2016 May Turn Rough for Exelon Corporation as Challenges Mount
Exelon Corporation: Fall in revenues?
North America’s dominant nuclear generator, Exelon Corporation (EXC), will report its 1Q16 financial results on May 6, 2016. Let’s look at Exelon’s revenues first.
In nine of the last 11 quarters, Exelon has reported far better revenues than analysts’ estimates. Analysts are estimating EXC to post revenues of $6.7 billion in 1Q16 against its revenues of $8.8 billion in 1Q15.
Revenue growth
Exelon Corporation (EXC) is expected to serve 15 TWH (terawatt hours) of additional total load in 2016 compared to 2015. It served 195 TWH retail and wholesale load last year in comparison to its actual target of serving 180 TWH of load. This additional load may fetch higher revenues for Exelon in 2016.
Exelon’s management anticipates that the 2016 load growth could be driven by the slowly but steadily improving state of economy and customer growth, particularly in the residential market. However, energy efficiency programs may continue to hamper this growth this year as well. Additionally, volatile power prices in the wholesale market may be a point of concern for Exelon, as it has a huge exposure to the wholesale power business.
Similar to Exelon, FirstEnergy (FE), Public Service Enterprise Group (PEG), and Entergy (ETR) are also hybrid utilities that generate a significant portion of their earnings from merchant generation. Weaker power prices in the wholesale markets of the United States (SPY) resulted in poor performance of these utilities in the last few quarters.
Browse this series on Market Realist: