Exelon Reports Higher Negative Impact From Texas Winter Weather Event, In Reporting Q1 Earnings -- EnergyChoiceMatters.com

Exelon Reports Higher Negative Impact From Texas Winter Weather Event, In Reporting Q1 Earnings

May 5, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In reporting earnings today, Exelon reported a higher negative impact, versus a prior estimate, of the negative impact from the Texas winter weather event

Exelon said that, beginning on Feb. 15, 2021, Exelon Generation’s Texas-based generating assets within the Electric Reliability Council of Texas (ERCOT) market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced outages as a result of extreme cold weather conditions. In addition, those weather conditions drove increased demand for service, dramatically increased wholesale power prices, and also increased gas prices in certain regions. Exelon noted that, in response to the high demand and significantly reduced total generation on the system, the Public Utility Commission of Texas (PUCT) directed ERCOT to use an administrative price cap of $9,000 per megawatt hour during firm load shedding events.

The estimated impact to Exelon’s and Generation’s Net income for the first quarter of 2021 arising from these market and weather conditions was a reduction of approximately $880 million, Exelon said.

Exelon said, "The first quarter estimated impact includes certain charges associated with the natural gas business that may be reduced through waivers and/or recoveries from customers. Therefore, such charges are not included in the estimated full year earnings impact. Exelon and Generation estimate a reduction in Net income of approximately $670 million to $820 million for the full year 2021."

Exelon had previously estimated in February the impact to net income for the first quarter of 2021 arising from the ERCOT market and weather conditions to be approximately $560 million to $710 million

Exelon said, "The ultimate impact to Exelon’s and Generation’s consolidated financial statements may be affected by a number of factors, including final settlement data, the impacts of customer and counterparty credit losses, any state or federal solutions to address the financial challenges caused by the event, and related litigation and contract disputes. Various parties, including Generation, have filed requests with the PUCT to void the PUCT’s orders setting prices at $9,000 per megawatt hour during firm load shedding events and to enforce its order and reduce prices for 32 hours between February 18 and February 19 after firm load shedding ceased. Appeals of certain of the PUCT’s orders also have been filed in state court. Exelon and Generation cannot predict the outcome of these proceedings or the financial statement impact."

Exelon said that it expects to offset between $410 million and $490 million of this impact for the full year 2021 primarily at Generation through a combination of enhanced revenue opportunities, deferral of selected non-essential maintenance, and primarily one-time cost savings.

In reporting earnings, Exelon said that its Generation segment had a GAAP Net Loss of $(793) million in the first quarter of 2021 compared with GAAP Net Income of $45 million in the first quarter of 2020. Generation had an Adjusted (non-GAAP) Operating Loss of $(571) million in the first quarter of 2021 compared with Adjusted (non-GAAP) Operating Earnings of $312 million in the first quarter of 2020, primarily due to the impacts of the February 2021 extreme cold weather event.

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