(Reuters) - Exelon Corp on Wednesday announced plans to split the company into regulated and unregulated businesses and gave an update on the impact of the Texas freeze on its power and gas operations.
The company, which released earnings earlier in the day, said it plans to separate its regulated electric and gas utility businesses from its unregulated power generation and customer-facing energy businesses and create two publicly traded companies.
Analysts said this was not a surprise since the company had previously indicated it was considering such a split.
Exelon reported fourth-quarter adjusted earnings per share (EPS) of 76 cents, above the 69 cents expected by analysts but down from 83 cents in the fourth quarter of 2019.
The recent weather events in Texas, however, caused the company to set its earnings guidance range for 2021 at $2.60-$3.00 per share, the midpoint of which falls below analysts’ $2.96 estimate for the year.
Exelon said its generation in Texas, specifically its Colorado Bend II, Wolf Hollow II and Handley plants, experienced periodic outages as a result of the historic cold.
Those unit outages came at the same time demand for power and natural gas soared in Texas and some power and gas prices hit record highs, resulting in what the company estimated would be a negative impact to first-quarter net income of $750 million to $950 million pretax or $560 million to $710 million post-tax.
“This loss is not acceptable to us,” Exelon CEO Christopher Crane told analysts on a call.
Crane said the company plans to mitigate that loss through one-time cost reductions and deferral of nonessential maintenance, which are expected to reduce the cash impact to $200 million.
Exelon Utilities will include the company’s six regulated electric and gas utilities, delivering electricity and gas to about 10 million customers.
Meanwhile, Exelon Generation will be the largest supplier of clean energy, backed by more than 31,000 megawatts of generating capacity of nuclear, wind, solar, natural gas and hydro assets, the company said.
The split is expected to be completed in the first quarter of 2022.
Exelon shares were down about 1.7% at $40.10 near the close of trading on Wednesday.
Reporting by Arathy S Nair in Bengaluru and Scott DiSavino in New York; Editing by Amy Caren Daniel and Matthew Lewis
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