Exelon Q1 2026 Earnings Call - Shifting Capital from Distribution to Transmission Amidst Regulatory Headwinds

Michelle, Event Specialist, Exelon Corporation: Hello, welcome to Exelon’s first quarter earnings call. My name is Michelle, I’ll be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today’s webcast is being recorded. During the presentation, we’ll have a question-and-answer session. You can ask questions by pressing star 11 on your telephone keypad. If you would like to view the presentation in full screen view, click the full screen button by hovering your computer mouse cursor over the PowerPoint screen. Press the escape key on your keyboard to return to the original view. Finally, should you need technical assistance, as a best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the help option in the upper right-hand corner of your screen for online troubleshooting.

It is now my pleasure to turn today’s program over to Ryan Brown, Vice President of Investor Relations. The floor is yours.

Ryan Brown, Vice President of Investor Relations, Exelon Corporation: Great. Thank you, Michelle. Good morning, everyone. Thank you for joining us for the 2026 1st quarter earnings call. Leading the call today are Calvin Butler, Exelon’s President and Chief Executive Officer, and Jeanne Jones, Exelon’s Chief Financial Officer. Other members of Exelon’s senior management team are also with us today and will be available to answer your questions following our prepared remarks. Today’s presentation, along with our earnings release and other financial information, can be found on the investor relations section of Exelon’s website. We would also like to remind you that today’s presentation and the associated earnings release materials contain forward-looking statements which are subject to risks and uncertainties. You can find the cautionary statements on these risks on slide 2 of today’s presentation or in our SEC filings. In addition, today’s presentation includes references to Adjusted operating earnings and other non-GAAP measures.

Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It’s now my pleasure to turn the call over to Calvin Butler, Exelon’s President and CEO.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Ryan, good morning, everyone. We appreciate you joining us for our first quarter earnings call. Our message today is straightforward. 2026 performance remains on track both financially and operationally. With a disciplined, adaptable platform, you can continue to depend on Exelon to navigate change and deliver on our commitments. This morning, we reported adjusted operating earnings of $0.91 per share, exceeding expectations with outperformance driven primarily by net favorable weather and timing-related items. We are also affirming our 2026 operating earnings guidance of $2.81-$2.91 per share. Reliability and operational performance continue to set the standard for the industry. Even as our system faced several high wind storm and storm events this spring, all utilities sustained top quartile in reliability performance with ComEd in top decile.

Our men and women on the ground continue to deliver, responding safely, restoring service quickly, and keeping customers connected. This quarter also included several important regulatory and legislative developments, most notably in Pennsylvania and Maryland. At PECO, we made the decision to withdraw the recently filed electric and gas rate cases. This was a deliberate, timing-based decision grounded in customer affordability considerations and informed by stakeholder feedback. Importantly, this decision does not change our commitment to safety, reliability, or long-term infrastructure investment. It demonstrates our ability to adjust timing and reallocate capital while maintaining the balance between near-term affordability and long-term system needs. Maintaining that balance requires difficult prioritization decisions and the strong ongoing stakeholder partnerships you’ve come to expect from Exelon. Looking ahead, we welcome continued close collaboration with all stakeholders across Pennsylvania as we reprioritize certain investments without compromising safety or reliability in the near term.

Before I move on, I also want to highlight a recent leadership update at PECO. David Velazquez, previously CEO of PECO, has transitioned into an advisory role reporting to me. Michael Innocenzo has stepped in as an interim President and CEO while continuing to serve as Exelon’s Chief Operating Officer. Michael previously served as President and CEO of PECO from 2018 to 2024 and brings deep operational experience, long-standing relationships across Pennsylvania, and a strong understanding of PECO’s system, workforce, and stakeholders. This transition ensures continuity and stability at PECO as we remain focused on operational excellence, affordability, and reliable service for our customers. Turning to Maryland, the Utility RELIEF Act has passed the legislature and is awaiting Governor Moore’s signature. We know the governor and state leaders share our focus on affordability.

However, the legislation does not address the growing imbalance between energy demand and supply. Residential supply costs in the Mid-Atlantic have increased by up to 80% or more over the past five years. Without addressing supply constraints, affordability challenges will persist. Addressing this challenge requires a combination of incremental transmission investment, continued reforms at PJM, and critically, the addition of new generation. We’re leaning into areas where we have a clear mandate today, like transmission, while also advancing solutions in areas where we currently cannot participate, including utility-owned generation. For example, HB 1561 in Maryland was designed to establish a clear path for utility-owned backstop generation, particularly storage and renewable resources.

Given the structural imbalance between supply and demand in the state and Maryland’s heavy reliance on imports from neighboring markets, this approach would have meaningfully enhanced energy security and resilience and ultimately avoid the risk of blackouts, which in 2024 PJM suggested could happen as soon as 2028 due to lack of supply. In short, affordability and reliability must go hand in hand. We remain committed to working constructively with stakeholders to deliver near-term customer relief while supporting the long-term investments required to keep energy safe, reliable, and affordable. As such, we have taken a hard look at our plan and made deliberate adjustments. Let me be clear. This is a different plan for a different moment.

We are pulling back on certain projects, reprioritizing capital across our portfolio, and delivering $350 million of incremental O&M savings in 2027 tied to work we will no longer pursue. We are actively reshaping the business to best meet the needs of our customers while delivering on the Exelon promise to keep energy bills as low as possible. This includes accelerating the use of new technologies, focusing investment on the highest impact opportunities, and maintaining disciplined cost control. Doing business as usual is not an option. The energy market has shifted dramatically, with significant load growth and a lack of supply to meet the evolving needs of our customers and communities at a reasonable price. While we remain confident in the value of our work and investments, this moment requires us to adapt, to be agile, and make changes thoughtfully and purposefully.

Our core mission, commitment to safety, reliability, ethics, and compliance, and service to our customers are not changing. Jeanne will walk through the details in a moment, but with these actions in place, we are reaffirming our 2026 Adjusted operating earnings guidance of $2.81-$2.91 per share and our long-term operating earnings growth outlook from 2025-2029 near the top end of the 5%-7% range. This is our platform at work. Size, scale, diversification, and discipline translate directly into execution. 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.

Our scale, multi-state footprint, and deep operational expertise allows us to step forward where reliability and resiliency investments are increasingly needed, especially as load growth and system complexity continue to accelerate. We’ve seen that play out in recent periods through our success across multiple competitive and reliability-driven processes. That momentum continues. In February, we submitted competitive bids for 2 Illinois transmission opportunities within the MISO Tranche 2.1 window, representing approximately $1.9 billion of total transmission capital spend pursued jointly with Invenergy. While it’s too early to comment on potential outcomes, these projects underscore our disciplined approach, deploying capital where RTOs have identified clear need, strong execution visibility, and attractive risk-adjusted returns. You should expect Exelon to continue engaging competitively and with discipline in future transmission windows across PJM and other ISOs, including 2 additional bids expected later this month.

Affordability and energy security cannot be solved by transmission alone. Additional generation is critical. We continue to work closely with federal officials, PJM, and state leaders to address elevated supply costs and emerging reliability challenges across the system. Let me reiterate, you cannot have a conversation about affordability without addressing the underlying shortage of generation. We support measures that bring new generation forward while avoiding market designs that result in unnecessary or excessive payments at the customer’s expense. That’s why we’ve been focused on ensuring our data center pipeline is increasingly backed by FERC-approved Transmission Security Agreements, which have now secured approximately $1 billion of collateral. Real affordability depends on careful design, from load forecasting and cost allocation to how new resources are integrated into the market framework.

There’s more work ahead as implementation details continue to take shape, and our team remains closely engaged with PJM regulators and policymakers to ensure outcomes that protect customers and support a reliable, affordable system. As we said before, addressing these challenges will require an all-of-the-above approach, including utility-led solutions, demand-side alternatives, and merchant investment. While we do not control the supply side, we remain intensely focused on reducing the costs we can control and on actively advocating on behalf of our customers. In the past year alone, we’ve delivered approximately $1 billion in customer savings through a combination of actions, including our award-winning programs that connect customers to assistance, our industry-leading customer relief fund, a recently approved gas supply settlement, and disciplined cost management that kept costs nearly flat, driven by operational efficiencies. We’re delivering this $1 billion.

While delivering this $1 billion, we’ve also provided best-in-industry reliability. In contrast, over the last two years, customers have paid $32 billion to generators for capacity in PJM, while supply has declined by 1.2 gigawatts over that same period, meaning customers paid more and received less. The time for action is now. PJM has been warning about 2028 reliability risks since 2024. We’re halfway there. There’s been no meaningful progress on new supply. While recent activity in the PJM interconnection queue is encouraging, it’s not enough for projects to simply be in the queue. We need to ensure they are built and come online in time to meaningfully address this reliability need. Had utilities been allowed to build generation for the 2028/2029 planning year, we would be in a materially stronger position today.

As we’ve highlighted before, Charles River Associates estimated that utility-supported generation could have saved PJM customers between $9.6 billion and $20 billion in the 2028/2029 delivery year, while reducing outage risk from energy shortages by approximately 85%. Our customers simply cannot afford to wait any longer. With that, I’ll turn it over to Jeanne to walk through our financial performance and provide additional details on our rate case activity. Jeanne.

Jeanne Jones, Chief Financial Officer, Exelon Corporation: Thank you, Calvin, and good morning, everyone. In addition to our first quarter financial update and progress on our 2026 regulatory activity, today, I will review several disclosure updates that reinforce our confidence in our path to Adjusted operating earnings growth near the top end of the 5%-7% range, beginning on slide 5. We recognize that balancing affordability with safety and reliability is critically important, and we remain actively engaged in solutions that put customers first. Our customers are served by some of the most reliable utilities in the nation, and continued investment is essential to maintaining that performance in the near term while supporting long-term economic growth.

Our revised four-year capital plan reflects these priorities by rebalancing investment, enabling us to invest nearly $10 billion in 2026 and a total of $41.7 billion over the next four years for the benefit of our customers. This reflects $1.1 billion of project deferrals and reductions in PECO and BGE distribution, coupled with $1.5 billion of incremental transmission investment to support project realignment and the interconnection of data center customers that have signed Transmission Security Agreements. Despite the rebalance of capital, we are maintaining our revised annualized rate base growth of 7.9% over the next four years, reflecting the substantial and accelerating transmission growth opportunities we are experiencing across our service territory. The need for additional transmission infrastructure is real, and we are witnessing this growth firsthand, driven by reliability requirements and large load interconnections.

We now anticipate transmission rate base growing at 16% through 2029 and are maintaining our previous upside guidance of $12 billion-$17 billion, which doesn’t include our recent competitive transmission bids in MISO or potential solar or storage opportunities. Having executed within 2% of our plan since 2023, we remain confident in our ability to deliver this next phase of growth through disciplined execution, advancing important economic and energy priorities while keeping customer affordability front and center through a continued focus on cost management. We are confident in our ability to drive expense growth well below inflation. In addition to nearly flat expense growth from 2024-2026, we are now targeting no more than 2% adjusted O&M growth through 2029.

We remain committed to managing the portfolio as 1 Exelon and are leveraging our dedicated team to identify another $350 million of savings in 2027. Our revised plan incorporates cost reductions achieved through accelerating AI and technology transformation, prioritizing IT projects with the greatest customer and operational impact, focusing our community investments, reducing the use of outside contractors, implementing a managed hiring process, and offering a targeted voluntary separation program later this year. We also continue to rely on a balanced funding strategy to support this execution. We are committed to ensuring that we maintain financial flexibility and strong credit metrics over the guidance period, targeting approximately 14% at Moody’s and S&P. I’ll provide additional detail on our balance sheet and financing strategy on a later slide. Turning to slide 6, we present our quarter-over-quarter adjusted operating earnings walk.

Exelon earned $0.91 per share in the first quarter of 2026, compared to $0.92 per share in the same period in 2025. Earnings are lower in the first quarter relative to the same period last year, primarily driven by $0.07 of new distribution and transmission rates, net of depreciation and AFUDC, and $0.01 of favorable weather at PECO. This favorability was offset by $0.04 of ComEd timing due to revenue shaping in 2025, $0.02 of higher interest expense at Corporate and PECO, $0.01 of higher credit loss expense at BGE, and $0.01 attributable to the recognition of Pepco Maryland’s MYP reconciliation, of which a final order was received in March.

These results are slightly ahead of our indications on the fourth quarter call, primarily due to favorable weather and timing-related items. Looking ahead to next quarter, we expect second quarter earnings to be approximately 15% of the midpoint of our projected full-year earnings guidance range, which contemplates normal weather and storm activity and anticipated revenue shaping and timing for the quarter. In combination with Q1 results, this would result in recognizing 47% of projected full-year earnings in the first half of the year, in line with seasonal shaping in prior years and allowing us to remain on track for full-year operating earnings of $2.81-$2.91 per share, with the goal to be at the midpoint or better.

Turning to slide 7, we highlight our regulatory activity in 2026, starting with the Pepco Maryland base rate case, where we have filed a notice with the Maryland Public Service Commission to pursue the traditional base rate case we had filed last fall, requesting a revenue requirement of $119.9 million, which primarily requests to seek recovery of critical infrastructure investments and incremental financing costs associated with rising interest rates. These investments support system reliability, capacity, and long-term growth for our customers, including projects such as the White Flint Substation in Montgomery County, which expanded capacity to meet current and future energy needs, reduced outage risk and maintenance needs through removal of more than 16 miles of overhead lines and strengthened system resilience through underground supply lines and modern equipment.

Collectively, this and other investments contributed to Pepco achieving the lowest outage duration in the state. Evidentiary hearings were held last week and a final order is expected in August. In Delaware, Delmarva Power’s electric base rate case continues to progress on schedule, with intervener testimony due at the end of October. The requested revenue increase allows us to better support our customers through targeted programs and essential investments. This includes a new income-based rate and reliability projects such as Basin Road, where two transformers originally installed in 1967 were replaced and now reliably serve over 2,500 customers, including Wilmington Airport, the Delaware National Guard, and surrounding communities. DPL expects to be able to implement interim rates in effect in July. Finally, on slide eight, I will conclude with a review and update of our balance sheet activity.

We continue to take advantage of favorable market conditions early in the year and have made substantial progress toward our 2026 capital needs. We have completed approximately 43% or $2.3 billion of our planned long-term debt financing, successfully executing all expected debt transactions both at corporate and Pepco Holdings Inc. for the year and materially de-risking our go-forward financing plan. The strong investor demand and attractive pricing for our debt securities continue to be a testament to the strength of our balance sheet and to our value proposition, positioning us well in service to our customers. We also continue to execute our pre-issuance hedging strategy to further protect us from interest rate volatility.

Through 2029, we expect to fund the revised $47.417 billion capital plan with about $21.8 billion of internally generated cash flow, $13.1 billion of debt at the utilities, and $3.4 billion of holding company debt. The balance will be funded with $3.4 billion of equity, approximately 40% of our incremental capital plan from last year’s plan and representing less than 2% of Exelon’s annual market cap. We have already made progress on approximately 37% of these equity needs, with all of our $850 million in equity needs for 2026 and over $400 million in 2027 priced using forward contracts under our ATM. Maintaining a strong balance sheet remains core to our strategy.

We continue to identify opportunities to mitigate risk in our plan and expect to maintain financial flexibility above our downgrade thresholds, targeting credit metrics of 14% over the planning period. We remain confident in our ability to deliver value for our customers and our shareholders. Thank you. I’ll now turn the call back to Calvin for his closing remarks.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Jeanne. I’ll close on slide 9 by reinforcing what matters most as we move forward. Our priorities are clear and unchanged. We are executing our capital plan with discipline, delivering strong operational performance, advancing affordability through prudent investment, and pursuing growth where it strengthens the system and creates long-term value. That discipline is supported by a platform built to perform. Our scale, diversified footprint, and capital flexibility allow us to adapt as conditions evolve without losing focus or momentum. In 2026, we expect to deploy approximately $10 billion of capital for the benefit of our customers, earn a consolidated 9%-10% ROE, and deliver operating earnings of $2.81-$2.91 per share, with a goal of achieving midpoint or better while maintaining a strong and resilient balance sheet.

The infrastructure we operate is foundational to the communities and economies we serve. We take that responsibility seriously, and we meet it every day through consistent execution, high operational standards, and a clear focus on the people who rely on us. Before I close, I also want to recognize the work of our employees across this company. Balancing long-term infrastructure needs with customer affordability is not easy. It requires judgment and discipline at every step. That work extends beyond prioritizing the right investment. It includes constructive regulatory engagement, partnership with local communities, and advocacy for policies that promote affordability and reliability even when they’re not popular. I’m proud of how our teams manage this balance. Their focus on execution, affordability, and customer outcomes is exactly what allows Exelon to deliver today while positioning us for the future. The world around us continues to change, but our approach remains consistent.

We remain focused, disciplined, accountable, and confident in our ability to deliver. Michelle, we can now open it up for questions.

Michelle, Event Specialist, Exelon Corporation: Thank you. If you would like to ask a question, simply press star 11 on your telephone keypad. Our first question comes from Shar Pourreza with Wells Fargo. Your line is open.

Shar Pourreza, Analyst, Wells Fargo: Hey, guys. Good morning.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Morning, Shar.

Shar Pourreza, Analyst, Wells Fargo: Morning, Calvin. Calvin, I wanted to start with Pennsylvania. I mean, it seems like it’s the noisiest in the country right now. I guess, what are you getting from Shapiro to make withdrawing the case and weathering this environment worth it? I mean, the gas utilities seem to be okay. One of your peers has a black box settlement which should get approved. The move is a bit conflicting. I guess, what is it about this case that spooks stakeholders versus your other peers? I guess, how should we be thinking about the trade-offs here in the state from your move? Thanks.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thanks, Shar, and thank you for asking the question. In all seriousness, Shar, Pennsylvania has always been a jurisdiction in which we leaned into and had strong regulatory backdrop and strong relationships, and we continue to have those. Our decision to remove the Pennsylvania filing was based on conversations we had with a variety of stakeholders. Those stakeholders said, "Hey, if you could partner with us to address the affordability issue and lean in, timing is not the best right now." We’re assessing our future rate case filings in Pennsylvania, but all geared to having a strong infrastructure to provide safe, reliable service. Again, I’m not conflating this with any other cases that have been filed by other companies.

We did what was best and what is best for Exelon and PECO, specifically at this time. We believe PECO needs to make investments in the future, and we will do so, but we will work collaboratively with all stakeholders to make sure it’s a prudent decision and timed appropriately to move forward.

Shar Pourreza, Analyst, Wells Fargo: Got it. Perfect. Hopefully, that created the goodwill that you guys needed for that. Then Calvin, just on conversations around supporting supply side solutions and long-term resource adequacy agreements, I guess any movement with House Bill 1272 or Senate Bill 897, I guess, how should we be thinking about the catalyst and timing? Is this something we could see before or after the election? Is Pennsylvania waiting for PJM answers from FERC or the RBA process first? I guess, how do we think about, you know, resource adequacy in the bills that are out there in light of you just pulling a rate case and creating, hopefully, some goodwill? Thanks.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Yes, Shar, you go right to the core issue, we’re not going to adequately address supply affordability without addressing the supply issue. That is our conversation, not just in Pennsylvania, but across all jurisdictions. When you see us show up in an advocacy position for bills that allow utilities and to get new generation built, that’s what it’s all about. Recognizing also right now that Pennsylvania is in an election year, you have a 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. If you don’t do that, the same issue that we’re talking about today, we’ll be talking about in the next 3 to 5 years.

That is what we’re communicating with all stakeholders. You can’t talk affordability without talking the supply stack, period. This is what’s obvious, but people wanna talk about it in silos. It has to be a holistic approach, and we have to talk about them generally. The bills you mentioned go directly to that issue, and we will continue to partner with other utilities and stakeholders in the state to address them.

Shar Pourreza, Analyst, Wells Fargo: Okay, perfect. I appreciate it. Thank you so much, Calvin. I’ll see you guys in a few days. Thanks. Bye.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: I appreciate you, Shar. Thank you.

Michelle, Event Specialist, Exelon Corporation: Thank you. Our next question comes from Steve Fleishman with Wolfe. Your line is open.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Morning, Steve.

Steve Fleishman, Analyst, Wolfe Research: Hi, good morning. Thanks. I guess just following up on Pennsylvania, that you didn’t really mention the governor’s letter.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Yes, sir.

Steve Fleishman, Analyst, Wolfe Research: in terms of kind of focus on, I guess kind of seemed like a more adverse regulatory structure. Could you just, you know, maybe comment on how you interpreted that? Was that part of what you’ve been hearing when you pulled the case, and how should we think about that when you ultimately do file a case?

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Steve. I think the Governor’s letter, first and foremost, it all centered on affordability, right? That’s, that’s kind of what I was just sharing with Shar. Having said that, he brought up 3 specific points. One, making sure that utilities are going after the most cost-effective forms of capital. He wanted transparency in rate making, and he used the term justifiable returns. Let me tell you, it was nothing that we hadn’t heard in our conversations with him, and he put it out there to the entire energy portfolio within the State of Pennsylvania, all the utilities, and said, "Future rate cases, future discussions need to be centered on these 3 principles." We have no concern with that, Steve.

Really going in, and as I’ve shared with the Governor and others have shared with the Governor, is that there’s a 9-month regulatory process within Pennsylvania, and we will continue to operate in a very transparent methodology and work with the Commission and the Governor and his team to ensure that he understands the what and the why. Why the investments we’re making are adding value and safe and reliable and resilient service to Pennsylvanians, and also what we are doing on the front end to control our costs. When we, when I laid out to you in my opening comments, we’re pulling $350 million of costs out of our business, I think that goes right to the Governor’s well, one of his message is that, hey, justifiable returns. Are you doing utility?

Are you doing your part in ensuring that you’re keeping your costs as low as possible? My response to him is absolutely. We were doing it before, and we’ll do it into the future to manage this business. At the same time, as we manage this business, we know how economic development is important to you, we know how creating jobs is important to you, and there’s no better partner that I can speak than PECO has been doing for not only the last decade, but multi decades in the state of Pennsylvania. These are the very issues that we’re talking about today, and we’ll talk about in the future.

Steve Fleishman, Analyst, Wolfe Research: Great. Thanks for that. Sorry, I have two other questions. One is just on the comment on PJM issues and the need for more generation, which clearly agree is a problem. You know, one of the things that did come up recently was the Crane restart and the fact that even when you had something coming back, it’s not potentially interconnected till 2031. Is there, like, things that can be done by PJM or transmission owners to deal with that aspect of getting interconnection done quicker?

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Yeah. To you. Thank you, Steve Fleishman. We’ve been on top of that issue, and partnering with PJM to see what we can do and how we can do different routes, what we can do to really secure them and get them on sooner. The reality of it is, as I’ve always said, we have a concern with the entire reliability and resiliency of the system, and I would look to Colette to see. You know, I’m gonna phone a friend and ask Colette Honorable if she wants to provide any input into that.

Colette Honorable, Senior Executive (PJM/Operations), Exelon Corporation: Thank you, Calvin. Good morning. Colette Honorable here. Thanks for the question about the interconnection queue. As you know, PJM has been in the midst of evaluating how best to progress the interconnection queue, and last week announced that 811 new generation projects capable of generating 220 GW of electricity have applied to interconnect to the grid. We’ve also seen that PJM has reopened the queue, and we applaud PJM for that action because we understand all too well, as we hear from our customers, that we need to move that backlog and get the supply through the queue. We also know that we needed to address reliability challenges.

While we are encouraged that there are over 800 projects in the queue, we know that there’s still more work to be done because only 19% of the projects that are in the queue reach operation. We also know 54 GW have been cleared through the interconnection process, but they’re delayed by siting, permitting, and supply chain issues. Most of all, to your question, we need new supply. While we’re encouraged by the work at PJM, there’s a lot more that needs to be done, so we’re pleased to see the new leadership at PJM in David Mills, and we’re hopeful that he can help move this along. Thanks, Calvin.

Steve Fleishman, Analyst, Wolfe Research: Okay. Then just a quick last one. The transmission CapEx increase that you did. I guess if you didn’t lower the distribution, would that have kinda happened anyway? Is there more of that coming from the data centers? Are you kinda managing within a total, you know, capital level that you were trying to kinda manage within? I don’t know if that makes sense, that question, but yeah.

Jeanne Jones, Chief Financial Officer, Exelon Corporation: It does. I think, you know, it was work that we saw on the horizon. I think we’ve always spoken to the diversification of our portfolio, but also not one project being greater than 3%. Having those projects available to pull in within the planning period, it’s work that we knew we needed to do. It was also work that was aligned to some of the cluster studies. I think that’s the benefit of Exelon’s diversified capital portfolio. We can pivot as needed. I think, you know, with that being said, right? Our $12 billion-$17 billion of opportunities outside the planning period, we didn’t change that range. We still think that that’s very robust, still driven by the same four or five themes, and we’ll continue to kinda manage the portfolio.

As Calvin said, this is the plan for this moment. We did pull back on distribution, right? There’s a cost to investing, and there’s a cost to not investing. We do believe that there’s critical work we still need to do in those states, but this is the right plan for this moment. We know through our strong operations on the distribution side, we saved our customers $1 billion in avoided outage costs in 2025 alone. The investment needs to be done, but this is the right mix for today, and we’ll continue to evaluate and adjust. Again, that brings me back to the benefit of the size, scale diversified portfolio of Exelon.

Steve Fleishman, Analyst, Wolfe Research: Got it. Thanks for taking all my questions. Appreciate it.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Oh. Thank you, Steve.

Michelle, Event Specialist, Exelon Corporation: Thank you. Our next question comes from Nicholas Campanella with Barclays. Your line is open.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Morning, Nick.

Colette Honorable, Senior Executive (PJM/Operations), Exelon Corporation: Nick.

Hey, good morning, team. Morning. Thanks for taking the time. I wanted to just ask one follow-up on the letter, if I can just. You know, there was things proposed around the return that, you know, would point to a lower ROE and, you know, potentially lower equity cap, depending on how the mechanics around that worked. Obviously, those would be significantly below the state averages across the U.S., it, you know, already has kind of raised the company’s implied cost of capital. Can you kind of talk to just the risk of it going there? And, you know, my understanding is you do have a GRC penciled into this plan, if you can confirm that.

Nicholas Campanella, Analyst, Barclays: You know, does the company have any view if that would require legislation to go that way? Or, is this something the PSC at its discretion could do? Thank you.

Jeanne Jones, Chief Financial Officer, Exelon Corporation: I think what we would say on not just the ROEs, but the cap structure and the transparency on investments. To Calvin’s point, we believe that Pennsylvania has a robust regulatory process that allows us to build an evidentiary record that can pull in all forms of debating what, you know, and justifying what is a fair and reasonable return. We believe that that’s the right place to have that conversation. It’s what we’ve always done, right. Even in a settlement, right, you still have to justify your returns. You still have to use Capital Asset Pricing Models or other things, right, that say, "Hey, based on publicly available data, real data," right, which is what the Governor is asking us to pull in, this is a justifiable return.

We know that a healthy and a financially sound utility needs to have justifiable returns that are commensurate with the risk that’s being taken by the regulated utility. We know that the capital structure has to balance the right risks to make sure that we have appropriate credit ratings that drive lower cost of financing for our customers. We would look to continue to leverage that process to build the evidentiary record that results in the right economics for both a financially sound utility, but one that can continue to invest, to create economic development, to drive jobs, and to avoid the significant costs that we know are associated with not investing.

Nicholas Campanella, Analyst, Barclays: Okay, thank you. You know, maybe it sounds like you introduced some O&M rationalization here in the plan. You’re working towards identifying more. You outlined kind of, you know, some of the things there that you’re doing, but just how much is, I guess, sustainable versus one time and could be kind of recaptured through a rate case proceeding?

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: First off, Nick, I would tell you that we’re going to run our business in the most efficient manner. When we talk about pulling out $350 million in cost, it’s largely driven by if we’re not gonna do certain projects, we’re gonna pull those costs out of the business and manage it. If an opportunity arises as we look at future investments to bring back in certain avenues or outlets to get that done, we will. We will always maintain and run a very efficient business. That’s our promise to our customers. When we talk about maintaining, I always approach this as most of them, if not all, are going to be sustainable cost savings to deliver this value.

For us to look at through 2029, we’re not going to ever make any decisions that will sacrifice the reliability and safety of the system. Therefore, these savings are geared to being an efficient operation overall. They’re not geared toward one particular opco. They’re geared as a system, but certain opcos will have to make deeper provisions because if you’re not investing, you’re going to have to make those adjustments. That’s how we’re approaching it.

Nicholas Campanella, Analyst, Barclays: Okay. Just one more, if I could, you continue to be on stable outlook to my understanding. Just the feedback from the agencies through what’s transpired here in Pennsylvania?

Jeanne Jones, Chief Financial Officer, Exelon Corporation: Yeah, we’ve had a lot of discussions with the agencies. You know, PECO was already on negative outlook. They’re on review for a downgrade. I mean, I think the combination of us continuing to invest, and we have been leaning on that investment profile. I would, you know, I do think that the regulatory climate factor is in there. That is something we’ll continue to work through. Of course, we want to maintain the stronger the credit ratings, the lower the cost of financing. We’ll stay close to them. As a whole, I think from an Exelon perspective, though, you know, Pennsylvania is one piece.

We’re managing this as a portfolio, our diversified platform, our ability to kind of pivot around different projects and still deliver. Importantly, still maintain that target of 14%. When you have that cushion to the credit rating downgrades, I think it’s a testament to how we put safe, reliable grid and balance sheet at the forefront of our decisions, and that allows us to continue to deliver not only for our customers, but for our shareholders too.

Nicholas Campanella, Analyst, Barclays: Thanks for those thoughts. Thank you.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Nick.

Michelle, Event Specialist, Exelon Corporation: Thank you. Our next question comes from Paul Zimbardo with Jefferies. Your line is open.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Morning, Paul.

Paul Zimbardo, Analyst, Jefferies: Hi, good morning, team. First I’d say nice to see the swift adjustments. I know those aren’t easy decisions to make. Just the first one I had was it sounds like kind of more intensity, and you’re prepared to mark every quarter-over-quarter, Calvin. Just, is there a point where you kind of need to take matters into your own hand and pursue more contracted generation opportunities, advocate for bigger changes with the states and PJM? Just could you kind of gauge where you are on kind of the intensity and more shifting towards being more proactive to the extent you can versus waiting for PJM?

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: First off, Paul, thank you, and thank you as always for the questions and for joining. Let me begin by saying we are taking things in our own hands. When you look at our transmission organization led by Carim Khouzami, a year ago, we didn’t have that. We’re going after competitive transmission bids to date. We are also looking at partnerships to go after generation, to build generation, contracted generation. We’re doing all those things to date. Per our process and who we are as a company, I don’t talk about those things with you, Paul, until I know they’re done or until we’ve got something to talk to you about that is signed and we’re delivering for you. That’s just who we are as Exelon. When I tell you something, we’re going to deliver. That’s one.

The second piece is the intensity comes from it’s our job to run this business. When we come out and say, to your point, we’re taking $350 million of costs out within this year and the $1 billion in savings we’ve delivered for our customers, that is a very thoughtful process, and we know it impacts people’s livelihoods and everything else. When we talk about less contractors on our system, when we talk about plans that impact our employees, we don’t take those lightly. It’s up to us to run a business to ensure that we have a stable environment for our 20,000-plus employees, and we’re delivering the value to our communities. Are we being proactive? Absolutely.

We will talk to you about those when those plans are baked and we’re running through the tape, right? Because speculation doesn’t deliver results, and we’re committed into our earnings results that we provided to you through 2029 to deliver. If that was to adjust, we’ll be the first ones to tell you the what and the why. We are committed to this. Yes, I am. We are, not I. We are being very intentional about how we focus our efforts day to day based on the changing market dynamics that we’re facing. When you’re sitting in our market right now, you can hear it across PJM. You don’t step into any of our states without the first thing the governors or commissions talk about is affordability. We’re not being tone deaf.

We’re listening, and we’re addressing it. I’ll stop there.

Paul Zimbardo, Analyst, Jefferies: No, no, totally. Totally. No, it’s good to hear. Just kind of pulling it a little bit together a bit, just between the net higher earnings from kind of shifting the transmission, the cost control, kind of would you say this builds more contingency in the plan, or is this more kind of you’re in the same place as you were before, which is the reconfiguration of the rate case timings as well?

Jeanne Jones, Chief Financial Officer, Exelon Corporation: I would say this gets us back to plan, Paul. Of course, as always, like, we want to factor in all the risks and opportunities and give you a plan that accommodates a variety of different scenarios. This is about getting back to the plan that we shared earlier. As Calvin said, it’s a different plan for this moment. As a management team, that’s what you want us to do. You want us to pivot, leverage the portfolio of Exelon, still deliver, but do it in a way that contemplates a variety of outcomes.

Paul Zimbardo, Analyst, Jefferies: Okay. Understood. I’ll thank you, team. Good luck.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Paul.

Michelle, Event Specialist, Exelon Corporation: Thank you. At this time, I’d like to turn the conference back over to Calvin Butler for closing remarks.

Calvin Butler, President and Chief Executive Officer, Exelon Corporation: Thank you, Michelle. Let me begin by thanking everyone once again for joining our Q1 earnings call. I hope what you’ve taken away today is what you’ve heard is that you’re seeing the power of Exelon at work. Our diversified platform, committed men and women to deliver have committed to reaffirm what we said we’re going to do each and every day. We appreciate your continued interest and support, and we hope to see many of you in the months ahead. With that, Michelle, that concludes our call.

Michelle, Event Specialist, Exelon Corporation: Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.