Exelon to Invest $38B in Infrastructure Amid Changing Usage Patterns

Exelon Corporation’s EXC investments to strengthen transmission and distribution infrastructure allow it to meet rising demand from customers. EXC’s cost-saving initiatives and stable operations enable it to generate a steady cash flow and reward shareholders.

However, new technology disrupting usage patterns, failure of equipment or facilities and fluctuating weather conditions are concerns.

Tailwinds of EXC

Exelon is making substantial infrastructure investments, with plans to allocate nearly $38 billion between 2025 and 2028 toward regulated utility operations. These funds will focus on grid modernization and enhancing system resilience to better serve customers. Rising demand from data centers within its service territories is creating additional growth opportunities.

Other utilities like NextEra Energy NEE, Duke Energy DUK and American Electric Power Company AEP, Exelon has a long-term capital plan to strengthen operations. Over the 2025-2028 period, it intends to invest $21.7 billion in electric distribution, $12.6 billion in electric transmission and $3.8 billion in gas delivery. These strategic investments are expected to drive a 7.4% rate base CAGR through 2028 and support targeted annual EPS growth of 5-7% over the same period.

Serving more than 10 million customers, Exelon has delivered benefits through tax reform measures, energy efficiency programs and ongoing cost-saving initiatives. The company’s disciplined expense management keeps costs rising at a pace below inflation, further benefiting customers.

Exelon is prioritizing the transmission and distribution of clean energy, with a significant portion of its distribution revenues decoupled to offset declines from lower usage. This approach shields the company’s top line from load fluctuations, ensuring more stable earnings. Operating under seven different regulatory jurisdictions also provides a diversified and balanced rate base.

Headwinds of EXC

Emerging and advanced technologies have the potential to reshape the energy industry and alter the structure of energy delivery over time. Advancements in power generation, along with the growing adoption of commercial and residential solar systems and commercial microturbines, are enhancing the cost-effectiveness of customer self-generation. Such trends could reduce demand for Exelon’s transmission and distribution services, potentially weighing on its profitability.

Additionally, failures in equipment or delivery infrastructure could disrupt electric transmission as well as electric and natural gas delivery. Such interruptions may lead to revenue losses while increasing maintenance needs and capital expenditures.
 

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This article originally published on Zacks Investment Research (zacks.com).

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