Peco parent Exelon completes spinoff of its power generation business

Exelon Corp. on Wednesday completed its separation into two companies: a new generation and marketing business that owns the nation’s largest fleet of nuclear power plants, and a Chicago-based utility giant whose operations include Peco, Atlantic City Electric, and Delmarva Power.

For the 10 million customers of Exelon’s utilities, there will be few noticeable changes, other than new logos for the companies intended to magnify the common tie to the parent company.

Exelon shareholders received one share of the new company, Constellation Energy Corp., for every three shares of Exelon they owned as of Jan. 20. Constellation inherited the name of Exelon’s competitive power-marketing business based in Baltimore, which supplies energy to retail customers, including many large commercial and industrial operations.

Constellation also took ownership of Exelon’s vast power generation fleet, operated out of Kennett Square, which it bills as “the nation’s largest carbon-free energy producer.”

Constellation owns some or all of nuclear power plants at 13 locations, including the Limerick Generating Station in Montgomery County. It also owns and operates 50% of the Peach Bottom Atomic Generating Station in York County, and owns a minority share of the Salem Generating Station in Lower Alloways Creek Township, N.J.

Constellation Energy’s headquarters will remain in Baltimore. Its chief executive, Joseph Dominguez, had been the CEO of Exelon Generation.

The market reacted positively to the spinoff. Constellation’s stock opened at $50.00 a share on the NASDAQ under the ticker symbol CEG, and closed Wednesday at $53.01, up 6%. Exelon shares opened at $41.06 on Wednesday and closed at $42.86, up 4%. Since the spinoff was announced last Feb. 24, the markets have bid up Exelon shares 44%.

For Exelon’s retail utility customers, few changes are in store. The companies’ phone numbers and address will remain the same. Bills will still be due every month. Exelon owns Atlantic City Electric in New Jersey, Delmarva Power in Delaware, Baltimore Gas and Electric, Pepco in Washington, and Comed in Chicago, in addition to Peco, which has 1.6 million electric and 540,000 gas customers in the Philadelphia area.

Constellation Energy inherited the blue, orange and green flag logo formerly shared among Exelon properties. The Exelon utilities adopted a new unified logo on their buildings, vehicles, and correspondence that the company calls a “wave,” which is intended to convey vibrancy, movement and progress. The common logo also links the separate companies to the less well-known Exelon brand.

“We had a very high name trust and recognition and kind of brand perception of the utilities, but not as much to the parent or to each other,” Mike Innocenzo, Peco’s chief executive, said in an interview. The names of the utilities are not going away, he said. “But there’s even a larger company platform that is tied to each other, and that’s really the intent of having us all have the similar logos.”

Exelon described the separation as a strategic move to enhance shareholder value. Exelon employs about 18,000 people. Constellation Energy has about 13,000, most of them in power generation.

“Today is an important milestone in Exelon’s history,” Christopher M. Crane, Exelon’s president and chief executive, said in a statement. “With the successful completion of our separation, we step forward in a strong position to serve customer needs, drive growth and social equity in the communities we serve, and deliver sustainable value as our industry continues to evolve.”

At a time when 25 states have greenhouse gas targets or clean energy goals, Constellation is positioning itself as a leading provider of energy that is produced without emitting climate-altering carbon dioxide. It says its fleet of 32,400 megawatts nuclear, hydro, wind and solar generation facilities provides 10% of all emission-free power on the U.S. grid.

“The future health and prosperity of our nation is inextricably linked to our success in eliminating carbon pollution, and our entire focus will be on helping our customers and communities achieve that goal,” Dominguez, Constellation’s chief executive, said in a statement.

At investor conferences ahead of Wednesday’s spin-off, Constellation sent strong signals that it is in the market to expand its generation capacity, including acquiring existing nuclear plants.

“Constellation is exploring growth opportunities that build on its core businesses, including acquiring nuclear plants or other clean energy assets, creating clean hydrogen using its nuclear fleet, growing sustainability products and services for business customers, and leveraging the generation fleet for co-location of data centers and other opportunities,” the company said in investor presentations.