Exelon 4Q profit down 18 percent

Power company Exelon said Friday that its fourth quarter profit fell 18 percent, as demand for electricity in the U.S. remained soft in the weak economy.

Exelon made $581 million, or 88 cents per share, for the quarter ended Dec. 31 compared with profit of $707 million, or $1.07 per share, in the year-ago quarter. Revenue fell to $4.12 billion from $4.49 billion a year ago.

Exelon, one of the nation's largest power generators and the biggest operator of nuclear power plants in the U.S., says demand during the quarter continued to be weak at its utilities in the Chicago and Philadelphia areas. It says it also was hurt by a refueling outage at its Three Mile Island operations in Pennsylvania and above-average temperatures in the quarter.

Without charges, Exelon made $610 million, or 92 cents per share, for the quarter.

Like other power generators, Exelon has been hurt by two straight years of declining electricity usage because of the recession, with demand from industrial customers down 20 percent alone in 2009. Federal energy officials expect industrial consumption to rise modestly this year and next.

Because of lower demand, Exelon and other companies have been cutting costs and staff. Exelon said it slashed expenses by $200 million last year and cut 500 jobs.

Exelon said demand in the quarter at its Commonwealth Edison utility in the Chicago area fell 3.8 percent, and 2.3 percent for its PECO utility in the Philadelphia area.

The number of residential customers in both areas also declined in the quarter, something that has happened to utilities in other parts of the country as well, as the recession has forced children to move back in with parents and houses to stand empty after foreclosure.

Matthew Hilzinger, Exelon's senior vice president and chief financial officer, told analysts on a conference call that the company expects electricity consumption among commercial and industrial customers in the Chicago area to pick up beginning in the second quarter. The company is looking for commercial and industrial consumption to drop again in Philadelphia this year as the region is slower to recover from the recession.

Exelon expects more residential customers, but they will use less electricity as efficiency programs expand, he said.

Chairman and CEO John Rowe said the company continues to search for ways to cut costs and increase revenue, whether it is investments in transmission or expanding production by its nuclear fleet.

"There is no magic anywhere. It is all a matter of being very, very hardheaded, very opportunistic, and constantly looking for something that will deliver additional value to you," Rowe said.

Exelon reaffirmed its 2010 outlook, saying it expects operating earnings of $3.60 to $4 per share this year. Analysts surveyed by Thomson Reuters forecast profit of $4.04 per share.

For all of 2009, Exelon's earnings were flat with 2008 at $2.7 billion. Earnings per share were $4.09 for the year compared with $4.13 in 2008. Without charges and gains, Exelon made $4.12 per share for the year compared with $4.20 per share in 2008.

Exelon shares fell 94 cents to $47.11 in Friday afternoon trading. Shares have traded between $38.41 and $58.66 over the past year.