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Avoided Nuclear Shutdowns, Higher Power Prices Make Exelon A Buy

Oct. 05, 2021 3:32 PM ETExelon Corporation (EXC)6 Comments
Gary Gambino profile picture
Gary Gambino


  • Exelon's Byron and Dresden nuclear plants got a last-minute reprieve with the Illinois government passing subsidies to keep these plants running.
  • Market prices for power have increased substantially in the last few months, enabling the Generation spinoff to hedge out-year sales at higher prices.
  • These developments reduce my earlier concerns about the value of the Generation division and make Exelon a buy ahead of the spinoff.

Leaks Found At Illinois Nuclear Plants

Scott Olson/Getty Images News

Last-Minute Reprieve For Nuclear

Exelon Corp. (NASDAQ:EXC) earlier this year announced plans to spin off its Generation division by the first quarter of 2022, leaving a pure-play regulated utility focused on the transmission and distribution of electricity and natural

This article was written by

Gary Gambino profile picture
I am a Chemical Engineer by training and have an MBA with concentrations in Finance and Operations Management. I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income yield. I plan to focus my writing on positions I already hold or am considering changing, however my bias is toward long-term holding unless there is a very compelling reason to sell.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EXC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

Not a good sign that a utility has to hedge power prices. Just saying. That has to mean either their source material is highly variable or they are a high cost producer and can't afford slightly lower prices. But being regulated I just find it odd that they have to hedge. Seems like they ought to be able to pass the costs to the customer.
Gary Gambino profile picture
@johngonole it’s the unregulated part (soon to be spun off as Constellation) that hedges. Many customers prefer to sign up for fixed rates over a 1-3 year period. I don’t see anything wrong with selling futures to match the long-term contract prices.
Thanks Gary for the info.

Wish i had held on to my EXC. a last minute rescue huh?
Your nuclear generation units should be Gw and not Mw. A single wind turbine can produce around 3 Mw. Nuclear units generate more than 1 Gw.
Gary Gambino profile picture
@1nomadicangler thanks for catching. It's been fixed.
Old Professor profile picture
Helpful, update. Thanks.
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