Exelon Corporation (EXC) Earnings

Management highlights

- Grid Reliability and Resilience Performance • All Exelon utilities project top quartile reliability, with ComEd and PHI projected in the top decile. ComEd restored 90% of 530,000 customers affected by 2026 severe storms within 48 hours, after 16 major weather events (the most in over two decades). Since 2021, annual customer interruptions have declined by nearly 2 million, and top quartile reliability avoided an estimated $1 billion in customer outage costs in 2025 alone. • Every $1 million in Exelon investment creates an average of 8 jobs and $1.7 million in economic output for local communities. - Regulatory Activity • Open base rate cases are progressing: PEPCO Maryland (final order expected August 2026), BGE Maryland (filed July 2026 seeking a $156.1 million revenue increase, final order expected January 2027), DPL Delaware (seeking a $45.4 million revenue increase, final order expected Q3 2027, interim rates implemented July 2026), and ComEd Illinois (proposes $15.3 billion in grid investment 2028-2031, order expected December 2026). BGE delayed its filing and deferred non-critical projects to balance customer affordability with required grid investments. - Resource Adequacy and Strategic Solutions • Exelon identifies growing systemic strain in the PJM market: 2026 Q2 July record peak demand of 168 GW, with power prices surging tenfold to $800/MWh. The most recent PJM capacity auction cleared at the FERC price cap for the third consecutive auction, with a 6.8 GW reliability shortfall (larger than the prior 6.5 GW shortfall) and only 525 MW of new generation cleared, indicating the market is not attracting enough new supply even at capped prices. Exelon supports an all-of-the-above approach to address supply scarcity. 1. Transmission Expansion: Exelon continues to pursue competitive transmission opportunities across footprints, most recently submitting two additional MISO Tranche 2.1 bids in partnership with Invenergy, leveraging its scale and high-voltage transmission expertise. 2. Utility-Scale Battery Storage: Exelon is advancing a 500 MW battery storage project (the largest in PJM) at Atlantic City Electric in New Jersey, representing ~$1 billion in investment, projected to deliver over $700 million in net customer benefits with no bill impact until at least 2035. Additional storage projects are under review in Maryland. Storage can deploy in ~3 years (much faster than traditional generation) and captures unused renewable energy for peak demand periods. 3. Virtual Power Plants (VPPs) and Energy Efficiency: Approved VPP programs across multiple jurisdictions aggregate customer-side resources to reduce peak demand, support grid reliability, and provide customer compensation, aligning with state distributed energy policy goals. - Financial and Balance Sheet Discipline • 86% of 2026 debt financing needs have been completed, reducing exposure to 2026 interest rate volatility. 37% of planned equity needs through 2029 have already been priced via the ATM forward program, including all 2026 needs and half of 2027 needs. Expected average credit metrics of ~14% will be maintained through 2029, supporting investment grade credit and strategic flexibility.

Guidance

- Second quarter 2026 adjusted operating earnings came in at 43 cents per share, in line with consensus analyst expectations, up 4 cents year over year. - Full year 2026 adjusted operating earnings guidance of $2.81 to $2.91 per share is reaffirmed, with management targeting a result at or above the midpoint of the range. - Third quarter 2026 earnings are expected to represent approximately 27% of the full-year guidance midpoint, accounting for the PECO employee strike in early July 2026, normal weather and storm activity for the remainder of the quarter, and standard quarterly revenue and cost timing. - Annualized earnings growth of 5% to 7% (targeting the top end of the range) from 2025 through 2029 is reaffirmed, supported by 7.9% annualized rate-based growth, disciplined cost management, and a balanced financing plan. - Exelon's total $41 billion capital expenditure plan from 2026 through 2029 remains unchanged after updating the data center interconnection pipeline.

Segment performance

The transcript does not provide separate financial performance data and revenue contribution percentages for Exelon's individual operating product segments. The consolidated adjusted operating earnings for the second quarter of 2026 was 43 cents per share, up from 39 cents per share in the year-ago second quarter. Consolidated full-year 2026 adjusted operating earnings are targeted in a range of $2.81 to $2.91 per share. Total planned capital expenditure from 2026 through 2029 is $41 billion, with approximately $10 billion of capital planned for deployment in 2026.

Risks & headwinds

- Growing systemic resource adequacy scarcity in the PJM market, where demand is growing faster than new supply, resulting in extreme price volatility during peak demand periods and persistent reliability shortfalls in capacity auctions. This strain increases the risk of customer costs and reliability events without timely policy and infrastructure action. - Regulatory risk associated with pending rate cases across multiple jurisdictions, where regulatory outcomes may impact the ability to recover prudent grid investment costs. - Interest rate volatility: while 86% of 2026 debt financing is complete, uncompleted financing remains exposed to interest rate movements. - Dependence on regulatory approval for new major projects, such as the 500 MW New Jersey battery storage project, with final decisions not expected until 2027. - Extreme weather events are increasing in frequency and severity, raising storm restoration costs and outage risk if grid resilience investments are not deployed in a timely manner.

Analyst Q&A

• Q: PJM revised its EDC resource adequacy proposal; does the final version address key issues, and will Exelon intervene further with FERC? Also, why was the data center pipeline reduced by 11 GW?

  A: PJM's changes are helpful near-term steps for reliability, but are unlikely to resolve long-term affordability challenges. Exelon will continue to push for consumer protections and advocate that states should play a central role in resource planning, with utility-owned generation as a complement to market solutions. The 11 GW reduction reflects removing speculative projects that did not complete the required Transmission Security Agreement (TSA) process; 4 GW of the reduced volume has signed TSAs backed by $1 billion in collateral, and the 2026-2029 $41 billion capital plan remains unchanged as it never included speculative projects.

• Q: After withdrawing the PECO rate case, what is the outlook for refiling, and what inflection points is management waiting for?

  A: Exelon has had constructive ongoing discussions with the Pennsylvania governor's office, PUC, and key stakeholders, and sees positive indicators of a solid ongoing regulatory framework. Management is aligning the refiling with stakeholder priorities focused on customer value, transparent ROE, and affordability, and expects to refile once these concerns are addressed in a productive framework. PECO will prioritize investments in safety, reliability, and economic development aligned with stakeholder needs.

• Q: Does the very high simulated unconstrained PJM auction price for ComEd serve as a catalyst for more transmission and storage investment in Illinois?

  A: The high price confirms Exelon's long-held view that an all-of-the-above approach is needed to address scarcity, so yes, it supports more investment in both transmission (to move power where it is needed) and storage (to reduce peak pricing for customers). This opportunity is already reflected in Exelon's previously identified $12-17 billion long-term growth upside. Illinois is also moving forward with its own integrated resource planning process and a 3 GW storage procurement this year, creating additional avenues for investment.

• Q: What is the goal of Illinois' upcoming integrated resource planning (IRP) process amid PJM market scarcity?

  A: The core goal of the IRP is to give the state a clear, comprehensive picture of its specific demand and supply balance, so policymakers can prioritize and expand targeted programs (energy efficiency, storage, distributed generation) aligned with state emissions and reliability goals. This aligns with a broader trend of states taking more direct control of their resource adequacy amid ongoing PJM market challenges, which Exelon supports as a responsible approach to protecting customers.