Exelon: No Turnaround Coming in "Tough" Retail Environment, Not Headed for Growth

Exelon does not see any turnaround to the currently "tough" retail environment characterized by low margins and aggressive competition, executives said on an earnings call

"Low commodity prices, low load growth and tough retail margins continue to challenge our industry," Exelon CEO Christopher Crane said.

"Challenges we have faced over the past year have continued over the third quarter, with natural gas modestly down across all years, power prices mixed across all regions and years, heat rates modestly increased in the Mid-Atlantic and Midwest, very little volatility outside of ERCOT, and retail competition continues to be aggressive. These factors all combined to put further pressure on our ability to extract margin for our wholesale and retail businesses," added Kenneth Cornew, Exelon's Chief Commercial Officer.

"[T]he retail space is extremely competitive and challenged," Cornew continued. "We have remained disciplined and have not gone after volume for the sake of volume and have maintained appropriate margin on our sales. We have not seen anything in the market to lead us to believe that we have turned the corner and are headed for growth in this business, and the guidance we gave previously on retail volumes and margins still stands."

For the retail business, "the market environment overall still remains extremely competitive, and it's extremely competitive both on the commercial and industrial side and on the mass market side," said Joseph Nigro, CEO of Constellation. "[W]e've seen some stabilizing effect on our margins, meaning we've talked to you that our margins on the C&I side for power have been sub-$2, and they remain so, but they've stabilized slightly below that. And our expectation in our plan as we look at next year is not to see much improvement in that area."

Although some consolidation has occurred, with Nigro citing the purchase of the Hess book by Direct Energy, "the market is still highly competitive," Nigro said.