PECO Energy Company Execution - Excellence - Exelon Corbin A. McNeill, Jr. The DLJ Electric Power Conference June 12, 2000
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Important Notice The following communications contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein. The forward-looking statements herein include statements about future financial and operating results and the proposed merger involving PECO Energy Company and Unicom Corporation. The following factors, among others, could cause actual results to differ materially from those described herein: inability to obtain, or meet conditions imposed for, governmental approvals for the merger; failure of the PECO Energy Company or Unicom Corporation stockholders to approve the merger; the risk that the PECO Energy Company and Unicom Corporation businesses will not be integrated successfully; and other economic, business, competitive and/or regulatory factors affecting PECO Energy Company's and Unicom's business generally. More detailed information about those factors is set forth in the joint proxy statement/prospectus regarding the proposed merger. PECO Energy Company and Unicom Corporation are under no obligation to (and expressly disclaim any such obligation to) update or alter their forward-looking statements whether as a result of new information, future events or otherwise. Investors and security holders are urged to read the joint proxy statement/prospectus regarding the business combination transaction referenced in the foregoing information because it contains important information. The joint proxy statement/prospectus has been filed with the Securities and Exchange Commission by PECO Energy Company and Unicom Corporation. Investors and security holders may obtain a free copy of the joint statement/prospectus and other documents filed by PECO Energy Company and Unicom Corporation with the Commission at the Commission's web site at www.sec.gov. The joint proxy statement/prospectus and these other documents may also be obtained for free from PECO Energy Company or from Unicom Corporation.
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Agenda PECO Energy - Execution Excellence Status of Merger Business Segments - Emphasis on Execution: Generation and Power Marketing Energy Delivery Enterprises Wrap-up and Q&A
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] PECO Energy Company Execution Scorecard PECO Energy's Strategic Objectives: Build competitive generation portfolio improve efficiency of existing fleet disciplined acquisitions Develop profitable ventures portfolio telecommunications infrastructure services Optimize profitability of the distribution business in a competitive environment
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] PECO Energy Company Generation and Power Marketing Y-T-D Nuclear Capacity Factor at 94.5% AmerGen Assets 99.6% Capacity Factor Power Team's wholesale performance: Wholesale volumes are up 10% vs. '99 Gross margin flat vs. '99
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] PECO Energy Company Generation and Power Marketing AmerGen's Completed Acquisitions (2 GW) Clinton TMI AmerGen Acquisitions in process (3 GW): Oyster Creek: 2Q 2000 Vermont Yankee: - 3Q 2000 Nine Mile Point: - 3Q Auction Other Portfolio Additions - (4 GW) Tenaska, Texas - July 2000 Tenaska, Georgia - 2Q 2001 Cogentrix, Oklahoma - 1Q 2002 Peach Bottom, Pennsylvania - 2Q 2000
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] PECO Energy Company Ventures Portfolio Exelon Infrastructure Services Wave 1&2 acquisitions complete Annual revenues of $720 M (run-rate) Expect additional acquisitions Exelon Communications - ahead of plan AT&T Wireless - accumulating customers PECO Adelphia - expanding the network
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] PECO Energy Distribution 100% Choice on 1/2/00 $5B (of $5.26B) of stranded costs securitized 82% Customer Rentention as of 5/31/00 Cost controls in line with targets
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[LOGO OF PECO ENERGY] [LOGO OF UNICOM] A Compelling Combination National power marketing portfolio Nation's largest low-cost nuclear fleet Multi-regional distribution platform Among the largest electric utility customer bases Enterprises porfolio with proven value Financial scale and resources to execute Shareholder-driven management team
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] This Combination Delivers Enhanced competitive advantage across all three business segments 10% average annual EPS growth Immediate earnings accretion
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Relentless Execution an update on the last 9 months Restructured the merger agreement Repurchased $1B of stock Reached merger settlement in PA Gained approval from FERC and completed DOJ review Aggressive integration schedule on track
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Approval Milestones FERC - approval granted without condition DOJ - review process completed ICC - merger notice completed; GenCo decision pending PA PUC - settlement reached; decision pending Shareholders - vote scheduled June 27, 28 NRC - decision pending; expected June SEC - decision anticipated September
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon's Business Structure Exelon Corporation ------------------ | --------------------------------------------------------- | | | Exelon Exelon Exelon Generation Energy Delivery Enterprises ---------- --------------- ----------- Power Team ComEd Energy Delivery Infrastructure Services Nuclear PECO Energy Delivery Energy Services Operations AmerGen PECO Gas Distribution Telecommunications Fossil/Hydro Energy Operations Thermal
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Foundation for Growth [Slide contains a bar graph depicting actual earnings before special items for 1998 and 1999 and IBES projected earnings for 2000 for PECO and Unicom and projected earnings growth for Exelon for 2000 (pro forma annualized), 2001, 2002 and 2003. The Exelon graph indicates a 10% growth for 2001 to 2003. PECO 1998 $2.66 1999 $3.17 2000 $3.60 Unicom 1998 $2.27 1999 $2.89 2000 $3.25 Exelon 2000(pro forma annualized) $3.70 2001 $4.20 2002 $4.60 2003 $5.10]
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Generation
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Generation Strategy Drive cost leadership through proven fleet management model and economies of scale Grow asset portfolio through long term supply contracts, acquisitions, and development Optimize portfolio through balanced generation mix and geographic presence
[PECO ENERGY LOGO] [UNICOM LOGO] Improving Nuclear Fleet Production . Shorten refueling outages . Improve material condition . Implement rigorous operating standards and best-in-class practices . Every 1% increase in fleet capacity factor: . 1,225 additional GWh . $33M margin increase . $0.06 EPS increase [Slide contains bar graph depicting the Capacity Factors of approximately 87% for 1999, approximately 89% for 2000, approximately 90% for 2001, approximately 91% for 2002 and approximately 92% for 2003.]
[logo of PECO ENERGY] [logo of Unicom] Nuclear Competitive Advantage . Current nuclear all-in cost 2.9c/kWh . Nuclear cost stretch target capitalizes on tangible opportunities . All-in nuclear cost stretch-target remains below forecasted 2.4c/kWh CCGT marginal cost All-in Cost [Slide contains a bar graph depicting the Current All-in Cost of 2.9 cents per kWh decreasing to an All-in Cost Target of approximately 2.0 cents per kWh. There are five elements which are depicted to contribute to the decrease to achieve the All-in Cost Target. Asset Write-down of approximately 0.4 cents per kWh, Productivity Improvements of approximately 0.2 cents per kWh, Labor, Materials and Services and Operating and Maintenance Reduction aggregating approximately 0.3 cents per kWh.]
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Extracting Additional Value Asset-Based Power Marketing Geographic diversity of assets reduces transmission costs improves asset utilization enables market expansion Diversity of generation mix enhances portfolio of higher margin, custom products Minimize supply costs through coordinated dispatch Complementary skill sets within marketing organizations
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Asset Margin Enhancement Commodity ==> ==> ==> Premium Product Price taker ==> ==> ==> Price leader Lower Margins ==> ==> Higher Margins Sell in blocks ==> ==> Follow the load Compete on Cost ==> ==> Compete with custom products
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Energy Delivery
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Growing the Delivery Footprint [The slide contains a graphic image depicting the Continental United States and contains the following data:] Chicago Philadelphia Customers: 3.4M Sales: 83,500 GWH Summer Peak: 21 GW Customers: 1.5M Gas Cust: 400K Sales: 35,300 GWH Summer Peak: 8GW Exelon Energy Delivery ---------------------- Customers: 4.9M Gas Cust: 400K Sales: 118,800 GWH Summer Peak: 29 GW
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Energy Delivery Strategy Achieve top quartile performance improve reliability enhance customer satisfaction and loyalty Improve financial performance produce strong cash flows maintain EPS while amortizing intangible asset Manage regulatory environment
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Enterprises
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Enterprises Strategy Leverage Enterprises': physical assets customer relationships competencies: energy, energy services, infrastructure management, telecommunications to take advantage of industry trends: outsourcing construction and maintenance outsourcing energy risk management rapid growth of voice, video and internet
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] Exelon Businesses Building the Infra-Com Concept GROWTH National Telecom and Infrastructure THROUGH Services Businesses ACQUISITION National Infrastructure Services Business Regional (Phila) Telecom and Infrastructure Services Businesses MARKET OPPORTUNITIES [The slide contains a graph depicting the relationship between acquisition of telecom and infrastructure services businesses and market opportunities in these businesses. The graph contains three concentric bands indicating the types of opportunities that become available as the businesses grow: Regional (Philadelphia) Telecom and Infrastructure Services Businesses; National Infrastructure Services Businesses; National Telecom and Infrastructure Services Businesses.]
[LOGO OF PECO ENERGY] [LOGO OF UNICOM] EXELON will be the most recognized and admired utility services company in the world.
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