Good morning. My name is Cassandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter earnings conference call. [Operator Instructions] And now I would like to turn the call over to Stacie Frank, VP of Investor Relations. You may begin.

Thank you, Cassandra, and good morning. Welcome to Exelon's Fourth Quarter 2011 Earnings Conference Call. We issued our earnings release this morning. If you haven't received it, the release is available on the Exelon website. The earnings release and other matters we will discuss in today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties, as well as adjusted non-GAAP operating earnings. Please refer to today's 8-K and Exelon's other filings for a discussion of factors that may cause results to differ from management's projections, forecasts and expectations and for a reconciliation of operating to GAAP earnings. In addition, during the call today, we will be discussing the proposed merger of Exelon and Constellation Energy Group, Inc. Today's discussion is not a substitute for the disclosures in the definitive joint proxy statement and prospectus that was mailed to shareholders on or about October 12, 2011. For important additional information regarding the proposed merger, including the associated risks and uncertainties, please refer to the earnings release and today's 8-K, as well as the definitive joint proxy statement. Presenting on our call today are John Rowe, Exelon's Chairman and Chief Executive Officer; Matthew Hilzinger, Exelon's Senior Vice President and Chief Financial Officer; and Ken Cornew, Exelon's Senior Vice President and President of Exelon Power team. They are joined by Chris Crane, Exelon's Chief Operating Officer and other members of Exelon senior management team who will be available to answer your questions. I will now turn the call over to John Rowe, Exelon's CEO.

Good morning, everybody. It's always a shame to waste someone as talented as Stacie reading the Safe Harbor language, but the lawyers keep saying, she has to do it. 2011 was another fine year for Exelon. We had very strong financial and operating performance; we grew the company through acquisitions, which are working on both on an earnings and cash flow basis; we made progress on a range of regulatory, legislative and market issues; and we are getting ever closer to consummating our merger with Constellation. Our fourth quarter operating earnings were $0.82 per share. While December was a little disappointing due mostly to weather, our full year 2011 operating earnings per share of $4.16 were within our final guidance range, better than our 2010 results and well above our original expectations for the year. Our leading drivers in '11 were the strong performance of the generation fleet, led, of course, by our ninth consecutive year of over 93% capacity factors in nuclear that's helped significantly by our Texas operations. Tax benefits helped us a great deal. The impact of the Illinois Energy Infrastructure Modernization Act was positive, as was our summer weather. The good news was partially offset by costly storms at both ComEd and PECO and lower than weather-normalized load at PECO. ComEd had a terrible July storm wise, which we soaked up successfully, and PECO had both a hurricane and a freak fall snowstorm. Matt will review the quarter-over-quarter and full year financial drivers in more detail. As you know, we made a $2.1 billion contribution to the pension at the beginning of the year, which along with Doug Brown's fine work on asset allocation, allowed us to end the year at 83% funded status. And remember, this is with very low discount rates. The contribution gives…

Thank you, John, and good morning, everyone. This morning, I will review a few details for the fourth quarter and full year operating results and provide some information to what lies ahead. The press release issued this morning and today's slide presentation includes a significant amount of information regarding this quarter's results. We'll start by highlighting a few key items shown on Slide 7. Exelon closed out 2011 by delivering fourth quarter operating earnings of $0.82 per share and $4.16 per share for the full year, which includes $0.07 of unfavorable weather versus the prior year. We are pleased with our 2011 financial and operating performance and, as John discussed, our operating companies contributed significantly to these results. Moving to Slide 8, Generation contributed $0.54 per share to the fourth quarter operating results and $3.01 per share for the year. Generation's fourth quarter results reflect favorable market conditions of $0.06 per share, which is primarily driven by net favorability for the mid-Atlantic and Midwest regions and hydro production. Now moving to ComEd on Slide 9, ComEd delivered operating earnings of $0.18 per share in the fourth quarter and $0.61 per share for the full year, resulting in an annual earned ROE of 9.3%. ComEd's fourth quarter results included $0.06 per share benefit for the revenue requirement reconciliation and the establishment of a regulatory asset for storm costs related to the implementation of the Energy Infrastructure Modernization Act passed earlier this fall. The infrastructure legislation provides a reliable mechanism for the recovery of the $2.6 billion capital expenditures ComEd will make to modernize and upgrade the system over the next 10 years beginning in 2012. As required by the legislation, the Illinois Power Agency will conduct a procurement auction in February of this year for around-the-clock energy contracts for June 2013…

Thanks, Matt, and good morning, everyone. I just -- I'd like to say, it's always a better morning these days when natural gas futures are up a little bit and for the past few days, they have been. So again, good morning. As John mentioned, I want to spend a few minutes this morning going over what we've witnessed recently in the gas and power markets, and let me start with the gas market. Natural gas prices have continued to move lower on strong production and an unprecedented lack of winter weather. Weak estimated [ph] growth and general bearishness on economic growth are adding to the downward pressure. These factors are resulting in significant gas storage inventories that would persist with continued mild weather, which would be a drag on gas prices through 2012 and potentially into 2013. Between September 30, 2011 and the end of the year, 2013 and '14 natural gas prices dropped by approximately $0.80. And as John mentioned, over the first 3 weeks of the year, prices have fallen almost another $0.30 and prompt month gas has hit levels last seen in January 2002. Longer term, in the 2014 and 2016 time period, we expect natural gas prices in the $4 to $6 range, which we believe is supported by the long-run margin on cost of production. This will be dependent on reasonable levels of gas demand growth, some of which we expect to come from coal plant retirements and the expected resulting increase in natural gas generation as a replacement source of power. Producer discipline will need to be a key part of the longer-term response to lower gas prices. We saw one announcement earlier this week of a shift from dry gas to more liquids-rich plays, and we would expect that will continue. What's…

[Operator Instructions] Your first question comes from the line of Greg Gordon.

So obviously, we -- just to be clear, the open and hedged gross margins that you guys have laid out for us in your deck are from year-end, but pricing has continued to decline during the first 3 weeks of January, so we should be cognizant that on a sort of true mark, the open gross margins would be a bit lower. Is that accurate?

That's correct, Greg.

And then I'm actually intrigued by your commentary on the heat rate phenomenon. Are you just seeing a lack of liquidity out the curve that might be related to sort of a change in dynamics because there's just fewer hedge funds, fewer big investment banks that are transacting in those markets, or are there other dynamics at play?

That's very well possible. I think -- now in looking at what's happened in January, we saw a significant decline in forward heat rates in the first week, week and a half of January. And then we did see a rebound in those heat rates at some level back to better levels but still not where we would expect them to be. I think liquidity is an issue, particularly in the out years. I believe there is -- there was some significant selling going on with -- the fear is that the gas market was going to continue to decline. I do think the stay of the Cross-State Air Pollution Rule had an immediate impact on forward power prices. So when you lump all these things together, you saw a lot of bearish sentiment in the market. Although some of that has recovered in the past week or so, I still see when I study spot market prices, spot market heat rates, when we look at our modeling, as I described in my commentary, I still see upside -- significant upside in the -- in heat rates based on the real fundamental factors that should be driving the market.

And what's the importance -- does the importance of having a broadening retail channel sort of increase in this type of environment, or is it -- are retail pricing channels also coming under pressure with dramatic decline in gas?

Greg, obviously, retail pricing follows, at some level, wholesale pricing. So it's not the answer to the price decline, but the retail channel is a channel that allows for incremental margin. It is a channel that allows for you not to transact in the standard or over-the-counter product markets and with the liquidity commentary you and I both have just brought up, it's always positive to have other channels to transact in cellular power besides over-the-counter markets and standard trading ones.

Your next question comes from the line of Jay Dobson.

Ken, just finishing up on that, so you'd suggest there'd be higher margins in the retail business than we see in the broader market, understanding that the retail and the wholesale are going to track one another. Just wanted to finish up on that last thought.

Okay, on retail margins, we have seen retail margins be cyclical and inversely correlated to price in natural gas cycles. However, there are a couple of comments to that. The market has not really been very cyclical in the last couple of years, and has been steadily declining. That competitive environment on the retail side, particularly in new markets, like Pennsylvania, where you do have many, many players looking for market share, has put pressure on margins. That being said, our -- in our business, we're seeing relatively stable margins in the areas where we're transacting.

Let me -- this is John. Let me try to flesh out what Ken just said because I think it's important. One of the reasons, there were many that you've all heard, but one of the reasons Exelon was interested in acquiring Constellation is that in general, the margin, if you go all the way to the retail customer, is somewhat larger than it is just selling into the wholesale market. And indeed, Constellation has been successful in securing quite attractive margins on regular basis. Now what Ken is trying to say is that when wholesale prices rise, retail margins tend to shrink a little. But when wholesale margins fall, it goes in the same direction, but there's a lag, and the retail margins get a little bit larger. I think I said that accurately, didn't I, Ken?

You did, John.

And that's part of why we want this whole retail market channel.

No, that's very helpful, Ken and John. I appreciate that. And then John, I'll let you direct to the question, but capital spending -- I appreciate Ken's comments on fundamental views around power prices, but certainly, gas prices are going to make some of these uprates certainly out in the '14, '15 time frame look a little less economic. So just wondering how you're thinking about CapEx over the next 3 to 5 years. And I isolate this on a stand-alone basis, obviously.

Let me open the can and then defer this to Chris, who's the one who's going to have the responsibility to make the ultimate reality here. Of course, we're reassessing capital programs. How we look at them is different depending on where we look at them. For example, at ComEd, with the new Illinois Act, we are going to get stable returns on increasing capital expenditures. When it comes to the nuclear uprates, we're going to take a fresh and hard-boiled look at that them as we do every 6 months. And we'll obviously take our most recent views of gas and power markets into account. When it comes to like Exelon Wind, well, if the contract is good enough with a counterparty that's good enough, that has even different capital implications. So Chris is going to be going through the whole capital program with this kind of attitude in mind. And with that, let me let Chris expand upon it because he's the one who's got to do it, and he's the one that you got to rely on for making this all work in a way that protects your dividend.

Yes. I agree with everything that John said. In starting with the balance sheet, we main -- have maintained a strong balance sheet that gives us the room to weather these cycles, ending 2011 at over 50% FFO to debt gives us that room continuing to stress the balance sheet and analyze these capital projects that will continue. As we see them now, the uprates, and those are the ones that get closest to the bubble, we'll have to watch closely and we do. We'll continue -- well, we've got time between now and 2015. And the beauty of these projects is the ability to stop, slow -- stop or slow or accelerate as we see and not be stuck with a lot of -- some capital that makes us finish a project that may become uneconomic. So we feel good about them. And we feel there's a lot of time through 2012 to continue to analyze and look at the market. We see the trend, but we've got to understand the trend and the sustainability of the trend. And we'll -- as I said, we have time and room to make the decisions through '12 and into '13 on how we continue to support '15 and beyond.

Your next question comes from the line of Brian Chin.

Just piggybacking off Jay's question. Could you remind us again what you've said in the past about to what extent the nuclear uprates have some degree of flexibility? If I recall right, there's some portion of those uprates that are a little bit more requisite than others. So just a little bit of update on clarity on that would be helpful.

Well, there were basically 3 parts to the nuclear uprate program, and 2 of the 3 parts were relatively low capital with relatively high returns. And now the ones that are left are the bigger capital requirements and the tougher decisions. Chris, why don't you pick up.

Yes. The first bucket was measurement uncertainty. It's a calibration method, allows us to get a few percent out of multiple units. The second bucket was on component replacement with new engineer standards, turbines, generators, more efficiency, and those projects are halfway through and are needed for plant life extension, but they also pay for themselves nicely with the returns on the more efficient components. And the third and the final bucket is most costly are the EPUs, the extended power uprates. They're at 3 facilities, LaSalle, in Illinois, Peach Bottom and Limerick. We continue to watch those closely. We have the Peach Bottom project proceeding on. We're in the early stages of the Limerick and the LaSalle project. We continue to watch them closely. They still have a positive -- they still meet the positive hurdle rates that we require them to. But the optionality around those, if we see the NiHub market can't support, for instance, we could stop the LaSalle project without any ramifications on maybe a stronger market in PJM West Hub or the East for Peach and Limerick. So that kinds of describes the optionality.

I think the important thing for you all to remember is, we probably have that optionality for another 9 months or a year. There comes a point when you have to either do these things or not do them. And Mike Pacilio was talking to Chris and I the other day, what he said was no news to Chris, but it was probably a good reminder for me, which is, "Don't just dither with these things and put them off." That doesn't work very well with large nuclear projects. So it's very important that we get very conservative, very hard-headed and reanalysis done over the next several quarters and make the right decision for you.

One follow up to that. That third bucket, the EPUs, is that roughly about 1/3 of the nuclear uprate in spending that we should see, so that way, we have some way of quantifying to what extent you've got flexibility on that, or is that not a reasonable assumption?

Yes. I think it was slightly more than 1/3. They're putting it in front of me now. So the EPU total was $2.5 million, if I've got this right, out of almost a $4 million project -- billion, excuse me, billion, out of a 4 project. So it's over 1/2 of the spend. It was a more significant portion of the spend. And I think we've disclosed that a couple times before, and we'll make sure we put it in our update to you.

Your next question comes from the line of Steve Fleishman.

Just before my question, I just wanted to -- I guess this might be your last earnings call, so we're going to miss your many metaphors.

Maybe my bottom lines, too.

I don't know if there's a real direct way to answer this question, but is there a gas price in your heads whereby it's harder to be so strong on just the ability to get through this period to get to MATS in terms of security of the dividend and credit?

Well, the answer is no, but that's only half an answer. Of course, the other half is yes. The answer is no because it's not just a matter of gas price. It's a matter of gas price and how long it lasts. It's the amount of time it takes to get through. And so, obviously, the first things we do are things like reanalyzing the power uprates. The next thing Chris is going to do is hunt for ways consistent with all our commitments in places like Maryland to cut costs. And we're going to deliver the merger synergies we promised you. We're going to do all those things, and that buys us a fairly substantial amount of space. But $2.40 gas isn't jolly. If you're really going to project that for 10 years, we've got a problem here. So Chris, you or Ken want to pick up on Steve's question? I mean, I don't think there is a number, Steve, but there is a mixer -- a mix of numbers and time. I'm pretty sure that Chris has got several years to work with this, and he's going to be working very hard to make certain that we keep the dividend and the coverages. Chris, Matt, do you want to add to that? This is what it's all about.

No. That's well stated. We've got time. We don't think these prices are sustainable. But if, for some reason, they are, we have time to make adjustments as required, and we're as committed to the dividend as ever, and it will never be a surprise to you. So the way we look at it, if we're in trouble, we're the lowest cost in the stack. Where is everybody else and how is this sustainable? So with the hedging, with room in the balance sheet, we have time and we'll prudently go through it. And you won't be surprised if something ever happens.

I told you in one of my metaphors, Steve, that we were the hyena looking for the dead stuff on the road. There's going to be an awful lot for Chris to eat if we see these low gas prices continuing.

Okay. One other quick question. Just -- since I think your last call, we got the final MATS rule and we also -- PJM, I guess, came out at least with their demand forecasts for the next RPM. Any more color on kind of general direction of RPM based on the updates we've seen?

Ken or Joe, 1 of the 2 of you.

Yes, Steve, on the next auction, obviously, there are a lot of moving parts to this auction. Some decline in demand, which would have some downward pressure on price, but several other elements that would have, I think, upward pressure on price. We have some net CONE and gross CONE changes that should be positive. We do have an ECR calculation concept in which coal plants will have higher ECRs year-over-year. But what really is, in my mind, going to drive this next auction is how DR, and particularly unlimited DR prices itself in the next auction. With tightening fundamentals, I would expect unlimited DR, if it clears in the auction to be utilized in this stack. So that's a big component. But all in all, I'm -- I feel positive about an uptick in the auction. But clearly, there are a lot of variables still in play that we need to ferret out.

Your next question comes from the line of Hugh Wynne. Hugh Wynne - Sanford C. Bernstein & Co., LLC., Research Division: I think I'll keep my questions for sidebar conversation with Stacie and I'd just like to do something I don't usually do, which is to throw out a compliment. Looking at your Slide 15 here, and there's one thing you don't mention, which I think is very important. In my experience, Exelon has increasingly stood out from its peers at a time of more aggressive in-your-face earnings manipulation towards your justifications for earnings growth estimates that now are clearly out of date. You, by contrast, have provided, on a consistent basis, numbers that I have found to be trustworthy earnings estimates that generally were conservative and a very transparent look at the future trajectory of earnings. So I just wanted to 2 compliment you on that. I think it causes your financial group to stand out relative to others, and I hope that Chris and Matt and Stacie will preserve that very fine tradition. So thanks for that, and that's really the end of my comment.

We're just a pack of pilgrims, and we want to keep your confidence as we march around in our grand black and white and gray outfits.

All right. I think that's a perfect opportunity and perfect segue to turn the call back over to John for some closing remarks.

Well, I am going to talk about Slide 15. Stacie, thank you. As Steve Fleishman suggested, this I expect to be my last earnings call as CEO. And that's after 28 years of trying to be useful to all of you and to customers, all the way from little Skowhegan in Maine to here in Chicago. Obviously, I'm absolutely delighted to be able to end a very long career with what I hope and expect to be the completion of the Constellation acquisition. Exelon is a great company, and with Constellation and with Chris' leadership, it's going to be an even greater company. The only thing that could make me happier would be if power prices and earnings forecasts were back where they were in '07 and '08. That would make me happier because it would make you happier and make all of us richer. And that's the objective I've had in mind for all 28 years. But even though these aren't the best of times for Exelon, I'm still very proud that we have run this for our investors, and we've tried to do what Hugh Wynne suggested and give you straight numbers as soon as we know what they might be. And as I look at the situation, yes, I loved it when Exelon was 40% bigger than Southern, and I don't like seeing Southern and Duke and Dominion having more market cap than us right now. But the point I would like to make is before we regulate it, integrates are on the top of the curve, and we're right now in the trench. Things in '08 were too good for us to be true forever. Things right now won't be forever either. And while you wait for better times to come at Exelon, you can know…

This concludes today's conference call. You may now disconnect.