How CEO Crane is remaking Exelon
The planned acquisition of Pepco Holdings, narrowly approved by Maryland regulators on May 15, is Crane’s first major deal since succeeding John Rowe as CEO in 2012. The $6.8 billion deal puts his stamp on Chicago-based Exelon, for better or worse.
Buying Pepco, which provides electricity service in Washington, D.C., and its Maryland suburbs through three regulated utilities, shifts Exelon away from its heavy tilt toward nuclear power operations under Rowe. Assuming D.C. regulators approve, as expected, the deal will double the utilities Exelon already owns, including Chicago’s Commonwealth Edison.
Exelon expects regulated utility operations to produce more than 60 percent of future earnings, up from about 45 percent last year. In 2007, Exelon got about three-quarters of its profit from power generation.
The course correction makes strategic sense. Nuclear power plants no longer are the profit machines they were back in the late 1990s and early 2000s, when Rowe built the nation’s largest fleet of nuclear reactors. Since then, electricity demand has plateaued and natural gas prices have plummeted, driving down wholesale power prices and profits at Exelon’s nuclear plants.