Exelon Corporation announced yesterday that it intends to spin off Exelon Generation, its competitive power generation and customer-facing energy businesses, from Exelon Utilities, its group of six regulated electric and gas utilities.
The split into two publicly traded companies will “establish the nation’s largest fully regulated transmission and distribution utility company and the largest carbon-free power producer paired with the leading customer-facing platform for clean, sustainable energy solutions,” Exelon said in its February 24 announcement.
The majority of Exelon Generation’s clean power production comes from its nuclear reactor fleet, the country’s largest, with a total of 21 units in four states—Illinois, Maryland, New York, and Pennsylvania. In 2020, the fleet produced some 150 million megawatt hours of zero-emission electricity, enough to power 13.6 million homes and to avoid more than 106 million metric tons of carbon emissions, according to the announcement. Exelon Generation’s other assets include wind, solar, natural gas, and hydroelectric facilities.
The official word: “Our industry is changing at a rapid pace, and our customers expect us to continuously innovate to stay ahead of the growing demand for clean energy, evolving business conditions, and changing technology,” said Christopher Crane, Exelon’s president and chief executive officer. “Now is the right time to take this step to best serve our customers, employees, community partners, and shareholders. These are two strong, distinct businesses that will benefit from the strategic flexibility to focus on their unique customer, market, and community priorities.”
The plan: Exelon said that it hopes to complete the separation in the first quarter of 2022, after receiving the necessary regulatory approval from the Federal Energy Regulatory Commission, the New York Public Service Commission, and the Nuclear Regulatory Commission. The company’s shareholders, whose approval is not required, will retain their current shares of Exelon stock and receive a pro rata dividend of shares of the new company’s stock. Also, until the transaction is completed, Exelon will continue to be led by Crane and his current management team.
The big question: In a largely positive fourth-quarter 2020 earnings call with analysts following the announcement, Joe Nigro, Exelon’s chief financial officer, noted that the future of the new power generation company could be impacted by “uncertainties,” including “legislation in Illinois.” The reference was to Exelon’s August 2020 decision to close two of its six Illinois nuclear plants, Byron and Dresden, later this year unless state lawmakers can produce legislation to address market policies that fail to compensate nuclear for its carbon-free energy.
While legislation toward that end has yet to be introduced, state Sen. Sue Rezin (R., 38th Dist.) confirmed to Newswire yesterday that legislation is in the works, adding, “I do not see the split of the company affecting what we’ve been working on for the last year in any way.”