Exelon Generation Adjusted Earnings Lower

Exelon's Generation unit reported adjusted earnings of $499 million for the third quarter of 2010, versus $504 million a year ago, on lower energy gross margin largely due to lower energy prices under the power purchase agreement with PECO and higher nuclear fuel costs.

The adjusted metric excludes several factors such as unrealized impacts from economic hedging. When including these impacts, GAAP net income for the Generation unit was $605 million for the third quarter of 2010, versus $657 million a year ago.

Generation's average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $35.11 per MWh in the third quarter of 2010 compared with $36.32 per MWh in the third quarter of 2009.

Market and Retail sales for the Generation unit in the quarter were 33,521 GWh, versus 30,594 GWh a year ago.

Exelon said that it continues to pursue value added load following products that leverage the load following capability of its generation portfolio. These opportunities are typically in the form of agreements of up to three years in duration procured either through default service solicitations, or through direct sales to end users through Exelon's competitive retail supplier, Exelon Energy.

Exelon CEO John Rowe, always ready for quickly accretive mergers, said that Exelon in particular would like to have some assets that are more counter cyclical with its merchant generation. "We'd like to have more merchant generation if we can get it to a low enough price," Rowe said during an earnings call.