Good morning, everyone and thank you for joining for our Fourth Quarter 2014 Earnings Conference Call. Leading the call today are Chris Crane, Exelon’s President and Chief Executive Officer; Jack Thayer, Exelon’s Chief Financial Officer; Joe Nigro, CEO of Constellation; and Bill Von Hoene, Exelon’s Chief Strategy Officer. They are joined by other members of Exelon’s senior management team who will be available to answer your questions following our prepared remarks. We issued our earning release this morning along with a presentation, each of which can be found in the Investor Relations section of Exelon’s website. The earnings release and other matters that we discuss during today’s call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could defer from our forward-looking statements based on factors and assumptions discussed in today’s material and comments made during this call and in the Risk Factors section of the earnings release and the 10-K, which we expect to file later today. Please refer to today’s 8-K and the 10-K and Exelon’s other fillings for a discussion of factors that may cause the results to differ from management’s projections, forecasts, and expectations. Today’s presentation also includes references to adjusted opening earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for a reconciliation between the non-GAAP measures to the nearest equivalent GAAP measures. We have scheduled 60 minutes for today’s call. I will now turn the call over to Chris Crane, Exelon’s CEO.

Good morning and thanks for everybody joining. We had another strong year of operations in 2014, which we are very pleased with given the challenging weather conditions at the start of the year. At the utilities, each OpCo achieved top decile performance for safety and top quartile performance for outage frequency and duration. The nuclear fleet ended the year at 94.2% capacity factor, which this marks our 15th year in a row being over 92%. Gas and hydro power dispatch match was at 97% and our renewable energy capture was at 95%. On the financial side, we delivered $2.39 a share in line with our recent year full year guidance. Exelon Generation delivered a strong year for performance in what was a volatile year and our generation to load matching strategy drove strong results during an unexpected mild summer. The utilities performed well in light of severe storms and continuing challenging interest rate environment. 2014 was an active year for us. In addition to selling several assets, we continue the process of recycling capital and strengthening our balance sheet. I will highlight some of our major investments for the year. We grew across the enterprise. From the utility growth perspective, we announced the PHI merger and continued on with our infrastructure upgrade plant spending $3.1 billion of utility investment. On the merchant side, we announced the state-of-the-art CCGT newbuild in ERCOT and we added 215 megawatts in nuclear, wind and solar capacity during the year. At Constellation on the retail side, we completed the acquisition of Integrys retail and ProLiance. We also made investments in adjacent markets in emerging technology to continue to prepare for an evolving marketplace. Bloom Energy and our micro grid investments are good examples of that. We also have a number of major regulatory developments in…

Thank you, Chris and good morning everyone. We provided information on our fourth quarter financial results in the appendix of today’s materials on Slides 17 and 18. I will spend my time this morning on 2015 earnings guidance and our O&M forecast. Turning to Slide 3, we expect to deliver adjusted operating earnings in the $2.25 to $2.55 range, which is the same as our 2014 guidance and earnings of $0.60 to $0.70 per share for the first quarter. Our guidance does not include the earnings from the Pepco Holdings acquisition, but does reflect all asset divestitures to-date. As you know we sold several assets last year, the proceeds of which are being used to partially finance the PHI acquisition and to recycle capital on the merchant side of our business. The lost contributions from these divestitures results in an earnings impact of $0.12 per share relative to last year. In future years there is minimal earnings impact, in particular as capacity revenue from Keystone and Conemaugh runs off. The modest lost earnings from the divested plants will be meaningfully offset by the accretion from our Pepco merger and earnings from other growth projects. For 2015, the earnings impact from these divestitures of $0.12, combined with an additional refueling outage at nuclear of $0.02 and the increased pension and OPEB cost at ExGen of $0.02 are modestly offset by higher capacity prices of $0.07. The full year benefit of the elimination of the DOE fee at Exelon Nuclear of $0.04 and by higher earnings at ComEd of $0.03. As you know at EEI we gave earnings projections for Exelon for three utilities through 2017. Since that time, we have adjusted the midpoints of that guidance down by a total of $0.05 per share due to the impacts of treasury yields…

Thanks, Jack and good morning. The Constellation business continues to perform at high levels. We finished 2014 strong and are seeing solid results so far in 2015 as a result of our generation of load matching strategy and our ability [Technical Difficulty] to market. My comments today will address market events during the fourth quarter and what they mean for our commercial business going forward, including our hedging strategy, the New England ISO capacity market results and our updated hedge disclosures. During the fourth quarter, we experienced a decline in prices across the energy complex as oil and natural gas both realized steep losses in the spot market. Power prices followed gas lower in the second half of the quarter as expectations of extreme weather subsided. The primary driver weighing on prices was the contraction of winter premiums as the markets focus moved away from last year’s Polar Vortex and on to higher natural gas production storage estimates. NI Hub and West Hub around-the-clock prices were down $1.50 to $3 for calendar years 2016 and ‘17 from the end of the third quarter to the end of the fourth quarter. In response, we have positioned the portfolio to better align with our fundamental view that we expect to see seasonal power price subside, primarily at NI Hub and began to build a long position into the forward years. This is similar to how we positioned the portfolio the last few years when our fundamental view showed power market upside. When the market is volatile, our generation of load strategy allows us to optimize the portfolio to lock-in additional value. During the year, we aggressively pursued load-following sales when we observed appropriate risk premiums and increasing margins. We are very highly hedged in 2015 and not impacted from the large downturn…

Thanks very much Joe and good morning everyone. As Chris referenced in his opening statements, there are a number of developments playing out on the policy front that affect our customers are our businesses. These issues are not necessarily earnings impactful in 2015, but they may have a material impact on the company beyond this year. And so we are going to spend a few minutes this morning sharing with you our perspectives on the issues. I will start with three issues affecting the generation business in policy space. First on the capacity market reform front that Kris referenced, we have been involved in PJM’s stakeholder process to develop a proposal that will harden the power supply system to help it withstand extreme weather events and ensure reliability for customers. We believe the proposal that now sits before FERC is constructive and if approved will address the gaps in system reliability. The proposal has many similarities to the – for performance market design, which FERC approved in New England a couple of years ago. It’s a no-excuses approach that provides fair compensation to reliable assets that do perform and penalizes suppliers that do not. We think this is a win-win for our customers and for our generation business. We have invested billions of dollars in our fleet over the years to make it the most reliable set of generating assets in the country and we think that the fleet will fare well in a pay for performance system. All told, we view developments on the capacity reform front as decidedly positive and we are expecting a ruling from FERC by April 1. Second, let me talk briefly about the discussions that are ongoing in Illinois. As Chris referenced and as you all have seen by now, the state of Illinois…

[Operator Instructions] Your first question comes from Greg Gordon of Evercore-ISI.

Thanks. Good morning guys.

Hey, Greg.

Jack, can you comment again on the – to revisit the comments you made on the earnings guidance for the utilities, because as I look at the $0.20 to $0.30 from BGE, $0.35 to $0.45 from PECO and $0.45 to $0.55 from ComEd, if I just take the exact midpoint there, that’s $1.15 versus $1.25 at the midpoint of the eyes that’s a $0.10 delta, not a $0.05 delta? Is there a reason why I am miscalculating that?

No, Greg. The $0.05 delta was with respect to 2017. The 2015 guidance to your point is down $0.10. Some of that is just a mere factor of rounding. We speak in terms of $0.05 increments. And would say 2015 guidance is down on a relative basis, $0.05 year-over-year, although the rounding would indicate that is down $0.10, it’s just a matter of how we round it up or round it down our expectations.

Okay. So the earnings power out in ‘17 of you three utility businesses is a nickel lower than your prior expectation, not a dime?

That’s correct. And I think importantly there, you see the sensitivity we have to interest rates, primarily ComEd, you see the impact of the bonus depreciation, which has the CPS impact of lowering rate based and lowering expected earnings but also is the cash flow and savings related to that is a contributor to the $1 billion of incremental capital we see in ‘16 and beyond that we can deploy to grow both our utilities business as well as our merchant business.

Okay. Another question, because I think there is a bit of an apples and oranges going on in terms of the discussion, now that you have given us an earnings guidance for this year, that includes the $0.12 dilution from the generation, from the asset sales that you are using to fund the Potomac transaction. As we roll into – if we assume that deal closed precisely on 12/31, is it accretive by $0.15 to $0.20? Is it accretive by $0.15 to $0.20 all things equal off this base or is it more accretive because you are also offsetting the dilution from the asset sales you used to fund the deal?

The $0.15 to $0.20 number, Greg, that we referenced incorporates the net dilution associated with the asset sales. That said as I mentioned in the script, the earnings contribution from those assets, while admittedly $0.12 this year, because of the failure of Keystone and Conemaugh to clear capacity markets, the contribution from those assets diminished meaningfully off the curve. The $0.15 to $0.20 that I referenced we would anticipate in 2017, so that’s while you mentioned a close in 12/31 obviously per Bill’s comments we are anticipating a Q2 and Q3 close. We wouldn’t expect to see that all of that $0.15 to $0.20 until 2017, we will be certainly achieving part of that during the 2016 period.

Got it. So, I get it, so the math on the earnings contribution from the assets sold, they would have been significantly less than the $0.12 contributor out in time?

Correct.

Okay. One more question, just in a little bit of the weeds on the forecast for O&M, you did call out increased O&M predominantly at BGE, ComEd, and ExGen and then you say that through ‘17, you expect 0.2% growth. Specifically at ExGen, as we get out into ‘17 is that growth rate sort of pro rata across all the businesses? Is ExGen’s O&M roughly static, because I know you are adding assets to the mix in ‘17? And I am wondering whether there is a significant increase in O&M associated with that or whether the totality of the O&M is still only growing nominally inclusive of those new asset additions?

It’s pretty static, Greg. Certainly, we are adding those assets, the operating cost of which will increase. We added Integrys. We added ProLiance. We have announced in recent months both a waste-digesting plant out in LA, a pulp and biomass facility down in Georgia partnered with P&G. We are looking for incremental opportunities in that space. We are offsetting that in part with activities that we are pursuing broadly across the company to drive lower operating costs both within the embedded businesses – so Constellation, the power generation business, the nuclear business, as well as our business services corporation. So, on a kind of blended basis, we see relatively flat O&M further out the curve. Obviously, wage inflation is a component of that. Interest rates have been a meaningful factor of that in driving pension costs and the growth in the liabilities side of that higher. So, as CPI oscillates as interest rates move that will continue to be candidly something a little bit outside our control, but obviously something we are trying to focus on other things to offset.

Great, thank you guys.

Thank you.

Your next question comes from Dan Eggers from Credit Suisse.

Hey, good morning, guys.

Good morning, Dan.

Just following up on Greg’s question on the utility outlook, if you go back to a year ago when you guys gave guidance I think that kind of all these expectations are down about $0.15 today from where they were a year ago. Can you just bridge for me what has changed a year-to-year basis? And then if you thought about interest rates normalizing or pension normalizing, how much of the $0.15 erosion could you reasonably get back?

I don’t know that Dan I can track you back to year end of 2013, but clearly you have seen a material degradation in the interest rate environment. As an example in 2014, the average 30-year was 3.34%. The interest rate for 30 years today is 2.63%. So, just with even – even within on an average basis of full year, the continued decline of interest rates and/or sensitivity to that through the formula rates at ComEd has been significant. For sensitivity, say 25 basis points up or down, and the interest rate is $9 million improvement or detriments to our expected revenues at ComEd. Obviously, the same element is impacting us from a pension liability side marry that with a change in the mortality tables and longer expected lives of our pension and OPEB participants. And that is a headwind – and that’s a headwind that we pass through, through the formula rate within ComEd. But we have to go through rate cases at PECO, and we have to go through a rate cases at BGE to recapture that. So, and then I guess the final element that’s changed, I think is given our load sensitivity of PECO and given some of our longer term load sensitivity of BGE and ComEd as we have continued to experience zero, and in some instances negative load growth that’s been a headwind as well. That said, we continue to see meaningful opportunities to deploy capital in that space. We see an opportunity to drive our customers’ reliability and experience. And importantly we see opportunities to earn a fair rate of return in those businesses. And as we are delivering and evolving a ray of services of our customer, even perhaps improve upon what we allowed to earn.

Okay, got it. And I guess, just kind of on the deployment of capital conversation, what are you guys seeing in the ERCOT markets at this point in time underlying the new build decision, it seems like sparks have eroded since those plans were announced and obviously with maybe an economic slowdown, because of oil and gas drilling, there is a little bit of concern in the market, I suppose over demand growth?

Yes, Dan, it’s Ken. We are very comfortable with our decision to invest in our combined cycle plants in Texas, and there are several reasons for it. First, the technology we have chosen, we think puts us in a significant competitive advantage. Again, as you know with the position in the stack, we would have as well the ramping capability in the units also cost advantage, given we own these sites. We have advantaged cost position that we don’t think it would be matched in the market. Importantly, we made this investment on our long-term fundamental views. And without talking about a re-assumption in our fundamental views, they are not – they are not drastically different than the environment we are seeing right now. We didn’t – we didn’t make a bet on massive load growth in Texas. We are very conservative in our assumptions. And the last thing I will say Dan is we have a significant load business in Texas as well. And having these plans and this capability and matching that capability with our load business is something, I think you are seeing it right now. We have proven that that is the value proposition that Exelon brings to table. And we expect that the investment in these plants will really enhance that value proposition in Texas.

Okay. Thanks, Ken. And I guess Bill can you just walk us through what kind of a timeline we need to see in Illinois as far as draft legislation on carbon action and kind of progression to get something done before the recess in the summer.

Yes, Dan. As you know the recess is scheduled or at least currently scheduled for the end of the May. And what we anticipate is that legislation consistent with the policy solutions outlined in the 1146 report will be introduced in the general assembly sometime within the next month. We are actively working with legislators, regulators and stakeholders with that in mind. So I would expect to see something surface within the next month and that will give ample time for the legislator to consider it. There will be hearings related to 1146 or possibly to the legislation specifically that will accompany that. But if this gets introduced as we anticipate within that next 30 days or so, it will give an opportunity to go through the full discourse in the legislature before the recess in May.

Okay. Thank you, guys.

Our next question comes from Jonathan Arnold from Deutsche Bank.

Yes, good morning, guys.

Good morning.

Quick one first, just on Illinois and following up on Dan’s question, is there a sponsor that has emerged or sponsor of this or are you still kind of working that out?

There is – Jonathan, there has been nothing publicly announced. There will be a significant number of sponsors and it will be bipartisan, but that won’t be revealed until the legislation itself is actually announced.

Well, as you have said, you are expecting it to be broadly supported?

Correct. We anticipate Republican and Democratic sponsors in significant numbers.

In both houses or is it going to sort of emerge in one house and then go to the other?

The mechanics, it is not yet been determined what the mechanics will be, but there will be adequate support and sponsorship in both houses to run it through the legislature.

Great. And then if I could also just revisit the question on the regulated guidance, I am sorry to do this, but Jack when I look at the $1.11 starting point for 2014, which was pretty consistent with the EEI slide and your statement that 2017 is only down by a nickel in the midpoint, which would imply $1.35 versus $1.40. I think where I am having confusion is that you had said – you called that an 8% CAGR at EEI, but now you are saying 5% to 6%, but seems to me that the $1.11 to the $1.35 would be more like 6% to 7%. And 5% to 6% implies a bigger reduction. Can you speak to that at all?

I think Jonathan we are talking about 100 basis points. And to be candid, the rounding issue comes into play. So, I think I would focus more on the $0.05 of degradation from EEI’s 2017 expectation to where we sit today. And some of that is an issue of the timing of capital deployment and other elements and I think we feel good about 5% to 6% growth. Ideally, we will endeavor to deliver higher growth that $1 billion of incremental spend in ‘16 and beyond is potentially a driver of that incremental growth.

But the $0.05 is what we should really focus on?

Yes.

Got it. Thank you.

Your next question comes from Steven Fleishman from Wolfe Research.

Yes, hi, thank you. So not to beat a dead horse with that, does your viewpoint on the utility include any of the $1 billion being reinvested in it or is that, that would now be in additive?

No, its additive.

Great.

Incremental.

Thanks. And then just with respect to the Illinois legislation, I know there is other aspects of this, not just on nuclear plants. So, maybe you could give us a little bit of better sense of what else might be addressed in this legislation. I am assuming it’s also kind of renewables, but is there other aspects that would likely be in this?

Steve, this is Bill. The legislation that we are referencing in the nuclear is standalone for the time being. There are going to be undoubtedly additional energy-related initiatives. There was a group that convened last week called the Clean Jobs Coalition, which was an environmentally directed group of a number of agencies and entities, which indicated that they will introduce legislation that will relate to energy efficiency to renewable standards and also to a cap and invest system that would be implemented in connection with 111(d). So, we anticipate that, that will be legislatively active and there undoubtedly will be a variety of other things that will be considered as well.

Okay. And just lastly and maybe to Joe on your kind of point of view in your hedging, it sounds just to kind of clarify, it sounds like you are particularly focused on future NI Hub prices being too low. Is that fair?

Yes, Steve. I think there is two elements. I think you are correct when you think about the expansion opportunities, heat rates I think that’s primarily in NI Hub. I think from our perspective as well, we actually see upside to the natural gas markets, especially this maybe to a lesser extent in ‘16 and more so as you move out into ‘17 and ‘18 on the back of demand pickup and where prices are today and that would be true, for example, both at West Hub and NI Hub. You can see in the quarter that we sold less than our ratable plan, approximately 5% of our portfolio – total portfolio, whereas an average quarter, we would sell about 8% and we rotated out of a lot of the gas shorts that we had because of the big heat rate move we had. So, as we move forward as we build a position that falls behind ratable, it’s going to be done more on a, I’ll call it a flat-priced basis, where we are just going to take the power that we would have normally sold and just hold it in our portfolio and we will tailor that to locations and time buckets. NI Hub will be a big piece of that, but we will be looking at other areas as well depending on what we see in the gas market.

Okay. Thank you.

Your next question comes from Julien Dumoulin-Smith from UBS.

Hi, good morning.

Good morning.

So, I wanted to ask a little bit of a bigger picture question here around the direction of the company vis-à-vis utility versus merchant. And as you think about that decision point, you have obviously made a couple of decisions over the past years, PEPCO namely, how were you thinking about positioning the company towards the merchant side of the business, specifically as you think about, a) potentially expanding nuclear and then b) specifically expanding into Texas, are either of those avenues palatable or desirable under a merchant expansion? And then more broadly, is a merchant expansion desirable at this point in time?

So, we continue to look at both sides. The utility business as we talked about we can operate the utilities well. We can drive efficiencies in. We can improve the customer experience while we are getting returns. We are in a unique situation with ComEd on the formula rate at some historically low interest rates. We are not running from the investment – the utility business. We think interest rates will normalize and will be at the right place for the return. So, we will continue to make prudent investments and operate the utilities well there. On the merchant side, it’s all about the value proposition in looking at the specific investments. If a nuclear plant came available and we could fold it into the portfolio and see our adequate returns, we would certainly have the scale and the scope to put one in. We don’t see any out there right now, but newbuild is not an option. So, that’s the only way we get as acquisition. As we have said before, we do think Texas is one of the more interesting markets to invest in right now, and that’s why we are proceeding with organic growth down there. We do look at assets that come up from time-to-time in the ERCOT market. Most have been overvalued from our perspective on the long-term fundamentals. That’s why building these new technology units makes more sense to us. So, we will continue to look for opportunities on both sides of the business and use the balance sheet prudently to make the investments, but one thing that we – in the last couple of years as we do our asset valuations on an annual basis, recycling capital has become a focus and we will continue to watch that. If we see assets and others have more value and we can deploy that capital into other arenas, we will not be – we will not be shy of any divestiture. And that’s what we did this year with divesting assets and having the opportunity to use that capital into what we think is something that would be strategically valuable for us with PEPCO and also having the – creating the new balance sheet space to make the investments in new unit. So, we were still very confident in the model and confident in the investment thesis. And if low interest rates are hard on pensions and they are hard on the formula rates, but in the long run we see those coming back and we still think it’s a good investment in CC.

Alright, great. And then secondly, if you can comment more specifically around Ginna in New York, obviously there has been some development there, what’s your latest expectations if you can elaborate?

Chris you want me to take that?

Joe is going to grab it.

Thanks.

Julien, this is Joe Dominguez. We continue negotiating the RSSA with our counterparties up there in New York. I think you will see developments become public on that within the next few days to a week.

Got it, fair enough. Thank you. Good luck.

Thanks.

Thank you.

Your next question comes from Stephen Byrd from Morgan Stanley.

Good morning.

Good morning.

I wanted to – I think I had heard that on the call that Keystone and Conemaugh had not cleared in the PJM auction, and if that’s correct, I wondered if you can just elaborate on the rational, I thought of those as large well-operating co-plants, I am just curious what was the driver behind that?

And Stephen, this is Joe. Good morning. There are a couple of reasons for that. First of all, as you know into the mechanisms afforded in the PJM model, you can calculate an avoided cost rate on each of your units. And we take the opportunity with our fossil units in particular and all of our fossil units to do that. And that’s just what I’d call our cost base line. And recognizing what we need from a cost perspective on those units we take that into account in our bidding strategy. And we have a host of other assets that we have to look at in particular to make sure that we are looking this in a proper sense from a total portfolio basis. And in the way that math worked for Keystone and Conemaugh in particular, it just didn’t clear given where the clearing prices were today for that particular option.

So, Steven just a little to add to that, this is Ken, there are substantial costs at the plant associated with the environmental upgrades. That associated with the avoid the energy benefits that were very low from that 2009 to 2013 period drove the avoided cost rates up at those plants. And as we said before we – the market works when participants bid their costs, and that’s what we do.

Okay, great. Thank you. And just shifting to the utility, in terms of achieving the growth rates that you have laid out, what kind of low growth assumptions sort of your latest thinking that’s driving that growth?

Denis, do you get that?

Okay, great. And the change in terms of the outlook from flat to – negative to flat to positive, what’s your – just at a high level view of what would drive that improvement in load growth?

Okay. Thank you very much.

And our final question comes from Hugh Wynne from Sanford Bernstein.

Thanks. The $435 million asset impairment charge in this quarter, how do you breakdown between Keystone, Conemaugh and upstream assets and others?

Hugh, the total of overall long-live assets impairments that we had during the year, we had a wind impairment that was $0.06. We had a lease impairment that was $0.02. We had Quail Run assets held for sale impairment of $0.04. Keystone and Conemaugh was $0.29 of that. Upstream was $0.09 for a total of $0.50. On the flip side of that, we had $0.28 of gains related to the sale of Safe Harbor, sale of Fore River, again on the sale of West Valley. So, overall on a net basis, it’s about $0.22 negative impact on the year.

Okay. And then my question is for Bill. Bill, though you’re lawyer and you are talking about the potential implications of the Clean Power Plan EPS and Clean Power Plan, I just want to get your views as to the likelihood that the plan survives at all. I understand there has been challenges as to whether EPA has a authority to regulate CO2 under 111(d) at the – in the first place. And then secondly if it does, whether that authority extends to energy efficiency and renewables is this Clean Power Plan going to be with us in the long run or do you think it’s going to be whittled down or overturned altogether?

Well, one thing that we can be abundantly certain of is that there will be litigation respecting whatever the final rule will be. But the basic tenants, Hugh, of the underpinnings of the rule are legally sound. The ability to regulate carbon emission has been already ruled upon by the United States Supreme Court and our expectation is that there will be litigation and there maybe modifications that result from that, but the basic underpinning of the rule will survive and will have the impact that will be significant in that scope.

Right, thank you very much.

I would now like to turn the call back over to our presenters.

So, thank you very much everybody for joining. As we laid out from an operation standpoint, very strong year, we continue to run well, continue to watch costs and contain where we can. The Constellation, the Generation business has done a very good job in this marketplace and we continue to see – feel very strong that, that will be continue to be supported. The utility side, the utilities are operating well as I said. We see the investment thesis as right. We know the sensitivity to the interest rates, but don’t think that’s a long-term sustainable issue and we will continue to keep investing. Thanks.