Exelon Corp. anticipates spending $1.25 billion less on Illinois utility Commonwealth Edison Co. through 2026 in the wake of regulatory setbacks.
The Illinois Commerce Commission in December 2023 determined Commonwealth Edison's (ComEd) four-year grid plan did not adequately describe community benefits, transparency, affordability or cost-effectiveness and did not comply with the state's Climate and Equitable Jobs Act (CEJA) of 2021. The law requires Illinois to transition to 50% renewable energy by 2040 and 100% clean energy by 2050 through reducing emissions and supporting electrification.
The commission also authorized an 8.91% return on equity (ROE) for ComEd, a substantial decrease from the administrative law judge's recommended 9.28% ROE and the utility's requested 10.50% ROE.
"Outright rejection of the grid plan, the challenging financial support for our net distribution investment in the December order and uncertainty around the amount of spend ComEd will be able to recover has caused us to dramatically reduce the originally planned level of distribution investment in Illinois," company executive vice president and CFO Jeanne Jones said Feb. 21 during a fourth-quarter 2023 earnings call.
Overall, Exelon's 2024–2027 capital plan totals $34.5 billion, up more than $3 billion from the 2023–2026 plan. Electric transmission infrastructure is seen as an area of growth, particularly to support more than 6 GW of datacenter demand in the company's service territory.
Exelon also initiated 2024 earnings guidance of $2.40 to $2.50 per share, which will "cover a range of possible outcomes, from not receiving any rate relief relative to the final order to the prospect that we receive an approval of our revised grid plan," Jones added.
There is no set deadline for the commission to rule on ComEd's revised grid plan, which the utility plans to file in March, but Jones said Exelon expects a decision in 2024.
The commission also approved the utility's request for rehearing of the rate case, but only as it relates to establishing the forecast rate base and operations and maintenance expense for each year of the rate plan, pending approval of a revised grid plan for the company.
Exelon does not believe "a settlement in principle" is likely, company President and CEO Calvin Butler noted.
"We simply cannot invest at the same pace under an ROE that does not fairly recognize ComEd's cost of financing to do so, especially in the current interest rate and inflation environment," Jones emphasized.
Exelon's stock price was up about 4.9% as of about noon ET in Feb. 21 trading after having fallen 15% since the December ruling.
For the fourth quarter of 2023, Exelon reported operating earnings of $603 million, or 60 cents per share, up from $428 million, or 43 cents per share, in the same period of 2022. The S&P Capital IQ consensus normalized estimate was 58 cents.
For the full 2023 year, Exelon reported operating earnings of $2.38 billion, or $2.38 per share, up from $2.24 billion, or $2.27 per share, in 2022.
