Good morning. My name is Dushyanta and I will be your conference operator today. At this time, I'd like to welcome everyone to the Q3 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you, I will now turn the conference over to Francis Idehen. Please go ahead.

Thank you Dushyanta. Good morning everyone and thank you for joining our third quarter 2015 earnings call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer; Joe Nigro, CEO of Constellation; and Jack Thayer, Chief Financial Officer. We 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 earnings release this morning along with the presentation, each of which can be found in the Investor Relations section of Exelon's website. The earnings release and other matters which we discuss during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material, comments made during this call, and in the risk factors section on the 10-K which we filed in February, as well as in the earnings release and the 10-Q, which we expect to file later today. Please refer to the 10-K, today's 8-K and 10-Q, and Exelon's other filings for a discussion of factors that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted operating 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've scheduled one hour for today's call. I'll now turn the call over to Chris Crane, Exelon's CEO.

Good morning, everyone and thanks for joining us this morning. We're pleased to deliver another very strong and what's been a very good year for us thus far. First, I'll highlight our financial and operational performance and then I'll switch over to our key strategic objectives. On the financial front we're reporting operating earnings of $0.83 per share over 6% EPS growth versus the same period last year and above our guidance range. Despite the delays in closing PHI which I'll address further, we're still on track to deliver our best year of earnings since 2012. We are raising our guidance range to 240 to 260 and Jack will provide more details on the financial performance during his remarks. It's been a phenomenal year across our companies. At the utilities we're set to invest $3.7 billion this year and needed infrastructure and enhancements and grid reliability and resiliency modifications. Part of more than the $16 billion investment that's planned over the next five years. This includes our smart meter installation program which we now have completed nearly 5.5 million gas and electric installations across our operating companies. Our utilities will exceed $1 billion in net income in 2015, driven by industry leading operational performance with each utility achieving first quartile safety, first and second quartile safety results and ranking in first quartile in customer satisfaction. We reached the settlement at PECO in its recent rate case filing which follows the BGE recent unanimous rate case settlement in Maryland. This highlights how strong operational performance supports recovery and constructive regulatory environments. On the generation side of the business we had another solid quarter of operations performance. Nuclear capacity factor was 95.5, power dispatch match was 99%, renewable energy captures was 94.8%. We also had great execution in Constellation this quarter showing…

Thank you, Chris and good morning everyone. The Constellation business had another strong quarter outperforming our targets. Our portfolio management team performed very well and as Chris mentioned our retail and wholesale business is having a very strong year. In addition, our core strategy of matching our generation fleet with our load business continues to provide significant value for our shareholders. It has been paying off across the volatility and price spectrum. We have captured higher prices for our generation during periods of extreme weather while managing our load obligations and we've captured higher margins during low volatility period like this summer as we've realized lower cost to serve our customers. It also provides us with an important channel to market for our hedging activities which is important in times of low liquidity and in places where there is not an active market. Our past results and our current hedge disclosure show that our business can drive in either market environment and provide a great deal of value to the enterprise. My comments today will focus on power and gas markets during the quarter and our fundamental view. The recent PJM capacity performance auction and our hedge disclosures in hedging activity. Turning to the power markets on slide four. NiHub remains undervalued even independent of gas prices. PJM West price is more fairly valued when accounting for the new generation underdevelopment and expected in the East. Our fundamental view of power prices remained unchanged in addition we especially see upside in the non-winter months and during off peak hours. The difference between our fundamental view and the near term forward market prices of NiHub is primarily driven by changes in dispatch stat [ph]. Additionally fuel and coal markets are in contango while power is backwardated which is unusual. We think…

Thank you, Joe, and good morning, everyone. As Chris and Joe stated we had another strong quarter financially and operationally. My remarks will focus on our financial results for the quarter, our full year guidance range, and provide an update on our cash outlook for 2015. Starting with our third quarter results on slide six, Exelon delivered earnings of $0.83 per share exceeding our guidance range by $0.08. This compares to $0.78 per share for the third quarter of 2014. Exelon's Utilities delivered combined earnings of $0.33 per share outperforming the third quarter of last year by $0.04. During the quarter, we saw favorable weather at both PECO and ComEd. Cooling degree days were up 30% from the prior year and 28% above normal in Southeastern Pennsylvania and up 18% from the prior year and 3% above normal in Northern Illinois. Distribution revenues at both ComEd and BGE were higher quarter-over-quarter reflecting the impacts of increased capital investment and higher rates respectively. On September 10th, PECO reached a settlement on its rate case filing. They agreed upon revenue requirement increase of $127 million represent 67% of the original proposal. The Pennsylvania PUCs decision is expected in December of this year with rates going into effect on January 1, 2016. The Pennsylvania PUC recently approved the new system 2020 plan which will lead to an additional $275 million being invested during the next five years to install advanced equipment and reinforce the local electric system making it more weather resistant and less vulnerable to storm damage. An order on commence annual formula rate filing is expected to issue by the ICC in early to mid-December. As a reminder ComEd requested a revenue decrease of $55 million in its current filing. This reduction reflects the continued focus on cost management and operational…

[Operator Instructions] Your first question comes from the line of Dan Eggers with Credit Suisse.

Just Jack taking a before you left off on the Pepco accretion numbers. You guys are going to have $0.13 of drag because of the equity and the debt associated with the acquisition. If we look at '16, how much of that $0.13 gets offset I guess on a year-over-year base if we're to step forward one year.

Dan we would anticipate that the transaction would close towards the end of the first quarter and the transaction will be modestly diluted to --.

Including $0.13 or net of the $0.13?

Including the impact of the shares and debt issue, so it inclusive of that $0.13 expense associated with interest and increase shares.

Okay. If I go I guess next question. On the Constellation side with the retail margins coming through. Can you guys give us some context is that how much contribution is coming from that business or where you guys sit in that historic margin range of $2 to $4 megawatt hour. Just so we can see a little better from the outside what's going on there.

Yeah hi Dan, this is Joe. Good morning. In the let's start with the second question first. We are still well within that $2 to $4 range. It's above the $2 value and it's below the $4. Our commercial industrial originations remained solid and we're happy with that. As for the margin, I think about it more on a total portfolio basis, because there is retail margins of one component of it. The second thing is we serve a lot of wholesale polar load as well which have a different margin structure associated with them. But the money that we made in the third quarter which really driven by three key things. The first thing is that if you go back and look at our hedge disclosure again for the second quarter, we were effectively 100% hedged across our book for the year. And so we set up with the short buys recognized we had the backstop of our own generation to serve loaded market guide volatile. The second thing is we cost it our loads when we sold them the risk premiums were much higher than what is realized in the spot market primarily driven by the low, low gas prices during the third quarter. And then the last thing is we took an opportunity when the prices dropped to hair cut during the summer to materially get our position in longer as we walked into August and then we saw some volatility. So we capitalized them that as well. So it's really been three components that drove the value.

Okay, got it. And I guess last question you maybe Chris or Jack is just on the decision to differ the nuclear plant closures. How much earnings drag should we assume is coming off those three plants in 2016? And given the delays in making decision what would actually get you guys the point to decide which higher in any of these assets that are making money.

So let's first talk about PJM and Quad and Byron. The CP auctions substantially changed the profile of cash flow and earnings. We have still need on the low power portfolio standard to cement the long-term viability of these assets. But Quad is just marginal flat on free cash flow. It just slightly dilutive on earnings. And if we can move the CP along, it will greatly improve that. Byron is in a little bit better shape based off of CP and we'll continue to watch that closely. On Clinton we were prepared with no action taken on the capacity market to go forward with the retirement. We have seen a commitment and action at MISO to evaluate zone 4 as its only competitive, real competitive market to evaluate the redesign of the capacity construct that would adequately compensate the generators for the investors they are making. We've also seen positive signals from the state of Illinois by evaluating and starting workshops to evaluate the problem statement and workshops to look at potential fixes on Zone 4 in Southern Illinois. So now that we've seen some potential for improvement, we're willing to go another year. At unit Clinton is one of our newest units in the fleet is got over 30 years of potential run left, with support coming from MISO and understanding the problem statement at - and the state now considering what should be done in the southern part to ensure reliability. We saw that as an enough promise to extent it one more year to see what we can do in 2016.

So that is your view that you'll have some sort of market reform in '16 I guess in the first half of '16 in MISO for those plants look viable or is it just the action that will get you comfortable even if it's not resolve.

We want to resolve in 2016. I don't know if it's going to be in the first half but it has got to get resolved in 2016 between the lower power portfolio standard and the capacity construct in MISO it is going to be imperative for us to go forward. Quad in the subsequent auction is cleared 16-17, 17-18. So we've got a blanket on that for couple of years but it did not cleared 18-19.

Okay, got it. Thank you guys.

Your next question comes from Steve Fleishman with Wolfe Research.

Yeah, hi. Good morning. Couple of questions just on the [indiscernible] recent update that you gave, is the kind of push out of the accretion or just due to delays and closing and just more time to get the cost cuts and through and I guess maybe any rate relief through like the rate free is that you have. Is that the main difference?

That's part of it and the other part is our approved from the time we announced the merger and from when we talked about the LRP last year - last quarter excuse me, our position is improved. So there is a little bit of we're better than we were. And the delays is the other part of it.

Okay. And then I guess just on the nuclear decision. And I would just wondered there is a little bit of kind of risk okay, you were crying wolf on this, because you talked about this for a while then you're not shutting this year. Just how is the risk of the shutting like real in '16 or what is different in terms of making this decision now. I mean gas prices are also a lot lower too.

Yes. So we opened the books to key stakeholders in the stake. They could see the red [ph] that was being produced by these assets. We were able to work with PJM and the other stakeholders on CP that gave us the improvement that we're not seeing the level of red [ph] or in some cases neutral on the assets. These are long lived assets and their big decisions to make we're not crying wolf we've actually got results. And if we can continue to get results these units will become profitable and be able to stay within the fleet. And the contributions they make to the communities that they serve. So this is not as backing down on a decision this is as making progress on a path that we define clearly at the beginning of this. If we cannot see progress we would shut the units down. We have seen progress and we continue to believe there is potential for more progress. If we do not see that progress, we will shut the plants down.

Great. Thank you very much.

Your next question comes from Greg Gordon with Evercore ISI.

Thanks. A few questions, first back on [indiscernible] I have the good fortune of having follow them before you. You announced the acquisition and I have been keeping my model up to date. And it actually looks to me like their financial situation is materially degraded over the year or so year and half or so and through the time that’s been caused by this delay they haven’t gotten rate increases, they've got massive operating cost increase they’ve added several hundred basis points of leverage to their balance sheet I mean they don’t look like they are a viable entity in their current form if this deal doesn’t close. So, it’s part of this problem with the delay and the accretion that you’re coming from a deeper hole?

If the delay in filing the rate cases has contributed to PHI’s position that they’re in now. They publicly spoke about what their future would be on a stand. We believe that once we are able to fold them into the fleet and drive the synergies and help support them with the operational performance that will give the environment for a fair regulatory recovery going forward. As we’ve seen with BGE.

Yeah. I mean certainly as I have observed on a standalone basis they’ve just seen a massive escalation in cost which I am sure you’d be able to control much more readily given Exelon’s playbook that should lead to a necessity from lower ask in terms of rate increases to get back to a decent return more to think correct?

Yeah. I mean that’s part of the thesis in our filings and what we’re able to do with the settlements we can drive the synergies with our platform that will reduce the request for needed scope of rate increases.

Okay. Thanks. Going back to the $0.08 to impact to earnings from bonus depreciation Jack that’s on this year’s earnings and is that sort of lower rate base net of capital allocation and can you just walk us through how you do that calculation?

Sure. That would be Greg on 2015. The $0.08 would hit $0.07 at ExGen, it would hit a penny at ComEd importantly it would also improve our cash flow by $650 million and at ComEd we would see the impact of bonus depreciation would cause a $215 million reduction in ComEd's rate base.

So, what do you assume, you do with the 650 million in cash just becomes goes at the corporate general bucket or do you assume a specific offset in the denominator through much that reduction if you just less that, is that the answer?

Effectively, we would reinvest that back into the utilities part of our business to fund our capital plan.

Okay. And why is there such a big impact on ExGen?

It’s the domestic production credits, there is a limit or they goes into place and as those bonus depreciation hits that limitations goes into effect and meaningfully hits our ExGen part of our business with somewhat unique with our exposure to this within the industry.

That hits your ability to consume production tax credits?

It’s more, Tom do you want to - had a tax.

As a generator, we’re entitled to claim so called domestic production activities in - which has completed as a percentage of generation income so as bonus appreciation reduces that income or therefore reduces the related...

Okay, got it. Thank you guys.

Your next question comes from the line of Jonathan Arnold with Deutsche Bank.

Good morning guys.

Good morning John.

Quick question. I noticed that in your recast of the ‘15 guidance those now you obviously have the holdco drag which I apologize I missed this guessing in part of the financing on Pepco. But what would be we - that ride of - what’s the reasonable run rate of holdco expense as we look for beyond this year?

So, Jonathan, we commented in our earning script that the equity and debt financing associated with PHI because we didn’t close as anticipated in Q3 and would be a $0.13 drag on the year. So, our guidance contemplates that drag and incorporates that obviously. Prospectively, we would anticipate closing the transaction towards the end of the first quarter of 2016, we would get the benefit of Pepco’s earnings and the pro forma would be modestly diluted for ‘16 until we as Chris mentioned execute the rate cases and grow the revenues and earnings at PHI over the course of the next several years.

And I had the comment about the $0.13 diluted that was a ‘15 comment or was it ‘16?

No that’s a ‘15 comment Jonathan. 15, sorry 2015 drag in 2016 we have the benefits of PHI for three quarters.

Okay, got it. So once you close will you start on that the holdco financing for that deal kind of into the segment or do you think you’ll still have a discrete pair of drag that might be larger going forward?

We will incorporate the shares issued or we have the shares issued the 893 million shares in the share counts that will give us advisory for all of our business units and then we have the corporate moving company or holding company that will get allocated.

Okay so I should once we get into ‘17 let’s say this parent segment the best guess is kind of flat?

Starting in ‘17 we’ll start to see increase in going into ‘18 and very strong at the end of the LRP period.

Okay, thank you guys. And then could I ask one other thing we saw this Maryland A.G. filing in the second quarter any thoughts around timing how concerned are you it might be Maryland that ends up throwing the rents in the work?

Darryl you want to cover that?

Yeah Jonathan, this is Darryl Bradford. We have - the attorney general asked for leads to file [indiscernible] brief we’re going to following on opposition today along with the Maryland Public Service Commission, why there'd be attorney general allow to file in that we feel that the Maryland decision is a very strong one the parties that are appealing and have a very heavy burden, go for its permit there will be a hearing in the Circuit Court on December 8 on this and we believe that decision was very solid and we believe that it will be of help.

Okay great. Thank you very much.

Your next question comes from the line of Hue Wynn [ph] with Bernstein.

Thank you. I was wondering if you could provide any high level perspectives on the cost cutting initiative that you had mentioned in the scripted remarks.

Yeah we’re going to be putting out the details at EEI but we’ve looked at our corporate center BSC business service cost, we’re looking at a IT cost in some of the work that we can do there and also at the generating company so we should be able to provide more detail on that or we will be providing more detail in the year.

All right. Thanks so much.

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

Good morning.

Morning.

So first question going back to Pepco if you will, the 2019’s figure what’s embedded in there is that simply just closing on the transaction, executing status quo or are there rate case assumptions etcetera I was just trying to get a little bit more sense that far out in terms of what’s baked in?

So there are rate case assumptions that we’re taking straight out of PHI’s RP. Once we close we’ll be able to get deeper into those numbers in the drivers but it is based up of their assumptions on what they’ll recover in rate cases and their assumption on cost in cost controls going forward. So we will be able to do more on that and provide updates when we get into the detail at the close.

Got it. To a clarification it might be a little tricky first earned ROE’s approximately I mean is it fair to say what I’ll let you comment on that on the Pepco side and then separately as you think about this transaction you’ve got I suppose the cost update coming at EEI, is there some fungibility between those two as well?

I'm sure there is because you are going to have the Massachusetts model will dictate the over hedge down to the specific company. So there should be with this improvement minor adjustments. But it would too early to speculate now on where there goes. On the ROE's the calculation would be straight out of the LRP that PHI is operating under now their LRP that will have to be updated post close with our assumptions of not only the cost reductions but the operational improvements.

Great. Last little question here. What is the creaks you guys filed an interesting 8-K recently regarding must offer requirements in 2019. Is there and ability to clip participate for a partial year and toward the subsequent capacity auction at all?

[Indiscernible] will take that.

Hey, Julien, it's Joe [ph]. Julien we've looked at that that would be very difficult especially with the new CP environment. So you've seen our most [indiscernible] we don't intend to participate with that.

Got it. Just wanted to clarify. Thank you.

Your final question comes from Ali Agha with SunTrust.

Thank you. Good morning.

Good morning.

First question, just wanted to clarify the $0.08 beep [ph] that you had in the third quarter above the high end of your guidance, was that all coming from the stronger performance at Constellation or what was the main driver there?

Ali it was both across the utility business as well as that constellation and nextgen part of our businesses. So we had strong weather and operating results at both PECO and ComEd and then we had good operating results at PJE and as Joe articulated in his discussion we had strong performance from the generating part of our company.

Okay. Second question, this disconnect in pricing between your fundamental view of NiHub and the forwards we've been hearing that for the last several quarters now and this [Inaudible] happen during that - what is your opinion is going to trigger that to coincide? Is there just a search in demand, extreme weather, I mean like I said we've been seeing this for a while, what do you think will change that?

Good morning. I think - it’s Joe. I think there is a couple of things. But I think the biggest thing is there is a complete lack of liquidity in NiHub and especially when you get beyond like 2015-17 period. We think that when - with normal weather in 2016 we think NiHub is somewhat fairly value. But as you move out on the curve it gets materially undervalued and that's driven mostly by the lack of liquidity. If you look at you have gas prices that are in a contango market and M3 is relevant because it's across the [indiscernible] a lot of hours setting price using M3 gas. So if you look at like 2016 to 2018 you've got $0.25 of value on the curve just associated - $0.40 of value associated with Henry hub prices and another $0.20 to $0.25 with M3. There are $0.65 a value in the gas curve and yet the power prices at NiHub today are $0.25 back warding. In addition closely contango as well so that part of it, the coal [ph] retirements part of it. We have seen heat rate expansion even at these low gas prices, we think some of that has been massed quite frankly by the fuel being so low. But when you put all that together in the complete lack of liquidity that's where we coming up with the driver of higher prices in the future.

Understood. And the last question assuming these forward curve stay as they are and I know that at EEI you'll update your curves 18 to the mix as well. But when you look at - I mean you are showing us fairly flat margins 16 17, the cost saving that you are planning are they going to be strong enough so that just directionally GenCorp can a show a positive net income stream because depreciation another expansion are going up as well or are we still looking at flat to perhaps declining GenCorp profile given what the forward curves are telling us right now.

Ali, its Jack. I know that there is a lot of interest in us engaging on the cost reduction topic before EEI. But I think it's probably better to align our disclosure around that cost reduction effort with our outlook for 16 17 and 18 hedge disclosures. You'll obviously see the significant benefit of CP in that period aligned with the benefits of cost reduction. So the story is positive, we'd ask for your patience in terms of transparency around that until EEI.

The bottom line is we are seeing improvement over the LRP period.

Okay. So from an Exelon perspective just directionally you would as we stand here today 18 19 earnings with that going there should be higher than where we are in '15. Is that a fair statement?

Yes.

Thank you.