Illinois and Pennsylvania are primed for data center and “high-density” load growth, Calvin Butler, Exelon president and CEO, said on a quarterly earnings conference call Thursday.
“We continue to see significant activity around high-density load growth,” Butler said. “We have a high probability of load growth, not only in Illinois, but Pennsylvania.”
PECO Energy, an Exelon utility serving southeast Pennsylvania, has had inquiries from data centers and other businesses, according to David Velazquez, PECO president and CEO. “We have the infrastructure to be able to support that, both on the generation side and also we have the transmission infrastructure,” he said during the call.
Besides data centers, PECO customers are electrifying their systems, according to Exelon Executive Vice President and COO Michael Innocenzo. “We're seeing development around the South Philadelphia area,” he said. “Lots of opportunities for growth and all sorts of electrification.”
Meanwhile, Exelon is focused on several pending rate cases, Butler said. PECO is seeking a $464 million rate hike, with a 10.95% return on equity. The Pennsylvania Public Service Commission is expected to make a decision on the request late this year, according to Exelon.
In Illinois, Exelon’s Commonwealth Edison subsidiary in March refiled a grid plan after the Illinois Commerce Commission rejected its initial proposal in December. ComEd is seeking a $670 million rate increase over four years for its grid plan. The revised plan is 30% less costly than ComEd’s first proposal, and 40% of its benefits will go to disadvantaged communities, according to Jeanne Jones, executive vice president and chief financial officer at Exelon.
ComEd is also seeking a one-time $627 million distribution formula rate hike, with a decision expected in December, Jones said.
Meanwhile, a Federal Energy Regulatory Commission audit found that ComEd misallocated certain construction costs and the utility may be required to issue refunds to some customers, Exelon said in its latest 10-Q report filed Thursday with the U.S. Securities and Exchange Commission.
ComEd determined that a loss was probable and recorded its regulatory liability to reflect its best estimate of that loss, pegged at $27 million — up from a previous $11 million estimate — but a resolution of the issue could result in higher losses that could affect Exelon and ComEd financial statements, the Chicago-based utility company said.
Exelon’s first-quarter update marks an “intermediary period” between its fourth quarter strategic update and upcoming traction on key regulatory initiatives, such as its Illinois grid plan and PECO rate case, Shahriar Pourreza, a Guggenheim Partners equity analyst, said in a client note Thursday.
Looking ahead to potential catalysts for Exelon in the second half of this year, Pourreza said the utility company has yet to fully lean into the dialogue on data centers to the same degree as some utility companies such as PPL, which has signed interconnection deals with data centers with more than 3 GW of load. Also, Guggenheim expects “fairly firm clarity” on pending rate cases by late in the third quarter, including a proposed order by an ICC administrative law judge on ComEd’s grid plan and intervenor testimony in the PECO rate case.
On the financial front, Exelon’s first-quarter income dipped to $658 million, or 66 cents/share, down from $669 million, or 67 cents/share a year ago, partly due to storm-related costs. Revenue jumped to $6 billion in the first quarter from $5.6 billion in the same period last year.
