...Business Risk Financial Risk + Base-load generation at Exelon Generation Co. LLC (ExGen) is subject to considerable energy margin variability, reflecting low natural gas prices, the growing availability of renewable power, demand, and changes in weather. + Because of its higher fixed-cost structure and its nuclear plants, margins in the past three years have been narrower than those of its peers. + Regulators are now more sympathetic to the distressed nature of nuclear power production and have approved zero emission credit (ZEC) revenues in New Jersey, New York, and Illinois. + ExGen's ability to influence market design has become, in our view, a successful part of its business strategy. + The company has a proactive hedging strategy, and cash flow from wholesale generation is significantly hedged over the next two years. + We estimate that about 92% of expected output will be hedged in 2018, falling to around 65% of output in 2019. + Free operating cash flow (FOCF) is sufficient to help...
