Exelon to split into utility, generation companies
NEWARK – Exelon Corp., the parent company of Delmarva Power, the state’s lone regulated electricity utility that supplies Northern Delaware, announced Wednesday that it is splitting the company’s utility and generation segments into their own companies.
The plan, approved by Exelon’s board of directors, will create a company comprised of the company’s six regulated electric and gas utilities and a company containing its competitive power generation and customer-facing energy businesses. Both companies would continue to be publicly traded entities, with the separation targeted for the first quarter of 2022.
The split is subject to approval by the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and New York Public Service Commission. Exelon shareholder approval is not required though.
CEO Chris Crane and the existing management team will lead Exelon through the separation. The senior management teams, board appointments and company names for each of the new companies will be announced in coming months, officials said.
The separation gives each company the “financial and strategic independence to focus on its specific customer needs, while executing its core business strategy,” officials said in a press release.
“Our industry is changing at a rapid pace and our customers expect us to continuously innovate to stay ahead of growing demand for clean energy, evolving business conditions and changing technology,” Crane added in a statement. “Now is the right time to take this step to best serve our customers, employees, community partners and shareholders. These are two strong, distinct businesses that will benefit from the strategic flexibility to focus on their unique customer, market and community priorities.”
Exelon Corp. (EXC) shareholders will retain their current shares and receive a pro-rata dividend of shares of the new company’s stock in a transaction that is expected to be tax-free to Exelon and its shareholders for U.S. federal income tax purposes. The actual number of shares to be distributed to Exelon shareholders will be determined prior to closing.
Exelon serves electricity and natural gas to more than 10 million customers across five states and the District of Columbia. The utilities include Delmarva Power, serving Delaware and eastern Maryland; PECO, serving southeastern Pennsylvania; Atlantic City Electric, serving southern New Jersey; BGE, serving central Maryland; Pepco, serving Washington, D.C., and central Maryland; and ComEd, serving northern Illinois.
The company touted its $22 billion in investments to modernize its grid and improve customer service over the past four years, resulting in each utility achieving its best-ever customer satisfaction rating in 2020. Exelon pledged to invest another $27 billion to the same efforts over the next four years.
Meanwhile, the new generation company will reportedly be the largest supplier of clean energy in the continental United States, backed by more than 31,000 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydro assets. It produces about 12% of the nation’s carbon-free energy.
With the Biden administration and many states pushing ahead goals for green energy production, company officials told analysts Wednesday that they believe the separation will better position their generation segment to capitalize on the opportunities ahead.