Exelon's Risk Profile Has Changed Thanks To Constellation And Fracking
Disclosure: I am long WEC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Exelon Corporation's (EXC) bulls have long touted the company because of its Exelon Generation LLC wholesale power generation subsidiary and because of its large concentration of nuclear power plants as part of its power generating assets. Exelon's stakeholders need to realize that may have held true in 2008 but isn't as applicable now. Exelon's risk profile has changed over the last 5 years thanks to its Constellation Energy Group Inc (CEG) in 2012 as well as the advent of hydraulic fracturing serving as a game-changer in the natural gas and energy marketplace.
Formation of Exelon
Exelon was formed from the merger of PECO Energy and Unicom Corp in October 2000. In 1999, PECO and Commonwealth Edison's holding company Unicom agreed to a blockbuster merger that created the largest nuclear power plant operator. At the time, Unicom owned four plants with 13.47 GW of capacity and PECO owned two plants outright with 4.07 GW of capacity. PECO also owned 50% of a joint venture with British Energy called Amergen and Amergen owned 4 plants with 3.625 GW of capacity. The purpose of this deal was to combine two historically mediocre performing utilities located in big urban metropolitan areas which had large nuclear power operations in order to potentially take advantage of the emerging wholesale power distribution markets. Exelon later bought out British Energy's share of Amergen and renamed it Exelon Generation LLC. READ FULL ARTICLE HERE