Exelon reported earnings of 39 cents/share for the second quarter as it deals with a large pipeline of new data centers and rising wholesale prices that are costing its customers across its six utilities, all in PJM.
“We have remained very active across a variety of federal and state proceedings to solve an ever-evolving set of opportunities to better serve our customers and advance our state’s energy and economic goals,” CEO Calvin Butler said on an earnings call held July 31.
The Illinois legislature examined a broad omnibus energy bill this session that would have affected transmission, energy storage, efficiency and resource planning efforts but ultimately did not pass it.
“The process offered us and other stakeholders the opportunity to discuss critical issues, and we remain optimistic that Illinois will continue to lead the nation in advancing progressive, constructive legislation that enables effective partnership across private and public entities,” Butler said.
Other states like Pennsylvania and New Jersey are looking into ways to expand their power generation supplies as PJM’s market is increasingly tight, which could allow Exelon and other utilities to own generation. Butler indicated Exelon was interested in utility-owned generation in an earlier earnings call, but he offered more details this time. (See Utilities Pushing for Return to Owning Generation in Pennsylvania.)
Through the recently enacted Next Generation Energy Act, Maryland is seeking over 3,000 MW in new supply through a competitive process beginning in October. COO Michael Innocenzo told analysts if that falls short, it could present an opportunity for utility-owned generation.
“It’s clearer now than ever that states should be thinking broadly about how to secure the energy futures for our citizens,” Butler said. “Exclusive reliance on PJM enabled low and relatively steady supply costs for its customers in a period of low demand growth, and when states weren’t yet facing significant turnover in their generation-supply driven by economics, policy and technology.
“But the volatility and unpredictability we are seeing in supply costs, along with a steady increase in warnings from institutions like NERC and [the U.S. Department of Energy] is undermining the faith in the status quo. Despite higher prices, we are not seeing the market respond fast enough. We saw some new generation entry, but demand growth was double that amount.”
Demand response is one of the quickest to market supply options, but despite the tightening supply-demand balance in PJM, the number of megawatts bid into the market fell this past auction, Butler said.
“Bigger, longer-term fixes are available with legislative action, and we stand ready to be part of that solution,” Butler said. “We look forward to continuing the dialogue with our states to be a part of the solutions to ensure energy is delivered reliably and cost-effectively, in a manner that best suits their goals. Time remains of the essence in adding supply to the grid.”
Exelon has 17 GW of large loads in its pipeline looking to connect to the grid (with deposits already paid), and an additional 16 GW are in advanced planning stages but not quite as far. Its Commonwealth Edison subsidiary in Chicago is holding another cluster study window in August, in which several gigawatts of additional projects have shown interest.
Exelon used to be a major player in the power markets with the country’s largest nuclear fleet and a large retail business, but all of that was spun off into Constellation Energy in 2022. If Exelon and other utilities are successful in directly owning generation, Butler said the market would still have a role to play.
“We will continue to partner with PJM, but we do see it as an ‘and’: The competitive markets and regulated generation being part of the solution,” he said.
