Exelon cites progress in Constellation merger, new wind project

An Exelon (NYSE: EXC) subsidiary brought a new 90-MW wind project into commercial operation at the end of the fourth quarter while overall Exelon continues to clear hurdles toward approval of its merger with Constellation Energy (NYSE: CEG).

Those were among the highlights from Exelon’s 4Q11 earnings call held Jan. 25.

Exelon’s adjusted (non-GAAP) operating earnings declined to 82 cents per share in the fourth quarter of 2011 from 96 cents per share in the fourth quarter of 2010.

Company CEO John Rowe lamented weak power prices, which he said are being held down by the mild winter, cheap natural gas and the market’s reaction to a federal appeals court putting the U.S. EPA’s Cross-State air pollution rule on hold in December.

Exelon and Constellation continue to move ahead with the regulatory reviews needed to complete their proposed merger, Rowe said. On Dec. 21, 2011, the U.S. Department of Justice (DOJ) cleared the way for the merger in connection with its review of the transaction under the Hart-Scott-Rodino Act. The DOJ’s Antitrust Division filed court papers seeking approval by the U.S. District Court for the District of Columbia with regard to the merger.

The merger has been approved by the New York Public Service Commission, the Public Utility Commission of Texas and shareholders of Exelon and Constellation.

The merger also requires regulatory approvals by the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC) and the Maryland Public Service Commission (PSC). Rowe said a settlement has been reached with several major stakeholders in Maryland and approval from the Maryland PSC should come in February. Rowe still expects the Constellation deal to be completed during the fourth quarter of this year.

During the call, Rowe praised the performance of the company’s nuclear operations for having a fleet with at least a 90% capacity factor for several years.

Exelon-operated nuclear plants completed five scheduled refueling outages in the fourth quarter of 2011, compared with completing four scheduled refueling outages in the fourth quarter of 2010.

Rowe also detailed the company’s activities in developing wind energy.

Exelon Wind’s Michigan Wind 2 Project, located in Minden City, Mich., was completed on Dec. 30, 2011. The 50-turbine, 90-MW wind project is the first commercial wind facility developed by Exelon Wind. Consumers Energy, based in Jackson, Mich., is purchasing the output from the project through a 20-year renewable energy purchase agreement. The completion of Michigan Wind 2 brings Exelon Wind’s total generation in Michigan to 212 MW. In early 2012, Exelon Wind will begin construction on Harvest II Wind, a 59-MW project also located in Michigan.

In another wind development, an Exelon affiliate has purchased a major interest in a Kansas wind project. In December, Exelon Wind and Infinity Wind Holdings, LLC entered into a purchase agreement by which Exelon Wind bought all of the membership interests in Shooting Star Wind Project, LLC, a 104-MW wind power generation project in Kiowa County, Kan. The acquisition includes a 20-year power purchase agreement with Mid-Kansas Electric Company for 100% of the project’s output. Construction of Shooting Star began in November 2011, and the project is expected to begin full commercial operation in the fourth quarter of 2012.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.