Exelon is adjusting its capital spending plan to lower its utility expenses next year by $350 million in an effort to help keep electric bills as low as possible, company officials said Wednesday.
“As we adjust our plan to reflect current realities, we are also leaning into areas where we see strong visibility and clear need, most notably in transmission,” Calvin Butler, Exelon president and CEO, said during an earnings conference call.
Exelon now expects its transmission rate base will grow by 16% a year through 2029, according to Jeanne Jones, Exelon executive vice president and chief financial officer, audit and risk.
“The need for additional transmission infrastructure is real, and we are witnessing this growth firsthand, driven by reliability requirements and large load interconnections,” Jones said.
Exelon’s revised capital plan reflects $1.1 billion of project deferrals and reductions at PECO Energy and Baltimore Gas and Electric, coupled with $1.5 billion of increased transmission investment, partly to support the interconnection of data center customers that have signed transmission security agreements, Jones said.
The revised plan calls for $41.7 billion in spending over four years starting this year, and will result in 7.9% annual rate base growth, the Chicago-based utility company said. Exelon said it has $12 billion to $17 billion in potential transmission investment not included in its capital expenditure plan.
During the call, Butler said Exelon was seeking to build transmission projects that are put out to bid.
Exelon, for example, teamed up with Invenergy to bid on two Illinois transmission projects that are part of the Midcontinent Independent System Operator’s Tranche 2.1 window. The projects would cost about $1.9 billion, he said.
“We are also looking at partnerships to ... to build generation, contracted generation,” Butler said.
Butler continued to call for allowing utilities to own generating assets in states that bar that practice to help drive down power supply costs.
Residential supply costs in the Mid-Atlantic region have increased by up to 80% over the past five years, Butler said.
“Addressing these challenges will require an all-of-the-above approach, including utility-led solutions, demand-side alternatives and merchant investment,” Butler said.
Butler said the outlook for bills in Pennsylvania that would allow utilities to own generation is dim given that it’s an election year and the state has divided government.
“To get anything done this year is going to be a long shot, but I think it's necessary to continue to advocate for utility-owned generation and new generation in the state and across the mid-Atlantic specifically,” Butler said. “If you don't do that, the same issue that we're talking about today, we'll be talking about in the next three to five years.”
Meanwhile, Exelon utilities have two pending rate cases. In Maryland, Potomac Electric Power Co. is seeking a $120 million rate hike with a 10.5% return on equity. Pepco estimates it would increase the average residential electric bill by 5.9%, according to an earnings call presentation. Exelon expects the Maryland Public Service Commission will make a decision in August.
In Delaware, Delmarva Power & Light is seeking a $45 million rate hike, with a 10.5% ROE. If approved, it would raise the average residential power bill by 4.4%, according to DPL. Exelon expects a decision on the request in April.
Exelon’s data center pipeline remains unchanged from last quarter, with 18-GW “high probability” projects and 43 GW in large load interconnection requests that are being studied or about to be studied, according to the presentation.
On the financial front, Exelon’s first-quarter income increased to $919 million, or 90 cents/share, from $908 million, or 90 cents/share, in the year-ago period, partly driven by rate increases. Exelon’s revenue grew 7% in the first quarter to $6.2 billion, up from $5.8 billion.
