Q4 2024 Earnings Summary
- Exelon is experiencing significant growth in high-density load centers, such as data centers, leading to substantial investment opportunities in transmission infrastructure. They plan to invest $3.5 billion over the next four years, with 80% of that dedicated to transmission, driven by these high-density load centers and economic development across their territories.
- Exelon projects an annualized earnings growth of 5% to 7% through 2028, aiming to achieve the midpoint or better of this range. This growth is supported by strong capital investments and a focus on operational efficiency, positioning the company for consistent year-over-year earnings increases.
- The company anticipates potential favorable regulatory decisions from FERC regarding policies on energy security and resource adequacy. Such rulings could enhance Exelon's ability to meet unprecedented load growth, create additional investment opportunities, and focus on energy security and affordability for customers while protecting investors' interests. ,
- Regulatory uncertainty in Maryland could impact Exelon's future rate case filings and financial performance. Analysts are concerned about the reconciliation decision and its implications, asking for more clarity on how Exelon is thinking about Maryland.
- Variability and unpredictability in capital expenditures required for data center load growth introduce uncertainty in Exelon's capital planning. Exelon admits that every project is different, making it hard to establish a rule of thumb for CapEx per gigawatt, which challenges accurate future CapEx estimations.
- Potential delays or uncertainties related to FERC policies on colocation could affect Exelon's operations and investments. Exelon executives are seeking clarity on FERC's stance, and any unfavorable or delayed decisions could negatively impact the company's plans.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Operating Earnings Guidance | FY 2024 | no prior guidance | $2.40 to $2.50 per share | no prior guidance |
Long-term Annualized Operating Earnings Growth | FY 2024 | no prior guidance | 5% to 7% through 2027 | no prior guidance |
Capital Investment | FY 2024 | no prior guidance | $7.4 billion | no prior guidance |
Return on Equity | FY 2024 | no prior guidance | 9% to 10% | no prior guidance |
Equity Issuance | FY 2024 | no prior guidance | $1.6 billion total; approx. $475 million per year | no prior guidance |
Operating Earnings Guidance | FY 2025 | no prior guidance | $2.64 to $2.74 per share | no prior guidance |
Dividend Guidance | FY 2025 | no prior guidance | $1.60 per share, 5.2% growth | no prior guidance |
Capital Investment Guidance | FY 2025 | no prior guidance | $38 billion | no prior guidance |
Earnings Growth Guidance | FY 2025 | no prior guidance | 5% to 7%, expecting midpoint or better | no prior guidance |
Return on Equity | FY 2025 | no prior guidance | 9% to 10% | no prior guidance |
Dividend Payout Ratio | FY 2025 | no prior guidance | Approximately 60% of operating earnings | no prior guidance |
Equity Funding | FY 2025 | no prior guidance | $2.8 billion total; approx. $700 million per year | no prior guidance |
First Quarter 2025 EPS Contribution | FY 2025 | no prior guidance | Approximately 33% of the midpoint of full-year earnings guidance range | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Operating EPS | FY 2024 | $2.40 to $2.50 | $2.45 (sum of Q1 0.66, Q2 0.44, Q3 0.71, Q4 0.64) | Met |
Capital Investment | FY 2024 | $7.4 billion | $7.10 billion (interpreting Q4 2024 CapEx of $7,097 million as full-year total) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Data center load growth | Significant momentum (5 GW in engineering, tax incentives in IL, etc.) | 24% CAGR, 200+ centers online, meaningful deposits, $400M offset at rate base | Consistent across periods; sentiment remains bullish; potential large impact on load growth |
AI-driven data centers | AI fueling higher power demand, supportive policies (IL, PA) | No explicit mention in Q4 2024 | Not mentioned currently; still a significant future driver |
Transmission infrastructure investments | Essential for load/reliability, ~45% plan increase | $12.6B planned, $10B-$15B more possible, supports high-density load centers | Consistent investment focus; sentiment remains bullish with expanding opportunities |
Earnings growth targets | 5%-7% annual growth reaffirmed, $2.40-$2.50/sh guidance for 2024 | 5%-7% from $2.45/sh through 2028, $2.64-$2.74/sh for 2025, stable dividend | Steady upward trajectory; strong management confidence |
Regulatory environment | Co-location rate design, IL grid plan, MD MYP focus | Awaiting FERC 205 docket by Feb 2025, multiple state-level actions on in-state generation, rate cases resolved | Active engagement across jurisdictions; sentiment is cautiously positive amid ongoing policy changes |
Maryland rate case uncertainty | 1-year plan approval, $44.6M revenue increase, partial disappointment | Confident in reconciliation by 1H25, multiyear plan benefits, legislative push for in-state gen | Uncertainty persists but greater clarity expected soon |
Resource adequacy challenges | Baseload replaced by renewables; AI, data centers driving load | MD imports ~40%, PA exploring utility-built gen, 45 bills in motion across jurisdictions | Heightened stakeholder focus; remains a key challenge for reliability |
Variability in capital expenditures | Not mentioned in Q2 2024 | Location- and load-specific needs can cause capex to vary significantly | New topic in Q4; underscores flexibility in project spending |
Affordability and rising power prices | Double-digit bill increases possible, energy efficiency to mitigate | Waived fees, suspended disconnects, $500M in low-income assistance, focus on cost control | Consistent priority; rising prices drive urgency for mitigation efforts |
PJM capacity auction signals | Price signals highlight need for more generation/transmission; some bills up | CMC alignment with the next auction; call for enhanced solutions to address fast load growth | Continued concern over capacity; policy solutions still evolving |
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Data Center Load Growth
Q: How will data center growth affect Exelon's CapEx and rate base?
A: Exelon is experiencing significant data center expansion, with over 200 online data centers and a 24% compound annual growth rate in megawatts online over the past few years. This growth drives increased capital investment, especially in transmission, which accounts for 80% of the $3.5 billion planned over the next four years. Customer deposits from data center developers, which were about $400 million in 2024, help protect other customers but reduce rate base. -
FERC 205 Filings and Colocation Policy
Q: What's the outlook on settling FERC 205 filings regarding colocation?
A: Exelon seeks clarity from FERC on colocation policies through its 205 filings, aiming for equitable cost allocation to ensure affordability. A decision on the 205 filings could come as soon as February 24. Exelon continues to engage with stakeholders and is supportive of colocation, provided costs are appropriately allocated. -
Growth Guidance into 2027
Q: Is growth into 2027 based on prior year's midpoint?
A: Yes, Exelon's growth from the 2024 midpoint of $2.45 per share through 2028 is calculated year-over-year from the prior year's midpoint, targeting the midpoint or better of the 5% to 7% growth rate over the four-year period. -
Maryland Regulatory Developments
Q: How will Maryland's reconciliation decision impact future rate cases?
A: Exelon expects the Maryland reconciliation process to conclude in the first half of the year, affirming that incurred costs were prudent. Multiyear plans have aligned investments with state policy while keeping distribution rates in the first quartile, providing benefits like cost control and affordability. -
Legislative Efforts in Pennsylvania and Maryland
Q: What are the expectations for legislative actions in PA and MD on resource adequacy?
A: Both states are pursuing legislation to address resource adequacy and energy security. Maryland, which imports about 40% of its power, is incentivizing in-state generation. Pennsylvania is exploring alternatives like longer-term contracts and utility-built generation, possibly requiring new legislation. -
Illinois Grid Plan and Large Loads
Q: What capital is allocated for large loads in Illinois?
A: In Illinois, about $400 million of distribution capital for large load growth was not initially approved but can be reconciled annually if forecasts are accurate. ComEd has also increased its transmission plan by $1 billion due to high-density load growth, particularly from data centers. -
Carbon Mitigation Credits (CMC) Status
Q: Any updates on managing the CMC roll-off in Illinois?
A: The Carbon Mitigation Credits extend through 2027, providing stability before the next capacity auction. Exelon is collaborating with the Illinois Power Agency and stakeholders to find solutions that ensure reliable generation and stable energy prices. -
Artificial Island Discussions with PSEG
Q: How quickly can data centers connect to Atlantic City Electric's system?
A: Connection timelines depend on the data center's load size and ramp-up speed. Exelon works creatively with customers to meet their timing needs, often accommodating them without significant delays.