Exelon Plans $23 Billion in Capital Outlays Between 2019 and 2022

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Utility holding company Exelon Corporation (NYSE:EXC) (Chicago, Illinois) plans to make nearly $23 billion in capital expenditures in its regulated utility units over the 2019-2022 period, company officials have told investors. Exelon, which operates six regulated electric and gas utilities serving 10 million customers, invested about $5.85 billion last year in those businesses.

The planned capital investments are expected to increase the company's regulated base of assets by 7.8% per year on a compound annual growth rate (CAGR) basis, boosting its regulated rate base from $37.6 billion in 2018 to $50.7 billion in 2022. Utilities earn a return from regulators based on their regulated assets. The capital expenditures and rate base numbers do not include Exelon's merchant generation business, which operates nuclear and other forms of generation in various states.

Click on the image at right to see Exelon's projected capital expenditures for 2019-2022 and its projected rise in regulated assets.

Industrial Info is tracking 73 active projects valued at $4.87 billion that are planned for Exelon's utilities or its generation business. Click here to view the project list.

The company's Chicago-based electric utility, Commonwealth Edison (ComEd), is expected to get the largest share of planned capital investments, about $8.625 billion, between 2019 and 2022, company officials told investors earlier this year. As Commonwealth Edison is largely a distribution utility, most of those planned investments will be for grid modernization.

After Commonwealth Edison, Exelon's Washington, D.C.-based utility business, Pepco Holdings Incorporated (Pepco), is scheduled to see the next heaviest four-year investment, totaling about $6 billion over 2019-2022. As with ComEd, most of Pepco's investments will go to its electric delivery networks in the District of Columbia and portions of Maryland, Delaware and New Jersey. It also operates a natural gas distribution utility in northern Delaware.

Exelon's BGE unit, which delivers electricity and natural gas to customers in Baltimore and central Maryland, is slated to get about $4.375 billion in capital investments over the next four years. And Exelon's fourth utility unit, PECO, which provides retail electric and gas delivery networks in southeastern Pennsylvania, is expected to make about $3.925 billion in capital investments over the next four years. As with Exelon's other energy-delivery units, these investments will be targeted mainly for upgrading, expanding and modernizing its delivery networks to improve reliability and safety.

In 2018, separate federal court rulings upheld New York's and Illinois' decisions to provide financial support for Exelon's nuclear units. Last year, New Jersey also approved financial aid to keep Exelon's nuclear units open in that state. And Pennsylvania is considering financial support for nuclear generation as part of its carbon-reduction goals, company officials told investors in February.

Exelon's four utility businesses generated $1.835 billion in net income for 2018, a 9.9% increase over net income of $1.670 billion in 2017, the company said. Net earnings for Exelon's merchant generation business posted a $178 million loss in 2018, mostly because of early plant retirements, nuclear decommissioning losses and the mark-to-market impact of economic hedging activities. In 2017, however, that unit earned $2.7 billion.

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