NEW YORK, Apr 29, 2015 (BUSINESS WIRE) -- Fitch Ratings has taken the following rating actions on Exelon Corp. (EXC) and its subsidiaries: EXC --'BBB+' Issuer Default Ratings (IDR) maintained on Rating Watch Negative; Exelon Generation Co., LLC's (Exgen) --IDR and senior unsecured debt ratings downgraded to 'BBB' from 'BBB+'; Rating Outlook revised to Stable from Negative; Baltimore Gas and Electric Co.' S (BGE) --IDR upgraded to 'BBB+' from 'BBB'; Outlook revised to Stable from Positive; Commonwealth Edison Co.' S (Comed) --IDR affirmed at 'BBB' Outlook revised to Positive from Stable; PECO Energy Co. (PECO) --IDR affirmed at 'BBB+'; Outlook Stable. A full list of the rating actions follows at the end of this release. Can also incentivize drivers to plug in during off-peak hours, helping to reduce peak. Install a total of 1.73 million meters by the end of 2015. PECO received. The Rating Watch Negative for EXC reflects the increased leverage that results from its pending acquisition of Pepco Holdings, Inc. (PHI, IDR rated 'BBB' by Fitch). The higher leverage reflects the acquisition financing plan and the consolidation of the more levered PHI. The rise in leverage is mitigated in part by an increase in regulated earnings. The Exgen downgrade reflects Fitch's view that the previous ratings are inconsistent with the inherent cash flow volatility of the commodity sensitive competitive generation business. The ratings also reflect the on-going weakness in forward power and natural gas prices, soft power demand and aggressive competition in the retail supply business. Credit protection measures that are solidly within the investment grade category are also captured in the revised ratings. The BGE upgrade reflects the improvement in the company's financial profile in recent years, which Fitch Ratings believes is sustainable, although on-going rate support will be required. The Positive Ratings Outlook for Comed recognizes the uptrend in financial performance in recent years and the regulatory predictability in Illinois due to a formula rate plan (FRP) that provides for annual rate adjustments that reduce regulatory lag. On-going improvement is expected by Fitch in 2015. KEY RATING DRIVERS FOR EXELON CORP. Pending Merger: The proposed acquisition increases consolidated leverage compared to EXC's stand-alone financial position. The additional leverage reflects the financing plan that includes a significant debt component and the consolidation of the higher levered PHI. The financing plan for the $7.2 billion acquisition includes $3.5 billion of new EXC corporate debt, $1 billion from Exgen asset sales (completed in 2014), $1.7 billion of common equity and $1.0 billion of mandatorily convertible debt (issued in 2014). Under Fitch criteria the convertible debt issued by EXC, in the form of equity units, receives no equity credit. In addition, EXC will assume approximately $5.0 billion of PHI consolidated debt. The merger is expected to close in 2015 Q2 or Q3. Utility Earnings Contribution: EXC's ratings benefit from the predictable and growing earnings and cash flow contributions of its three regulated utilities. The utilities accounted for approximately 53% of 2014 adjusted operating income growing to an estimated 60% (excluding the pending PHI acquisition) by 2019. The utilities have sound and/or improving credit profiles, limited commodity price risk and a relatively predictable earnings, balancing the more volatile earnings and cash flow of the commodity sensitive competitive generation business. Competitive Generation Business: The operating environment for EXC's competitive generation business is expected to remain challenging with sluggish demand and low natural gas and power prices likely to persist for several years.
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