Jeanne Jones
Chief Financial Officer at Exelon
Thank you, Calvin, and good morning, everyone. I want to shout-out our PICO employees and all EGO fans as well, and I'll just say go burns. But with that being said, today, I'll cover our 4th-quarter and full-year results, key regulatory developments and updates to our financial disclosures, including 2025 guidance. Starting on Slide 7, as Calvin noted, we delivered strong financial results for the third year in a row, earning $2.45 per share on a GAAP basis and $2.50 per share on a non-GAAP basis. Results that are at the top-end of our guidance range and result in 6% growth off the midpoint of our guidance range for 2023. For the quarter, Exxon earned $0.64 per share on a GAAP And non-GAAP basis. Full-year earnings benefited from Comed rehearing order we received in April. We also managed costs across the platform well as we offset another year of mild winter weather and higher storm activity, while ensuring we could accommodate a range of outcomes with significant regulatory activity in the 4th-quarter. Quarter-to-date and year-to-date drivers relative to prior year can be found on Appendix slides 35 and 36. Thank you. Turning to our outlook for 2025 on Slide 8, we are initiating operating earnings guidance of $2.64 to $2.74 per share. With new rates in effect across nearly all of our jurisdictions, furthering continued investment for our customers, 2025 earnings growth relative to the midpoint of our 2024 estimated guidance range is in-line with previous disclosures. As we look-ahead to the first-quarter, we expect the relative EPS contribution to full-year earnings to be higher than historical patterns at approximately 33% of the midpoint of our projected full-year earnings guidance range. This accounts for the cold start to the year, new rates in effect, anticipated shaping of costs and Comed revenue timing and assumes normal weather and storm conditions for the balance of the quarter. Turning to Slide nine, as Calvin mentioned, we successfully closed out a busy regulatory calendar in 2024, reaching final resolution on key rate cases that provide supportive cost recovery for the next several years. Starting with Pepco, on November 26, the DC Public Service Commission issued a final order on Pepco's Climate Ready Pathway DC multiyear plan, providing for $123.4 million incremental revenue requirement and a 9.5% ROE through 2026, advancing the shared interest in supporting the district's energy goals. As part of the order, the Commission initiated a lessons learned process to evaluate the learnings from DC's experience with multi-year plans thus far and to formalize the adoption of regulations for alternative forms of ratemaking. We are looking-forward to participating in the process in which a final work report for the first phase is due by the end of 2025. Moving on to PECO, the Pennsylvania Public Utility Commission approved the Joint petitions for settlement in PECO's electric and gas rate cases on December 12. The approved settlements allow for a $354 million electric revenue requirement increase, excluding a onetime credit of $64 million in 2025 and a $78 million gas revenue requirement increase in 2025, providing the funding necessary to further enhance reliability, enable cleaner energy options and improve the level of service customers have come to expect. Last, on December 19, the Illinois Commerce Commission approved Comed's refiled grid plan and rate plan adjustments, providing recovery for a level of investment that will allow us to serve customers safely and reliably while making progress on the goals of SEGA. Secondly, relative to 2023 rates in effect, the final order provides for an approximate revenue requirement increase of $1 billion from 2024 through 2027, inclusive of the increases that were approved in the December 2023 order. As a reminder, the construct allows for the recovery of prudently incurred investment and expenses of up to 105% of the approved revenue requirement with certain investment categories such as storms and new business recoverable independent of the 105% threshold. With these final orders, close to 90% of our rate base has established rate mechanisms in-place through 2026 or 2027, allowing us to focus on plan execution and the strategic engagement necessary to support growing electrification needs and promote expansion of reliable generation in our states. There are currently two Pepco Holdings-based rate cases open. Delmarva Power filed its gas distribution base rate case in the 3rd-quarter, seeking to recover continued reliability investments, including pipeline integrity management, aging pipe upgrades and upgrades to its LNG plant with the expectation of implementing interim rates on April 20, subject to refund. Atlantic City Electric also filed its base distribution rate case on November 21st, seeking recovery for grid improvement and modernization work supporting New Jersey's Energy Master Plan and the Clean Energy Act. ACE has requested an increase of $108.9 million with the expectation of implementing interim rates on August 21, subject to refund. Finally, in Maryland, we continue to work to close-out open reconciliations from our first BGE and Pepco Maryland multi-year plans and we remain engaged in the lessons learned process for multi-year plans as we approach our next rate case filings in Maryland. For our final briefs in December, we continue to advocate for multi-year plans as the appropriate rate structure to direct the increasing investment needed to support a reliable 21st century grid, while offering specific options to address stakeholder feedback on ways to improve upon the first set of multi-year plans. Moving to Slide 10, we provide our updated utility capex and rate base outlook through 2028. We plan to spend approximately $9.1 billion in 2025 and a total of $38 billion over the next four years, an increase of $3.5 billion from the prior four-year planning period, which reflects greater investments to support our jurisdictions and updates to align with recently approved rate cases and jurisdictional priorities. Of the overall increase, over 80% is attributable to incremental transmission capital. Such investment is driven by the structural trends that underpin the energy transformation in our jurisdictions, increased demand for high-voltage investments to support high-density load growth in expanding and modernizing generation supply stack and the reliability and resiliency needs of grid customers. Over $1 billion of that transmission increase is projected at ComEd, where we see continued commitments from data centers and other high-density load customers and interest continues to grow in our other jurisdictions as well. Thank you. Serving this new business will also require additional investment in the distribution network. The balance of the additional transmission relates to continued capacity expansion across our platform, including an additional year of investment in our two largest transmission projects. One, supporting the retirement of the Brand Insures coal plant and the other the Tri-County line to address reliability needs due to low-growth in the region. As a reminder, the Brand project is expected to go into service in 2028, while the Tri-County will go into service at various points in 2029 and 2030. As we continue to allocate relatively more spend to longer-dated transmission projects, our annualized rate base growth of 7.4% over the next four years remains fairly consistent plan over plan with a projected addition of nearly $20 billion from 2024 to 2028. Thank you. As the next slide shows, we feel confident about our ability to continue making the necessary investments to ensure our regions can meet their economic and energy goals, which rely more than ever on a safe, secure and resilient grid. As you'll see on Slide 11, Exxon has an unmatched platform to meet the clear need for transmission investment. The proliferation of high-density load, increasingly volatile weather and a growing and changing generation stack all point to it. We serve more customers than anyone else, and we are one of the largest investors in transmission among our peers. With award-winning reliability, our utilities are uniquely positioned to capitalize on the transmission opportunities beyond our existing 11,000 plus miles today. Beyond the $12.6 billion transmission capital in our plan, we estimate $10 billion to $15 billion of transmission opportunity within our footprint in the next five to 10 years. This includes over $1 billion of additional investment to support new high-density load, which is in our pipeline, but not yet in our guidance due to its earlier stages of design and planning or estimated online dates. This upside also includes investments to address teams between PJM and other regions, such as the work associated with MISO Tranche 2.1, which we are optimistic will result in at least $1 billion of spend in our comment service territory through PJM's supplemental planning process. Our involvement in those projects also creates opportunity to be a part of the competitive processes for the $6 billion of work MISO estimates it will bid-out, and we continue to see more of a need than ever for new-generation, particularly to ensure our states can meet their policy goals. Transmission interconnections are needed to deliver that power to customers, no matter where it's situated or how it's generated. In fact, achieving goals amid growing economic development in Illinois will likely require significant transmission investment. All of this work complements the continued need for reliability and resilience investment in our existing infrastructure to modernize aging lines, ensure better security and harden critical infrastructure. In 2019, PJM found that two-thirds of the transmission system in its footprint were over 40 years-old with one-third exceeding 50 years and some lower voltage transmission assets nearing 90 years. It is clear that there is no shortage of need to invest to serve our customers and communities well beyond our four-year plan. With some of the best-run utilities in the country, we are well-positioned to execute these opportunities while prioritizing reliability, resiliency and affordability. Thank you. Moving to Slide 12, our dedication to operational excellence encompasses a commitment to customer affordability, ensuring we deliver above-average value at below average rates. Our ability to deploy $38 billion of capital for the benefit of our customers over the next four years is only possible with a rigorous focus on cost management and delivering value for those investments. This focus is saving our customers approximately $550 million in O&M annually relative to what it would have been growing at a standard inflation level over the last decade. And we felt confident we can continue to keep our expense growth similarly limited over a planning horizon with an institutionalized team and culture committed to delivering value even when our jurisdictions look To expand ways in which we can support them. As we have mentioned, we have taken advantage of our exclusive focus on energy delivery to standardize and streamline our organizational structure and operations. Through 2024, this has resulted in approximately $100 million and executed sustainable savings initiatives with line-of-sight to many more opportunities to ensure we can keep raising the bar for the value we provide our customers. Operating as One Excellent has helped to identify unique and impactful opportunities like our cross-company project to identify best practices amongst our frontline distribution employees. This discipline further enhances the value of our investments, which have improved reliability by 35% since 2016., achieving -- achieving some of the best reliability metrics in the industry, while also maintaining bill metrics that are 19% to 21% below US averages makes it clear we are delivering above-average performance at below average rates. Turning to Slide 13 with $38 billion of projected capital spend driving 7.4% rate base growth, along with earning ROEs of 9% to 10%,we are projecting compounded annual earnings growth of 5% to 7% from our 2024 guidance midpoint of $2.45 per share. Maintaining our commitment to transparency, we have provided assumptions associated with our expected annual growth and earnings through 2028 on Appendix Slide 18. As you can see on the slide, after 2024, we expect to deliver each year within the 5% to 7% range, keeping us on-track to deliver at midpoint or better of our 5% to 7% annualized growth rate from 2025 to 2028. We also continue to project an approximate 60% dividend payout of operating earnings with the dividend now projected to grow in the lower-end of our long-term earnings target as we retain more of our capital to invest more efficiently for our customers. For 2025, we anticipate paying out a dividend of $1.60 per share, representing 5.2% growth over last year. Finally, I will conclude with a review of our balance sheet and financing expectations on Slide 14. Maintaining a strong balance sheet continues to be core to our strategy, and we closed out another year with average credit metrics comfortably exceeding our downgrade thresholds of 12% at Moody's and S&P. We are pleased to receive an upgrade from S&P last week, which takes Exxon's corporate credit rating up to BBB-plus from BBB. We have updated our slides to reflect this improvement along with the revised downgrade threshold of 13% at S&P that is reflective of the higher credit rating. With most investment plans and recovery mechanisms established over the next two to three years and our balanced funding strategy in-place, we anticipate our metrics approaching 14% by the end of our forecast, demonstrating our commitment to maintaining a strong balance sheet. As a reminder, we continue to advocate for language that incorporates repairs for calculating the corporate alternative minimum tax in the final treasury regulations. So our plan incorporates the assumption that the final regulations will not allow for repairs. If implemented in a way that mitigates the cash impact, we'd expect an increase of approximately 50 basis-points to our consolidated metrics on average over the plan. From a financing perspective, we expect the $38 billion capital plan to be supported by $20 billion of internally generated cash-flow, $12 billion of debt at the utilities and $3 billion of debt at the holding company with the balance funded with a modest amount of equity. Specifically, we expect 40% of our incremental capital will be funded with equity, bringing our total equity needs to $2.8 billion over the four-year plan, implying approximately $700 million of equity per year. Our financial plan has also been designed to accommodate the use of other fixed-income securities that receive equity credit in-place of senior debt at our holding company. In addition to other credit supportive internal levers, these instruments provide a more efficient means of building additional financial flexibility while ensuring we deliver at the midpoint or better of our 5% to 7% annualized earnings growth rate range through 2028. I want to close by reiterating our confidence not only in the plan we have laid out, but in the broader opportunity we have to deliver value for our customers and our shareholders, not just now, but in the decades to come. Thank you. I'll now turn the call-back to Calvin for his closing remarks.
