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Exelon Energy Retail Electric Volumes Up by Over 50%

July 27, 2011
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Retail supplier Exelon Energy recorded "significant growth" during the first six months of the year, executives said during an earnings call this morning.

Specifically, delivered electric sales volume by Exelon Energy for the first six months of the year increased by more than 50% versus the year-ago period to 9.6 million megawatt-hours.

The growth was primarily in Pennsylvania, executives said.

Turning to financial results, non-GAAP operating earnings for Exelon's Generation unit increased $67 million to $523 million for the second quarter, from $456 million in the year-ago quarter.

The Generation segment consists of owned and contracted electric generating facilities, wholesale energy marketing operations, and competitive retail sales operations.

The improvement in operating earnings was largely driven by higher gross margin due to the expiration of a PPA with PECO with the end of rate caps, coupled with favorable market and portfolio conditions, including wind and hydro volume. Earnings were also lifted by benefits from the special transfer tax deduction related to nuclear decommissioning trust funds.

The expiration of the PECO PPA contributed about $100 million to the improvement in operating earnings.

Offsetting these gains were lower nuclear volumes, primarily reflecting the effect of more plant outage days in 2011 and higher nuclear fuel costs; higher operating and maintenance expenses, primarily reflecting increased planned nuclear refueling outages; and increased depreciation and interest expenses.

On a GAAP basis, Generation's net income was $443 million compared with $382 million in the second quarter of 2010. Among other things, GAAP results for 2011 include (after tax) the impact from mark-to-market losses of $75 million from economic hedging activities, and net costs of $10 million associated with the planned retirement of certain fossil generating units.

Generation's average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $41.59 per MWh in the second quarter of 2011 compared with $36.87 per MWh in the second quarter of 2010.

Average realized margin for the second quarter of 2011 was $58.92/MWh in the Mid Atlantic and $37.28 in the Midwest.

Market and Retail electric sales by Generation were 40,799 GWh for the quarter, versus 30,265 GWh a year ago.

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