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DATE

Wednesday, May 6, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Calvin G. Butler
  • Chief Financial Officer — Jeanne M. Jones
  • Chief Operating Officer / Interim President and CEO of PICO — Michael A. Innocenzo
  • Senior Vice President, Regulatory and External Affairs — Colette D. Honorable
  • Vice President, Investor Relations — Ryan Brown

TAKEAWAYS

  • Adjusted Operating Earnings -- $0.91 per share, compared to $0.92 per share in the same period in 2025, driven by net favorable weather and timing-related factors.
  • Earnings Guidance -- Full-year adjusted operating earnings guidance reaffirmed at $2.81 to $2.91 per share, with management targeting the midpoint or better.
  • Long-Term Earnings Growth Outlook -- Guidance for 2025 to 2029 maintained near the top end of the 5%-7% range.
  • Capital Plan Shift -- Four-year capital plan totals $41.7 billion, with $1.1 billion of project deferrals and reductions in PICO and BGE distribution, offset by $1.5 billion of incremental transmission investment.
  • Transmission Growth -- Transmission rate base is now projected to grow at 16% through 2029, excluding new MISO bids or potential solar/storage opportunities.
  • O&M Savings -- Targeting $350 million in incremental operations and maintenance savings in 2027 linked to work not being pursued.
  • Customer Savings Delivered -- $1 billion in customer savings achieved over the past year through relief programs, a gas supply settlement, and cost discipline.
  • Return on Equity -- Consolidated ROE guidance provided at 9%-10% for 2026.
  • Credit Metrics Target -- Maintaining a target of approximately 14% for Moody's and S&P credit metrics over the guidance period.
  • Debt Financing Progress -- $2.3 billion, or 43% of 2026's planned long-term debt issuance, completed, covering both corporate and Pepco Holdings tranches.
  • Equity Plan Execution -- 37% of total equity needs through 2029 already addressed, including all $850 million required in 2026 and over $400 million in 2027 via ATM forward contracts.
  • Regulatory Developments -- PICO withdrew recently filed electric and gas rate cases in Pennsylvania for timing and affordability reasons, without altering infrastructure investment commitment.
  • Pepco Maryland Rate Case -- $119.9 million revenue requirement sought to recover critical infrastructure investments and higher financing costs, with a final order expected in August.
  • Delmarva Power Rate Case -- Delaware intervenor testimony scheduled for October, with interim rates planned for July implementation.
  • MISO Transmission Bids -- Two competitive bids submitted in Illinois for MISO Tranche 2.1, representing approximately $1.9 billion of capital with Infinergy partnership.
  • PJM Transmission Security Agreements -- Approximately $1 billion of data center collateral secured via FERC-approved agreements.
  • Leadership Change at PICO -- Michael A. Innocenzo named interim President and CEO, replacing Dave Vajos, ensuring continuity while Innocenzo continues as COO of Exelon Corporation.

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RISKS

  • PICO is on negative credit outlook and under review for downgrade, explicitly linked to investment climate and regulatory developments in Pennsylvania.
  • Management stated, "Without addressing supply constraints, affordability challenges will persist," highlighting unresolved exposure to rising Mid-Atlantic energy supply costs.
  • Utility Relief Act in Maryland does not address the imbalance between energy demand and supply, raising potential affordability and reliability risks.
  • Only 19% of PJM interconnection queue projects reach operation, and 54 gigawatts remain delayed by siting, permitting, and supply chain issues, which may limit realization of planned growth.

SUMMARY

Exelon Corporation (EXC 2.23%) reported $0.91 per share in adjusted operating earnings, slightly below prior-year results, yet outpacing internal expectations due to favorable weather and timing. Capital deployment has been strategically realigned, shifting $1.1 billion from distribution to higher-return transmission, while maintaining the current rate base growth forecast. Management highlighted proactive customer relief, cost controls, and operational excellence as levers maintaining earnings guidance and credit health. Regulatory filings in Maryland and Delaware focused on recovering infrastructure costs and supporting capacity, with execution timelines and rate base outcomes scheduled for later in the year.

  • PJM market supply-demand imbalances and limited new generation have led Exelon Corporation to advocate for structural reforms and pursue new transmission and generation opportunities, including $1.9 billion in recent competitive bids.
  • Leadership transition at PICO was executed to maintain operational continuity amid regulatory reprioritization in Pennsylvania.
  • Management expects to recognize 47% of full-year earnings in the first half of the year, consistent with historic seasonal patterns, with second-quarter earnings projected at approximately 15% of the planned annual result midpoint.
  • Customer savings of $1 billion reflect both avoided outages and programmatic relief, yet ongoing supply shortages and regulatory headwinds represent unresolved challenges to affordability and growth.

INDUSTRY GLOSSARY

  • PJM: The regional transmission organization overseeing the electric grid and wholesale market in the Mid-Atlantic and parts of the Midwest.
  • MISO: Midcontinent Independent System Operator, responsible for grid reliability and managing wholesale electricity markets across the central U.S.
  • AFUDC: Allowance for Funds Used During Construction—an accounting method for capitalizing financing costs related to construction projects.
  • ATM: At-the-market equity offering program, allowing a company to issue shares incrementally at prevailing market prices.

Full Conference Call Transcript

Ryan Brown: Great. Thank you, Michelle. Good morning, everyone. Thank you for joining us for the 2026 first quarter earnings call. Leading the call today are Calvin G. Butler, Exelon Corporation's President and Chief Executive Officer, and Jeanne M. Jones, Exelon Corporation's Chief Financial Officer. Other members of Exelon Corporation's senior management team are also with us today and will be available to answer your questions following our prepared remarks. Today's presentation, along with our earnings release and other financial information, can be found on the Investor Relations section of Exelon Corporation's website. We would also like to remind you that today's presentation and the associated earnings release materials contain forward-looking statements which are subject to risks and uncertainties.

You can find the cautionary statements on these risks on Slide 2 of today's presentation or in our SEC filings. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Reconciliations between these measures and the nearest equivalent GAAP measures can be found in the appendix of our presentation and in our earnings release. It is now my pleasure to turn the call over to Calvin G. Butler, Exelon Corporation's President and CEO.

Calvin G. Butler: Thank you, Ryan, and good morning, everyone. We appreciate you joining us for our first quarter earnings call. Our message today is straightforward. 2026 performance remains on track, both financially and operationally, and with a disciplined, adaptable platform, you can continue to depend on Exelon Corporation to navigate change and deliver on our commitments. This morning, we reported adjusted operating earnings of $0.91 per share, exceeding expectations, with outperformance driven primarily by net favorable weather and timing-related items. We are also affirming our 2026 operating earnings guidance of $2.81 to $2.91 per share. Reliability and operational performance continue to set the standard for the industry, even as our system faced several high-wind storm events this spring.

All utilities sustained top-quartile reliability performance, with ComEd in the top decile. Our men and women on the ground continue to deliver: responding safely, restoring service quickly, and keeping customers connected. This quarter also included several important regulatory and legislative developments, most notably in Pennsylvania and Maryland. At PICO, we made the decision to withdraw the recently filed electric and gas rate cases. This was a deliberate, timing-based decision grounded in customer affordability considerations and informed by stakeholder feedback. Importantly, this decision does not change our commitment to safety, reliability, or long-term infrastructure investment. It demonstrates our ability to adjust timing and reallocate capital while maintaining the balance between near-term affordability and long-term system needs.

Maintaining that balance requires difficult prioritization decisions and the strong ongoing stakeholder partnerships you have come to expect from Exelon Corporation. Looking ahead, we welcome continued close collaboration with all stakeholders across Pennsylvania as we reprioritize certain investments without compromising safety or reliability in the near term. Before I move on, I also want to highlight a recent leadership update at PICO. Dave Vajos, previously CEO of PICO, has transitioned into an advisory role reporting to me. Michael A. Innocenzo has stepped in as an interim President and CEO while continuing to serve as Exelon Corporation's Chief Operating Officer. Michael A.

Innocenzo previously served as President and CEO of PECO from 2018 to 2024 and brings deep operational experience, long-standing relationships across Pennsylvania, and a strong understanding of PICO's system, workforce, and stakeholders. This transition ensures continuity and stability at PICO as we remain focused on operational excellence, affordability, and reliable service for our customers. Turning to Maryland, the Utility Relief Act has passed the legislature and is awaiting Governor Moore's signature. We know the governor and state leaders share our focus on affordability. However, the legislation does not address the growing imbalance between energy demand and supply. Residential supply costs in the Mid-Atlantic have increased by up to 80% or more over the past five years.

Without addressing supply constraints, affordability challenges will persist. Addressing this challenge requires a combination of incremental transmission investment, continued reforms at PJM, and, critically, the addition of new generation. We are leaning into areas where we have a clear mandate today, like transmission, while also advancing solutions in areas where we currently cannot participate, including utility-owned generation. For example, HB 1561 in Maryland was designed to establish a clear path for utility-owned backstop, particularly storage and renewable resources.

Given the structural imbalance between supply and demand in the state and Maryland's heavy reliance on imports from neighboring markets, this approach would have meaningfully enhanced energy security and resilience and ultimately avoided the risk of blackouts, which in 2024 PJM suggested could happen as soon as 2028 due to lack of supply. In short, affordability and reliability must go hand in hand. We remain committed to working constructively with stakeholders to deliver near-term customer relief while supporting the long-term investments required to keep energy safe, reliable, and affordable. As such, we have taken a hard look at our plan and made deliberate adjustments. Let me be clear. This is a different plan for a different moment.

We are pulling back on certain projects, reprioritizing capital across our portfolio, and delivering $350 million of incremental O&M savings in 2027 tied to work we will no longer pursue. We are actively reshaping the business to best meet the needs of our customers while delivering on the Exelon Corporation promise to keep energy bills as low as possible. This includes accelerating the use of new technologies, focusing investment on the highest-impact opportunities, and maintaining disciplined cost control. Business as usual is not an option. The energy market has shifted dramatically with significant load growth and a lack of supply to meet the evolving needs of our customers and communities at a reasonable price.

While we remain confident in the value of our work and investments, this moment requires us to adapt, to be agile, and to make changes thoughtfully and purposefully. Our core mission—commitment to safety, reliability, ethics and compliance, and service to our customers—is not changing. Now, Jeanne will walk through the details in a moment. But with these actions in place, we are reaffirming our 2026 adjusted operating earnings guidance of $2.81 to $2.91 per share and our long-term operating earnings growth outlook from 2025 to 2029 near the top end of the 5% to 7% range. This is our platform at work. Size, scale, diversification, and discipline translate directly into execution.

As we adjust our plan to reflect current realities, we are also leaning into areas where we see strong visibility and clear need—most notably, in transmission. Our scale, multistate footprint, and deep operational expertise allow us to step forward where reliability and resiliency investments are increasingly needed, especially as load growth and system complexity continue to accelerate. We have seen that play out in recent periods through our success across multiple competitive and reliability-driven processes. That momentum continues. In February, we submitted competitive bids for two Illinois transmission opportunities within the MISO Tranche 2.1 window, representing approximately $1.9 billion of total transmission capital spend pursued jointly with Infinergy.

While it is too early to comment on potential outcomes, these projects underscore our disciplined approach—deploying capital where RTOs have identified clear need, strong execution visibility, and attractive risk-adjusted returns. You should expect Exelon Corporation to continue engaging competitively and with discipline in future transmission windows across PJM and other ISOs, including two additional bids expected later this month. However, affordability and energy security cannot be solved by transmission alone. Additional generation is critical. We continue to work closely with federal officials, PJM, and state leaders to address elevated supply costs and emerging reliability challenges across the system. Let me reiterate. You cannot have a conversation about affordability without addressing the underlying shortage of generation.

We support measures that bring new generation forward while avoiding market designs that result in unnecessary or excessive payments at the customer's expense. That is why we have been focused on ensuring our data center pipeline is increasingly backed by FERC-approved Transmission Security Agreements, which have now secured approximately $1 billion of collateral. Real affordability depends on careful design, from load forecasting and cost allocation to how new resources are integrated into the market framework. There is more work ahead as implementation details continue to take shape, and our team remains closely engaged with PJM, regulators, and policymakers to ensure outcomes that protect customers and support a reliable, affordable system.

As we said before, addressing these challenges will require an all-of-the-above approach, including utility-led solutions, demand-side alternatives, and merchant investment. While we do not control the supply side, we remain intensely focused on reducing the cost we can control and on actively advocating on behalf of our customers. In the past year alone, we have delivered approximately $1 billion in customer savings through a combination of actions, including our award-winning programs that connect customers to assistance, our industry-leading customer relief fund, a recently approved gas supply settlement, and disciplined cost management that kept costs nearly flat driven by operational efficiencies. We have delivered this $1 billion while also providing best-in-industry reliability.

In contrast, over the last two years, customers have paid $32 billion to generators for capacity in PJM, while supply has declined by 1.2 gigawatts over that same period—meaning customers paid more and received less. The time for action is now. PJM has been warning about 2028 reliability risk since 2024. We are halfway there, and there has been no meaningful progress on new supply. While recent activity in the PJM interconnection queue is encouraging, it is not enough for projects to simply be in the queue. We need to ensure they are built and come online in time to meaningfully address this reliability need.

Had utilities been allowed to build generation for the 2028/2029 planning year, we would be in a materially stronger position today. As we have highlighted before, Charles River Associates estimated that utility-supported generation could have saved PJM customers between $9.6 billion and $20 billion in the 2028/2029 delivery year while reducing outage risk from energy shortages by approximately 85%. Our customers simply cannot afford to wait any longer. With that, I will turn it over to Jeanne to walk through our financial performance and provide additional details on our rate case activity. Jeanne?

Jeanne M. Jones: Thank you, Calvin, and good morning, everyone. In addition to our first quarter financial update and progress on our 2026 regulatory activity, today I will review several disclosure updates that reinforce our confidence in our path to adjusted operating earnings growth near the top end of the 5% to 7% range, beginning on Slide 5. We recognize that balancing affordability with safety and reliability is critically important, and we remain actively engaged in solutions that put customers first. Our customers are served by some of the most reliable utilities in the nation, and continued investment is essential to maintaining that performance in the near term while supporting long-term economic growth.

Our revised four-year capital plan reflects these priorities by rebalancing investment, enabling us to invest nearly $10 billion in 2026 and a total of $41.7 billion over the next four years for the benefit of our customers. This reflects $1.1 billion of project deferrals and reductions in PICO and BGE distribution, coupled with $1.5 billion of incremental transmission investment to support project realignment and the interconnection of data center customers that have signed Transmission Security Agreements. Despite the rebalance of capital, we are maintaining a revised annualized rate base growth of 7.9% over the next four years, reflecting the substantial and accelerating transmission growth opportunities we are experiencing across our service territory.

The need for additional transmission infrastructure is real, and we are witnessing this growth firsthand, driven by reliability requirements and large load interconnections. We now anticipate transmission rate base growing at 16% through 2029 and are maintaining our previous upside guidance of $12 billion to $17 billion, which does not include our recent competitive transmission bids in MISO or potential solar or storage opportunities. Having executed within 2% of our plan since 2023, we remain confident in our ability to deliver this next phase of growth through disciplined execution, advancing important economic and energy priorities while keeping customer affordability front and center through a continued focus on cost management.

We are confident in our ability to drive expense growth well below inflation. In addition to nearly flat expense growth from 2024 to 2026, we are now targeting no more than 2% adjusted O&M growth through 2029. We remain committed to managing the portfolio as one Exelon Corporation and are leveraging our dedicated team to identify another $350 million of savings in 2027. Our revised plan incorporates cost reductions achieved through accelerating AI and technology transformation, prioritizing IT projects with the greatest customer and operational impact, focusing our community investments, reducing use of outside contractors, implementing a managed hiring process, and offering a targeted voluntary separation program later this year.

We also continue to rely on a balanced funding strategy to support this execution. We are committed to ensuring that we maintain financial flexibility and strong credit metrics over the guidance period, targeting approximately 14% at Moody's and S&P. Turning to Slide 6, we present our quarter-over-quarter adjusted operating earnings block. Exelon Corporation earned $0.91 per share in 2026, compared to $0.92 per share in the same period in 2025. Earnings are lower in the first quarter relative to the same period last year primarily driven by $0.07 of new distribution and transmission rates, net of depreciation and AFUDC, and $0.01 of favorable weather at PICO.

This favorability was offset by $0.04 of ComEd timing due to revenue shaping in 2025, $0.02 of higher interest expense at corporate and PICO, $0.01 of higher credit loss expense at BGE, and $0.01 attributable to the recognition of Pepco Maryland's N Y P reconciliation, for which a final order was received in March. These results are slightly ahead of our indications on the fourth quarter call, primarily due to favorable weather and timing-related items. Looking ahead to next quarter, we expect second quarter earnings to be approximately 15% of the midpoint of our projected full-year earnings guidance range, which contemplates normal weather and storm activity and anticipated revenue shaping and timing for the quarter.

In combination with Q1 results, this would result in recognizing 47% of projected full-year earnings in the first half of the year, in line with seasonal shaping in prior years and allowing us to remain on track for full-year operating earnings of $2.81 to $2.91 per share, with the goal to be at the midpoint or better. Turning to Slide 7, we highlight our regulatory activity in 2026.

Starting with the Pepco Maryland base rate case, where we have filed a notice with the Maryland Public Service Commission to pursue the traditional base rate case we had filed last fall, requesting a revenue requirement of $119.9 million, which primarily seeks recovery of critical infrastructure investments and incremental financing costs associated with rising interest rates. These investments support system reliability, capacity, and long-term growth for our customers, including projects such as the White Flint substation in Montgomery County, which expanded capacity to meet current and future energy needs, reduced outage risk and maintenance needs through removal of more than 16 miles of overhead lines, and strengthened system resilience through underground supply lines and modern equipment.

Collectively, this and other investments contributed to Pepco achieving the lowest outage duration in the state. Evidentiary hearings were held last week, and a final order is expected in August. In Delaware, Delmarva Power's electric base rate case continues to progress on schedule, with intervenor testimony due in October. The requested revenue increase allows us to better support our customers through targeted programs and essential investments. This includes a new income-based rate and reliability projects such as Basin Road, where two transformers originally installed in 1967 were replaced and now reliably serve over 2,500 customers, including Wilmington Airport, the Delaware National Guard, and surrounding communities. DPL expects to be able to implement interim rates in effect in July.

Finally, on Slide 8, I will conclude with a review and update of our balance sheet activity. We continued to take advantage of favorable market conditions early in the year and have made substantial progress toward our 2026 capital needs. We have completed approximately 43%, or $2.3 billion, of our planned long-term debt financing, successfully executing all expected debt transactions both at corporate and Pepco Holdings for the year and materially de-risking our go-forward financing plan. The strong investor demand and attractive pricing for our debt securities continue to be a testament to the strength of our balance sheet and to our value proposition, positioning us well in service to our customers.

We also continue to execute our pre-issuance hedging strategy to further protect us from interest rate volatility. Through 2029, we expect to fund the revised $47.17 billion capital plan with about $21.8 billion of internally generated cash flow, $13.1 billion of debt at the utilities, and $3.4 billion of holding company debt. The balance will be funded with $3.4 billion of equity—approximately 40% of our incremental capital plan from last year's plan and representing less than 2% of Exelon Corporation's annual market cap. We have already made progress on approximately 37% of these equity needs, with all of our $850 million in equity needs for 2026 and over $400 million in 2027 priced using forward contracts under our ATM.

Maintaining a strong balance sheet remains core to our strategy. We continue to identify opportunities to mitigate risk in our plan and expect to maintain financial flexibility above our downgrade thresholds, targeting credit metrics of 14% over the planning period. We remain confident in our ability to deliver value for our customers and our shareholders. Thank you. I will now turn the call back to Calvin for his closing remarks.

Calvin G. Butler: Thank you, Jeanne. I will close on Slide 9 by reinforcing what matters most as we move forward. Our priorities are clear and unchanged. We are executing our capital plan with discipline, delivering strong operational performance, advancing affordability through prudent investment, and pursuing growth where it strengthens the system and creates long-term value. That discipline is supported by a platform built to perform. Our scale, diversified footprint, and capital flexibility allow us to adapt as conditions evolve without losing focus or momentum.

In 2026, we expect to deploy approximately $10 billion of capital for the benefit of our customers, earn a consolidated 9% to 10% ROE, and deliver operating earnings of $2.81 to $2.91 per share with a goal of achieving midpoint or better, while maintaining a strong and resilient balance sheet. The infrastructure we operate is foundational to the communities and economies we serve. We take that responsibility seriously, and we meet it every day through consistent execution, high operational standards, and a clear focus on the people who rely on us. Before I close, I also want to recognize the work of our employees across the company. Balancing long-term infrastructure needs with customer affordability is not easy.

It requires judgment and discipline at every step. That work extends beyond prioritizing the right investment. It includes constructive regulatory engagement, partnership with local communities, and advocacy for policies that promote affordability and reliability, even when they are not popular. I am proud of how our teams manage this balance. Their focus on execution, affordability, and customer outcomes is exactly what allows Exelon Corporation to deliver today while positioning us for the future. The world around us continues to change, but our approach remains consistent. We remain focused, disciplined, accountable, and confident in our ability to deliver. We will now open the call for questions.

Operator: Thank you. If you would like to ask a question, simply press star 11 on your telephone keypad. Our first question comes from Shahriar Pourreza with Wells Fargo. Your line is open.

Shahriar Pourreza: Good morning, Calvin. I wanted to start with Pennsylvania. It seems like it is the noisiest in the country right now. What are you getting from Governor Shapiro to make withdrawing the case and weathering this environment worth it? The gas utilities seem to be okay. One of your peers has a black box settlement that should get approved. The move is a bit conflicting. What is it about this case that spooks stakeholders versus your other peers? How should we be thinking about the trade-offs here in the state from your move? Thanks.

Calvin G. Butler: Thank you for asking the question. Let me begin by saying what a difference a year makes. In all seriousness, Pennsylvania has always been a jurisdiction in which we leaned in and had a strong regulatory backdrop and strong relationships, and we continue to have those. Our decision to withdraw the Pennsylvania filing was based on conversations we had with a variety of stakeholders. Those stakeholders said, if we could partner with them to address the affordability issue and lean in, timing is not the best right now. We are assessing our future rate case filings in Pennsylvania, all geared to having a strong infrastructure to provide safe, reliable service.

I am not conflating this with any other cases that have been filed by others. We did what is best for Exelon Corporation and PICO specifically at this time. We believe PICO needs to make investments in the future, and we will do so, but we will work collaboratively with all stakeholders to make sure it is a prudent decision and timed appropriately to move forward.

Shahriar Pourreza: Hopefully that created the goodwill you needed. On conversations around supporting supply-side solutions and long-term resource adequacy agreements—movement with House Bill 1272 or Senate Bill 897—what should we think about for catalyst and timing? Could this happen before or after the election? Is Pennsylvania waiting for PJM answers from FERC or the RBA process first? How should we think about resource adequacy and the bills that are out there, in light of you just pulling a rate case and creating, hopefully, some goodwill? Thanks.

Calvin G. Butler: You go right to the core issue. We are not going to adequately address affordability without addressing the supply issue, and that is our conversation not just in Pennsylvania, but across all jurisdictions. When you see us show up in an advocacy position for bills that allow utilities to get new generation built, that is what it is all about. Recognizing also that Pennsylvania is in an election year with a divided government, getting anything done this year is a long shot, but it is necessary to continue to advocate for utility-owned generation and new generation in the state and across the Mid-Atlantic specifically.

If you do not do that, the same issue we are talking about today we will be talking about in the next three to five years. You cannot talk affordability without talking the supply stack. Period. It has to be a holistic approach, and the bills you mentioned go directly to that issue. We will continue to partner with other utilities and stakeholders in the state to address it.

Operator: Thank you. Our next question comes from Steven Fleishman with Wolfe. Your line is open.

Ryan Brown: Morning, Steve.

Steven Fleishman: Hi, good morning. Thanks. Following up on Pennsylvania, you did not really mention the governor's letter. It seemed like a more adverse regulatory structure. Was that part of what you were hearing when you pulled the case, and how should we think about that when you ultimately do file a case?

Calvin G. Butler: Thank you, Steve. The governor's letter centered on affordability. He brought up three specific points: making sure that utilities are going after the most cost-effective forms of capital, transparency in ratemaking, and what he termed justifiable returns. It was nothing we had not already heard in our conversations with them, and he put it out to the entire energy portfolio within Pennsylvania—all the utilities—and said future rate cases and discussions need to be centered on these three principles. We have no concern with that.

There is a nine-month regulatory process within Pennsylvania, and we will continue to operate transparently and work with the commission and the governor and his team to ensure understanding of the what and the why—why the investments we are making add value in safe, reliable, and resilient service to Pennsylvanians, and what we are doing on the front end to control our costs. We are pulling $350 million of cost out of our business. That goes directly to the governor's message on justifiable returns and doing our part to keep costs as low as possible. We were doing it before, and we will do it into the future.

At the same time, we know economic development and job creation are important to him, and there is no better partner than PICO has been in Pennsylvania for decades. These are the very issues we are talking about today and will talk about in the future.

Steven Fleishman: Thanks for that. On PJM issues and the need for more generation, one recent thing was the Crane restart and that even when you have something coming back, it is potentially not interconnected until 2031. Are there things that can be done by PJM or transmission owners to deal with the interconnection timeline and get it done quicker?

Calvin G. Butler: Thank you, Steve. We have been on top of that issue, partnering with PJM to see what we can do—different routes, what we can do to really secure them and get them on sooner. The reality is we have a concern with the entire reliability and resiliency of the system. I will ask Colette Honorable to provide input.

Colette Honorable: Thanks for the question about the interconnection queue. As you know, PJM has been evaluating how best to progress the interconnection queue and last week announced that 811 new generation projects capable of generating 220 gigawatts of electricity have applied to interconnect to the grid. We have also seen that PJM has reopened the queue, and we applaud PJM for that action because we understand all too well—as we hear from our customers—that we need to move that backlog and get the supply through the queue. We also need to address reliability challenges.

While we are encouraged that there are over 800 projects in the queue, we know that there is still more work to be done because only 19% of the projects in the queue reach operation. We also know 54 gigawatts have been cleared through the interconnection process but are delayed by siting, permitting, and supply chain issues. Most of all, to your question, we need new supply. We are pleased to see new leadership at PJM with David Mills, and we are hopeful that he can help move this along.

Steven Fleishman: Last one. The transmission CapEx increase you did—if you did not lower distribution, would that have happened anyway? Is there more coming from the data centers, or are you managing within a total capital level you were trying to maintain?

Jeanne M. Jones: It is work that we saw on the horizon. We have always spoken to the diversification of our portfolio and not one project being greater than 3%. Having those projects available to pull in within the planning period is a benefit of Exelon Corporation's diversified capital portfolio. We can pivot as needed. Our $12 billion to $17 billion of opportunities outside the planning period did not change—that range is still very robust, driven by the same four or five themes. We will continue to manage the portfolio. As Calvin said, this is the plan for this moment. We did pull back on distribution, but there is a cost to investing and a cost to not investing.

There is critical work we still need to do in those states, but this is the right plan for now. Through our strong operations on the distribution side, we saved our customers $1 billion in avoided outage costs in 2025 alone. The investment needs to be done, but we will evaluate and adjust, leveraging the size, scale, and diversified portfolio of Exelon Corporation.

Steven Fleishman: Got it. Thanks for taking all my questions. Appreciate it.

Calvin G. Butler: Thank you, Steve.

Operator: Our next question comes from Nicholas Campanella with Barclays. Your line is open.

Ryan Brown: Good morning, Nick.

Nicholas Campanella: Good morning, team. Thanks for taking the time. One follow-up on the letter, if I can. There was a proposal around the return that would point to a lower ROE and potentially lower equity cap, depending on the mechanics. Those would be significantly below state averages across the U.S. and have already raised the company's implied cost of capital. Can you talk to the risk of it going there? My understanding is you do have a GRC penciled into this plan—can you confirm that? Do you have a view on whether that would require legislation to go that way, or is this something the PSC at its discretion could do?

Jeanne M. Jones: On ROEs, capital structure, and transparency on investments, we believe Pennsylvania has a robust regulatory process that allows us to build an evidentiary record that brings in all forms of debate and justifies what is a fair and reasonable return. That is the right place to have that conversation. Even in a settlement, you still have to justify your returns using capital asset pricing models or other approaches based on publicly available, real data—which is what the governor is asking us to pull in—to determine a justifiable return. A financially sound utility needs justifiable returns commensurate with the risk taken by the regulated utility.

The capital structure has to balance the right risks to maintain appropriate credit ratings that drive lower cost of financing for our customers. We will leverage that process to build the record that results in the right economics for a financially sound utility that can continue to invest to create economic development, drive jobs, and avoid the significant costs associated with not investing.

Nicholas Campanella: Thank you. You introduced some O&M rationalization in the plan and are working toward identifying more. How much is sustainable versus one-time and can be recaptured through a rate case proceeding?

Calvin G. Butler: We are going to run our business in the most efficient manner. When we talk about pulling out $350 million in cost, it is largely driven by work we are not going to do. If we are not going to do certain projects, we will pull those costs out and manage accordingly. If opportunities arise in the future to bring back certain avenues of investment, we will evaluate them. But we will always maintain and run a very efficient business. We approach these as sustainable cost savings through 2029. We will not make decisions that sacrifice reliability and safety. These savings are geared toward overall efficiency.

Certain op codes will need to make deeper provisions because if you are not investing, you must adjust. That is how we are approaching it.

Nicholas Campanella: One more. You continue to be on stable outlook to my understanding. What feedback are you getting from the agencies through what has transpired in Pennsylvania?

Jeanne M. Jones: We have had a lot of discussions with the agencies. PICO was already on negative outlook and is under review for downgrade. The combination of continuing to invest and the regulatory climate factors in, and we will continue to work through that. We want to maintain stronger credit ratings to lower financing costs. From an Exelon Corporation perspective, Pennsylvania is one piece. We manage this as a portfolio. Our diversified platform, our ability to pivot around different projects and still deliver, and importantly, our ability to maintain that target of 14% are key.

Having cushion to downgrade thresholds is a testament to how we put a safe, reliable grid and balance sheet at the forefront of our decisions, allowing us to deliver for customers and shareholders.

Jeanne M. Jones: Thank you, Nick.

Operator: Thank you. Our next question comes from Paul Zimbardo with Jefferies. Your line is open.

Ryan Brown: Good morning, Paul.

Paul Andrew Zimbardo: Hi. Good morning, team. First, it is nice to see the swift adjustments. I know those are not easy decisions. It sounds like more intensity in your prepared remarks quarter over quarter, Calvin. Is there a point where you need to take matters into your own hands and pursue more contracted generation opportunities and advocate for bigger changes with the state and PJM? How do you gauge where you are on shifting toward being more proactive to the extent you can versus waiting for PJM?

Calvin G. Butler: Thank you, and thank you as always for the questions. We are taking things into our own hands. Our transmission organization, led by Kusami, is going after competitive transmission bids—two to date. We are also looking at partnerships to build generation and contract for generation. We are doing those things now. As a company, we will talk about them when they are done or when we have something signed and ready to deliver. When I tell you something, we are going to deliver. The intensity comes from our job to run this business.

When we say we are taking $350 million of cost out this year and delivered $1 billion in savings for our customers, that reflects a thoughtful process that impacts people and livelihoods. Fewer contractors, programs that impact employees—we do not take that lightly. It is up to us to ensure a stable environment for our 20,000-plus employees while delivering value to our communities. Are we being proactive? Absolutely. We will talk to you about those actions when the plans are baked. Speculation does not deliver results. We are committed to our earnings results through 2029. If that was to adjust, we will be the first to tell you the what and the why.

We are being very intentional about our focus based on changing market dynamics. Across PJM, the first thing governors or commissions talk about is affordability. We are listening and addressing it.

Paul Andrew Zimbardo: Pulling it together between net higher earnings from shifting to transmission and the cost control—does this build more contingency into the plan, or are you in the same place as before, given the reconfiguration of rate case timings as well?

Jeanne M. Jones: This gets us back to plan, Paul. As always, we factor in risks and opportunities and give you a plan that accommodates a variety of scenarios. This is about getting back to the plan we shared earlier, but it is a different plan for this moment. As a management team, that is what you want us to do—pivot, leverage the portfolio of Exelon Corporation, still deliver, and do it in a way that contemplates a variety of outcomes.

Paul Andrew Zimbardo: Thank you, team. Good luck.

Calvin G. Butler: Thank you, Paul.

Operator: At this time, I would like to turn the conference back over to Calvin G. Butler for closing remarks.

Calvin G. Butler: Thank you, Michelle. Let me begin by thanking everyone once again for joining our Q1 earnings call. I hope what you have taken away today is the power of Exelon Corporation at work. Our diversified platform and committed men and women reaffirm what we said we are going to do each and every day. We appreciate your continued interest and support, and we hope to see many of you in the months ahead. That concludes our call.

Operator: Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.