Exelon utilities have been awarded $870 million in transmission projects by the PJM Interconnection to bolster grid reliability, mainly in eastern Maryland to help handle the planned retirement of Talen Energy’s coal-fired Brandon Shores power plant near Baltimore.
There are other opportunities for transmission development, Exelon officials said Wednesday during an earnings conference call.
Exelon utilities have made four proposals in the $300 million to $1 billion range to build power lines that would serve Dominion Energy’s service territory, according to David Velazquez, Exelon’s executive vice president of utility operations. PJM is expected to make a final decision on the projects late this year, he said.
Transmission is also needed for wind farms planned off the coast of Maryland and New Jersey, Velazquez said.
Exelon expects 50% annual growth in electric cars and 12% annual growth in data centers nationwide, according to Calvin Butler, Exelon president and CEO. Exelon’s Commonwealth Edison utility in Illinois is seeing “sizable opportunity” in data centers, he said.
Exelon’s utilities have seven pending distribution base rate cases seeking $2.9 billion in annual revenue, including about $1.8 billion for ComEd, according to the company’s SEC filing. Six of the cases propose returns on equity of 10.4% to 10.65%. One asks for an 8.91% ROE.
Some of those rate cases reflect state efforts to reduce their greenhouse gas emissions.
In May, Exelon subsidiary Pepco filed a three-year, $213.6 “climate ready pathway” plan with the Maryland Public Service Commission. The proposal includes more than $150 million for transportation electrification, building decarbonization, beneficial electrification and distributed energy integration, Butler said. Pepco also proposed a performance incentive mechanism focused on reliability, greenhouse gas emission reductions and removing equipment that poses health and environmental risks, he said.
The plan would accelerate tax benefits to buffer bill increases, according to Jeanne Jones, Exelon chief financial officer. Exelon expects the PSC to make a decision by June.
In a key milestone for Exelon, Butler said that ComEd last month reached the end of the three-year term of a deferred prosecution agreement with the Department of Justice. The agreement centered on a ComEd bribery scandal. ComEd paid $200 million in 2020 under the agreement.
“We remain committed at all levels of the company to the highest standards of integrity and ethical behavior and we look forward to building on the trust of our customers as we continue to move forward,” Butler said.
A Securities and Exchange Commission investigation is ongoing. Exelon recorded a $46.2 million “loss contingency” in the second quarter related to the probe, the company said Wednesday in its quarterly SEC report.
ComEd is also challenging an audit report released July 27 by the Federal Energy Regulatory Commission that alleges the utility overcharged transmission customers by misallocating certain overhead costs to capitalized construction costs, Exelon said in its quarterly report.
Exelon set aside $11 million in the first quarter to cover potential liabilities from the FERC audit.
The resolution of the audit could result in losses above what has been set aside, Exelon said.
On the financial front, Exelon’s second-quarter income fell 26% to $343 million on $4.8 billion in revenue from $465 million on $4.2 billion in revenue in the year-ago quarter, the utility company said. The decrease in earnings was partly driven by higher interest expense caused by rising interest rates and higher debt levels as well as unfavorable weather, according to Jones.
Not including certain one-time factors, second-quarter adjusted earnings per share fell 7% to 41 cents from 44 cents in the same quarter last year.
Exelon has more than 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its transmission and distribution utilities: Atlantic City Electric, Baltimore Gas and Electric, Commonwealth Edison, Delmarva Power & Light, PECO Energy and Pepco.