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Exelon ( EXC ) aims to own regulated power supplies in

Mid-Atlantic amid

rising bills

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CEO Butler advocates for legislative changes to allow

regulated

power generation

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Independent power companies oppose regulated generation

By Laila Kearney

NEW YORK, Sept 23 (Reuters) - Major U.S. electric

utility Exelon ( EXC ) plans to step up its push to own power

plants in its Mid-Atlantic service area next year, where

electricity bills are spiking in the face of rising demand and

new supplies are slow to be added, CEO Calvin Butler told

Reuters this week.

Exelon's ( EXC ) effort comes as PJM Interconnection, the

country's largest grid providing electricity to over 65 million

people in the Midwest to the Mid-Atlantic, faces supply

shortfalls amid surging demand from data centers and the

electrification of industries like transportation.

Chicago-based Exelon ( EXC ) said in July that it was considering

its options for building and owning regulated power generation,

which electric utilities are legally barred from in about half

of U.S. states.

In those states, regulated utilities generally own power

lines, while independent power producers own and operate power

plants to diversify market power, which can help prevent

anti-competitive behavior.

Butler said allowing electric utilities like Exelon ( EXC ) to build

new regulated power supplies, which is currently barred by state

laws in much of PJM's territory, would ease the grid's power

crunch and bring down prices.

Regulated power generation in the region where Exelon ( EXC )

operates would require a series of changes to state law, which

Butler said his company is laying the groundwork for by talking

to lawmakers and governors ahead of next year's lawmaking

meetings.

"I believe the 2026 legislative sessions are going to be an

opportunity for us," Butler told Reuters at a meeting in New

York on Monday. "We're going to be advocating for it."

About half of U.S. states are considered deregulated,

generally, meaning that electric utilities that own transmission

and distribution lines cannot also own regulated power

generation. The deregulation effort began in the 1990s in

response to rising electricity costs.

As power bills rise again, some of the 13 states in PJM,

like Maryland and New Jersey, have considered amending their

laws to allow regulated power generation.

"I'm one of the staunchest supporters for competitive

markets when they work, but we are seeing that the competitive

marketplace in PJM is not working," Butler said.

U.S. power demand is forecast to hit record highs this

year and next, according to the U.S. Energy Information

Administration.

FIGHTING RISING BILLS

If allowed by the states, Butler said he would seek to build

community solar in low-to-moderate income neighborhoods, which

he said would reduce power bills.

Some 80% of recent household electricity bill increases are

power supply costs, Butler said, as opposed to utility charges.

With nearly 11 million customers, Exelon ( EXC ) is one of the

biggest power utilities in the country and covers some of the

most impoverished urban communities, including those in

Philadelphia, Baltimore and Atlantic City. Some of those cities

have also seen the biggest power bill increases over the summer.

Independent power companies have argued against the idea of

regulated power generation in deregulated states, saying

utilities would pass the cost down to customers and further

raise bills.

Butler said regulated utilities can often build power

supplies with a lower impact on bills. They have lower borrowing

costs and cost of capital and a speedier permitting process

because utilities like Exelon ( EXC ) already own substantial land and

easements to develop new power generation, he said.

Exelon's ( EXC ) overall return on its assets is about 9.5%, or

roughly half of what he said independent power producers earn.