Exelon reports 2001 profits up on higher wholesale volumes

Ann de Rouffignac
OGJ Online

HOUSTON, Jan. 29 -- Exelon Corp.'s earnings rose 15% in 2001, despite a difficult year in the industry and disappointing results from the unregulated retail electricity sales businesses.

The Chicago-based company reported 2001 earnings of $1.42 billion, or $4.43/share, up from $1.25 billion, or $3.86/share in 2000 despite one of the "toughest and most volatile years in the industry's history," said CEO Corbin McNeill.

McNeill predicted the difficult conditions will persist in 2002. But he reaffirmed the company's earnings guidance at $4.45-4.85/share. In October 2001, the company adjusted its 2002 estimates down.

"I see the same conditions for 2002 as persisted in 2001, a weak economy, low energy prices, and inefficient power markets," McNeill said on a conference call. But Exelon accomplished "across the board" cost cutting and achieved a good year in 2001, anyway, he said.

Exelon Enterprises, which consists of competitive retail energy businesses, other energy services, and telecommunications was the only "disappointment," he said. That unit reported annual loss of $107 million before interest and taxes for 2001, compared to a loss of $172 million in 2000.

"I have no allegiance to any of these businesses," said McNeill. "We will extract the most value out of them if it means selling, running, or shutting them down." McNeill said Exelon won't have a "fire sale" but is "not committed to them forever" either.

Overall 2001 results were driven by improved availability of the fossil plants and higher wholesale market sales volumes, offsetting falling wholesale prices and margins for the second half of the year, the company said. Increased generation from the nuclear group, which operated at a 94% capacity factor also contributed. The generating group reported earnings before interest and taxes of $962 million, up from 2000 EBIT of $462 million. Utility affiliates accounted for 61% of sales of the electricity.

The power marketing business results were not broken out separately from Exelon Generation. But the company said Power Team exceeded expectations by achieving an average realized price for the full year of $37/Mw-hr, compared to the average spot price of $28/Mw-hr in Exelon's primary generation supply regions.

Exelon Energy Delivery reported earnings before interest and taxes of $2.6 billion down slightly from $2.7 billion in 2000. This business group consists of the retail electricity and gas transmission and distribution operations.