Hello and welcome to Exelon's First Quarter Earnings Call. My name is Gigi and I'll be your event specialist today. All lines have been muted to minimize background noise. Please be aware that today's webcast is being recorded. We will have a question-and-answer session during the presentation. It is now my pleasure to hand over the program to Andy Plenge, Vice President of Investor Relations. The floor is yours.

Thank you, Gigi. Good morning everyone. We are pleased to have you with us for our 2023 first quarter earnings call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer; and Jeanne Jones, Exelon's Chief Financial Officer. Other members of Exelon's senior management team are also with us today and will be available to answer your questions following our prepared remarks. You may have seen that we issued our earnings release this morning, our release along with the presentation being used for today's call can be found in the Investor Relations section of Exelon's website. As a reminder, the earnings release and other matters that we will discuss during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. As a result, actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. You can find in today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts and expectations. In addition, today's presentation includes references to adjusted operating earnings and other non-GAAP measures. Both the appendix of our presentation and our earnings release contain information for reconciliations between the GAAP measures and the nearest equivalent GAAP measures. We've scheduled 45 minutes for today’s call. And it is now my pleasure to turn the call over to Calvin Butler, Exelon's President and CEO.

Thank you, Andy, and good morning, everyone. We appreciate you joining us for our first quarter earnings call. Our team of over 19,000 employees have entered this first full year of operations after the separation, excited to lead the energy transformation as a premier T&D utility, and it shows in our results. We are delivering our plan on course. I'll start on slide four, covering our key messages. We delivered strong year-over-year growth in the first quarter, earning $0.67 per share on a GAAP basis and $0.70 per share on a non-GAAP basis. These results keep us on track to deliver earnings within our guidance range of $2.30 to $2.42 per share for 2023. This is despite the impact of mild weather, which is a testament to the stability offered by the progressive, largely decoupled rate-making mechanisms in our jurisdictions. Operationally, we had our best on record reliability performance at all four of our utilities, with ComEd continuing to operate in the top decile. As it pertains to our rate cases, we are well underway in a number of jurisdictions with three new filings initiated since the fourth quarter earnings call. Building a stronger, smarter, resilient, and cleaner grid requires investment; we are engaging with our stakeholders to align on our shared goals and ensure this investment is compensated fairly, as it is integral to our strategy. On February 15th, Atlantic City Electric filed a distribution base rate case with the New Jersey Board of Public Utilities to support investments in infrastructure to maintain safety, reliability, and customer service for our customers. It also includes initial recovery for ACE’s Smart Meter deployment, which brings a host of benefits that Jeanne will highlight shortly. BGE filed its second multi-year plan on February 17th, and Pepco DC filed its second MYP on April 13th. Both NYP rate cases incorporate investments that enable the energy transformation guided by jurisdictional policy, whether it be the Climate Solutions Now Act in Maryland or DC's transformative energy policies like the DC Climate Action Plan. Finally, Pepco expects to file its second MYP, our final anticipated base rate filing for the year with the Maryland Public Service Commission later this month. Jeanne will take the time to highlight the next steps across our open rate cases and provide additional details on the regulatory calendar shortly. Now in working through these rate cases, we have several new commissioners expected across our jurisdictions, including new chairs in place or pending in Illinois, Maryland, and Pennsylvania, and new appointees in Illinois and Maryland. We appreciate the service of the outgoing commissioners and are excited to begin working with the newest members on this next phase of the energy transformation. Given this transformation will be measured in decades, it reinforces the importance of building a shared forward-looking understanding of priorities and needs across a variety of stakeholders, which is accomplished through transparency and collaboration. This kind of approach supports continuity through the inevitable evolution in legislative and regulatory bodies over time. Lastly, we continue to reaffirm our existing expectations to be at the midpoint or better of our 2021 to 2025 and 2022 to 2026, 6% to 8% annualized earnings growth ranges, with dividend growth to match underpinned by the investments we are making on behalf of customers and earning an annual consolidated ROE in the 9% to 10% range during that time. Our diverse deconcentrated capital expenditure plan and predictable investment recovery frameworks contribute to the compelling risk-adjusted total shareholder return of 9% to 11% that we offer investors between our dividend and earnings growth through 2026. Our results are built on an operating philosophy that relentlessly pursues Exelon, as is highlighted on the next slide. Slide five reviews our operating performance for the start of 2023. Beginning first with reliability, you can see that our utilities continue to operate at industry-leading levels, both in terms of outage frequency and outage duration. Both ComEd and PHI achieved best on record outage frequency performance, and all four utilities achieved best on record system outage duration performance. Now consistent with our focus on continually improving operations and customer value, we are now using total system outage time versus average customer outage duration as one of our reliability metrics. This refined metric better ensures we are comprehensively capturing the customer experience on an equitable basis in each of our service territories. This performance is a testament to the hard work that our employees put in each and every day. It also speaks to the effectiveness of the investments in reliability and resiliency that our utilities have made, providing a great foundation as we discuss with our stakeholders the next phase of investments to support their energy transformations. As it pertains to safety, PHI is now operating at top decile levels, and Pepco is in the top quartile, both up from the second quartile last year, while BGE improved from the third quarter to the second quartile. Now, while we are encouraged by the progress we have made on the safety front in the company, we have a safety-focused zero tolerance culture. We are using targeted training at each of our utilities, such as ergonomics awareness training at ComEd, in light of its move out to the second quartile to address the areas driving underperformance. Gas order response continues its run of top decile performance with all three utilities performing at world-class levels in 2023. PHI responded to all gas owners in less than an hour, achieving a perfect rating. Lastly, I want to spend a moment talking about customer satisfaction. As you can see, our four utilities are operating in the second quartile after three out of the four closed out 2022 in the top quartile. While each operating company has unique areas to address, there are a few common trends. For instance, the bar for communicating with customers around outages and reliability continues to be raised as our customers increasingly rely on the grid, whether it be working remotely or charging their cars. They need access to information in real time. We are excited about the investments we have made and the tools they already have at their disposal, such as mobile apps, and we will continue to invest in enhancements focused on improving communications. Although, another area of focus is new technology through upgrades to our customer care and billing software. These investments will allow us to provide more options to meet customer needs around billing and other services and enhance self-service options for those experiencing slower turnaround times. But perhaps the primary driver of lower customer satisfaction scores relative to the latest available benchmark as of 2021 is one that is not unique to Exelon. While the inflationary environment has shown signs of abating recently, particularly around energy supply costs that are a pass-through for us, customers have been impacted by increased costs in many aspects of their lives and businesses. That's why we will continue to focus on maintaining more than average rates and overall bill levels. Again, rates in our cities are 23% below the average rate in the largest cities in the United States, and we have connected customers to increasing amounts of assistance as well, totaling over $1 billion the last two years. But we have to continue to articulate the value customers are receiving, and we will maintain focus on managing our own costs to deliver our products as efficiently as possible. We also address bill impacts and our approach to rate cases. Our proposed deferral of 35% of ComEd's 2024 rate increase to 2026 is just one example, as is Pepco's DC proposed expansion of the residential aid and arrearage management programs. Ensuring we are leading the industry and customer satisfaction remains a top priority for us. Now, Jeanne will provide an update on our financial performance for the first quarter. Jeanne?

Thank you, Calvin, and good morning, everyone. Today I will cover our first quarter financial updates and progress on our 2023 rate case schedule, and I'll also highlight the ways in which our utilities are advancing a smarter, stronger, and cleaner energy grid to better serve all customers. Starting on slide six, we show our quarter-over-quarter adjusted operating earnings plan. As Calvin mentioned, Exelon earned $0.70 per share in the first quarter of 2023 versus $0.64 in the first quarter of 2022, reflecting growth of $0.06 per share over the same period. Variance in growth was driven primarily by $0.10 of higher distribution and transmission rates associated with investments and completed rate cases, including the uplift from higher treasury rates, impacting ComEd's distribution hourly. We also benefited $0.03 from the reversal of other one-time items from 2022, including the discontinued operations adjustment from the separation and the customer refund in Illinois. These items were partially offset by $0.05 of lower earnings due to the sustained warmer-than-normal temperatures throughout the winter, impacting our non-decoupled jurisdictions in Pennsylvania and Delaware, as well as $0.02 of higher interest expense due to the rising interest rates and higher levels of debt at the holding company. There was also $0.70 per share in the first quarter which reflects an approximate 30% contribution of the midpoint of our projected 2023 operating earnings guidance range. Historically, we have earned on average 28% of full-year earnings in the first quarter. Heading into 2023, we expected Q1 to be slightly ahead of historical patterns due to the completion of rate cases at PHI and Pepco, rising treasury rates impacting income as are we relative to 2022 and the absence of one-time items from the separation. However, we are also seeing the impact of unfavorable weather at Pepco and DPL Delaware. While the weather tempered some of that upside, we still delivered earnings ahead of expectations due to timing at PHI and the recognition of carrying costs related to the carbon mitigation credit balance by ComEd. Looking ahead to next quarter, after factoring in some PHI year-over-year timing items, the relative EPS contribution in the second quarter is expected to moderate at approximately 17% of the midpoint of our projected full-year earnings guidance range. The combination of Q1 and Q2 will result in achieving approximately 47% for projected full-year earnings through the first half of 2023. This puts expected results for the first half of 2023 in line with how we performed last year, delivering 48% of our full-year earnings in the first half of 2022. On a full-year basis, we expect the $0.05 of unfavorable weather experienced in the first quarter to be offset with a combination of O&M levers across the platform, favorable depreciation at Pepco, and the full-year earnings impact of the carrying cost associated with the carbon mitigation credit regulatory asset balance. With this continued increase in rate base as we deploy capital for the benefit of our customers and our disciplined approach to cost management, we remain on track to deliver expected earned returns at the utilities within our 9% to 10% targeted range by year-end, and affirm our full-year operating earnings guidance of $2.30 to $2.42 per share in 2023. In line with past practice, we would not expect to visit protected 2023 guidance until the third quarter and recall, our goal is always to achieve the midpoint or better of that range. Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of 6% to 8% from 2021 and 2022 guidance midpoint through 2025 and 2026, respectively, with the expectation to be at the midpoint or better of that growth range. Turning to slide seven. As Calvin mentioned, there have been some important developments on the regulatory front since the last earnings call. Let me start by reminding you of two electric distribution rate cases in progress. First, Delmarva Power Delaware has revised a revenue request for a $47.8 million increase based on an updated test period in its electric distribution rate case, both full proposed rates going into effect on July 15th subject to refund. We expect a decision in the second quarter of 2024. Additionally, as discussed previously, ComEd filed its electric distribution multi-year rate plan in January, and we expect intervening testimony due from the Illinois Commerce Commission staff on May 22nd, and evidentiary hearing to be held in late August as the next key milestone. A final order in the ComEd will say case is expected no later than December 20th. ComEd also filed its 2022 formula rate reconciliation seeking recovery of $247 million in rates effective January 1st, 2024. A key driver at the increase is the impact of US Treasury yields starting to increase from their depressed levels experienced during the COVID-19 pandemic, which as you'll recall was reflected in 2022 earnings. First statute in order is expected on the reconciliation by December 17th. Since the last earnings call, there were three new rate cases filed. First, on February 15th, Atlantic City Electric filed a distribution-based rate case with the New Jersey Board of Public Utilities seeking a revenue increase of $105 million, reflecting an RV of 10.5%. The filing supports critical investments to enhance service and deliver safe, reliable, and sustainable energy for customers through key programs, including the company's EV Smart Electric Vehicle Program and the deployment of the Smart Energy Network Program, which I will highlight later in the presentation. Because of these sustained efforts to modernize the energy grid, our customers experience the most reliable energy service ever in 2022 with the lowest frequency of electric outages on record. As permitted by New Jersey Law, ACE may implement full proposed rates on November 17th, subject to refund, and a final order is expected in the first quarter of 2024. Next, BGE filed its second multi-year plan with the Maryland Public Service Commission on February 17th, which we provided preview into on our fourth quarter earnings call. Covering the year 2024 through 2026, the multi-year plan details how BGE will invest nearly $2.3 billion annually in the electric grid and natural gas system and nearly $400 million total in electric vehicle and building efficiency programs. These investments will inject nearly $36 billion into the local economy and support an estimated 72,000 jobs as indicated in a study performed by Caldwell University. Importantly, BGE's infrastructure plan includes more than 300 projects and maintenance programs designed to continue meeting customers' needs and lay the foundation for the state of Maryland to reach its goal of net-zero emissions by 2045. An order is expected on the proposed plan in December 2023. As previously noted, we also requested that the commission provide an order on the proposed reconciliation of 2021 and 2022 costs totaling $77 million of under recovery in parallel with the order on the second multi-year plan. That brings me to slide eight where I want to take a moment to highlight Pepco DC's Climate Ready Pathway multi-year plan that was filed with the Public Service Commission of the District of Columbia on April 13th. Pepco is requesting a $190.7 million revenue increase over the 2024 to 2026 period to recover planned capital investments that are intended to enhance the reliability, resiliency, and security of the local energy grid, and to further support the district's goal to be carbon neutral by 2045, one of the most ambitious climate goals in the nation. Specifically, this will be done through investments in equipment and infrastructure that will enable the integration of more renewable energy, such as solar. They will also help customers access and adopt cleaner energy technologies like electric vehicles, and they will allow Pepco to manage load to ensure the electric service customers depend on is available when they need it. As part of the many maintenance programs included in Pepco's proposed multi-year plan, one involves replacing nearly 24 miles of aging power cables with newer and more modern cables so that all customers experience high quality of service and high reliability. It is the customers and communities that are at the forefront of Pepco's Climate Ready Pathways plan with a central focus on improving the social equity and advancement of affordability of electric service. As part of that commitment, the company is hoping the plan filing proposes several measures to address affordability, including expanding enrollment for the Residential Aid Discount program to include any customer who qualifies for any low-income program in the district, as well as enhancing the Arrearage Management Program. The expansion of these programs would help to further extend the reach of valuable energy assistance, which in 2022 alone provided approximately $21 million to nearly 30,000 Pepco customers in DC or on average $700 per customer. Pepco's multi-year plan comprehensively works to keep service affordable, foster a cleaner energy future, and improve reliability, resiliency, and security through significant investments. This influx of resources directed toward accommodating the next phase of DC's energy transformation is expected to inject more than $580 million in the local economy and support more than 3,800 full-time jobs. An order is requested from the DCPSC by February 2024, based on a proposed 10-month procedural schedule. All our ongoing rate cases are proceeding in line with expectations and you can find further detail on slides 20 through 24 of the appendix. Moving to slide nine. During the first quarter, we continued to invest capital for the benefit of our customers and are on track to meet our $7.2 billion commitment for 2023. These investments in energy infrastructure are vital to maintaining the high standard of service that we have in serving our customers while also preparing the grid for the clean energy transformation. Today, I would like to talk about how Atlantic City Electric is enhancing the customer experience in South Jersey through the Smart Energy Network program, the last major initial smart meter deployment program planned for Exelon utilities. Smart meters are foundational to a smarter power grid. They enable customers to better understand real-time energy usage in homes and businesses, and they provide enhanced information to make our systems more efficient and resilient. With a broad installation beginning in September 2022, ACE employees and their contract partners have been steadily upgrading approximately 30,000 meters per month, and all 568,000 meters are expected to be replaced by mid-2024. When fully installed and operational, the Smart Energy Network is expected to deliver $416 million in operational and customer benefits over the next 15 years. Most notably, these benefits include the ability to restore power faster and more efficiently. They provide tools that help customers use less energy and save money, as well as a reduced need for estimated billing and the capability to provide more detailed outage information when outages occur. They also allow for better integration of new clean energy technologies, including solar, which has experienced the highest penetration in ACE's territory relative to all of our other jurisdictions at approximately 25% of net peak demand. To put these benefits into perspective, on an annual basis, ACE expects to eliminate 134,000 truckloads, reduce major store operations and cost by 10%, and save $4.5 million in annual contracted meter reading costs. The Smart Energy Network is a critical step in advancing a cleaner energy future for South Jersey and helping the state meet its climate goals. Leveraging expertise from its sister utilities, ACE is committed to using its collective resources to ensure all customers realize the full benefits of this meter upgrade initiative. This is the power of the Exelon platform. As shown in our discussion on our balance sheet on slide 10, as you remember on our last earnings call, we project 100 to 200 basis points of cushion on average over our guidance period for our consolidated corporate credit metrics above S&P and Moody's downgrade thresholds of 12% over the guidance period, demonstrating our commitment to maintaining a strong balance sheet. If the corporate alternative minimum tax was not mitigated through an inclusion of repairs in its calculation, we anticipate being at the lower end of that 13% to 14%. We continue to await guidance from the treasury, which we are optimistic they will issue before year-end. And we remain encouraged by the engagement they have in understanding how its implementation can impact energy infrastructure providers like Exelon. From a financing perspective, we have successfully raised $2.5 billion at corporate and approximately $2 billion for ComEd and the PHI entities. Today, we have completed over 80% of our planned 2023 long-term debt financing needs. This positions us well for any unexpected market volatility in the balance of the year. We continue to see strong investor demand for our debt offerings, which is a testament to the strength of our balance sheet and to our value proposition as a premier T&D utility with low-risk attributes. To reiterate our equity needs, there has been no change in our guidance to issue $425 million of equity as a holding company by 2025. We'll continue to update you as we make progress on that plan. Thank you, and I'll now turn the call back to Calvin for his closing remarks.

Thank you, Jeanne. Let me conclude our prepared remarks with a reminder of our priorities and commitments for 2023 as the premier T&D utility. It starts with operations. Operating safely and reliably is our core mission, and you can count on us to focus on that every hour of every day. Secondly, as you heard from Jeanne, we have a full set of rate case proceedings well underway that will set our path for the next three to four years, given our multi-year plan frameworks. The transformation of our energy system requires a lot of coordination and alignment, and we welcome the opportunities to engage with stakeholders on the most effective and efficient means to meet our jurisdictional goals. And third, we are focused on executing financially. We're looking to deploy $7.2 billion of capital this year, more than ever before, while maintaining earned ROEs in the 9% to 10% range and delivering on our 2023 earnings guidance range of $2.30 to $2.42 per share. We have made great progress on our financing plan for the year, while also laying the groundwork for future financing needs, and we continue to focus on ensuring our balance sheet is strong. Last, we continue to focus on maximizing the value we provide our customers, and ensuring we are serving them in an equitable manner. As an example of how we are innovating to support a more affordable energy transformation, I'll point to BGE's recent partnership with the City of Baltimore. Specifically, BGE will share responsibility for improving the City's 700-mile conduit infrastructure, reducing the amount the City paid for maintenance capital improvements, and allowing BGE to take advantage of its contracting and construction efficiencies, all while ensuring a healthy conduit system to provide more reliable and affordable power. And beyond our direct operations, we will continue to support our communities beyond providing cleaner, more reliable energy, such as through our more than 75 workforce development programs across our six utilities. Indeed, investments like ACE's Smart Energy Network that Jeanne highlighted benefit greatly from those programs. In anticipation of this investment program, a six-year, 6.5 million job training program was established in 2018 to educate the workforce needed to fill the energy jobs of the future in New Jersey. Fourteen of our talented employees deploying the smart meter technology are graduates of that development program established five years ago. And we expect to hire more than 15 additional graduates by the end of June, reinforcing our vision of facilitating an energy transformation that will stretch over generations of thoughtful planning and coordination. We look forward to building on the progress made in these first three months and meeting our commitments in 2023. We are delivering on course. Thank you, and we welcome your questions.

Thank you. Your first question comes from Shar Pourreza from Guggenheim.

Hey, good morning, guys.

Good morning, Shar.

Good morning.

Good morning. So, hey, guys. Just if we could maybe start with Illinois. I mean, we obviously saw the trial outcome last night. Realize you guys have taken a lot of steps since 2020 to improve, but any sort of high-level read-throughs to the regulatory construct at this point, or anything remaining for ComEd from a legal or even judicial standpoint. Thanks.

Yeah. Thank you, Shar. So first from the start, as you know, Shar, we have cooperated fully with the investigations conducted by the government and our regulators. The deferred prosecution agreement signed in 2020 resolved the Justice Department's investigation into ComEd, but we want to be clear that we have done much more than that. We have made substantial changes to our contracting, lobbying, and compliance operations to ensure that the conduct that was at issue in the trial does not happen again at all levels from my office and throughout the leaders of the organization and the 6,300 employees who keep the lights on every day in Illinois. We are committed to the highest standards of integrity and ethical behavior for our business. We have the privilege and the responsibility of serving well over 10 million customers, and we do not take that lightly. But I want to have Jeanne spend some time talking about the other issues that have come as a result of this. And then I’m going to ask Gil, CEO of ComEd, to kind of walk through to your question, the regulatory and legislative proceedings as we move forward. Jeanne?

Thank you, Calvin, and good morning, Shar. As Calvin mentioned, the deferred prosecution agreement has resolved our issue with the Department of Justice. However, there are a few legal matters related to the events that led to the DOJ investigation, which we have outlined in our 10-Ks and Qs. I'll provide a brief overview. These details will be disclosed later today when the Q is released. We have a securities suit, several derivative suits, and consumer fraud suits. Additionally, there's an ongoing FCC investigation. The securities suit was filed in 2019, with the next court status set for late June. Based on recent developments, we have recorded a probable loss of $173 million in this matter, but we expect full recovery through insurance, meaning there will be no impact on earnings or cash. There are three pending derivative suits, including one filed in April and May, all of which assert similar claims, and there are no financial updates on those. It’s worth noting that one of them will result in a cash recovery for the company. We also had three consumer fraud cases filed, two of which have been dismissed, and we recently argued to dismiss the remaining case. Lastly, the FCC investigation is still ongoing, and we continue to fully cooperate, but there are no updates on that front. This is just a status update, and we'll provide more details in the Q. Now, I'll turn it over to Gil to discuss the multi-year plan.

Our proposed grid modernization plan and multi-year rate plan fully align with the goals of the Climate Equitable JOBS Act and the energy and environmental policy objectives for an orderly and equitable energy transition in our state. This plan has resulted from extensive stakeholder engagement with various parties over the past couple of years. As we filed our proposed rate case in January of this year, we look forward to continuing our open and collaborative work with all stakeholders. As Jeanne mentioned earlier, the interveners are set to file their testimony this month. Hearings will take place in August, and we expect an order in December of this year. So, Shar, we’re on track, and I appreciate your question.

Perfect. And then, just lastly, Maryland, obviously Calvin set a pretty aggressive offshore wind target last month, 8.5 gigs by 2031. As I guess as we look at the plan today, could we see incremental transmission opportunities at Delmarva, I guess put differently? What do you embed in the plan at this point? Thanks guys.

So if I can, what you're asking is that from Maryland's offshore legislation that just recently passed, could that have a spillover in Delmarva? Is that the question there, Shar?

Perfect. And as we're thinking about transmission opportunities, yes, correct.

I believe that the legislation presents an opportunity for Exelon to engage in transmission. The updated legislation mandates that PJM conduct a study of the transmission system with a more comprehensive approach. It will focus on utilizing existing infrastructure, reducing permitting risks and grid challenges, ensuring open access to collective transmission systems, and avoiding any single points of failure. This strategy allows Exelon to stand out from the competition. Furthermore, the state aims to achieve 8,500 megawatts of offshore wind energy capacity by 2031, and I believe we are well-positioned to contribute to that goal. David Velazquez, who manages our transmission, is here with me. Dave, do you have anything to add?

Shar, just to add, yeah. We do think that there are potential incremental opportunities on transmission there. We've not included anything in the current plan for opportunities that are there. And the way the legislation reads by the beginning of July in 2025, the JSC or the PSE will direct PJM to issue kind of a competitive transmission solicitation for the transmission that's needed to support the offshore wind.

Terrific. Thank you guys so much. Appreciate it.

Thank you, Shar.

Thanks, Shar.

Thank you. One moment for our next question. Our next question comes from the line of Paul Zimbardo from Bank of America.

Hi. Good morning team. Thank you.

Good morning, Paul.

Great. If you could you discuss the O&M savings drivers you mentioned in the script and just at what segments you're expected to realize the offsets for unfavorable weather? I think you said across the platform, which sounds broader than I believe it's PECO and Pepco, where the impacts were from weather.

Sure. I'll address that and then Calvin can chime in as well. The $0.05 figure comes from several factors. To start, we approached this year with a conservative and substantial strategy. You might recall that we experienced some favorable weather and storms last year, and we took steps to reduce risks at the end of the year to support us in 2023 and beyond. That has proven beneficial as we entered the year. Additionally, we've effectively managed our interest rate exposure by completing our sole corporate financing in the first quarter, which has minimized our vulnerability in that area. As you noted, we also have leverage throughout the business, primarily in ways that impact the bottom line. It's important to remember that savings at the corporate level benefit all areas of the business as well. Furthermore, we've observed favorable depreciation at Pepco compared to our expectations. Lastly, regarding the $0.05 overall, we experienced a penny's worth of favorability from the carbon mitigation credit deposit rate on that regulatory asset, which is likely to amount to about $0.03 over the full year. Combining all these factors, we are confident about offsetting the $0.05 and are optimistic about our performance for the rest of the year, aiming for results around the midpoint or better.

Okay. Excellent. Thank you. And then changing topics. I saw the infrastructure opportunity. Could you quantify how much that could be? And just confirming if there's any offset to rate-based, those kind of items are factored into the plan. Thank you.

Hey, Shar, you cut out midway through your question. Would you mind repeating that please? I mean, Paul.

Sure. I was asking about the IIJ, the Infrastructure and JOBS Act. Just I saw that headline during the quarter. If you could quantify what the opportunity could be for Exelon. And just if there are any offsets to rate base from kind of federal financing, if that's incorporated in the plan today.

We have applied for $700 million, and it's a highly competitive process, making it difficult to predict how much we'll actually receive. However, I can confirm that we haven't included it in our current estimates. Therefore, we are not anticipating any significant impact on our rate base or financing needs, and we are reaffirming our current positions. We will keep you updated as the situation evolves.

And I would just add Paul, understanding, as we've said before, the IIJA and the IRA create tremendous opportunity for us as Exelon utilities specifically to partner with our jurisdictions and drive this energy transition faster. And it also goes to the affordability factor of what we do and how we do within our jurisdictions. So we're working hard and partnering and looking for all the opportunities to really increase our investments, but more importantly, partner with our communities in this endeavor.

Yes. No, I know you are. Thank you both very much. Appreciate it.

Thanks, Paul.

Thank you. One moment for our next question. Our next question comes from the line of Steve Fleishman from Wolfe.

Hey, Steve.

Good morning, Calvin. Regarding Illinois, we're expecting to receive the recommendation soon concerning the multi-year framework. Key factors to consider seem to be the capital structure, return on equity, and likely the rate base. Besides those, are there any other critical issues we should keep an eye on in the recommendations, such as incentives?

Yeah. Thank you. I'm going to let Gil take that in because he's been intimately involved in the process. Gil?

I think you've pretty much captured. Those are the items that we anticipate parties are going to be interested in.

Okay. I think there was a minimum capital structure allowed under the bill. Is that still the case?

Yeah. It's kind of true.

Harbor at 50%.

Okay. My other question is about the carrying charge or recovery on the CMC deferral. Is this just CMC cost that you haven't yet recovered in rates but are earning a carrying charge on?

That's right. Yeah. It earns a customer deposit rate, which was zero in 2022 and then was reset at 5% at the end of last year, early part of this year. And so outside relative to expectations for this year. But that reg asset is expected to be collected and wind down by May of 2024. So it's not a future year's earnings. But it is helpful this year.

Okay. And then finally regarding the IRS implementation of the IRA and the minimum tax, have there been any developments or insights on that? Specifically about the repair tax issue or are we just waiting?

Yes, the situation remains the same. We're still looking at approximately $200 million per year, which is included in our guidance. We have outlined the potential impacts on our earnings and credit metrics based on whether the situation improves or not. We're hopeful for regulatory clarity by the end of the year and are continuing discussions with the energy industry and the treasury regarding the repair deduction and the implications of the corporate alternative minimum tax for energy providers like Exelon. Recently, we've had further conversations about the unique aspects of the utility sector due to the capital-intensive nature of our business. However, there are no new changes to our assumptions or estimates.

Okay. Great. Thank you.

Thank you.

Thank you, Steve.

Thank you. One moment for our next question. Our next question comes from the line of David Arcaro from Morgan Stanley.

Morning, Dave.

Good morning. Thank you for taking my question. There's a new chair in Illinois, and I was wondering if you have had any initial discussions or insights regarding it. How do you anticipate working with the ICC moving forward, especially considering this is such a busy regulatory year?

Yeah. David, thank you for the question. I think, as I said in my opening comments, the transition of leadership and commissioners is part of the process, and so we are really engaging with all stakeholders in a very collaborative process to move forward. But directly to your question, the Governor Pritzker accepted the resignation of Chair Solinsky and has nominated the incoming first Doug Scott, who as you know, used to be the former Chair of the commission and was very instrumental in the drafting and creating of the Climate Equitable and JOBS Act. And there has been communication, but the communications have been around moving the state's goals forward, and we have heard nothing to date that is taking, that are derailing those efforts. And as Gil alluded to earlier Jeanne, we're still expecting a final order on comments for your multi-year plan by December 20th. So also along with the new chair, they're getting a couple of new commissioners and again, that process continues to move forward.

I was also wondering about the ComEd and BGE reconciliations. I wanted to check if there are significant factors that cause fluctuations in those regulatory processes, or if they are mostly standardized regarding the costs involved and if the recovery processes are generally consistent.

The reconciliation filed for ComEd pertains to the 2022 formula rate and is part of a process that has been in place for 10 years, making it relatively straightforward. As noted in my prepared remarks, this involves cash collection related to the true-up of treasury rates based on prior year rates, which allows for earnings recognition followed by adjustments in subsequent rates. The situation with BGE is different, as this is the first reconciliation under the multi-year plan in Maryland. This will be the initial experience with this process, but there is a framework to guide us. The order for this will be issued in December this year. This process is significant not only for this year but also for setting future precedents, as it will clarify which costs are recoverable. Understanding how to manage variances will help us determine if we should record a receivable or regulatory asset, or if we achieve favorable outcomes, a liability that will be returned to customers. Navigating this process will be beneficial, similar to what we've seen with ComEd, where initial experiences have aided future operations.

Okay. Got it. That's helpful. Thanks so much.

Thank you, Dave.

Thank you. One moment for our next question. Our next question will be the last one coming from the line of Jeremy Tonet from JP Morgan Securities LLC.

Good morning, Jeremy.

Hi, good morning. Hi. Thanks.

Morning.

Just wanted to dial into Maryland, a little bit more if we could. We've seen changes in the commission and there are these kind of policy goals out there. Just wondering, how you see that affecting BGE, both the electric and gas side, or is that kind of offsetting over time or just wondering updated thoughts about the future of gas there and how the impacts Exelon?

Great question. With me is Carim Khouzami, the CEO of BGE. I'll take the initial part and then let Carim add any further insights. Similar to Illinois, we have a transition in the chair of our commission along with a couple of appointees from Governor Moore. Governor Moore is taking a strong stance on advancing decarbonization and transportation electrification in Maryland, positioning it alongside efforts in California and Illinois. This aligns with the goals of BGE and Pepco Maryland. We believe that our gas portfolio is essential for the future decarbonization of the industry as we work on replacing the gas infrastructure in Maryland. Our ongoing efforts are focused on reducing greenhouse gas emissions. We are addressing this with a portfolio approach since system reliability and affordability for our customers are crucial. We have communicated these objectives to the state, and BGE has been actively engaged in those discussions. I’ll let Carim add more if he wishes.

Thank you, Calvin, and good morning. I think you hit all good points. One of the key points to highlight is in last year's legislative session, the Climate Solutions Now Act, which set forth state goals for us to achieve as an economy-wide goal laid out a number of working groups where they would determine what is the right path for Maryland going forward. BGE and the other Maryland utilities are at the table with all the other interested parties, and we're working through those issues now, and that will be concluding at the end of this year with recommendations. As Calvin mentioned, there are a number of ways to get to the state goals. We see the pathway that is the most affordable, reliable, and resilient as being one that still includes gas as part of the infrastructure. And we're working with the groups to kind of talk through what is the right path for Maryland, and we do have confidence that gas will be part of the future.

Got it. That's very helpful there. And then, just pivoting to results in, just a smaller question overall, but I was hoping you could illuminate a little bit of color on the GAAP to non-GAAP reconciliations there as far as the change in environmental liabilities and the change in perk audit liability, if just a little bit more color on what those items were.

Sure.

On the environmental liabilities, the PHI is a legacy issue for which we continue to update our remediation estimates, resulting in a slight increase in the reserve. Regarding ComEd, there has been an audit that began in 2021, and we received draft findings earlier this year. Following ongoing discussions, we recognized approximately $15 million as a probable loss. This situation is still unfolding, and that's essentially the nature of these two items, which are infrequent and unusual as we separate them from our operating perspective.

Got it. That makes sense. That's helpful. I'll leave it there.

Thank you.

Thank you, Jeremy.

Thank you. At this time…

Is that the last question?

Yes, that was the last question. And at this time, I would like to turn the conference back over to Calvin Butler for closing remarks.

Thank you, Gigi. And I just want to take a moment to say thank you for joining us today. I appreciate your engagement and all your questions. And with that, it concludes the call. Have a great day.

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