Exelon CEO Chris Crane on Tuesday apologized for subsidiary Commonwealth Edison’s involvement in a bribery scandal and said he may be forced to shut down the company’s Illinois nuclear plants without favorable state legislation.
In July, ComEd agreed to a $200 million fine with the Illinois U.S attorney’s office to settle allegations it bribed the state House of Representatives’ speaker in return for legislation that increased the company’s earnings and bailed out its money-losing nuclear plants. Under the Deferred Prosecution Agreement, the bribery charge will be deferred for three years and then dismissed, as long as ComEd continues to cooperate with “ongoing investigations of individuals or other entities.” (See ComEd to Pay $200 Million in Bribery Scheme.)
“We’ve taken robust actions to identify and address deficiencies, including enhancing our compliance governance, to prevent this conduct,” Crane said during a conference call with financial analysts. “We apologize for the past conduct, which did not live up to our values. These new policies will ensure it won’t happen again.
“We’re extremely disappointed with the seriousness of the past misconduct,” he said, listlessly reading his prepared comments. “We know many stakeholders understandably feel the same disappointment. We will take every possible step to earn back the confidence and trust we have lost. This will not happen overnight, and it will be a formidable task, but we’re resolved to get there.”
Crane said Chicago-based Exelon must restore the trust that “has been eroded” while, at the same time, working through legislative strategy in Illinois to help its nuclear plants earn capacity market revenue.
“It’s very critical for us to get it done,” he said, noting his “analytic folks” have a “strong sense” that Exelon’s nuclear units will not clear the next PJM Base Residual Auction.
“Some are uneconomic at this point right now, and some may become more uneconomic,” Crane said. “If we can’t find a path to profitability, we’re going to have to shut them down. We will not run plants and lose free cash flow or earnings on assets that are not supporting themselves. … We will not let the balance sheet [be] further [deteriorated] by non-profitable assets.”
Exelon has lost 14.7% of its stock value since the year began.
The company reported a “strong quarter” with earnings of $521 million ($0.53/share). A year ago, the company had earnings of $484 million ($0.50/share).
Exelon’s operating earnings of $0.55/share beat analysts’ expectations of $0.42/share, as gathered by Zacks Investment Research. The stock price gained 76 cents on the NASDAQ, closing at $38.75.
