Associated Press | Exelon Corp. said Friday that its first-quarter earnings rose 5 percent
and that electricity demand and residential customer growth is starting
to pick up as the economy improves.

The nation’s utilities are a proxy for how the economy is doing. Signs
of improved demand would support other indicators that the economy is
getting better.

Exelon, based in Chicago, said it earned $749 million, or $1.13 per share, for the quarter ended March 31, up from $712 million, or $1.08 per share, in the year-ago quarter.

Discounting the one-time gains and charges, profit would have been $662 million, or $1 per share, down from $797 million, or $1.20 per share, in the year ago quarter.

Analysts surveyed by Thomson Reuters expected a lower adjusted profit of 89 cents a share.

Revenue fell to $4.5 billion from $4.8 billion a year ago. That was well short of analysts’ expectation of revenue of $4.72 billion.

Exelon shares edged up 3 cents to $43.68 in afternoon trading Friday. The shares initially fell to a 52-week low of $42.78 before coming back.

Exelon raised its electricity demand outlook for its Philadelphia-area utility PECO to a growth rate of 0.3 percent compared with its old forecast of a decline of 1.5 percent.

Matthew Hilzinger, senior vice president and chief financial officer, told analysts that Exelon signs of improving demand in the region are showing up earlier than expected. Overall demand rose 0.5 percent in the quarter, discounting the weather.

“The large commercial and industrial class is seeing increased load in the steel manufacturing segment as well as health care and educational services,” he said. “The residential growth appears to be tied to better economic recovery.”

In Chicago, Hilzinger said demand is expected to turn around by midyear for its Commonwealth Edison utility’s largest commercial and industrial customers. The company maintained its 0.8 percent growth rate estimate for Chicago for 2010.

The company added 2,500 residential customers during the quarter versus a year ago, the first time that has happened since December 2008, he said.

The improving demand led the company to bump up the bottom range of its 2010 earnings forecast from $3.60 to $3.70 per share while keeping the top end at $4 per share. Analysts expect earnings of $3.76 for the year.

The company said it expects earnings of 80 to 90 cents per share in the second quarter, below Wall Street estimates of 93 cents per share.

Hilzinger said the second-quarter estimates include lower power prices as well as increased nuclear fuel costs.

The company’s first-quarter profit was helped by gains in hedges for Exelon’s expected generation. The company also recorded non-cash charges of about $65 million because of the recent federal health care overhaul.

Exelon and other companies currently receive a government subsidy to keep prescription drug benefits for retirees. They have been able to deduct their expenses, but that ends in 2013 under the recently passed legislation.

Companies are announcing the charges now because accounting rules say they have to book them during the period a new law is enacted.

The company, the nation’s largest nuclear power operation, said its adjusted profit fell in part because of increased scheduled refueling outages at its nuclear fleet and lower margins within its generation business.