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Pepco Holdings Reports Fourth Quarter and Full Year 2014 Financial Results

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Pepco Holdings, Inc. (NYSE:POM) today reported fourth quarter and full year 2014 earnings from continuing operations as follows:

Three Months Ended Year Ended
December 31, December 31,

2014

2013

2014

2013

Net Income from Continuing Operations (GAAP)
Net Income ($ in millions) $ 35 $ 58 $ 242 $ 110
Earnings Per Share $ 0.14 $ 0.23 $ 0.96 $ 0.45
Adjusted Net Income from Continuing Operations (Non-GAAP)
Adjusted Net Income ($ in millions) $ 59 $ 61 $ 321 $ 280
Adjusted Earnings Per Share $ 0.23 $ 0.24 $ 1.27 $ 1.14

“2014 was a year of significant accomplishments as we continued to see appreciable improvements in both reliability and customer satisfaction. Our financial and operating results reflect the positive impact of our investments in the electric system across our jurisdictions,” said Joseph M. Rigby, Chairman, President and Chief Executive Officer. “During the fourth quarter of 2014, approval for the pending merger with Exelon was received from the Federal Energy Regulatory Commission and the Hart-Scott-Rodino waiting period expired.” Rigby added, “This month a settlement agreement in connection with the merger was filed with the Delaware Public Service Commission, and regulatory approval was received from the Board of Public Utilities in New Jersey. We are pleased with our progress to date and work continues with Exelon on obtaining the remaining state regulatory approvals. Looking ahead, we remain confident that our pending merger with Exelon will provide significant stakeholder benefits, including enhancing our ability to achieve our fundamental strategy of providing our customers with safe and reliable service.”

In 2014, Pepco Holdings’ GAAP net income from continuing operations was $242 million, or 96 cents per share, as compared to $110 million, or 45 cents per share in the prior year. Excluding items that we believe are not representative of ongoing business operations, 2014 adjusted net income from continuing operations would have been $321 million, or $1.27 per share, as compared to $280 million, or $1.14 per share in the prior year.

The primary drivers of the increase in adjusted net income from continuing operations (Non-GAAP) for 2014, as compared to 2013, were higher electric distribution and transmission revenue (primarily due to higher rates from continued infrastructure investment and growth in the number of distribution customers), partially offset by higher depreciation expense and higher operation and maintenance expense.

Pepco Holdings’ GAAP net income from continuing operations for the three months ended December 31, 2014 was $35 million, or 14 cents per share, as compared to $58 million, or 23 cents per share, for the same quarter in the prior year. Excluding items that we believe are not representative of ongoing business operations, adjusted net income from continuing operations for the fourth quarter of 2014 would have been $59 million, or 23 cents per share, as compared to $61 million, or 24 cents per share, in the fourth quarter of 2013.

The decrease in adjusted net income from continuing operations (Non-GAAP) in the fourth quarter of 2014, as compared to the 2013 fourth quarter, was due to higher operation and maintenance expense and higher depreciation expense, partially offset by higher electric distribution revenue (primarily due to higher rates from continued infrastructure investment) and favorable income tax adjustments.

Due to the pending merger with Exelon, Pepco Holdings will not be providing earnings guidance for 2015.

Non-GAAP Financial Information

Management believes the adjusted net income from continuing operations and related per share data are representative of Pepco Holdings’ ongoing business operations. Management uses this information internally to evaluate Pepco Holdings’ period-over-period financial performance and, therefore, believes that this information is useful to investors. The presentation of adjusted net income from continuing operations and related per share data is intended to complement, and should not be considered as an alternative to, reported earnings and related per share data presented in accordance with generally accepted accounting principles in the United States (GAAP).

Reconciliation of GAAP Financial Information to Adjusted Financial Information

Net Income from Continuing Operations

(Millions of dollars)

Three Months
Ended
December 31,
Year
Ended
December 31,
2014 2013 2014 2013
Reported (GAAP) Net Income from Continuing Operations $ 35 $ 58 $ 242 $ 110

Adjustments (after-tax):

Incremental merger-related transaction costs

6

23

Incremental merger-related integration costs

2 8
Impairment losses related to Pepco Energy Services (PES) long-lived assets 16 3

48

3
Potomac Capital Investment Corporation (PCI) valuation allowances related to certain deferred tax assets 101
Interest associated with change in assessment of corporate tax benefits related to the cross-border energy lease investments 66
Adjusted Net Income from Continuing Operations (Non-GAAP) $ 59 $ 61 $ 321 $ 280

Earnings per Share from Continuing Operations

Three Months
Ended
December 31,
Year
Ended
December 31,
2014 2013 2014 2013
Reported (GAAP) Earnings per Share from Continuing Operations $ 0.14 $ 0.23 $ 0.96 $ 0.45
Adjustments (after-tax):

Incremental merger-related transaction costs

0.02 0.09
Incremental merger-related integration costs 0.01 0.03
Impairment losses related to PES long-lived assets 0.06 0.01 0.19 0.01
PCI valuation allowances related to certain deferred tax assets 0.41
Interest associated with change in assessment of corporate tax benefits related to the cross-border energy lease investments 0.27
Adjusted Earnings per Share from Continuing Operations (Non-GAAP) $ 0.23 $ 0.24 $ 1.27 $ 1.14

The income tax effects with respect to the foregoing adjustments, where applicable, were calculated using composite income tax rates of 35 to 41 percent. Most merger-related costs are not tax deductible.

Discontinued Operations

Due to the early termination of Pepco Holdings’ cross-border energy lease investments during 2013, these investments are accounted for as discontinued operations and are no longer reported as a separate segment for financial reporting purposes.

In 2013, Pepco Energy Services completed a previously announced wind-down of its retail energy supply component. As a result, the operations of PES’ retail electric and natural gas supply businesses are accounted for as discontinued operations and are no longer a part of the PES segment for financial reporting purposes.

For the year ended December 31, 2014, there was no activity in discontinued operations, compared to a net loss of $1.31 per share for 2013.

Recent Events

Pepco Holdings – Exelon Merger

On November 20, 2014, the Federal Energy Regulatory Commission issued an order approving the planned merger with Exelon Corporation (Exelon) announced in April 2014. On December 22, 2014, the Hart-Scott-Rodino Act (HSR) waiting period expired, however, the Department of Justice has not advised Pepco Holdings or Exelon that it has concluded its investigation. The HSR Act no longer precludes the parties from closing the merger for a period of twelve months following the expiration of the waiting period. On February 11, 2015, a stipulation of settlement agreement related to the merger proceeding was approved by the New Jersey Board of Public Utilities. On February 13, 2015, a settlement agreement was filed with the Delaware Public Service Commission (DPSC). The agreement requires the approval of the DPSC. Applications for merger approval are pending with the District of Columbia Public Service Commission (DCPSC) and the Maryland Public Service Commission. The parties anticipate closing the transaction in the second or third quarter of 2015 following the receipt of the required approvals.

Operations

  • Power Delivery electric sales were 47,215 gigawatt hours (GWh) for the full year 2014 compared to 47,497 GWh in the full year 2013. In the electric service territory, heating degree days increased by 4 percent and cooling degree days decreased by 6 percent for 2014 compared to 2013. Weather-adjusted electric sales were 47,108 GWh for the full year 2014 compared to 47,477 GWh for the full year 2013.
  • Power Delivery electric sales were 10,996 GWh in the fourth quarter of 2014, compared to 11,085 GWh for the same period in 2013. In the electric service territory, heating degree days decreased by 7 percent for the three months ended December 31, 2014, compared to the same period in 2013. Weather-adjusted electric sales were 11,179 GWh in the fourth quarter of 2014, compared to 11,013 GWh for the same period in the prior year.
  • For the quarter ended December 31, 2014, PES recorded an impairment loss of $28 million ($16 million after-tax) associated with its combined heat and power thermal generating facilities and operations in Atlantic City, as a result of significant adverse changes in the financial condition of its customers and business climate. PES impairment losses for the full year 2014 were $81 million ($48 million after-tax).
  • During 2014, PES signed $43 million in energy efficiency contracts and $88 million in underground transmission construction contracts. PES signed $66 million in energy efficiency contracts and $111 million in underground transmission construction contracts for the same period in 2013.

Regulatory Matters

  • On November 12, 2014, Pepco and the District of Columbia Department of Transportation received approval from the DCPSC for the triennial plan and related surcharge (filed in June 2014) for the District of Columbia power line undergrounding project. The legislation for the public-private partnership to underground up to 60 high-voltage lines became law on May 3, 2014. The DCPSC issued the order approving the financing plan on November 24, 2014. The order authorizes the District of Columbia to issue up to $375 million of bonds to fund the majority of its portion of the underground project and establishes a customer surcharge that will repay the cost of the bonds. The DCPSC orders are subject to a notice of appeal period which expires on April 3, 2015. If no appeals are filed, the District of Columbia will move forward on the financing plan, and the project is expected to begin in the second half of 2015.

Further details regarding changes in consolidated earnings between 2014 and 2013 are provided in the schedules that follow. Additional information regarding financial results and recent regulatory events can be found in the Pepco Holdings, Inc. Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission, and which is also available at www.pepcoholdings.com/investors. Pepco Holdings, Inc. routinely makes available this and other important information on its website, which is a key channel of distribution for Pepco Holdings, Inc. to reach its public investors and to disclose material, non-public information. Information on the website is not part of this news release.

About PHI: Pepco Holdings, Inc. (NYSE:POM) is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City Electric provide regulated electricity service; Delmarva Power also provides natural gas service. Through Pepco Energy Services, PHI also provides energy savings performance contracting services, underground transmission and distribution construction and maintenance services, and steam and chilled water under long-term contracts.

Forward-Looking Statements: Some of the statements contained in this news release with respect to Pepco Holdings, Pepco, Delmarva Power and Atlantic City Electric, including each of their respective subsidiaries (each, a “Reporting Company”), are forward-looking statements within the meaning of the U.S. federal securities laws, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “could,” “expects,” “intends,” “assumes,” “seeks to,” “plans,” “anticipates,” “believes,” “projects,” “estimates,” “predicts,” “potential,” “future,” “goal,” “objective,” or “continue” or the negative of such terms or other variations thereof or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause one or more Reporting Company’s or their subsidiaries’ actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Therefore, forward-looking statements are not guarantees or assurances of future performance, and actual results could differ materially from those indicated by the forward-looking statements. These factors should be read together with the risk factors included in the “Risk Factors” section and other statements contained in each Reporting Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 27, 2015, and investors should refer to these risk factor sections and other statements. All of such factors and forward-looking statements are difficult to predict, contain uncertainties, are beyond each Reporting Company’s control and may cause actual results to differ materially from those contained in any forward-looking statements. Any forward-looking statements speak only as to the date this news release was issued, and none of the Reporting Companies undertakes any obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for a Reporting Company to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on such Reporting Company’s or its subsidiaries’ business (viewed independently or together with the business or businesses of some or all of the other Reporting Companies or their subsidiaries) or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any specific factors that may be provided should not be construed as exhaustive.

Pepco Holdings, Inc.
Earnings Per Share Variance
2014 / 2013
Year Ended December 31,
Power Pepco Energy Corporate Total
Delivery Services and Other PHI
2013 Earnings (loss) per share from Continuing Operations (GAAP) (1) $ 1.18 $ 0.01 $ (0.74 ) $ 0.45

2013 Adjustments (2)

— Interest associated with change in assessment of corporate tax benefits related to the cross-border energy lease investments

0.27 0.27
— PCI valuation allowances related to certain deferred tax assets 0.41 0.41
— Impairment loss related to PES long-lived assets 0.01 0.01
2013 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 1.18 0.02 (0.06 ) 1.14

Change from 2013 Adjusted earnings (loss) per share from Continuing Operations

Regulated Operations
— Distribution Revenue
-Weather (estimate) (3)
-Rate Increases 0.20 0.20
-Other Distribution Revenue 0.06 0.06
— Network Transmission Revenue 0.04 0.04
— Operation and Maintenance (0.04 ) (0.04 )
— Depreciation and Amortization (0.09 ) (0.09 )
— Other, net 0.01 0.01
Pepco Energy Services
Corporate and Other
Income Tax Adjustments (0.03 ) 0.01 (0.02 )
Dilution (0.03 ) (0.03 )
2014 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 1.30 0.03 (0.06 ) 1.27

2014 Adjustments (2)

— Incremental merger-related transaction costs (0.09 ) (0.09 )
— Incremental merger-related integration costs (0.03 ) (0.03 )
— Impairment losses related to PES long-lived assets (0.19 ) (0.19 )
2014 Earnings (loss) per share from Continuing Operations (GAAP) (4) $ 1.27 $ (0.16 ) $ (0.15 ) $ 0.96
(1) The 2013 weighted average number of diluted shares outstanding was 246 million.
(2) Management believes the adjusted items are not representative of the Company’s ongoing business operations. The presentation of this Non-GAAP financial information is intended to complement, and should not be considered an alternative to, the GAAP information.
(3) The effect of weather compared to the 20-year average weather is estimated to have had no impact on earnings per share.
(4) The 2014 weighted average number of diluted shares outstanding was 252 million.

Pepco Holdings, Inc.

Earnings Per Share Variance
2014 / 2013
Three Months Ended December 31,
Power Pepco Energy Corporate Total
Delivery Services and Other PHI
2013 Earnings (loss) per share from Continuing Operations (GAAP) (1) $ 0.25 $

-

$ (0.02 ) $ 0.23

2013 Adjustment (2)

— Impairment loss related to PES long-lived assets

0.01 0.01
2013 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 0.25 0.01 (0.02 ) 0.24

Change from 2013 earnings (loss) per share from Continuing Operations

Regulated Operations
— Distribution Revenue
-Weather (estimate) (3) (0.01 ) (0.01 )
-Rate Increases 0.04 0.04
-Other Distribution Revenue 0.01 0.01
— ACE Basic Generation Service (primarily unbilled revenue) 0.01 0.01
— Operation and Maintenance (0.05 ) (0.05 )
— Depreciation and Amortization (0.02 ) (0.02 )
— Other, net (0.01 ) (0.01 )
Pepco Energy Services
Corporate and Other
Net Interest Expense (0.01 ) (0.01 )
Income Tax Adjustments 0.02 0.01 0.03
2014 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 0.23 0.01 (0.01 ) 0.23

2014 Adjustments (2)

— Incremental merger-related transaction costs (0.02 ) (0.02 )
— Incremental merger-related integration costs (0.01 ) (0.01 )
— Impairment losses related to PES long-lived assets (0.06 ) (0.06 )
2014 Earnings (loss) per share from Continuing Operations (GAAP) (4) $ 0.22 $ (0.05 ) $ (0.03 ) $ 0.14
(1) The 2013 weighted average number of diluted shares outstanding was 250 million.
(2) Management believes the adjusted items are not representative of the Company’s ongoing business operations. The presentation of this Non-GAAP financial information is intended to complement, and should not be considered an alternative to, the GAAP information.
(3) The effect of weather compared to the 20-year average weather is estimated to have had no impact on earnings per share.
(4) The 2014 weighted average number of diluted shares outstanding was 253 million.
SEGMENT INFORMATION
Year Ended December 31, 2014
(millions of dollars)
Pepco Corporate
Power Energy and PHI
Delivery Services Other (a) Consolidated
Operating Revenue $ 4,607 $ 278 $ (7 ) $ 4,878
Operating Expenses (b) 3,916

354

(c)

4 4,274
Operating Income (Loss) 691 (76 ) (11 ) 604
Interest Expense 226 1 41 268
Other Income 40 2 2 44
Income Tax Expense (Benefit) 185 (36 ) (11 ) 138
Net Income (Loss) from Continuing Operations 320 (39 ) (39 ) 242
Total Assets 13,719 244 1,704 15,667
Construction Expenditures $ 1,144 $ 3 $ 76 $ 1,223
(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in Corporate and Other and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(7) million for Operating Revenue, $(7) million for Operating Expenses and $(4) million for Interest Expense.
(b) Includes depreciation and amortization expense of $549 million, consisting of $511 million for Power Delivery, $7 million for Pepco Energy Services and $31 million for Corporate and Other.
(c) Includes impairment losses of $81 million ($48 million after-tax) associated with Pepco Energy Services’ combined heat and power thermal generating facilities and operations in Atlantic City.
Year Ended December 31, 2013
(millions of dollars)
Pepco Corporate
Power Energy and PHI
Delivery Services Other (a) Consolidated
Operating Revenue $ 4,472 $ 203 $ (9 ) $ 4,666
Operating Expenses (b) 3,828

201

(c)

(31 ) 3,998
Operating Income 644 2 22 668
Interest Expense 228 1 44 273
Other Income 28 3 3 34
Income Tax Expense (d) 155 1

163

(e)

319
Net Income (Loss) from Continuing Operations 289 3 (182 ) 110
Total Assets 13,027 335 1,486 14,848
Construction Expenditures $ 1,194 $ 4 $ 112 $ 1,310
(a) Total Assets in this column includes Pepco Holdings’ goodwill balance of $1.4 billion, all of which is allocated to Power Delivery for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit Power Delivery. These expenditures are recorded as incurred in Corporate and Other and are allocated to Power Delivery once the assets are placed in service. Corporate and Other includes intercompany amounts of $(10) million for Operating Revenue, $(9) million for Operating Expenses and $(5) million for Interest Expense.
(b) Includes depreciation and amortization expense of $473 million, consisting of $439 million for Power Delivery, $6 million for Pepco Energy Services and $28 million for Corporate and Other.
(c) Includes impairment losses of $4 million ($3 million after-tax) associated with Pepco Energy Services’ landfill gas-fired electric generation facility.
(d) Includes after-tax interest associated with uncertain and effectively settled tax positions allocated to each member of the consolidated group, including a $12 million interest benefit for Power Delivery and interest expense of $66 million for Corporate and Other.
(e) Includes non-cash charges of $101 million representing the establishment of valuation allowances against certain deferred tax assets of PCI included in Corporate and Other.
PEPCO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended Year Ended
December 31, December 31,
2014 2013 2014 2013

UNAUDITED

(millions of dollars, except per share data)
Operating Revenue

$

1,118

$

1,091

$

4,878

$ 4,666
Operating Expenses
Fuel and purchased energy 458 483 2,080 2,070
Other services cost of sales 46 34 207 146
Other operation and maintenance 245 204 924 851
Depreciation and amortization 139 121 549 473
Other taxes 98 103

413

428
Deferred electric service costs (10 ) (13 ) 20 26
Impairment losses 28 4 81 4
Total Operating Expenses 1,004 936 4,274 3,998
Operating Income 114 155 604 668
Other Income (Expenses)
Interest and dividend income

(1

)

Interest expense (68 ) (68 ) (268 ) (273 )
Gain from equity investments 2
Other income 3 10 44 32
Total Other Expenses (66 ) (58 ) (224 ) (239 )
Income from Continuing Operations Before Income Tax Expense 48 97 380 429
Income Tax Expense Related to Continuing Operations 13 39 138 319
Net Income from Continuing Operations 35 58 242 110

Loss from Discontinued Operations, Net of Income Taxes

(322 )
Net Income (Loss) $ 35 $ 58 $ 242 $ (212 )
Basic and Diluted Share Information
Weighted average shares outstanding – Basic (millions) 252 250 251 246
Weighted average shares outstanding – Diluted (millions) 253 250 252 246

Earnings per share of common stock from Continuing Operations – Basic and Diluted

$ 0.14 $ 0.23 $ 0.96 $ 0.45

Loss per share of common stock from Discontinued Operations – Basic and Diluted

(1.31 )
Basic and Diluted earnings (loss) per share $ 0.14 $ 0.23 $ 0.96 $ (0.86 )
PEPCO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2014 2013
(millions of dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 14 $ 23
Restricted cash equivalents 25 13
Accounts receivable, less allowance for uncollectible accounts of $40 million and $38 million, respectively 782 835
Inventories 141 148
Deferred income tax assets, net 50 51
Income taxes and related accrued interest receivable 9 274
Prepaid expenses and other 63 54
Total Current Assets 1,084 1,398
OTHER ASSETS
Goodwill 1,407 1,407
Regulatory assets 2,409 2,087
Income taxes and related accrued interest receivable 81 75
Restricted cash equivalents 14 14
Other 166 163
Total Other Assets 4,077 3,746
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 15,465 14,567
Accumulated depreciation (4,959 ) (4,863 )
Net Property, Plant and Equipment 10,506 9,704
TOTAL ASSETS $ 15,667 $ 14,848
PEPCO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2014 2013
(millions of dollars, except shares)
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt $ 729 $ 565
Current portion of long-term debt and project funding 431 446
Accounts payable 174 215
Accrued liabilities 313 301
Capital lease obligations due within one year 10 9
Taxes accrued 41 56
Interest accrued 47 47
Liabilities and accrued interest related to uncertain tax positions 6 397
Other 314 277
Total Current Liabilities 2,065 2,313
DEFERRED CREDITS
Regulatory liabilities 343 399
Deferred income tax liabilities, net 3,266 2,928
Investment tax credits 16 17
Pension benefit obligation 396 116
Other postretirement benefit obligations 265 206
Liabilities and accrued interest related to uncertain tax positions 2 28
Other 193 189
Total Deferred Credits 4,481 3,883
OTHER LONG-TERM LIABILITIES
Long-term debt 4,441 4,053
Transition bonds issued by ACE Funding 171 214
Long-term project funding 8 10
Capital lease obligations 50 60
Total Other Long-Term Liabilities 4,670 4,337
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK
Series A preferred stock, $.01 par value, 18,000 shares authorized, 12,600 and zero shares outstanding, respectively 129
EQUITY
Common stock, $.01 par value – 400,000,000 shares authorized, 252,728,684 and 250,324,898 shares outstanding, respectively 3 3
Premium on stock and other capital contributions 3,800 3,751
Accumulated other comprehensive loss (46 ) (34 )
Retained earnings 565 595
Total Equity 4,322 4,315
TOTAL LIABILITIES AND EQUITY $ 15,667 $ 14,848
POWER DELIVERY SALES AND REVENUE
Three Months Ended Year Ended
December 31, December 31,
Power Delivery Sales (Gigawatt Hours) 2014 2013 2014 2013
Regulated T&D Electric Sales
Residential 3,688 3,826 17,129 17,168
Commercial and industrial 7,235 7,183 29,831 30,070
Transmission and other 73 76 255 259
Total Regulated T&D Electric Sales 10,996 11,085 47,215 47,497
Default Electricity Supply Sales
Residential 3,016 3,047 13,851 13,743
Commercial and industrial 1,245 1,170 5,420 5,079
Other 11 13 44 55
Total Default Electricity Supply Sales 4,272 4,230 19,315 18,877
Power Delivery Electric Revenue (Millions of dollars)
Regulated T&D Electric Revenue
Residential $ 184 $ 180 $ 824 $ 781
Commercial and industrial 245 236 1,013 970
Transmission and other 112 106 440 395
Total Regulated T&D Electric Revenue $ 541 $ 522 $ 2,277 $ 2,146
Default Electricity Supply Revenue
Residential $ 287 $ 289 $ 1,312 $ 1,376
Commercial and industrial 124 124 553 542
Other 36 41 211 157
Total Default Electricity Supply Revenue $ 447 $ 454 $ 2,076 $ 2,075
Other Electric Revenue $ 16 $ 14 $ 60 $ 60
Total Electric Operating Revenue $ 1,004 $ 990 $ 4,413 $ 4,281
Power Delivery Gas Sales and Revenue
Regulated Gas Sales (Mcf)
Residential 2,436 2,496 8,550 7,861
Commercial and industrial 1,778 1,713 6,063 4,945
Transportation and other 1,681 1,849 6,418 6,990
Total Regulated Gas Sales 5,895 6,058 21,031 19,796
Regulated Gas Revenue (Millions of dollars)
Residential $ 29 $ 32 $ 106 $ 103
Commercial and industrial 15 17 59 52
Transportation and other 3 2 11 10
Total Regulated Gas Revenue $ 47 $ 51 $ 176 $ 165
Other Gas Revenue $ 2 $ 3 $ 18 $ 26
Total Gas Operating Revenue $ 49 $ 54 $ 194 $ 191
Total Power Delivery Operating Revenue $ 1,053 $ 1,044 $ 4,607 $ 4,472
POWER DELIVERY – CUSTOMERS
December 31, December 31,
2014 2013
Regulated T&D Electric Customers (in thousands)
Residential 1,669 1,650
Commercial and industrial 200 200
Transmission and other 2 2
Total Regulated T&D Electric Customers 1,871 1,852
Regulated Gas Customers (in thousands)
Residential 118 117
Commercial and industrial 10 9
Transportation and other
Total Regulated Gas Customers 128 126
WEATHER DATA – CONSOLIDATED ELECTRIC SERVICE TERRITORY
Three Months Ended Year Ended
December 31, December 31,
2014 2013 2014 2013
Heating Degree Days 1,405 1,511 4,431 4,281
20 Year Average 1,519 1,526 4,259 4,276
Percentage Difference from Average (8%) (1%) 4%
Percentage Difference from Prior Year (7%) 4%
Cooling Degree Days 31 67 1,360 1,453
20 Year Average 32 29 1,396 1,393
Percentage Difference from Average (3%) 131% (3%) 4%
Percentage Difference from Prior Year (54%) (6%)
PEPCO ENERGY SERVICES
Financial Information – Continuing Operations
Three Months Ended

(Millions of Dollars)

December 31,
2014 2013
Operating Revenue $ 66 $ 49
Cost of Goods Sold 47 34
Gross Margin 19 15
Other Operation and Maintenance Expenses 15 10
Impairment Losses

28

(1)

4

(2)

Depreciation and Amortization 1 2
Operating Loss (25 ) (1 )
Other Income 1
Loss Before Income Taxes (25 )
Income Tax Benefit (11 )
Loss from Continuing Operations (GAAP) $ (14 ) $
Year Ended

(Millions of Dollars)

December 31,
2014 2013
Operating Revenue $ 278 $ 203
Cost of Goods Sold 212 148
Gross Margin 66 55
Other Operation and Maintenance Expenses 54 43
Impairment Losses

81

(1)

4

(2)

Depreciation and Amortization 7 6
Operating (Loss) Income (76 ) 2
Other Income 1 2
(Loss) Income Before Income Taxes (75 ) 4
Income Tax (Benefit) Expense (36 ) 1
Net (Loss) Income from Continuing Operations (GAAP) $ (39 ) $ 3
(1) Impairment losses of $28 million ($16 million after-tax) in 4Q14 and $81 million ($48 million after-tax) in 2014 associated with the combined heat and power thermal generating facilities and operations in Atlantic City.
(2) Impairment losses of $4 million ($3 million after-tax) associated with a landfill gas-fired electric generation facility.
(Millions of Dollars) December 31, December 31,
2014 2013
Total Assets $ 244 $ 335
Current Assets 146 188
Property, Plant and Equipment 30 113
Other Assets 68 34
Total Liabilities $ 90 $ 85
Current Liabilities 64 55
Long-Term Liabilities 26 30
Equity $ 154 $ 250

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