Exelon
Annual Report 2017

Plain-text annual report

POWERING A CLEANER AND BRIGHTER FUTURE FOR OUR CUSTOMERS AND COMMUNITIES 2017 SUMMARY ANNUAL REPORT CONTENTS 2 LETTER FROM OUR CEO 7 ABOUT EXELON 8 2017 AWARDS AND RECOGNITIONS 10 INNOVATION Winners of Exelon’s 2017 Innovation Expo 13 OUR BUSINESS COMMITMENT Billion Dollar Roundtable Supplier Spotlight—Frontier Technologies 15 SUSTAINABILITY Greenhouse Gas Initiative 16 COMMUNITY COMMITMENT Advancing women in the workplace 2017 Philanthropy 18 WHERE WE WORK 20 OUR PURPOSE AND PRINCIPLES 21 OUR COMPANIES 22 Exelon Utilities 24 Atlantic City Electric 26 Baltimore Gas and Electric (BGE) 28 ComEd 30 Delmarva Power 32 PECO 34 Pepco 36 Constellation 38 Exelon Generation 40 Business Services Company 42 OUR LEADERSHIP 45 CORPORATE PROFILE 46 CAUTIONARY STATEMENTS 1 Exelon 2017 Summary Annual Report | Contents LETTER FROM OUR CEO Fellow Stakeholders, Once again, Exelon and its operating companies have achieved record operational performance while turning in strong financial results. We’re proud of the work we have done in 2017, and are confident in our strategy to meet the challenges of our times. More than ever, we see our customers and communities wanting a future built on affordable energy that is reliable and, equally important, clean. Hundreds of companies have committed to powering their operations with clean energy, and homeowners are increasingly looking for ways to lower their carbon footprint and increase efficiency. All indications are that these trends will gain momentum. • Our generation fleet, with the lowest carbon emissions of any large generator, accounting for one ninth of all zero-carbon energy produced in the U.S. • Our industry-leading role as community partner and civic leader • Our talented, diverse and dedicated employees Each of these factors played a key role in the results we delivered in 2017: • Record-breaking operating performance • New highs in customer satisfaction • More than $5 billion invested in reliability and customer service platforms for our transmission and distribution systems • Highest-ever levels of company and employee philanthropy. Exelon’s value for stakeholders is clear: no company does more than Exelon to connect customers to clean energy and the infrastructure to deliver it Financial Performance reliably and efficiently. Our competitive advantage is based on: • Our family of strong operating companies • Our aggressive commitment to the customer and investing in technology and infrastructure to serve them better Exelon’s financial performance in 2017 was strong. Our stock delivered a total annual return including dividends of 15.1 percent, outpacing the UTY for the second consecutive year. Earnings were well within our expected range and would have exceeded plan absent a delay in the Illinois energy procurement process that pushed earnings related to the Zero Emissions Credit (ZEC) from 2017 into 2018, benefiting our 2018 outlook by $0.11 per share. 2 Exelon 2017 Summary Annual Report | Letter from our CEO 5% ANNUAL DIVIDEND GROWTH FROM 2018 THROUGH 2020 UTILITIES INVESTED ANNOUNCED $5.3 BILLION TO IMPROVE SYSTEM RELIABILITY AND OPTIMIZE NEW TECHNOLOGIES $250 MILLION IN COST CUTS BY 2020 Our credit metrics are strong and the balance sheet is healthy with metrics continuing the trend of recent years as we focus our growth capital on at or above our target levels across the businesses. In January 2018, we these businesses. announced an updated dividend policy targeting 5 percent annual dividend growth from 2018 through 2020 that is competitive with our regulated utility peers. Investing in Energy Infrastructure and Technology We are executing our strategy to prudently invest in utility infrastructure. In 2017, our utilities invested $5.3 billion to improve system reliability and Our regulated distribution and transmission businesses exceeded our optimize new technologies to improve customer service. At the same financial plan for 2017, benefiting from continued rate base growth as our time, they maintained a strong focus on managing expenses, successfully utilities make a range of investments to improve the reliability, efficiency reducing operating and maintenance costs year over year. and customer experience. Cost management remains a focus, and in the third quarter we announced a new cost reduction target of $250 million by 2020. We are taking better advantage of scale, new technology platforms, consolidation and simplification to continuously improve productivity. Offsetting these strong results was the continued decline in revenues at our competitive generation business, which was hurt by the lack of load growth, overall mild weather, low price volatility and increased competition. Throughout the year, all the utilities worked closely with state regulators, legislators, customers and other stakeholders on the deployment of distributed generation—new and innovative technologies to make the grid smarter and enhance the customer experience as we build the utility of the future. All our utility jurisdictions have active regulatory or legislative proceedings to enable the integration of distributed resources and technologies such as energy storage, microgrids and electric vehicles. Our GAAP earnings were $3.97 per diluted share in 2017, compared with We are leaders in these initiatives and are working to streamline $1.22 in 2016. On an adjusted operating (non-GAAP) basis, our earnings procedures, remove barriers and ensure customers can realize the benefits decreased to $2.60 per diluted share in 2017 from $2.68 in 2016.* Our of new technologies. regulated utilities represented a growing majority of our earnings in 2017, *For a reconciliation of GAAP earnings to adjusted (non-GAAP) operating earnings, please see page 46. 3 Exelon 2017 Summary Annual Report | Letter from our CEO WE ARE COLLABORATING WITH NATIONAL LABS, LEADING UNIVERSITIES, WE WILL CONTINUE TO START-UPS, VENTURE FUNDS AND CORPORATIONS IN THE DEVELOPMENT ADVOCATE FOR THE ECONOMIC OF NEW TECHNOLOGIES TO TRANSFORM THE WAY WE PRODUCE AND AND ENVIRONMENTAL HEALTH USE ENERGY OF OUR COMMUNITIES We are investing modestly in a variety of strategic areas that can be Advocating for Carbon Reduction and Communities developed into larger growth opportunities. Doing so allows us to be agile Exelon has and will continue to advocate for the fair treatment of nuclear and opportunistic as customers, markets, technology and policy conditions power as a low-cost reliable source of emissions-free power. Exelon’s shift. We are collaborating with national labs, leading universities, start-ups, plants are typically the largest source of carbon-free power in the states venture funds and corporations in the development of new technologies in which they operate and have decades of useful life remaining. They are and business models that have the potential to transform the way we also the economic mainstays of their communities, providing hundreds of produce and use energy. For example, Exelon’s investment in Volta Energy high-wage jobs, paying local taxes and supporting local organizations and Technologies will support the commercialization of the energy storage philanthropies. History has shown that when nuclear plants close, emissions work being done in the National Labs. This partnership enables us to rise and consumers face higher costs as more expensive fossil generation understand innovations and market changes, more knowledgeably invest fills the gap. Yet market rules that distort price formation continue to pose a in new technology and be an early mover on important developments. challenge to the industry. Exelon employees are also identifying new and innovative approaches We were successful in achieving transitional solutions with the ZEC to customer service, reducing our environmental impact, lowering costs and programs in Illinois and New York, and continue to defend that success. We improving safety, reliability and efficiency. We held our 6th and are currently engaging policymakers and other stakeholders in Pennsylvania most successful Innovation Expo in June 2017, and heard 500 employees and New Jersey as well, with the hope of securing policies that will preserve share their best ideas for improving the customer experience and threatened nuclear plants in those states. We announced our intention to stakeholder value. retire Three Mile Island Unit 1 in 2019 absent market reforms to restore the plant’s economic viability. We will continue to advocate for the economic and environmental prosperity of our local plant communities. 4 Exelon 2017 Summary Annual Report | Letter from our CEO (Left) Exelon employees volunteered a record 210,000 hours in 2017. (Center) Crews from our utilities joined the mutual assistance effort in Florida following Hurricane Irma; more than 2,200 Exelon employees and contractors helped restore power to customers in Florida and Georgia. Serving our Customers Record-breaking year for Powering our Communities Our utilities achieved best-on-record results in key reliability and customer Strong corporate responsibility and sustainability remain priorities for us. service metrics and are seeing top quartile—and in some cases top decile Exelon, our family of companies, the Exelon Foundation and our employees —performance compared to our peers. We are realizing the promise of the set a record in corporate philanthropy and volunteerism, committing over Pepco Holdings merger, and our newest utilities are driving excellence and $52 million in giving and volunteering 210,000 hours. We were named to achieving their best reliability performance in over a decade in nearly every the Civic 50, a list of the most community-minded companies, by the Points jurisdiction. Our utilities have also been nationally recognized with several of Light Foundation, and singled out as the utility sector leader. One focus prestigious honors for outstanding business and residential customer was STEM education—promoting the interest of young people, particularly satisfaction. Performance improvement across all six utilities is a tribute to women and minorities, in jobs in science, technology, engineering and math the scope and scalability of the Exelon model, enabling each utility to share —in our service territories and plant communities. We are helping to build the lessons and best practices of the others. a pipeline of qualified workers in the good-paying technology jobs of the In our Generation operations, our nuclear fleet achieved a capacity factor energy future. of 94.1 percent for the year. Our plants demonstrated their value during the In addition to the utilities’ commitment to their own customers, they also extended year-end cold snap, proving again the reliability and resilience of provided significant assistance with the massive restoration efforts following nuclear power. Gas and hydro plant dispatch match was nearly 99 percent, Hurricane Irma in September. More than 2,200 Exelon Utilities employees and renewable energy capture was 95.8 percent, both above goal. Several and contractors worked in grueling conditions to help restore power to new units, including the advanced combined cycle gas turbines in Texas, customers in Florida and Georgia. Earlier that summer, Hurricane Harvey the Georgia biomass plant, and the Los Angeles biogas digester, began hit close to home as many of our Texas-based employees were personally commercial operation in 2017. affected. The team rallied to assist fellow employees as well as the Houston 5 Exelon 2017 Summary Annual Report | Letter from our CEO IN 2017, WE WERE NAMED TO THE DOW JONES SUSTAINABILITY INDEX FOR THE 12TH CONSECUTIVE YEAR community. In early 2018, additional employee volunteers were deployed to Exelon made tremendous progress toward powering a cleaner and brighter assist in Puerto Rico’s recovery. Exelon employees volunteered for disaster future for our customers and communities in 2017. None of this would have relief after Hurricane Harvey, and contributed $820,000 to recovery efforts been possible without the 34,000 employees that work to keep the power in Texas, Georgia, Florida and Puerto Rico. and gas flowing to our customers 24 hours a day, 365 days a year. They truly Exelon remains committed to environmental sustainability and carbon are the best in the business. reduction. In 2017, we were named to the Dow Jones Sustainability Index We will continue to identify growth opportunities by focusing on capital North America for the 12th consecutive year, and recognized as having the lowest CO2 emissions of the top 20 investor-owned utilities. All six Exelon utilities offer energy efficiency or demand response programs, and three allocation, market reform, new technology and, most of all, on better serving our customers. We will improve our operating and financial margins through rigorous cost management, operating excellence and employee and ranked in the American Council for an Energy-Efficient Economy’s report stakeholder engagement. of the top 50 most energy-efficient utilities in the nation, with BGE and ComEd in the top 10. We are committed to delivering stable growth to our shareholders and an attractive dividend to you, and we appreciate your confidence. Our performance building and fostering a diverse and inclusive workplace and supporting that commitment with our partners continues to improve. Sincerely, Diversity Inc. named Exelon one of the top 50 companies for diversity; we fully implemented our sector-leading, family-focused paid leave expansion Christopher M. Crane President and Chief Executive Officer this year and were named to the Billion Dollar Roundtable, the first utility/ March 2018 energy company in that small group of champions of diverse supply chains. Practicing the fundamental principles of diversity and inclusion remains an imperative for Exelon. 6 Exelon 2017 Summary Annual Report | Letter from our CEO ABOUT EXELON ATLANTIC CITY ELECTRIC, BGE, COMED, DELMARVA POWER DEL. AND PEPCO ACHIEVED BEST-EVER PERFORMANCE FOR RELIABILITY 8.9 1.3 2 MILLION ELECTRIC UTILITY CUSTOMERS MILLION NATURAL GAS UTILITY CUSTOMERS MILLION COMPETITIVE RETAIL CUSTOMERS $33.5 532 MW BILLION IN OPERATING REVENUE SOLAR GENERATION CAPACITY $116.7 BILLION IN ASSETS $5.3 BILLION INVESTED IN UTILITIES IN 2017 34,621 EMPLOYEES 961 MW WIND GENERATION CAPACITY IN 11 STATES 35,168 MW OWNED GENERATING CAPACITY EXELON’S NUCLEAR FLEET PRODUCED A RECORD 157 MILLION MW HOURS 7 Exelon 2017 Summary Annual Report | About Exelon OUR UTILITIES WERE NATIONALLY RECOGNIZED FOR OUTSTANDING CUSTOMER SATISFACTION AND MOST TRUSTED BRANDS ONLY UTILITY ON THE FORTUNE 100 LIST DOW JONES SUSTAINABILITY NORTH AMERICA INDEX 2017 AWARDS AND RECOGNITIONS SUSTAINABILITY CORPORATE & FOUNDATION GIVING Dow Jones Sustainability Index $52.1 MILLION Exelon named to Dow Jones Sustainability Index Last year, Exelon and its employees set all-time for 12th consecutive year. records, committing more than $52.1 million to Newsweek Magazine’s Green Rankings Newsweek Magazine’s Green Rankings nonprofit organizations and volunteering more than 210,000 hours. recognized our leadership in sustainability, Civic 50 ranking us third among utilities, No. 12 among Exelon was named to the Civic 50, recognizing the the U.S. top 500 and 24th among the Global 500. most community-minded companies by Points of Carbon Reduction A 2017 M.J. Bradley & Associates report noted Exelon’s generation fleet had the lowest rate of emissions among the 20 largest public or privately held energy producers. Fortune also recognized Exelon as the second-lowest carbon Light, the world’s largest organization dedicated to volunteer service. CORPORATE RECOGNITION 2017 Laurie D. Zelon Pro Bono Award For exemplary legal pro bono service emitter of all Fortune 100 companies. and leadership. Land for People Award Received the Trust for Public Land’s national “Land for People Award” in recognition of Exelon’s deep support of environmental stewardship, creating new parks and promoting conservation. Kids in Need of Defense Innovation Award In recognition of Exelon’s legal department and the Baltimore chapter of Organization of Latinos at Exelon (OLE) for their work with unaccompanied minors from Central America. 8 Exelon 2017 Summary Annual Report | 2017 Awards DIVERSITY & INCLUSION WORKFORCE HeForShe DiversityInc Top 50 Exelon joined U.N. Women’s HeForShe DiversityInc. named Exelon as one of the campaign, which enlists men in the pursuit Top 50 companies for excellence in diversity. for gender equality. Billion Dollar Roundtable Indeed.com “50 Best Places to Work” Indeed.com ranked Exelon No. 18 on its Exelon became the first energy company to be “50 Best Places to Work.” inducted into the Billion Dollar Roundtable, an organization that promotes supplier diversity. Human Rights Campaign “Best Places to Work” For the third consecutive year, HRC’s Corporate CEO Action for Diversity & Inclusion™ Equality Index gave Exelon a perfect rating on its Exelon joined 150 leading companies for the best places to work for the LGBTQ community. CEO Action for Diversity & Inclusion to share best practices to build inclusive workplaces. 2017 U.S. Veterans Magazine’s “Best of the Best” Most veteran-friendly companies. Historically Black Engineering Schools Top Supporter recognition for five consecutive years. 9 Exelon 2017 Summary Annual Report | 2017 Awards INNOVATION Exelon employees explore the next generation energy company at the 2017 Innovation Expo. From Lightbulbs of Inspiration to Lighting Customer Homes More than 2,700 people converged in Washington, D.C., last summer with “This was our largest Expo to date, both from an attendee perspective one focus in mind—identifying new ways to provide reliable, safe and clean and the number of presentations,” said Chris Gould, Exelon’s senior vice energy to our customers. Exelon’s sixth Innovation Expo showcased the creativity of our 34,000 employees to help solve complex energy challenges and identify new opportunities to enhance service. Employees from across the company displayed nearly 500 projects that were either in the beginning phases of development or more developed and in some cases, already in the pilot phase. Employees voted on the winning ideas and projects through a mobile application that was developed for the Expo. president of Corporate Strategy and Chief Innovation and Sustainability Officer. “As we continue to build a culture of innovation, our people play a key role in the evolution of our business. We look forward to seeing where these new ideas will take us.” Winning individuals and teams from the Expo are working with Exelon’s Innovation group to develop their inventions and prepare them to be implemented at the company. 10 Exelon 2017 Summary Annual Report | Innovation HERE’S A LOOK AT THE 2017 INNOVATION EXPO WINNERS AND FINALISTS Brian Hoff, Exelon’s director of Technology Innovation (left) congratulates Nathan Bender (center) and Brann Northcutt (right) of the Air Carbon’s Fuel Team. Inspiration and Ideation (Beginning development) WINNER SECOND PLACE THIRD PLACE Air Carbon Fuels Team STORM: Qlik Interactive Live Dashboard Constellation Energy+ Reward Program Constellation’s Nathan Bender, Dan Butcher from PECO presented a storm Yana Kapralova and team members Stephen Adams and Brann Northcutt innovation idea to improve customer service Daniel Box, Crystal Obomese, Khoa Trang, presented the economics of incorporating through improved storm response and power Brenda Chicas, Jeff Hoolihan, and Shera direct air carbon capture technology and restoration. Called Qlik technology, Butcher’s McFearn presented Constellation Energy+, fuel generation into Exelon’s commercial tool centralizes storm data and performs a loyalty program that lets customers earn product mix. The team proposed that real-time analytics and deep dive capability points on supply charges and convert points Exelon leverage existing nuclear plants as to help restore power even faster in future to cash. The team determined that in addition an energy source for this technology, which storms. can separate carbon dioxide from the atmosphere, leveraging large-scale fans and a chemical catalyst solution to produce the element in a pure liquid form. to offering superior customer service and a variety of products, an incentive program would go far in making customers feel invested in the company. 11 Exelon 2017 Summary Annual Report | Innovation HERE’S A LOOK AT THE 2017 INNOVATION EXPO WINNERS AND FINALISTS The Digital Plant Innovation Team. Projects Undergoing Investigation and Implementation WINNER SECOND PLACE THIRD PLACE Digital Plant Innovation Team Digital Plant Viewer High Efficiency Ultrasonic Fuel Cleaning Dissolving Jet Pump Plug Seal Elizabeth Scott of LaSalle Generating Station Nick Osmond, Vikram Shah, James DuBay Exelon Generation’s Brian Carroll, Cliff Gray and presented a more efficient way to remove and John Freeman from Exelon Generation the Digital Plant Innovation Team developed the unwanted materials from the fuel used in created a technology that will minimize the Digital Plant Viewer to provide more detailed, nuclear power generation. Scott talked with chances of losing jet pump plugs, which are real-time information on plant operations by Expo attendees about the results and important maintenance tools used during accessing a variety of digital media. The tool learnings from using this process at LaSalle refueling outages to isolate two sections of incorporates 360-degree images, live camera during a recent refueling outage, a time when the nuclear system. streams, radiological survey information and plants are closed for routine maintenance. plant monitoring information that can be used to improve operating efficiency. The viewer will be available through mobile devices, nuclear plant touchscreen kiosks or any computer. With the Digital Plant Viewer, Exelon expects to save more than $5 million annually. 12 Exelon 2017 Summary Annual Report | Innovation BILLION DOLLAR ROUNDTABLE Representing Exelon as the company is inducted as the 27th member of the Billion Dollar Roundtable: EVP of Corporate Operations, Bridget Reidy (third from right), SVP and Chief Supply Officer David M. O’Brien (third from left), Emmett Vaughn, director, Diverse Business Empowerment (second from left) and Vernice Lewis, manager, Diverse Business Empowerment (far left). Exelon Named to the Billion Dollar Roundtable for Excellence in Supplier Diversity Exelon believes that embracing diverse perspectives makes our company Exelon earned membership by meeting and surpassing BDR’s threshold of stronger, and that extends to our partnerships in the business community. $1 billion in spending with minority and woman-owned suppliers in 2016. On Aug. 16, 2017, Exelon was inducted into the Billion Dollar Roundtable Inc. That year, Exelon increased its commitment to diverse businesses by 36 (BDR), a top-level advocacy organization that promotes corporate supplier percent over the previous year. In 2017, Exelon’s spending with diversity- diversity excellence. Exelon was the 27th inductee and first energy company certified vendors, ranging from asphalt manufacturers to fuel distributors to to join the exclusive group of U.S.-based corporations that have achieved technology companies totaled $2 billion. $1 billion or more in annual, direct spending with minority and women- owned businesses. “The induction of Exelon as a member company of the Billion Dollar Roundtable represents a significant milestone in our history,” said BDR “Exelon is committed to diversity and inclusion across our enterprise, from Chairman Rick Hughes. “Exelon’s market reach will offer an important and our recruitment and workplace practices to how we spend our resources unique perspective to the BDR roster of companies. We welcome Exelon’s because we know an inclusive culture results in greater innovation, market participation and thought leadership, particularly its view of enhancing competitiveness and opportunities for growth,” said Chris Crane, Exelon’s diverse supplier opportunities in the vital energy sector.” President and CEO. “We are honored to be listed among such an elite group of companies, and share the goals of the BDR and its commitment to promoting best practices across the supply chain.” 13 Exelon 2017 Summary Annual Report | Our Business Commitment SUPPLIER SPOTLIGHT Frontier Technologies Reshma Moorthy grew up with Frontier Technologies—and now she gets to grow it. She is president of the Wilmington, Del.-based firm that provides desktop services and other technology support to utility, pharmaceutical and federal government clients. A first-generation Asian-American, Moorthy came of age alongside the business that her parents founded 30 years ago. Moorthy now co-owns Frontier Technologies with her mother, Jayshree, who is chief executive officer. Her father, Krish, is the firm’s chief operating officer. “I remember in high school or even in college, my mom would have some orders and things that she would need some help getting done,” Moorthy recalls. “She would just teach me. I’m quick with technology. I grew up with technology.” As a student, she would even accompany her mother to networking functions, where together they encountered representatives from companies seeking suppliers, including Pepco and Exelon. Frontier began providing IT labor support and desktop services to Pepco, and now also provides Exelon with IT labor support. Moorthy became president of the family business in 2012 and was recognized in 2016 with the Philadelphia Business Journal Minority Business Leader Rising Star Award. In 2017, the firm was named an IBM Top Performing New Business Partner. Moorthy expresses confidence in her firm’s continued prospects and an even stronger partnership with Exelon. “We get the job done, and we want to grow as Exelon grows. I want to take this company to the next level.” 14 Exelon 2017 Summary Annual Report | Our Business Commitment “ We get the job done, and we want to grow as Exelon grows. I want to take this company to the next level.” Reshma Moorthy, President Frontier Technologies SUSTAINABILITY OUR UTILITY CUSTOMERS AVOIDED ALMOST SAVED MORE THAN 19.2 MILLION MWH OF ENERGY 8.7 MILLION METRIC TONS OF GREENHOUSE GAS EMISSIONS AS A RESULT OF OUR ENERGY EFFICIENCY PROGRAMS Powering a Cleaner Future As the largest producer of zero-carbon generation in the United States, Exelon continues to invest in technology and innovative approaches to Exelon has a prominent role to play in mitigating the risks associated with drive operational and energy efficiency across our systems and with our global climate change. Meeting the international target of limiting average customers. During 2017, our utility customers saved over 19.2 million MWh global temperature increases to 2-degrees Celsius by 2050 will require of energy and avoided almost 8.7 million metric tons of green house gas significant reduction in carbon emissions—an objective that cannot be emissions as a result of our energy efficiency programs, saving money achieved without the continued operation of the nation’s nuclear power on their bills in the process. Exelon is committed to working with our plants. One out of every nine zero-carbon electrons produced last year partners to achieve additional reductions over time and to implement came from Exelon’s portfolio of nuclear and renewable energy resources. measures to manage the effects of climate change in our operating areas. In addition to our zero-carbon generation resources, Exelon is focused on operational measures and capital investments that will continue to reduce our corporate greenhouse gas emissions, including emissions related to our electric and gas distribution systems. At the end of 2017, we set a goal to build on previous commitments and reduce our operational emissions by 15 percent by 2022. With continued progress, we can achieve a cleaner, brighter future for our customers and communities. 15 Exelon 2017 Summary Annual Report | Sustainability COMMUNITY COMMITMENT PHOTO TO COME Members of Girl Scout Troop 60194 prepare for the “Bling Your Booth” contest using solar power. Exelon Affirms Commitment to Women on a Global—and Very Local—Scale While numbers don’t always tell the whole story, there is one statistic we platform where men can become change agents for gender equality. take very seriously at Exelon: women fill 47 percent of all U.S. jobs, but Exelon committed to improve retention of women at the company by hold only 24 percent of jobs in Science, Technology, Engineering and Math 2020, with a goal to reach parity in voluntary turnover of men and (STEM) 1. As a leading energy company and employer of STEM professionals, women professionals. we have taken action to change those numbers in our workplace as well as the communities we serve. “A diverse team of people—with different backgrounds, experiences, cultures and perspectives—makes Exelon a better company and a To continue building the pipeline of women pursuing careers in our sector, stronger community partner, and results in greater innovation and market in 2017 the Exelon Foundation announced it will invest $3 million over three competitiveness,” commented Chris Crane, Exelon president and CEO. years to encourage and support young women’s involvement in STEM. The “We are pleased to join with UN Women and distinguished world leaders programs will create opportunities for girls and women to learn about and to create the change necessary to build a brighter, more sustainable pursue careers in STEM-related fields. future where generations of boys and girls have the tools to solve societal This announcement was part of Exelon’s commitment to the United Nations challenges together.” Women’s HeForShe campaign, which Exelon joined as a Thematic Champion Exelon’s HeforShe partnership will extend programing and actions already in September. Launched by UN Women three years ago, HeForShe was underway at the company, including community-based STEM programs. Last created to foster a movement with a systematic approach and targeted year, this included supporting Chicago Girl Scout troop 60194 in creating a solar-powered cookie booth for the Girl Scout “Bling Your Booth” competition. 1 “STEM Jobs: 2017 Update,” US Department of Commerce Economics and Statistics Administration 16 Exelon 2017 Summary Annual Report | Community Commitment 2017 PHILANTHROPY EXELON PROVIDED $52,095,589 IN FUNDS TO NONPROFIT ORGANIZATIONS IN 42 STATES EMPLOYEES DONATED $11.8 MILLION AND 210,196 VOLUNTEER HOURS NATIONAL VOLUNTEER WEEK 359 VOLUNTEER EVENTS IN 14 STATES AND 96 CITIES PEOPLE BENEFITED FROM EXELON GRANTS 3,777,273 GIVING TUESDAY EXELON EMPLOYEES VOLUNTEERED IN 150 SERVICE PROJECTS 17 Exelon 2017 Summary Annual Report | Community Commitment WHERE WE WORK Headquartered in Chicago, Exelon has operations and business activities in 48 states, the District of Columbia and Canada. • Exelon Generation has 35,100 megawatts of owned capacity, comprising one of the nation’s largest, cleanest and lowest-cost power generation fleets. • Constellation provides energy products and services to approximately 2 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. • Exelon’s utilities deliver electricity and natural gas to approximately 10 million customers in Delaware, New Jersey, northern Illinois, central and western Maryland, southeastern Pennsylvania and Washington, D.C. Exelon Utilities Constellation Generation Facilities CONSTELLATION HAS A PRESENCE IN EXELON GENERATION HAS ASSETS 48 STATES AND WASHINGTON, D.C. IN 25 STATES AND CANADA. 18 Exelon 2017 Summary Annual Report | Where We Work ILLINOIS • Nuclear: Braidwood, 2,831 MW MASSACHUSETTS • Gas: Mystic 8&9 • Solar: Solar New Jersey • LFG: Pennsbury, 6 MW GENERATION FACILITY LOCATIONS* ALABAMA • Gas: Hillabee (Combined Cycle), 753 MW ARIZONA • Solar: Solar Arizona, 46 MW • Solar: Solar Arizona 2, 23 MW • Solar: Mohave Sunrise Solar, 5 MW CALIFORNIA • Solar: AVSR 1, 242 MW • Solar: California PV Energy, 21 MW • Solar: California PV Energy 2, 27 MW • Solar: Sacramento PV Energy, 15 MW • Solar: SEGS (Ownership Interest Only), 9 MW COLORADO • Solar: Denver Airport Solar, 2 MW CONNECTICUT • Solar: Solar Connecticut, 1 MW GEORGIA • Biomass: Albany Green Energy 46 MW • Solar: Solar Georgia, 8 MW • Solar: Solar Georgia 2,8 MW IDAHO • Wind: Idaho Wind, 4 Projects, 65 MW • Solar: Solar Massachusetts, 842 MW • Nuclear: Byron, 2,347 MW • Nuclear: Clinton, 1,069 MW • Nuclear: Dresden, 1,845 MW • Nuclear: LaSalle, 2,320 MW • Nuclear: Quad Cities (Ownership Interest Only), 1,403 MW (Combined Cycle), 1,417 MW • Gas/Oil: Mystic 7, 575 MW • Oil: Mystic Jet, 9 MW • Oil: Framingham, 31 MW • Oil: West Medway, 124 MW • Solar: Holyoke Solar, 5 MW • Gas: SE Chicago, 296 MW 7 MW • Solar: Exelon City Solar, 9 MW • Solar: Solar Net Metering, • Wind: Illinois Wind, 1 Project, 8 MW KANSAS • Wind: Kansas Wind, 2 Projects, 60 MW MARYLAND • Nuclear: Calvert Cliffs, (Ownership Interest Only) 888 MW • Hydro: Conowingo, 572 MW • Gas/Oil: Perryman, 404 MW • Gas: Gould Street, 97 MW • Gas/Oil: Riverside, 39 MW Oil • Gas: Westport, 116 MW • Gas: Notch Cliff, 117 MW • Oil: Philadelphia Road, 61 MW • Solar: Solar Horizons, 8 MW • Solar: Solar Maryland, 8 MW • Solar: Solar Maryland 2, 8 MW 2 MW MAINE • Oil: Wyman (Ownership Interest Only), 36 MW MICHIGAN • Wind: Michigan Wind, 6 Projects, 226 MW MINNESOTA • Wind: Minnesota Wind, 5 Projects, 52 MW MISSOURI • Wind: Missouri Wind, 4 Projects, 162 MW NEW JERSEY • Nuclear: Oyster Creek, 625 MW • Nuclear: Salem (Ownership Interest Only), 1,007 MW, Nuclear; 16MW, Oil • Solar: Solar Maryland MC, • Solar: Solar Federal, 5 MW 2, 11 MW • Solar: Solar New Jersey 3, 1 MW NEW MEXICO • Wind: Wildcat, 14 MW NEW YORK • Nuclear: James FitzPatrick, • Nuclear: Ginna (Ownership Interest Only), 288 MW • Nuclear: Nine Mile Point (Ownership Interest Only), 838 MW • Solar: Solar New York, 3 MW OHIO • Energy Storage: Clinton Battery Storage, 10 MW • Solar: Solar Ohio, 4 MW OKLAHOMA • Wind: Bluestem, 101 MW OREGON • Wind: Oregon Wind, 4 Projects, 74 MW • Solar: Outback Solar, 6 MW PENNSYLVANIA • Nuclear: Limerick, 2,317 MW • Nuclear: Peach Bottom (Ownership Interest Only), 1,303 MW • Nuclear: Three Mile Island, 29 MW • Wind: Maryland Wind, 3 Projects, 140 MW • Solar: Solar New Jersey 837 MW 1, 18 MW • Oil: Falls, 51 MW • LFG: Fairless Hills, 60 MW * As of December 2017. Note: For nuclear stations, capacity reflects the annual mean rating. Fossil stations reflect a summer rating. Wind and solar facilities reflect name plate capacity. 19 Exelon 2017 Summary Annual Report | Where We Work • Oil: Croydon, 391 MW • Oil: Delaware, 56 MW • Oil: Richmond, 98 MW • Oil: Schuylkill, 30 MW • Oil: Southwark, 52 MW • Oil: Chester, 39 MW • Gas/Oil: Eddystone, 60 MW, Oil; 760 MW, Gas/Oil • Hydro: Muddy Run, 1,070 MW • Oil: Moser, 51 MW • Gas: Handsome Lake, 268 MW TEXAS • Gas: Mountain Creek 6, 7, 8, 808 MW • Gas: Wolf Hollow (Combined Cycle), 705 MW • Gas: Wolf Hollow II, 1,064 MW • Gas: LaPorte, 152 MW • Gas: Colorado Bend (Combined Cycle), 468 MW • Gas: Handley 3, 4, 5, 1,265 MW • Wind: Exelon Wind, 7 Projects, 70 MW UTAH • Waste Coal: Sunnyside, 26 MW WASHINGTON, DC • Solar: Solar DC, 1 MW CANADA • Gas: Grande Prairie, 105 MW OUR PURPOSE AND PRINCIPLES In 2017 we set out to articulate our purpose as a company—how and why we exist. Thousands of employees from across the company provided input, and the result is a bold affirmation of our reason for being. It also gives us a renewed focus on the impact we have in the communities where we work and live. Each day we are working to power people’s lives, to make them brighter and to build a better future. Our principles serve as our guide. PURPOSE PRINCIPLES Powering a cleaner and brighter future for our customers and communities. 1. We put customer needs at the center of all we do by fueling innovation to improve the delivery of clean and affordable energy and services. 2. We practice the highest level of safety and security to reliably deliver energy to our customers and communities. 3. Our workforce is the foundation of our success. We succeed as a team of diverse individuals; respected, engaged and inspired to shape our nation’s energy future. 4. We return our success to the communities we are privileged to serve. 5. We adhere to the highest standards—ethically and with uncompromising integrity–to drive value for our customers and shareholders. 20 Exelon 2017 Summary Annual Report | Purpose and Principles OUR COMPANIES We live our purpose and principles in every action at work and in our communities every day. Here are some snapshots from across the company. 21 Exelon 2017 Summary Annual Report | Our Companies ABOUT EXELON UTILITIES INSTALLED MORE THAN $21 BILLION 1 MILLION BEING INVESTED FOR CUSTOMERS IN NEW TECHNOLOGY AND SMART METERS INFRASTRUCTURE AT UTILITIES THROUGH 2021 THREE OF EXELON’S SIX UTILITIES 1.5 MILLION RANKED IN THE 2017 AMERICAN INTERRUPTIONS AVOIDED COUNCIL FOR AN ENERGY-EFFICIENT IN 2017 DUE TO ADDITIONAL ECONOMY REPORT OF THE CUSTOMERS EXPERIENCED 11,472 10% TRANSMISSION LINE MILES REDUCTION IN THE INVESTMENTS IN TOP 50 MOST ENERGY-EFFICIENT FREQUENCY OF OUTAGES UTILITIES IN THE NATION, “SMART SWITCHES” WITH TWO RANKING IN THE TOP 10 COMPARED TO 2016 SERVICE AREA 11,400 SQUARE MILES 10 MILLION CUSTOMERS 22 Exelon 2017 Summary Annual Report | Our Companies 25,590 SQUARE MILES COMBINED SERVICE TERRITORY EXELON UTILITIES Enhanced analytics can help predict when and where outages might occur on the grid. Smart Tools for Energy-Smart Customers After installing close to nine million smart meters over the past few years, “The scope of this project establishes Exelon as an industry leader in Exelon’s utilities are tapping into the capabilities made possible by the identifying ways to maximize available information and trends to improve data generated by digital meters to bring even more benefits to customers. operations and the overall customer experience.” The next phase of BIDA will focus on enhancements to the transmission and distribution system, using insights from smart grid technology to predict when and where outages might occur. The utilities can then implement preventative solutions and recover faster from storms and other incidents affecting the grid, improving reliability for Exelon customers. In 2017, the utilities launched Smart Energy Services, the first phase of an initiative to improve customer offerings by analyzing the energy data produced by the meters. Customers can now access a suite of tools to help them better manage their energy use and bills, including high usage alerts and personalized energy savings tips. Customers also receive regular reports about their energy efficiency and how their home is performing compared to similar homes in their area. “The six Exelon utilities are leveraging our combined strengths and talents to further improve our capabilities and reliability for our customers,” said Carim Khouzami, chief financial officer of Exelon Utilities and sponsor of the multi-phase project, called Business Intelligence and Data Analytics (BIDA). 23 Exelon 2017 Summary Annual Report | Our Companies ABOUT ATLANTIC CITY ELECTRIC AVERAGE CUSTOMER INTERRUPTIONS WERE REDUCED BY 24% COMPARED TO THE PREVIOUS THREE-YEAR PERIOD LAUNCHED A NEW LOCAL CALL CENTER TO PROACTIVELY ENGAGE CUSTOMERS AND CONNECT THEM WITH IMPORTANT ENERGY ASSISTANCE PROGRAMS IMPLEMENTED 10 NEW SAFETY BEST PRACTICES 24 Exelon 2017 Summary Annual Report | Our Companies RECEIVED THE ECONOMIC IMPACT AWARD FROM THE BOARD OF PUBLIC UTILITIES’ SUPPLIER DIVERSITY DEVELOPMENT COUNCIL FOR THE COMPANY’S COMMITMENT TO SUPPORTING DIVERSE BUSINESSES ATLANTIC CITY ELECTRIC PowerAhead is Atlantic City Electric’s comprehensive plan to enhance the power grid’s ability to withstand severe weather. Atlantic City Electric Powers Ahead with Grid Resiliency Program At Atlantic City Electric, we can’t control the wind, downpours and Approved by the New Jersey Board of Public Utilities in May 2017, hail that nature may bring, but we can make improvements that help us PowerAhead work includes: put up a good fight. • Increased technology monitoring to automatically alert the system of PowerAhead, Atlantic City Electric’s grid resiliency program, is a comprehensive plan to modernize and enhance the resiliency of the electric grid. The utility is investing approximately $80 million over the next five years on new infrastructure and system upgrades to improve service in areas that have experienced outages during recent severe storms. “We know that providing quality service for our customers means we have to enhance our energy infrastructure,” said Susan Coan, senior manager of government affairs for Atlantic City Electric. “PowerAhead will not only strengthen the electric grid and make it more resistant to severe storms, but the work that comes with it will also create jobs and help boost our southern New Jersey economy.” disruptions for faster and safer power restoration • Installation of special devices called reclosers that will allow service to be restored remotely • Structural durability enhancements, including stronger utility poles • TripSavers that automatically attempt to restore power connections • New system connections that will allow alternate power networks for South Jersey’s coastal barrier islands in the event of a storm These improvements are just the beginning. Atlantic City Electric will PowerAhead to continue identifying ways to deliver energy to customers just as reliably during stormy weather as we do on sunny days. 25 Exelon 2017 Summary Annual Report | Our Companies ABOUT BALTIMORE GAS AND ELECTRIC (BGE) BGE IS IN THE TOP 10% OF UTILITIES FOR RELIABILITY IN 2017 BGE RECORDED THE SHORTEST AVERAGE OUTAGE DURATION FOR CUSTOMERS IN THE COMPANY’S HISTORY INAUGURAL “BRIGHT IDEAS” PROGRAM PROVIDED GRANTS TO 55 TEACHERS RANKED HIGHEST IN CUSTOMER SATISFACTION WITH BUSINESS ELECTRIC SERVICE IN THE EAST AMONG LARGE UTILITIES BY J.D. POWER. LAUNCHED MOBILE JOB CENTER WITH ENOCH PRATT FREE LIBRARY 26 Exelon 2017 Summary Annual Report | Our Companies BALTIMORE GAS AND ELECTRIC (BGE) (Left to right) Calvin Butler, Allen Meacham Sr. (one of the founders of James Mosher Baseball) and Eddie Murray, Former Oriole, Major League Baseball Hall of Fame. BGE Partners with Baseball Greats to Inspire Youth in West Baltimore BGE believes that investing in youth helps build stronger communities. In the The park features a synthetic turf baseball diamond equipped with dugouts, fall of 2017, in partnership with the Cal Ripken Sr. Foundation, BGE unveiled a backstop and digital scoreboard. In addition to baseball, the park is used the Eddie Murray Field at BGE Park. The youth development park provides for a variety of after-school enrichment programs. children in West Baltimore with a safe place to play and opportunities for mentorship through sports and recreation. Baltimore Orioles Hall of Famers Eddie Murray and Cal Ripken Jr. were on hand for the unveiling on the grounds of James Mosher Baseball, believed to be the oldest continuously operating African-American youth baseball league in the country. “Every child deserves a positive environment where they can play and grow while surrounded by caring adults who can teach them important life lessons like teamwork, respect and personal responsibility,” said Cal Ripken Jr. “We are excited to bring this ballpark to the deserving kids and local community of West Baltimore. To be able to dedicate this park to my dear “Like the James Mosher Baseball League, BGE has deep roots in Baltimore, friend Eddie Murray makes it extra special.” and we are extremely proud to provide this legacy gift to the city we have called home for more than 200 years,” said Calvin G. Butler Jr., chief executive officer for BGE. “This youth development park will have a lasting impact on young people by providing them with a healthy environment where they can build skills and experiences necessary for success as adults.” The field was one of BGE’s gifts to its service area in honor of the company’s 200th anniversary in 2016, announced at a ground-breaking event in the fall of that year. 27 Exelon 2017 Summary Annual Report | Our Companies ABOUT COMED NAMED “MOST TRUSTED BRAND” BY MARKET STRATEGIES INTERNATIONAL CUSTOMERS EXPERIENCED 10% REDUCTION IN THE FREQUENCY OF OUTAGES COMPARED TO 2016 1.5 MILLION INTERRUPTIONS AVOIDED IN 2017 DUE TO ADDITIONAL INVESTMENTS IN “SMART SWITCHES” $7 MILLION IN GRANTS TO TRAIN LOCAL RESIDENTS FOR FUTURE ENERGY JOBS MORE THAN 230 GIRLS APPLIED TO JOIN THE 2017 ICE BOX DERBY COMPETITION AND STEM EDUCATION PROGRAM, NOW IN ITS FOURTH YEAR 28 Exelon 2017 Summary Annual Report | Our Companies COMED Chicago students make the connection for their solar-powered project. ComEd’s Solar Spotlight Shines on STEM Education for African-American and Latino Students With the energy industry undergoing rapid change, continued success pyramid, an art piece that is showcased at Gallery Guichard in Chicago’s depends on a workforce that is ready to innovate. With this goal in mind, Bronzeville neighborhood. For Hispanic Heritage month, Solar Spotlight ComEd launched the Solar Spotlight program in 2016 to help high school students helped create solar-powered clothing including a dress and dinner students explore opportunities in STEM (science, technology, engineering jacket that were decorated with their artwork. The two pieces featured and math) fields. Held in conjunction with ComEd’s annual Black History LED lights and appeared on the runway during Latino Fashion Week. The and Hispanic Heritage Month celebrations, Solar Spotlight is a two-day solar fashion pieces were also displayed at Chicago’s Mexican Museum of STEM immersion experience where students learn first-hand how solar National Art and the National Museum of Puerto Rican Arts and Culture. energy works. ComEd mentors serve as guides through the experience, helping students with the hands-on project and sharing information about their career journeys. Plans for the 2018 Solar Spotlight class include a visit to the Illinois Institute of Technology and a project to create solar-powered emergency kits that will be donated to local community centers. Some will be sent overseas “I’m glad to be able to give back to my community and it’s gratifying to see to locations like Haiti and Puerto Rico that have been affected by natural high school kids participate in this program and get excited about STEM,” disasters and massive power outages. said Brittanie Mullings, work planner in ComEd Regional Operations and a program mentor. “ComEd is committed to presenting creative and exciting education opportunities to engage students and showcase the potential that STEM To date, more than 200 students have participated in the program. In 2017, careers provide,” said Anne Pramaggiore, President and CEO, ComEd. “Solar an art component was added to the program curriculum. During Black power continues to grow, and we are focused on helping prepare the future History Month, students worked with a local artist to create a solar-powered workforce for these exciting energy careers.” 29 Exelon 2017 Summary Annual Report | Our Companies ABOUT DELMARVA POWER HELPED MORE THAN 1,700 NEW CUSTOMERS CONVERT TO CLEAN, EFFICIENT, AFFORDABLE AND SAFE NATURAL GAS SERVICE COMPLETED THE GAS CREWS RESPONDED TO $21 MILLION CREST SUBSTATION 99.88% OF EMERGENCY GAS CALLS IN UNDER 60 MINUTES— A RESPONSE RATE THAT IS AMONG THE BEST IN THE INDUSTRY. CUSTOMERS EXPERIENCED 23% SHORTER OUTAGES AND 11% FEWER OUTAGES FIRST DELAWARE NEW TECHNOLOGY SYMPOSIUM SHOWCASED INITIATIVES THAT ARE TRANSFORMING THE FUTURE ENERGY EXPERIENCE 30 Exelon 2017 Summary Annual Report | Our Companies DELMARVA POWER Delmarva Power crews work to restore customers affected by the devastating EF2 category tornado. After Devastating Tornado, Nearly 9,000 Customers Restored in 24 Hours We know that power is essential to the safety and wellbeing of our Delmarva Power teams worked around the clock to restore power to the customers, which is why we constantly invest in our systems and train so more than 8,700 customers affected by the storm. In less than 24 hours, that we can respond quickly to any disruption. Those efforts were put to they replaced 10 transmission poles, dozens of wooden distribution poles, the test in the early hours of July 24, 2017, when the National Weather and restrung thousands of feet of overhead wires. Service issued a tornado warning for Queen Anne’s County and surrounding areas of Maryland’s Chesapeake Bay coastal communities. “Days like this make me proud to be part of this remarkable team,” remarked Gary Stockbridge, Delmarva Power region president, as power was restored Moments later, high winds and heavy rain struck the region, followed by to the final customers. “What our crews accomplished together, using a swirling tornado that toppled trees, bent metal utility poles and tore at their experience, determination and grit, was incredible. Making sure our least one home from its foundation. The tornado had formed as a customers can rely on their energy is why we’re all here.” waterspout over the nearby Chesapeake Bay, and packed 125-mph winds as it spun ashore at category EF2, according to local officials and the National Weather Service. Within minutes, thousands of residents in Stevensville, Bay City, Kent Island and surrounding parts of Queen Anne’s County, Md., were without electrical power. But before sunrise, Delmarva Power crews were dispatched throughout the region and swiftly got to work. 31 Exelon 2017 Summary Annual Report | Our Companies ABOUT PECO MORE THAN 1.7 MILLION REMOTE OPERATIONS PERFORMED SINCE THE INSTALLATION OF SMART METERS KEPT SERVICE ON FOR CUSTOMERS 99.988% OF THE TIME WHICH RANKED IN THE TOP 25 PERCENT IN THE INDUSTRY NATIONWIDE NAMED PECO RECOGNIZED AS “BEST MID-SIZED COMPANY ONE OF THE TOP 10 UTILITIES IN PHILADELPHIA” 2017 BY FORBES FOR ECONOMIC DEVELOPMENT BY SITE SELECTION MAGAZINE BEST EVER PERFORMANCE IN 2017 FOR CUSTOMER SATISFACTION AND CALL CENTER SATISFACTION 32 Exelon 2017 Summary Annual Report | Our Companies PECO Sabrina Brooks, PECO manager of Marketing (right) congratulates Jules Purnell, the 1000th electric vehicle rebate customer. Smart Energy for Homes Begins in the House As PECO delivers on its promise of safe, reliable, affordable and clean • Clean Transportation requires the development of regional electric vehicle energy for customers today, it’s also driving innovation with tomorrow’s infrastructure plans and authorizes utility investments in infrastructure to customers in mind. With PECO’s Advancing Smart Energy initiative, we are ensure access to conveniently located electric charging and compressed supporting legislative policies that will help provide new programs and tools natural gas (CNG) fueling stations for residential and business customers giving customers more control over • Microgrids and Energy Storage allows PECO to develop microgrid and their power choices . battery storage pilot projects to enhance the reliability and security of the “We are directly responding to our customers’ expectations of high-quality service, more choices and new solutions,” said Mike Innocenzo, senior vice president and Chief Operating Officer, PECO.* “With this legislative agenda, we’re looking to provide new renewable energy options, clean transportation alternatives, increased access to low-cost natural gas, new technologies and near-perfect grid reliability—with fair and equitable rates for all our customers.” electrical grid for our customers • PA Solar for All supports the development and operation of solar power plants on underutilized urban land, which would provide benefits for low-income customers and meet state clean energy requirements • Rate Fairness enables innovative rate structures that support ongoing investment in the electrical grid as new technologies are developed, including distributed energy By advocating for our customers’ immediate and long-term needs, PECO PECO is supporting five bills that were introduced in the Pennsylvania House will transform the energy experience for our communities. of Representatives in the 2017 session: • Natural Gas Expansion which helps remove financial barriers for customers choosing to switch to natural gas *President and CEO as of March 30, 2018 33 Exelon 2017 Summary Annual Report | Our Companies ABOUT PEPCO KICKED OFF THE DISTRICT POWER LINE CUSTOMERS EXPERIENCED UNDERGROUNDING (DC PLUG) INITIATIVE TO UNDERGROUND THE MOST VULNERABLE OVERHEAD DISTRIBUTION LINES IN THE DISTRICT OF COLUMBIA LEADING TO INCREASED RELIABILITY AND RESILIENCY OF THE SYSTEM 41% SHORTER OUTAGES AND 18% FEWER OUTAGES WITH AVERAGE CUSTOMER INTERRUPTIONS REDUCED BY 30% COMPARED TO THE PREVIOUS THREE-YEAR PERIOD (Above) District resident Serenity, 8, wrote Petco asking for a hamster, but her letter was inadvertently sent to Pepco. Still, our customer service representatives made it happen. COMPLETED THE $200 MILLION WATERFRONT SUBSTATION ONE OF THE LARGEST SUBSTATIONS IN NORTH AMERICA NAMED THE 2017 “CORPORATION OF THE YEAR” BY THE CAPITAL REGION MINORITY SUPPLIER DEVELOPMENT COUNCIL, THE WASHINGTON, D.C., REGIONAL CHAPTER OF THE NATION’S LARGEST MINORITY SUPPLIER DEVELOPMENT GROUP 34 Exelon 2017 Summary Annual Report | Our Companies PEPCO Pepco and Exelon joined D.C. Mayor Muriel Bowser to launch the D.C. Infrastructure Academy, a public-private partnership providing critical skills- building and hiring opportunities for local residents in technical fields. Pepco and Exelon Partner with District of Columbia Mayor to Boost Local Workforce Development Connected by the goal of building job-ready skills for local, diverse talent, Pepco has called the District home for more than 100 years, and hiring Pepco was joined by District of Columbia Mayor Muriel Bowser last fall from local communities is a top priority. Now, Pepco and Exelon are directly to formally launch the D.C. Infrastructure Academy. The public-private investing to create a pipeline of talent that reflects the diversity of local partnership will provide training for local residents in the technical areas communities, while also expanding opportunities for workers to have that are critical for operating a city like Washington. careers in high-demand fields. The Infrastructure Academy is made possible in part by a $5.2 million “Our business view is holistic—when the communities we serve are contribution to workforce development programs across the District as a successful, vibrant and growing, we are successful. We cannot realize that result of Exelon’s 2016 merger with Pepco Holdings. Pepco will contribute vision by simply providing power,” said Bill Von Hoene, Exelon’s executive an additional $500,000 for the first five years of the Academy’s operation. senior vice president and Chief Strategy Officer. “We must focus on “We want to ensure that our customers are connected to us by more than power lines,” Dave Velazquez, president and CEO of Pepco Holdings, told those gathered at the utility’s Benning Service Center for the launch. “It’s incredibly important for us to hire from our own backyard. I always want to be able to look around our offices and see that the people who work for us live here and hail from a wide range of backgrounds and walks of life.” building partnerships with those who are truly making a difference in our communities to provide opportunities in underserved areas. This is an example of what we want to do.” 35 Exelon 2017 Summary Annual Report | Our Companies ABOUT CONSTELLATION THE STATE OF MASSACHUSETTS AWARDED CONSTELLATION AND STEM, A CONSTELLATION TECHNOLOGY VENTURES COMPANY, A $1.25 MILLION GRANT TO DEPLOY ENERGY STORAGE SOLUTIONS ACROSS THE STATE CONSTELLATION’S HOME SERVICES BUSINESS SAW CONTINUED GROWTH WITH THE OPENING OF A NEW SERVICE FACILITY IN FREDERICK, MD., AND THE LAUNCH OF PRODUCT SALES AND BUNDLED RATE OFFERINGS IN THE EXPANDING TEXAS MARKET #1 COMMERCIAL AND INDUSTRIAL POWER PROVIDER IN THE U.S. ENABLED CUSTOMERS TO AVOID 1.5 MILLION METRIC TONS OF GREENHOUSE GAS EMISSIONS THROUGH ITS “EFFICIENCY MADE EASY” PROGRAM 440 MW OF DISTRIBUTED ENERGY ASSETS COMPLETED OR UNDER CONSTRUCTION 36 Exelon 2017 Summary Annual Report | Our Companies CONSTELLATION MIGHTY MICROGRID An 800-kilowatt fuel cell-powered microgrid helps Hartford reduce power costs and provide emergency power for Parkville’s neighborhood NON-EMERGENCY MICROGRID FEED EXCESS ELECTRICITY EMERGENCY MICROGRID FEED UTILITY GRID FEED EMERGENCY POWER SWITCH GRID DISCONNECT SWITCH A Public-Private Partnership to Power a Community Microgrids are localized electric grids that are able to function Constellation provided engineering, procurement and construction services independently, continuing to provide essential service when the main grid for the project and operates the microgrid system. The city purchases the is down. In April, Constellation, Bloom Energy and the city of Hartford, electricity generated by Bloom Energy fuel cells at or below current market Conn., completed a microgrid powered by a fuel cell, an energy source that rates through a 15-year power purchase agreement. converts fuel into electricity. The 800-kilowatt microgrid system will supply emergency power to public buildings and businesses in Hartford’s Parkville neighborhood, including 100 percent of the electricity at the Parkville Elementary School, Dwight Branch Library, the Parkville Senior Center and Charter Oak Health Center. “I’m proud that Hartford is home to one of Connecticut’s first fully operational microgrids powering vital community services daily with clean, affordable energy,” said Hartford Mayor Luke Bronin. “This project strengthens Hartford’s energy infrastructure while reducing costs and making our city more sustainable.” If an electrical outage occurs in Parkville, the microgrid will also provide emergency power to a local gas station and grocery store. Excess power generated by the system will reduce electricity costs at four local schools. 37 Exelon 2017 Summary Annual Report | Our Companies The project is Connecticut’s first developed through a public-private effort and one of the first implemented through Connecticut’s Department of Energy and Environmental Protection Microgrid Grant Program. “As a competitive energy supplier, Constellation aims to provide customers with energy options that enhance operational efficiencies, resiliency and sustainability,” said Michael D. Smith, senior vice president, Distributed Energy, Constellation. “We applaud the city of Hartford, the state of Connecticut and our project partners for coming together to support innovative energy solutions.” ABOUT EXELON GENERATION BROUGHT MORE THAN 2,250 MW OF NEW, CLEAN GENERATION ONLINE NATION’S LOWEST CARBON-GENERATING FLEET MORE THAN 53,000 HOURS VOLUNTEERED BY EMPLOYEES IN THEIR COMMUNITIES NUCLEAR FLEET PRODUCED A BEST-EVER 157 MILLION MEGAWATT HOURS, EQUIVALENT TO POWERING 14.7 MILLION AVERAGE AMERICAN HOMES FOR A YEAR 23,445 MW OF ZERO-EMISSIONS GENERATION NUCLEAR, WIND, SOLAR, HYDROELECTRIC, LANDFILL GAS 38 Exelon 2017 Summary Annual Report | Our Companies EXELON GENERATION Alligator gar can grow up to nine feet long and weigh over 300 pounds. A 300-Pound Fish Tale Up until the 1960s, Illinois waterways were home to an ancient species of “Over the years, we’ve developed a better understanding of the potentially fish known as alligator gar. The fish had long, broad bodies and alligator-like negative long-term effects of letting a fish like alligator gar become extinct,” snouts, earning them their name. The species could also grow up to nine said Haas. “We recognize the role the alligator gar plays in keeping our feet long and weigh over 300 pounds. Alligator gar were all but eradicated ecosystems balanced. Generation’s commitment to the environment from Illinois, as gaming laws required gar to be killed for fear they would extends beyond providing clean energy. We believe it’s important to protect compete with other game fish. However, a few years ago, the fish were our natural resources as well.” given another chance. Haas and his team raise the alligator gar until they’re large enough to be Since 2011, Exelon Generation has been helping reintroduce the species released. Then they take the fish to the Jack Wolf Fish Hatchery near Pekin, at the Quad Cities Station fish hatchery, the only privately-owned Ill., where IDNR biologists tag them with tracking transponders and release hatchery on the Mississippi River. Generation’s Quad Cities nuclear plant them into Illinois waterways. began operating its hatchery shortly after the plant was built, to assist in maintaining the balance of the waters around the plant. The transponders allow biologists to track the fish over time. The initial population is now eight years old, ranging in size from 50-60 inches and Generation’s Senior Environmental Chemist Jeremiah Haas and his team weighing in between 35 and 60 pounds. Today, alligator gar are considered have raised more than 3,500 alligator gar, which have now been stocked important members of large river ecosystems. in a half-dozen Illinois waterways as part of a project led by the Illinois Department of Natural Resources (IDNR). 39 Exelon 2017 Summary Annual Report | Our Companies ABOUT BUSINESS SERVICES COMPANY RAISED MORE THAN $890,000 IN THE 2017 EMPLOYEE GIVING CAMPAIGN 3,500 EMPLOYEES FROM DEPARTMENTS INCLUDING CORPORATE AFFAIRS, CORPORATE STRATEGY, CORPORATE DEVELOPMENT, FINANCE, GOVERNMENT AND REGULATORY AFFAIRS AND PUBLIC POLICY, HUMAN RESOURCES, INFORMATION TECHNOLOGY, LEGAL, REAL ESTATE, RISK, SECURITY, SUPPLY CHAIN AND TRANSPORTATION 40 Exelon 2017 Summary Annual Report | Our Companies BSC EMPLOYEES VOLUNTEERED ALMOST 20,000 HOURS WITH COMMUNITY ORGANIZATIONS IN 2017 BUSINESS SERVICES COMPANY Members of the Luminous and ExelonSharing teams celebrate their winning ideas. For Young Professionals at Exelon, the Future is Now As part of the company’s commitment to building an engaging and inclusive • A redesigned, single platform intranet to allow rapid transfer of information workplace, Exelon hosts several employee resource groups (ERGs) where • A multi-department summit to promote the pooling of ideas across functions employees with a shared background or area of interest can connect. One • A reference guide to provide a shared language and background on ongoing such ERG, Developing Young Professionals, provides early-career employees collaboration between different Exelon departments and stakeholders opportunities to sharpen their skills while learning about different areas of the company. At the end of the four-month long challenge, the teams presented their solutions to a panel of Exelon executives, including Bridget Reidy, Exelon’s In 2017, the group’s Chicagoland chapter launched the Business Case executive vice president of Corporate Operations, and Melissa Washington, Challenge, posing the question: “How can we better collaborate up, ComEd’s vice president of External Affairs and Large Customer Services and down and across the organization to achieve success and progress as the executive sponsor of Developing Young Professionals. a company?” Four teams made up of 30 young professionals from 23 departments across Exelon, including Human Resources, Finance, IT and Corporate Communications, along with engineers, business analysts and customer service representatives from ComEd, accepted the challenge. Their proposals: • ExelonSharing, a platform to help the company scale collaboration to reduce waste and expenses by sharing resources such as cars and food orders. Team ExelonSharing and Team Luminous, who conceived the new intranet, both emerged as winners. “The Business Case Challenge provided us a great opportunity to leverage technologies to help solve challenging problems,” said Megan Zhao, senior compensation specialist and member of Team Luminous. “What impressed me even more is the commitment our senior leaders have to fostering an innovative culture at Exelon.” 41 Exelon 2017 Summary Annual Report | Our Companies 2017 EXECUTIVE COMMITTEE CHRISTOPHER M. CRANE President and Chief Executive Officer, Exelon Corporation CRAIG L. ADAMS* Executive Vice President, Exelon; President and CEO, PECO PAYMON ALIABADI Executive Vice President and Chief Enterprise Risk Officer AMY E. BEST Senior Vice President and Chief Human Resources Officer, Exelon Corporation CALVIN G. BUTLER, JR. Chief Executive Officer, Baltimore Gas and Electric JOSEPH DOMINGUEZ Executive Vice President, Governmental and Regulatory Affairs and Public Policy, Exelon Corporation DANIEL L. EGGERS Senior Vice President, Investor Relations, Exelon Corporation MAGGIE FITZPATRICK Senior Vice President, Corporate Affairs, Philanthropy and Customer Engagement, Exelon Corporation MIKE KOEHLER Senior Vice President and Chief Information and Chief Digital Officer, Exelon Corporation KENNETH W. CORNEW Senior Executive Vice President and Chief Commercial Officer, Exelon Corporation; President and CEO, Exelon Generation * Retired March 2018 42 Exelon 2017 Summary Annual Report | Our Leadership 2017 EXECUTIVE COMMITTEE JOSEPH NIGRO Executive Vice President, Exelon; CEO, Constellation DENIS P. O’BRIEN Senior Executive Vice President, Exelon Corporation; Chief Executive Officer, Exelon Utilities THOMAS S. O’NEILL Senior Vice President and General Counsel, Exelon Corporation MICHAEL J. PACILIO Executive Vice President and Chief Operating Officer, Exelon Generation ANNE R. PRAMAGGIORE President and Chief Executive Officer, ComEd M. BRIDGET REIDY Executive Vice President, Corporate Operations, Exelon Corporation KEN ROBINSON Senior Vice President, Audit and Controls, Exelon Corporation JONATHAN W. THAYER Senior Executive Vice President and Chief Financial Officer, Exelon Corporation DAVID M. VELAZQUEZ President and CEO, Pepco Holdings WILLIAM A. VON HOENE, JR. Senior Executive Vice President and Chief Strategy Officer, Exelon Corporation 43 Exelon 2017 Summary Annual Report | Our Leadership 2017 BOARD OF DIRECTORS ANTHONY K. ANDERSON Independent Director YVES C. DE BALMANN Independent Director ANN C. BERZIN Independent Director CHRISTOPHER M. CRANE President and Chief Executive Officer, Exelon Corporation NICHOLAS DEBENEDICTIS Independent Director NANCY L. GIOIA Independent Director LINDA JOJO Independent Director PAUL L. JOSKOW, PH.D. Independent Director ROBERT J. LAWLESS Lead Director, Independent Director ADMIRAL RICHARD W. MIES Independent Director JOHN W. ROGERS, JR. Independent Director MAYO A. SHATTUCK III Chairman STEPHEN D. STEINOUR Independent Director 44 Exelon 2017 Summary Annual Report | Our Leadership CORPORATE PROFILE Exelon Corporation (NYSE: EXC) is a Fortune 100 energy company with the largest number of utility customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2017 revenue of $33.5 billion. Exelon’s six utilities deliver electricity and natural gas to approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 35,100 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation’s cleanest and lowest- cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. Follow Exelon on Twitter @Exelon. Shareholder Inquiries Exelon Corporation has appointed EQ Shareowner Services as its transfer agent, stock registrar, dividend disbursing agent and dividend reinvestment agent. Should you have questions concerning your registered shareholder account or the payment or reinvestment of your dividends, or if you wish to make a stock transaction or stock transfer, you may call shareowner services at EQ Shareowner Services at the toll-free number shown to the left or access its website at www.shareowneronline.com. Morgan Stanley administers the Employee Stock Purchase Plan (ESPP), employee stock options and other employee equity awards. Should you have any questions concerning your employee plan shares or wish to make a transaction, you may call the toll-free numbers shown to the left or access its website at www.stockplanconnect.com. The company had approximately 105,000 holders of record of its common stock as of Dec. 31, 2017. The 2017 Form 10-K Annual Report to the Securities and Exchange Commission was filed on Feb. 9, 2018. To obtain a copy without charge, write to Carter Culver, Senior Vice President, Deputy General Counsel, Exelon Corporation, Post Office Box 805379, Chicago, Illinois 60680-5379. Corporate Headquarters Exelon Corporation P.O. Box 805379 Chicago, IL 60680-5379 Transfer Agent EQ Shareowner Services 800.626.8729 Employee Stock Purchase Plan 877.582.5113 Employee Stock Options 888.609.3534 Investor Relations Voice Mailbox 312.394.2345 Shareholder Services Voice Mailbox 312.394.8811 Independent Public Accountants PricewaterhouseCoopers LLP Website www.exeloncorp.com Twitter @Exelon Stock Ticker EXC 45 Exelon 2017 Summary Annual Report | Corporate Profile Cautionary Statements Regarding GAAP to Non-GAAP reconciliation: Forward-Looking Information This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC (PHI), Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2017 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 23, Commitments and Contingencies; and (2) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this report. Twelve Months Ended December 31, 2016 2016 GAAP Earnings (Loss) Per Share Mark-to-market impact of economic hedging activities Unrealized gains related to NDT fund investments Amortization of commodity contract intangibles Merger and integration costs Long-lived asset impairments Asset retirement obligation Reassessment of state deferred income taxes Merger commitments Plant retirements and divestitures Cost management program Like-kind exchange tax position Curtailment of Generation growth and development activities Noncontrolling interests 2016 Adjusted (non-GAAP) Operating Earnings (Loss) Per Share Twelve Months Ended December 31, 2017 2017 GAAP Earnings (Loss) Per Share Mark-to-market impact of economic hedging activities Unrealized gains related to NDT fund investments Amortization of commodity contract intangibles Merger and integration costs Merger commitments Long-lived asset impairments Plant retirements and divestitures Reassessment of state deferred income taxes Cost management program Like-kind exchange tax position Tax settlements Bargain purchase gain Gain on deconsolidation of business Vacation policy change NOTE: All amounts shown are per Exelon share and represent contributions to Exelon’s earnings per share. Amounts may not add due to rounding. Change in Environmental Remediation Liabilities Noncontrolling interests 2017 Adjusted (non-GAAP) Operating Earnings (Loss) Per Share 46 Exelon 2017 Summary Annual Report | Cautionary Statements Exelon $1.22 0.03 (0.13) 0.04 0.12 0.11 (0.08) 0.01 0.47 0.47 0.04 0.21 0.06 0.11 $2.68 Exelon $3.97 0.11 (0.34) 0.04 0.04 (0.14) 0.34 0.22 (1.37) 0.04 (0.03) (0.01) (0.25) (0.14) (0.03) 0.03 0.12 $2.60 Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 exeloncorp.com © Exelon Corporation, 2018 Exelon 2017 Summary Annual Report 

Continue reading text version or see original annual report in PDF format above