all for utilities to support capital investments. Looking forward, we remain focused on delivering stronger and returns at the utilities and supporting our growth targets to enable customer benefits. Turning to Slide 11, there were some important developments on the regulatory front since the last call. First, on September 1st, Delmarva, Maryland filed an electric base rate case with the Maryland Public Service Commission, seeking an approximately $29 million increase in electric distance rates and reflecting an ROE of 10.1%. The case highlight to Delmarva Power's strong record of reliability reporting the second-best reliability performance in Maryland in 2019 and 2020 behind only Pepco. Delmarva Power continues to make significant investments to improve reliability and customer service, for our customers and communities. DPL Maryland expects to receive an order by March 30th, 2022. Second, on September 15th, Delmarva Delaware received a verbal order for its distribution electric rate case. The Delaware Commission approved approximately $14 million increase in annual base distribution rates reflecting an ROE of 9.6%. As permitted by Delaware law, Delmarva Power implemented full allowable rates on October 6th, 2020, subject to refund. We also have two rate cases pending final orders in the fourth quarter. On October 6, the administrative logo (ph) was presiding over PECO's electric distribution base rate case, recommended the settlement with all parties be approved. The settlement provides for an increase of a 132 million, in annual electric distribution revenues. And we expect to receive an order in the fourth quarter. And then on November 2, the AOJ presiding over ComEd's 2021 distribution formula rate update, issued a proposed order. There were no adjustments to ComEd's proposed revenue requirement increase of $45.8 million. We expect to receive a final order from the Illinois Commerce Commission by early December. We continue to have constructive regulatory relationships across our jurisdictions and are working with our regulators, states, and communities to support their clean energy and climate goals. As a reminder, we expect nearly 100% of our rate base growth will be covered by alternative mechanisms by the end of our planning period, a differentiator for our utilities when compared to peers. More details on the rate cases can be found on slides 20 through 24 of the appendix. And as Chris mentioned, our energy efficiency programs highlighted on Slide 12 is one example of how Exelon's Utilities are helping their customers on the path to clean. Exelon Utilities are driving customer-driven emissions reductions in our communities through some of the nation's largest energy efficiency programs and conservation efforts. These programs enable customer savings through home energy audits, lighting discounts, appliance recycling, home improvement rebates, equipment upgrade incentives, and innovative programs like smart thermostats, and combined heat and power programs. In 2020, through a combination of new and prior-year investments, our utilities helped customers save over 22.3 million megawatt hours of energy. This equates to eight point million -- 8.1 million metric tons of CO2 emissions avoided. The equivalent of nearly 932,000 homes energy use for 1 year, or the carbon sequestered by 10.5 million acres of U.S. forest in 1 year, according to EPA's Greenhouse Gas calculator. Each of Exelon's Utilities is building upon existing work and supporting a path to clean that aligns to the goals and needs of their local jurisdictions and stakeholders. Our approach allowed jurisdictional flexibility such that each utility may respond to their unique regions and markets, and employ the strategies and solutions that best address their operational footprint and customer preferences. But for discussing our gross margin update on Slide 13, I want to remind you that we expect to provide 2022 hedge disclosures at Analyst Day, which will be held closer to the completion of the separation. However, what I can say now is that we have continued to hedge on our rateables plan for future years. And this includes the length from the Byron and Dresden retirement reversals until the carbon mitigation contracts begin and Exelon's full ownership of the CENG assets. Turning to the table, total gross margin increased $500 million since last quarter due to the plant retirement reversals in Illinois and full ownership of the CENG assets beginning on August 7th. In 2021, open gross margin is up $1.6 billion relative to the second quarter, primarily due to higher prices in all regions and higher volumes driven by execution of the EDF PUCT, and the decision to reverse Byron and Dresden 's early retirements. Capacity and ZEC dollars are up $100 million due to full ownership of the CENG assets. Mark-to-market of hedges were down $1 billion due to our hedged position, partially offset by the execution of power new business. We executed $200 million of power new business, and $50 million of non-power new business during the third quarter. The non-gross margin impacts of the Illinois plant reversals and the full ownership of CENG are incorporated on page 32 of the appendix. Thank you. And I'll now turn the call back to Chris for his closing remarks.

Operator:

Thank you. [ Operator Instructions] Our first question comes from Stephen Byrd, from Morgan Stanley. Your line is now open.

Chris Crane:

Thanks, Steve.

Chris Crane:

I'll let Kathleen Barron speak to it. We think there's a lot of positives that can be put in play here. I don't think we're looking for any handouts. We'd rather make the investments ourselves. And between Kathleen and Calvin Butler, we'll -- they'll ham and egg it.

Calvin Butler:

Good morning, Steve. And I will just add a couple of things to piggyback off what Kathleen said. If you think about some of the specifics that the federal government is looking to partner with the states, think about the $7.5 billion they've earmarked for a charging infrastructure. $5 billion going toward zero emission and clean buses, port electrification. When you think about port electrification, for our city of Baltimore and Philadelphia, what that would mean for them, and not even talking about the different grants that they're proposing where utilities could partner to do different things in creative. And all this is good for the customers. If those -- that -- those monies are coming directly to the state and there's a partnership, we will continue to invest on reliability and resiliency and then take these moments. It keeps the customer build down. And that is a concern of ours, just to keep affordability at the forefront of everything we do. So that's that partnership and how we see it playing out. Joe?

Stephen Byrd:

Very helpful, thank you. And then maybe just -- separately, just thinking about the utility business. You already have excellent growth, so I suppose this question is going to come across as somewhat greedy, but I am thinking about other areas of upside potential there. I was just curious, maybe for Calvin and Chris. As we think about categories of growth upside beyond, the excellent base plan that is, resulting in above average growth. What are some of the categories of, additional upside as we think about, the utilities growth prospects going forward?

Calvin Butler:

Chris, you captured it. It really goes around building the reliability and the resiliency of our system. And I think as we lay out our multi-year plans and across our jurisdictions, it's understanding and really diving in, Stephen, in terms of what the customers want in our jurisdictions, but the hardening and the resiliency of our system is coming in the forefront. In addition to fighting climate change, that's a big part of what we're doing in along with the security-related issues, as Chris has outlined. So those are opportunities in the areas, but it's that partnership and really understanding what the jurisdictions are wanting.

Chris Crane:

We can't run a system on the distribution side any longer at a 4,160-voltage level, we have to get up to 138, and that's going to take a significant investment to do that. And that's to support the distributed Generation. So there's a lot more work to be done.

Operator:

Thank you. And our next question comes from Steve Fleishman from Wolfe Research. Your line is now open.

Chris Crane:

Hi, Steve.

Chris Crane:

Well, Kathleen is earning her paycheck to ensure that it gets done. So I'll let her answer the question.

Steve Fleishman:

Kathleen, make it to -- make it 2 for 2.

Steve Fleishman:

Okay. My other question related to that is, I know there's a ton of detail of this, but just high level. How does the PTC interact with your existing state commitments for the different units, or subsidies or laws. Also you’re hedging and retail and all that, as well.

Kathleen Barron:

Yes, I'll start off and pass it to Jim on the hedging question. But the short answer is that under the nuclear PTC as drafted, revenues from a state program are not, included at the state program would adjust, or reflect the existence of the federal support. almost all of our programs have some explicit reference to the fact that if there is subsequent federal support after the state program takes effect, that it will be reflected in the state calculation of the support under the program. So there clearly will need to be further proceedings to evaluate and have the state adjudicate how that federal support will be reflected, but assuming that the PTC passes, we would expect each of the states to take a look at that and for it to be reflected in the level of the states' supports. Jim?

Steve Fleishman:

Great. Thank you.

Julien Dumoulin-Smith:

Hey. Good morning, team. Congrats on the continued progress across all your various efforts here. So kudos to Kathleen and team. But perhaps -- just to focus on one of the other topical issues of late. Uranium prices have been seeing a pretty sharp uptake of late. I suspect it's not too subsidiary and for you all, but I just want to make sure I understand how you all are thinking about that impact things sort of longer-term hedging and procurement activities. And ultimately impact back to the core business.

Bryan Hanson:

Thanks, Chris. Good morning, Julien. We think today's market fundamentals are much improved from the last uranium bull market that we saw 2008-2010 period. Demand is lower, primary mining supply has increased and utility inventories are higher. We at Exelon, we hedge with a diverse portfolio of fuel contracts that include varying pricing mechanisms, or varying horizons with a diverse group of qualified and reliable suppliers. And we maintain a strategic inventory, both to ensure security of supply for our reactors, and to provide flexibility and purchase timing in the event of a market disruption like we're seeing today. We even maintain or keep our uranium inventory in different material states, such as yellow cake gore uranium hexafluoride gas. So we think we're well hedged and well ready for this current bull market. We're looking in the forward part of the LRP for any opportunities and they're all well within our expectations that we see today.

Bryan Hanson:

UFS 6. Very good, Chris.

Chris Crane:

Yeah. I don't think we're ready to give a full business model on it right now. I think we've got a good partnership with the DOE. Exelon, like other utility companies, sees a great use for hydrogen if it's mixing it with natural gas to cut down the carbon loads or other ways. There's -- our strategy organization is still looking at the transportation methodology and they're doing some metallurgical research with other labs to make sure that we -- if we were replacing natural gas pipelines with hydrogen pipelines, that the embrittlement problem doesn't become severe. So what we need to do first, is predict or perfect an efficient technology, using our heat and steam to develop the Hydrogen. Then from there, continue to work with other stakeholders on, where we put the Hydrogen. Does it go in a mixed form with natural gas at first? Does it become, what was thought about ten years ago, the hydrogen economy? I don't think we're there yet. I think there is a lot of work to be done before we get there, but just having the grants and working with the labs and the government to start using a nuclear plant for something more than electricity because you've got all that waste, heat, and steam that can be redirected into the development of very efficient hydrogen, and then continue to move on from there.

Chris Crane:

Yes. Too early

Chris Crane:

Alright. Thanks.

Shar Pourreza:

Hey guys, good morning.

Shar Pourreza:

Joe, can you just maybe further unpack, I guess the level of details and additional disclosures around the retail business that you plan to talk about at the Analyst Day, now that it's obviously a lot more in focus? And then the interim, maybe just further elaborate in how we should think about Nigro? Think about the prompt year, and year to hedge profiles just given the lack of disclosures and significant moves in the curves. I mean, appear didn't, obviously, take as much advantage as expected, so maybe just a better sense here would help, even if it's directionally.