How Did Exelon’s Segments Perform in 1Q16?

Exelon Reports 1Q16 Earnings: Will Nuclear Plant Closures Help?

(Continued from Prior Part)

Exelon’s segment-wise operating income

Exelon Generation is the key performance driver for Exelon (EXC). It looks after owned and contracted generation facilities. This segment is also responsible for wholesale and retail customer supply of gas and electric services. Operating earnings for Exelon Generation fell to $415 million in 1Q16 against $719 million in 1Q15. It was driven by lower realized power prices and a rise in nuclear decommissioning amortization expenses. However, it was partially offset by fewer non-refueling outage days and increased capacity pricing.

The closure of two power plants in Illinois could significantly influence Exelon Generation’s earnings in the coming quarters. The prospects of this segment now rely very much on the regulators’ stance on the Illinois Energy Bill. The rejection of the bill would cost Exelon $300 million a year in revenues.

PECO Energy

Heating degree days during 1Q16 in the PECO Energy territory declined 27% compared to 1Q15. That drove total electric deliveries down 8.2% and natural gas (UGAZ) deliveries 20.2% relative to 1Q15. PECO Energy takes care of electric transmission and distribution as well as gas distribution operations in Southeastern Pennsylvania.

ComEd

Electricity transmission and distribution in Northern Illinois is taken care of by ComEd (Commonwealth Edison). It experienced 20.2% less heating degree days in 1Q16. This brought down total retail energy deliveries by 4.6% compared to 1Q15.

Baltimore Gas and Electric

Baltimore Gas and Electric reported a decline of $7 million in earnings in 1Q16 compared to 1Q15. It looks after electricity transmission and distribution operations in Central Maryland.

Investors can have passive exposure to utilities by investing in the Utilities Select Sector SPDR ETF (XLU). XLU invests 4.6% of its total holdings in Exelon. NextEra Energy (NEE) and Duke Energy (DUK) are some of XLU’s top holdings, each accounting for ~8% of the fund. Southern Company (SO) accounts for 7.5% of XLU.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - What Led to Exelon’s 14% Fall in 1Q16 Revenue?

• Part 2 - Is Exelon on Track to Go from a Hybrid to Regulated Utility?

• Part 4 - Are Overvalued Hybrid Utilities Still Attractive?