We were especially pleased that the last two installments in our multi-part analysis on Exelon Corporation (EXC) have been recognized for the high level of quality and unique analysis and research we have performed as part of our iconoclastic thesis on Exelon. Exelon’s largest subsidiary is its Exelon Generation Company LLC wholesale power generation operations, and its fortunes are directly tied to natural gas prices. Natural gas prices dropped from an unsustainably high price of $10.79/MCF in July 2008 to $1.89/MCF in April 2012, before rebounding to ~$2.80 in early September 2012. On September 9th, John Dunham & Associates released a study that concluded that the Obama Administration’s new draconian regulations on hydraulic fracturing would cost more than 20 times what the Administration estimated. Because hydro-fracking has resulted in the price of natural gas declining since 2008, we can see that Exelon is counting on the new regulations to boost the price of natural gas. This will help Exelon increase the price it receives for electric power generated on the wholesale market and enable it to offset a $275M loss it realized on the sale of its three Maryland coal-fired power plants.

In this installment of our report, we will be touching upon the four following recent events for Exelon:

  • Exelon’s Recent Strategic Asset Management Activities
  • D.C. Circuit Court of Appeals Vacating EPA’s Cross-State Air Pollution Rule
  • Highlights from the Barclays 2012 CEO Energy/Power Conference
  • Potential positive tailwinds for Natural Gas Prices, which will boost Exelon’s bottom line.

Exelon’s Recent Strategic Asset Management Activities

Legacy Constellation’s Maryland Coal-Fired Plants: Exelon has been able to stay in the news with regards to strategic and operational asset management activities. On August 9th, it reached an agreement to sell its three Maryland coal-fired power plants to Raven Power Holdings LLC. Raven is a newly formed company owned by Riverstone Holdings LLC, an energy and power-focused private equity firm founded in 2000 with approximately $22 billion of equity capital. Exelon assumed ownership of these plants when it acquired Constellation Energy (CEG) in March.

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