Stay-at-home orders mean you’re consuming about 5 percent more electricity than normal. But power consumption by commercial and industrial users cratered by about 15 percent in April, according to Exelon, the Chicago-based parent of Commonwealth Edison.
The impacts of the COVID-19 pandemic are felt everywhere. Utilities like ComEd and other big-city power distributors around the country that are owned by Exelon are insulated from a lot of the economic damage by regulators that ensure they make a profit on their operations in good times or bad.
But not entirely. Exelon reduced its earnings forecast for 2020 by 6 percent in its first-quarter report, issued today. That’s even after cutting $250 million in one-time expenses like travel, contract work, consultants and technology. The reason is the reduced consumption that reduces revenue at Exelon’s unregulated power plants and Constellation, its retail electricity unit.
And even ComEd is taking a hit as historically low interest rates reduce the regulated profit it makes on its business. Under Illinois’ formula rate scheme, ComEd’s returns are tied directly to the yield of 30-year U.S. Treasury bonds, which have fallen this year. That alone will reduce Exelon’s 2020 earnings per share by nearly 2 percent, Exelon said.
The health, or sickness, of the economy can be traced through power-consumption patterns. In the case of 2020, that sickness is far exceeding the impact of the Great Recession—at least so far. Usage by Commonwealth Edison customers in 2009, the worst year of that period, dropped 5.6 percent from 2008, but over half of that decline was because of benign weather conditions, with the remainder from the bad economy.
Exelon Chief Financial Officer Joseph Nigro told analysts on a conference call today that free cash flow at the company had fallen $775 million in the first quarter. About $600 million of that is from customers currently not paying their electric bills due to economic stress, and the company expects eventually to recover that. In Illinois, ComEd recovers the cost of sales it writes off from ratepayers who are still paying their bills.
Exelon expects commercial power consumption to remain 9 to 15 percent below normal levels throughout the second quarter. It forecasts that, with a gradual resumption of business, business demand still will be 4 to 6 percent below normal by the end of the year.
Meanwhile, residential demand will continue to be about 5 percent higher than normal through the second quarter.
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May 09, 2020 at 02:04AM
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