Why Exelon is limited to transmission and delivery

By

Updated

Exelon’s utility business

As mentioned earlier, Exelon (EXC) split its generation business and its utility business. This means Exelon’s utility subsidiaries’ function is limited to the transmission and delivery of electricity to end consumers. Exelon’s utility business provides some stability to the company’s revenue. Most of Exelon’s operation is part of the volatile unregulated market.

Exelon Utility

Utilities’ operating regions 

Exelon’s utilities division operates in three major states in the U.S.—Illinois, Maryland, and Pennsylvania. In these states, Exelon serves its customers through its subsidiaries—Commonwealth Edison (or ComEd), Baltimore Gas and Electric (or BGE), and Philadelphia Electric Company (or PECO).

  • ComEd – serves 3.8 million customers in Chicago, Illinois
  • BGE – supplies electricity and natural gas to 1.8 million customers in Maryland. It’s the largest utility in the state.
  • PECO – is headquartered in Philadelphia. PECO has 2.1 million customers. It operates in southeastern Pennsylvania.

Power supply 

The electric utility business in all three states is deregulated by the government. The customers are free to choose from a list of competitive power suppliers that operate in the region. However, the electricity has to be delivered by the above mentioned subsidiaries’ distribution network.

The utilities supply electricity to its customers based on their choice. Customers purchase power from power generators. This includes Exelon Generation. The utility companies purchase power from power producers through long-term, short-term, or spot market contracts.

Some of the other power producers in the regions are Dynegy Inc. (DYN), American Electric Power Company (AEP), and Public Service Enterprise Group (PEG). Except for Dynegy, all of the companies are part of the Utilities Select Sector SPDR (XLU).

Article continues below advertisement
Advertisement

More From Market Realist