Exelon has no acquisitions in the works but keeps its eyes open

After merging with Constellation Energy in 2012, Exelon (NYSE:EXC) has “nothing on the table now” in terms of imminent acquisitions although it continues to look at opportunities.

This was the message that Exelon Senior Vice President William Von Hoene shared with the Barclays 2013 CEO Energy-Power Conference Sept. 11 in New York. There has been a lot of industry “noise” in recent weeks about potential Exelon moves, Van Hoene said.

This was the issue many financial analysts questioned the Exelon official about at the conclusion of his formal remarks. The event was webcast.

“There is no particular timetable. We don’t have a calendar for it,” Van Hoene said in reference to acquisitions. But the Constellation merger has been effectively completed, said the Exelon manager.

That’s not counting a recently announced with France-based EDF Group to integrate the Constellation Energy Nuclear Group (CENG) into the Exelon fleet. CENG is a joint venture between EDF and Exelon. The recently announced integration also gives Exelon the option to buy out EDF’s interest in the nuclear units in Maryland and New York.

An advocate of “clean energy” Exelon would not necessarily rule out the purchase of scrubbed coal capacity if the situation was right, Van Hoene said in answer to a question. The analyst who posed the question noted that Exelon had once tried to buy NRG Energy (NYSE:NRG).

There are also some regions, such as PJM, where a purchase by Exelon could pose “market power” questions by regulators, Van Hoene said. The Exelon official noted once again that Exelon has nothing imminent on the horizon.

Exelon and its subsidiaries now operate in 47 states and parts of Canada. It has roughly 35 GW of capacity. More than half of that capacity, 19 GW, is comprised of the nuclear fleet.

Exelon opposes ‘subsidized’ generation in tough market

“It’s no secret this has been a challenging time for Exelon,” Van Hoene said.  Exelon President and CEO Chris Crane has said it’s a period where the company has had to “hunker down.”

At the Barclays conference, Van Hoene said the numbers haven’t been kind to Exelon and other generators lately. Shale gas production has increased to 24% of gas market. Natural gas prices have fallen 54% since 2008. Power prices have fallen 44% since 2008, Van Hoene said.

To make it through, Exelon is investing in its utilities. For a long time the merchant business had dominated the company financially.

What Exelon does best is “run fleets,” Van Hoene said. He said Exelon nuclear units have run at a 95% capacity factor during the first six months of 2013.

At the same time, Exelon is also advocating policies that support competitive markets, he said. This includes fighting what Exelon considers “subsidized” generation. The examples include:

** Public opposition to continuation of the production tax credit (PTC) for wind –a position that got Exelon kicked out of the American Wind Energy Association (AWEA). Exelon has said the wind market is maturing and could survive without such incentives.

** Successful opposition to subsidy legislation for the for the Tenaska Taylorville project in Illinois, and;

** Opposition to “subsidy legislation” for the Footprint Power gas-fueled project in Massachusetts.

Turning to other market issues, Exelon expects additional 20 GW of coal to retire in PJM in next 18 months and it does not believe that forward power prices have accurately reflected this, Van Hoene said.

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.