UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the Quarterly Period Ended March 31, 2022
or
| Commission File Number | Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and Telephone Number | IRS Employer Identification Number | ||||||||||||
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| EXELON CORPORATION: | ||||||||||||||
| PECO ENERGY COMPANY: | ||||||||||||||
Trust Receipts of PECO Energy Capital Trust III, each representing a 7.38% | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Exelon Corporation | x | Accelerated Filer | ☐ | Non-accelerated Filer | ☐ | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Commonwealth Edison Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| PECO Energy Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Baltimore Gas and Electric Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Pepco Holdings LLC | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Potomac Electric Power Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Delmarva Power & Light Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
| Atlantic City Electric Company | Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | x | Smaller Reporting Company | Emerging Growth Company | |||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The number of shares outstanding of each registrant’s common stock as of March 31, 2022 was:
| Exelon Corporation Common Stock, without par value | |||||
| Commonwealth Edison Company Common Stock, $12.50 par value | |||||
| PECO Energy Company Common Stock, without par value | |||||
| Baltimore Gas and Electric Company Common Stock, without par value | |||||
| Pepco Holdings LLC | not applicable | ||||
| Potomac Electric Power Company Common Stock, $0.01 par value | |||||
| Delmarva Power & Light Company Common Stock, $2.25 par value | |||||
| Atlantic City Electric Company Common Stock, $3.00 par value | |||||
TABLE OF CONTENTS
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1
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2
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3
| GLOSSARY OF TERMS AND ABBREVIATIONS | ||||||||
| Exelon Corporation and Related Entities | ||||||||
| Exelon | Exelon Corporation | |||||||
| ComEd | Commonwealth Edison Company | |||||||
| PECO | PECO Energy Company | |||||||
| BGE | Baltimore Gas and Electric Company | |||||||
| Pepco Holdings or PHI | Pepco Holdings LLC | |||||||
| Pepco | Potomac Electric Power Company | |||||||
| DPL | Delmarva Power & Light Company | |||||||
| ACE | Atlantic City Electric Company | |||||||
| Registrants | Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE, collectively | |||||||
| Utility Registrants | ComEd, PECO, BGE, Pepco, DPL, and ACE, collectively | |||||||
| ACE Funding or ATF | Atlantic City Electric Transition Funding LLC | |||||||
| BSC | Exelon Business Services Company, LLC | |||||||
| Exelon Corporate | Exelon in its corporate capacity as a holding company | |||||||
| PCI | Potomac Capital Investment Corporation and its subsidiaries | |||||||
| PECO Trust III | PECO Energy Capital Trust III | |||||||
| PECO Trust IV | PECO Energy Capital Trust IV | |||||||
| PHI Corporate | PHI in its corporate capacity as a holding company | |||||||
| PHISCO | PHI Service Company | |||||||
| Former Related Entities | ||||||||
| Constellation | Constellation Energy Corporation | |||||||
| Generation | Constellation Energy Generation, LLC (formerly Exelon Generation Company, LLC, a subsidiary of Exelon prior to separation on February 1, 2022) | |||||||
4
| GLOSSARY OF TERMS AND ABBREVIATIONS | |||||||||||
| Other Terms and Abbreviations | |||||||||||
| Note - of the 2021 Form 10-K | Reference to specific Combined Note to Consolidated Financial Statements within Exelon's 2021 Annual Report on Form 10-K | ||||||||||
| AEC | Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source | ||||||||||
| AFUDC | Allowance for Funds Used During Construction | ||||||||||
| AMI | Advanced Metering Infrastructure | ||||||||||
| AOCI | Accumulated Other Comprehensive Income (Loss) | ||||||||||
| ARO | Asset Retirement Obligation | ||||||||||
| BGS | Basic Generation Service | ||||||||||
| CEJA (formerly Clean Energy Law in the Exelon 2021 Form 10-K) | Climate and Equitable Jobs Act; Illinois Public Act 102-0662 signed into law on September 15, 2021 | ||||||||||
| CERCLA | Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended | ||||||||||
| CMC | Carbon Mitigation Credit | ||||||||||
| CODM | Chief Operating Decision Maker(s) | ||||||||||
| DC PLUG | District of Columbia Power Line Undergrounding Initiative | ||||||||||
| DCPSC | Public Service Commission of the District of Columbia | ||||||||||
| DEPSC | Delaware Public Service Commission | ||||||||||
| DOEE | District of Columbia Department of Energy & Environment | ||||||||||
| DPP | Deferred Purchase Price | ||||||||||
| EIMA | Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036) | ||||||||||
| EPA | United States Environmental Protection Agency | ||||||||||
| ERCOT | Electric Reliability Council of Texas | ||||||||||
| ERISA | Employee Retirement Income Security Act of 1974, as amended | ||||||||||
| ETAC | Energy Transition Assistance Charge | ||||||||||
| FEJA | Illinois Public Act 99-0906 or Future Energy Jobs Act | ||||||||||
| FERC | Federal Energy Regulatory Commission | ||||||||||
| GAAP | Generally Accepted Accounting Principles in the United States | ||||||||||
| GCR | Gas Cost Rate | ||||||||||
| GSA | Generation Supply Adjustment | ||||||||||
| GWh | Gigawatt hour | ||||||||||
| ICC | Illinois Commerce Commission | ||||||||||
| Illinois Settlement Legislation | Legislation enacted in 2007 affecting electric utilities in Illinois | ||||||||||
| IPA | Illinois Power Agency | ||||||||||
| IRC | Internal Revenue Code | ||||||||||
| IRS | Internal Revenue Service | ||||||||||
| LIBOR | London Interbank Offered Rate | ||||||||||
| MDPSC | Maryland Public Service Commission | ||||||||||
| MGP | Manufactured Gas Plant | ||||||||||
| mmcf | Million Cubic Feet | ||||||||||
| MW | Megawatt | ||||||||||
| MWh | Megawatt hour | ||||||||||
| N/A | Not applicable | ||||||||||
| NDT | Nuclear Decommissioning Trust | ||||||||||
| NJBPU | New Jersey Board of Public Utilities | ||||||||||
| NPNS | Normal Purchase Normal Sale scope exception | ||||||||||
5
| GLOSSARY OF TERMS AND ABBREVIATIONS | |||||||||||
| Other Terms and Abbreviations | |||||||||||
| NPS | National Park Service | ||||||||||
| OCI | Other Comprehensive Income | ||||||||||
| OPEB | Other Postretirement Employee Benefits | ||||||||||
| PAPUC | Pennsylvania Public Utility Commission | ||||||||||
| PGC | Purchased Gas Cost Clause | ||||||||||
| PJM | PJM Interconnection, LLC | ||||||||||
| POLR | Provider of Last Resort | ||||||||||
| PPA | Power Purchase Agreement | ||||||||||
| PP&E | Property, plant, and equipment | ||||||||||
| PRP | Potentially Responsible Parties | ||||||||||
| REC | Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source | ||||||||||
| Regulatory Agreement Units | Nuclear generating units or portions thereof whose decommissioning-related activities are subject to contractual elimination under regulatory accounting | ||||||||||
| RFP | Request for Proposal | ||||||||||
| Rider | Reconcilable Surcharge Recovery Mechanism | ||||||||||
| ROE | Return on equity | ||||||||||
| ROU | Right-of-use | ||||||||||
| RPS | Renewable Energy Portfolio Standards | ||||||||||
| RTO | Regional Transmission Organization | ||||||||||
| SEC | United States Securities and Exchange Commission | ||||||||||
| SOFR | Secured Overnight Financing Rate | ||||||||||
| SOS | Standard Offer Service | ||||||||||
| STRIDE | Maryland Strategic Infrastructure Development and Enhancement Program | ||||||||||
| TCJA | Tax Cuts and Jobs Act | ||||||||||
| Transition Bonds | Transition Bonds issued by ACE Funding | ||||||||||
| ZEC | Zero Emission Credit or Zero Emission Certificate | ||||||||||
6
FILING FORMAT
This combined Form 10-Q is being filed separately by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants). Information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic, and financial performance, are intended to identify such forward-looking statements.
The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, as well as the items discussed in (1) the Registrants' combined 2021 Annual Report on Form 10-K in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies; (2) this Quarterly Report on Form 10-Q in (a) Part II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part I, ITEM 1. Financial Statements: Note 12, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants.
Investors are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.
WHERE TO FIND MORE INFORMATION
The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that the Registrants file electronically with the SEC. These documents are also available to the public from commercial document retrieval services and the Registrants' website at www.exeloncorp.com. Information contained on the Registrants' website shall not be deemed incorporated into, or to be a part of, this Report.
7
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
8
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions, except per share data) | 2022 | 2021 | |||||||||
| Operating revenues | |||||||||||
| Electric operating revenues | $ | $ | |||||||||
| Natural gas operating revenues | |||||||||||
| Revenues from alternative revenue programs | |||||||||||
| Total operating revenues | |||||||||||
| Operating expenses | |||||||||||
| Purchased power | |||||||||||
| Purchased fuel | |||||||||||
| Purchased power and fuel from affiliates | |||||||||||
| Operating and maintenance | |||||||||||
| Depreciation and amortization | |||||||||||
| Taxes other than income taxes | |||||||||||
| Total operating expenses | |||||||||||
| Operating income | |||||||||||
| Other income and (deductions) | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Interest expense to affiliates | ( | ( | |||||||||
| Other, net | |||||||||||
| Total other deductions | ( | ( | |||||||||
| Income from continuing operations before income taxes | |||||||||||
| Income taxes | |||||||||||
| Net income from continuing operations after income taxes | |||||||||||
| Net income (loss) from discontinued operations after income taxes (Note 2) | ( | ||||||||||
| Net income (loss) | ( | ||||||||||
| Net income attributable to noncontrolling interests | |||||||||||
| Net income (loss) attributable to common shareholders | $ | $ | ( | ||||||||
| Amounts attributable to common shareholders: | |||||||||||
| Net income from continuing operations | |||||||||||
| Net income (loss) from discontinued operations | ( | ||||||||||
| Net income (loss) attributable to common shareholders | $ | $ | ( | ||||||||
| Comprehensive income (loss), net of income taxes | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Other comprehensive income (loss), net of income taxes | |||||||||||
| Pension and non-pension postretirement benefit plans: | |||||||||||
| Prior service benefit reclassified to periodic benefit cost | ( | ||||||||||
| Actuarial loss reclassified to periodic benefit cost | |||||||||||
| Pension and non-pension postretirement benefit plan valuation adjustment | ( | ||||||||||
| Unrealized gain on foreign currency translation | |||||||||||
| Other comprehensive income | |||||||||||
| Comprehensive income (loss) | ( | ||||||||||
| Comprehensive income attributable to noncontrolling interests | |||||||||||
| Comprehensive income (loss) attributable to common shareholders | $ | $ | ( | ||||||||
| Average shares of common stock outstanding: | |||||||||||
| Basic | |||||||||||
| Assumed exercise and/or distributions of stock-based awards | |||||||||||
Diluted(a) | |||||||||||
| Earnings per average common share from continuing operations | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Earnings (losses) per average common share from discontinued operations | |||||||||||
| Basic | $ | $ | ( | ||||||||
| Diluted | $ | $ | ( | ||||||||
__________
(a)The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect were none and less than 1 million for the three months ended March 31, 2022 and 2021, respectively .
See the Combined Notes to Consolidated Financial Statements
9
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization | |||||||||||
| Asset impairments | |||||||||||
| Gain on sales of assets and businesses | ( | ( | |||||||||
| Deferred income taxes and amortization of investment tax credits | ( | ||||||||||
| Net fair value changes related to derivatives | ( | ( | |||||||||
| Net realized and unrealized losses (gains) on NDT funds | ( | ||||||||||
| Net unrealized losses on equity investments | |||||||||||
| Other non-cash operating activities | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | ( | ||||||||||
| Option premiums (paid) received, net | ( | ||||||||||
| Collateral received, net | |||||||||||
| Income taxes | |||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by (used in) operating activities | ( | ||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from NDT fund sales | |||||||||||
| Investment in NDT funds | ( | ( | |||||||||
| Collection of DPP | |||||||||||
| Proceeds from sales of assets and businesses | |||||||||||
| Other investing activities | ( | ||||||||||
| Net cash flows (used in) provided by investing activities | ( | ||||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ||||||||||
| Proceeds from short-term borrowings with maturities greater than 90 days | |||||||||||
| Repayments on short-term borrowings with maturities greater than 90 days | ( | ||||||||||
| Issuance of long-term debt | |||||||||||
| Retirement of long-term debt | ( | ( | |||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Proceeds from employee stock plans | |||||||||||
| Transfer of cash, restricted cash, and cash equivalents to Constellation | ( | ||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase in cash, restricted cash, and cash equivalents | |||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
| Increase in DPP | |||||||||||
| (Decrease) increase in PP&E related to ARO update | ( | ||||||||||
See the Combined Notes to Consolidated Financial Statements
10
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Inventories, net | |||||||||||
| Fossil fuel and emission allowances | |||||||||||
| Materials and supplies | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Current assets of discontinued operations | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Goodwill | |||||||||||
| Receivable related to Regulatory Agreement Units | |||||||||||
| Other | |||||||||||
| Property, plant, and equipment, deferred debits, and other assets of discontinued operations | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
11
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Regulatory liabilities | |||||||||||
| Mark-to-market derivative liabilities | |||||||||||
| Unamortized energy contract liabilities | |||||||||||
| Other | |||||||||||
| Current liabilities of discontinued operations | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term debt to financing trusts | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Pension obligations | |||||||||||
| Non-pension postretirement benefit obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Mark-to-market derivative liabilities | |||||||||||
| Unamortized energy contract liabilities | |||||||||||
| Other | |||||||||||
| Long-term debt, deferred credits, and other liabilities of discontinued operations | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity | |||||||||||
Common stock ( | |||||||||||
Treasury stock, at cost ( | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss, net | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
12
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| (In millions, shares in thousands) | Issued Shares | Common Stock | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss, net | Noncontrolling Interests | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Long-term incentive plan activity | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuances | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Changes in equity of noncontrolling interests | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Distribution of Constellation (Note 2) | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| (In millions, shares in thousands) | Issued Shares | Common Stock | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss, net | Noncontrolling Interests | Total Shareholders' Equity | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Long-term incentive plan activity | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan issuances | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Changes in equity of noncontrolling interests | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
See the Combined Notes to Consolidated Financial Statements
13
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Revenues from alternative revenue programs | ||||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased power from affiliate | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Interest expense to affiliates | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
14
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | |||||||||||
| Other non-cash operating activities | ( | ( | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | ( | ||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Collateral received, net | |||||||||||
| Income taxes | ( | ( | |||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ||||||||||
| Issuance of long-term debt | |||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from parent | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase (decrease) in cash, restricted cash, and cash equivalents | ( | ||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
15
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Goodwill | |||||||||||
| Receivables from affiliates | |||||||||||
| Receivable related to Regulatory Agreement Units | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
16
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Mark-to-market derivative liabilities | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term debt to financing trust | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefits obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Mark-to-market derivative liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity | |||||||||||
| Common stock | |||||||||||
| Other paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
17
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||
| (In millions) | Common Stock | Other Paid-In Capital | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
| Net income | — | — | |||||||||||||||||||||
| Common stock dividends | — | — | ( | ( | |||||||||||||||||||
| Contributions from parent | — | — | |||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||
| (In millions) | Common Stock | Other Paid-In Capital | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
| Net income | — | — | |||||||||||||||||||||
| Common stock dividends | — | — | ( | ( | |||||||||||||||||||
| Contributions from parent | — | — | |||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
See the Combined Notes to Consolidated Financial Statements
18
PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Natural gas operating revenues | ||||||||||||||
| Revenues from alternative revenue programs | ||||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased fuel | ||||||||||||||
| Purchased power from affiliate | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Interest expense to affiliates | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
19
PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | |||||||||||
| Other non-cash operating activities | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Income taxes | |||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Changes in Exelon intercompany money pool | ( | ||||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Issuance of long-term debt | |||||||||||
| Changes in Exelon intercompany money pool | ( | ||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from parent | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| (Decrease) increase in cash, restricted cash, and cash equivalents | ( | ||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| (Decrease) increase in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
20
PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Fossil fuel | |||||||||||
| Materials and supplies | |||||||||||
| Prepaid utility taxes | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Receivables from affiliates | |||||||||||
| Receivable related to Regulatory Agreement Units | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
21
PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Long-term debt due within one year | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Borrowings from Exelon intercompany money pool | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term debt to financing trusts | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefits obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholder’s equity | |||||||||||
| Common stock | |||||||||||
| Retained earnings | |||||||||||
| Total shareholder’s equity | |||||||||||
| Total liabilities and shareholder's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
22
PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ||||||||||||||
See the Combined Notes to Consolidated Financial Statements
23
BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Natural gas operating revenues | ||||||||||||||
| Revenues from alternative revenue programs | ( | |||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased fuel | ||||||||||||||
| Purchased power and fuel from affiliate | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ( | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
24
BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | ( | ||||||||||
| Other non-cash operating activities | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Income taxes | ( | ||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | |||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Other financing activities | ( | ||||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase (decrease) in cash, restricted cash, and cash equivalents | ( | ||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
25
BALTIMORE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Fossil fuel | |||||||||||
| Materials and supplies | |||||||||||
| Prepaid utility taxes | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
26
BALTIMORE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefits obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholder's equity | |||||||||||
| Common stock | |||||||||||
| Retained earnings | |||||||||||
| Total shareholder's equity | |||||||||||
| Total liabilities and shareholder's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
27
BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ||||||||||||||
See the Combined Notes to Consolidated Financial Statements
28
PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Natural gas operating revenues | ||||||||||||||
| Revenues from alternative revenue programs | ( | |||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased fuel | ||||||||||||||
| Purchased power from affiliates | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
29
PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | |||||||||||
| Other non-cash operating activities | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Income taxes | |||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ( | |||||||||
| Issuance of long-term debt | |||||||||||
| Retirement of long-term debt | ( | ||||||||||
| Changes in Exelon intercompany money pool | |||||||||||
| Distributions to member | ( | ( | |||||||||
| Contributions from member | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase in cash, restricted cash, and cash equivalents | |||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
30
PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Fossil fuel | |||||||||||
| Materials and supplies | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Goodwill | |||||||||||
| Prepaid pension asset | |||||||||||
| Deferred income taxes | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
31
PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND MEMBER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Borrowings from Exelon intercompany money pool | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Unamortized energy contract liabilities | |||||||||||
| PPA termination obligation | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefit obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Unamortized energy contract liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Member's equity | |||||||||||
| Membership interest | |||||||||||
| Undistributed losses | ( | ( | |||||||||
| Total member's equity | |||||||||||
| Total liabilities and member's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
32
PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Membership Interest | Undistributed (Losses)/Earnings | Total Member's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | ( | $ | |||||||||||||
| Net income | — | ||||||||||||||||
| Distributions to member | — | ( | ( | ||||||||||||||
| Contributions from member | — | ||||||||||||||||
| Balance, March 31, 2022 | $ | $ | ( | $ | |||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Membership Interest | Undistributed (Losses)/Earnings | Total Member's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | ( | $ | |||||||||||||
| Net income | — | ||||||||||||||||
| Distributions to member | — | ( | ( | ||||||||||||||
| Contributions from member | — | ||||||||||||||||
| Balance, March 31, 2021 | $ | $ | ( | $ | |||||||||||||
See the Combined Notes to Consolidated Financial Statements
33
POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | |||||||||||||
| Revenues from alternative revenue programs | ( | |||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased power from affiliate | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ( | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
34
POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | ( | ||||||||||
| Other non-cash operating activities | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Income taxes | |||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ( | |||||||||
| Issuance of long-term debt | |||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from parent | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase in cash, restricted cash, and cash equivalents | |||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
35
POTOMAC ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Inventories, net | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Investments | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
36
POTOMAC ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Merger related obligation | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefit obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholder's equity | |||||||||||
| Shareholder's Equity | |||||||||||
| Common stock | |||||||||||
| Retained earnings | |||||||||||
| Total shareholder's equity | |||||||||||
| Total liabilities and shareholder's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
37
POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ||||||||||||||
See the Combined Notes to Consolidated Financial Statements
38
DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Natural gas operating revenues | ||||||||||||||
| Revenues from alternative revenue programs | ( | |||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased fuel | ||||||||||||||
| Purchased power from affiliates | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
39
DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | |||||||||||
| Other non-cash operating activities | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Income taxes | ( | ||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ||||||||||
| Other assets and liabilities | ( | ||||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ( | |||||||||
| Issuance of long-term debt | |||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from parent | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase in cash, restricted cash, and cash equivalents | |||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
40
DELMARVA POWER & LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash and cash equivalents | |||||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Fossil fuel | |||||||||||
| Materials and supplies | |||||||||||
| Prepaid utility taxes | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
41
DELMARVA POWER & LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Asset retirement obligations | |||||||||||
| Non-pension postretirement benefits obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholder's equity | |||||||||||
| Common stock | |||||||||||
| Retained earnings | |||||||||||
| Total shareholder's equity | |||||||||||
| Total liabilities and shareholder's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
42
DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ||||||||||||||
See the Combined Notes to Consolidated Financial Statements
43
ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2022 | 2021 | ||||||||||||
| Operating revenues | ||||||||||||||
| Electric operating revenues | $ | $ | ||||||||||||
| Revenues from alternative revenue programs | ||||||||||||||
| Operating revenues from affiliates | ||||||||||||||
| Total operating revenues | ||||||||||||||
| Operating expenses | ||||||||||||||
| Purchased power | ||||||||||||||
| Purchased power from affiliate | ||||||||||||||
| Operating and maintenance | ||||||||||||||
| Operating and maintenance from affiliates | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Taxes other than income taxes | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating income | ||||||||||||||
| Other income and (deductions) | ||||||||||||||
| Interest expense, net | ( | ( | ||||||||||||
| Other, net | ||||||||||||||
| Total other income and (deductions) | ( | ( | ||||||||||||
| Income before income taxes | ||||||||||||||
| Income taxes | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See the Combined Notes to Consolidated Financial Statements
44
ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| (In millions) | 2022 | 2021 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes and amortization of investment tax credits | ( | ||||||||||
| Other non-cash operating activities | ( | ||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Receivables from and payables to affiliates, net | ( | ||||||||||
| Inventories | ( | ||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Income taxes | |||||||||||
| Pension and non-pension postretirement benefit contributions | ( | ( | |||||||||
| Other assets and liabilities | ( | ||||||||||
| Net cash flows provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Changes in short-term borrowings | ( | ( | |||||||||
| Issuance of long-term debt | |||||||||||
| Retirement of long-term debt | ( | ||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from parent | |||||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash flows provided by financing activities | |||||||||||
| Increase in cash, restricted cash, and cash equivalents | |||||||||||
| Cash, restricted cash, and cash equivalents at beginning of period | |||||||||||
| Cash, restricted cash, and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental cash flow information | |||||||||||
| Decrease in capital expenditures not paid | $ | ( | $ | ( | |||||||
See the Combined Notes to Consolidated Financial Statements
45
ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Customer accounts receivable | |||||||||||
| Customer allowance for credit losses | ( | ( | |||||||||
| Customer accounts receivable, net | |||||||||||
| Other accounts receivable | |||||||||||
| Other allowance for credit losses | ( | ( | |||||||||
| Other accounts receivable, net | |||||||||||
| Receivables from affiliates | |||||||||||
| Inventories, net | |||||||||||
| Regulatory assets | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | |||||||||||
| Deferred debits and other assets | |||||||||||
| Regulatory assets | |||||||||||
| Prepaid pension asset | |||||||||||
| Other | |||||||||||
| Total deferred debits and other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
46
ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Long-term debt due within one year | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Payables to affiliates | |||||||||||
| Customer deposits | |||||||||||
| Regulatory liabilities | |||||||||||
| PPA termination obligation | |||||||||||
| Other | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred credits and other liabilities | |||||||||||
| Deferred income taxes and unamortized investment tax credits | |||||||||||
| Non-pension postretirement benefit obligations | |||||||||||
| Regulatory liabilities | |||||||||||
| Other | |||||||||||
| Total deferred credits and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholder's equity | |||||||||||
| Common stock | |||||||||||
| Retained deficit | ( | ( | |||||||||
| Total shareholder's equity | |||||||||||
| Total liabilities and shareholder's equity | $ | $ | |||||||||
See the Combined Notes to Consolidated Financial Statements
47
ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (In millions) | Common Stock | Retained Deficit | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2021 | $ | $ | ( | $ | |||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2022 | $ | $ | ( | $ | |||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||
| (In millions) | Common Stock | Retained Earnings | Total Shareholder's Equity | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ||||||||||||||
| Net income | — | ||||||||||||||||
| Common stock dividends | — | ( | ( | ||||||||||||||
| Contributions from parent | — | ||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ||||||||||||||
See the Combined Notes to Consolidated Financial Statements
48
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise noted)
Note 1 — Significant Accounting Policies
1. Significant Accounting Policies (All Registrants)
Description of Business
Exelon is a utility services holding company engaged in the energy distribution and transmission businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.
On February 21, 2021, Exelon's Board of Directors approved a plan to separate the Utility Registrants and Generation. The separation was completed on February 1, 2022, creating two publicly traded companies, Exelon and Constellation. See Note 2 — Discontinued Operations for additional information.
| Name of Registrant | Business | Service Territories | ||||||||||||
| Commonwealth Edison Company | Purchase and regulated retail sale of electricity | Northern Illinois, including the City of Chicago | ||||||||||||
| Transmission and distribution of electricity to retail customers | ||||||||||||||
| PECO Energy Company | Purchase and regulated retail sale of electricity and natural gas | Southeastern Pennsylvania, including the City of Philadelphia (electricity) | ||||||||||||
| Transmission and distribution of electricity and distribution of natural gas to retail customers | Pennsylvania counties surrounding the City of Philadelphia (natural gas) | |||||||||||||
| Baltimore Gas and Electric Company | Purchase and regulated retail sale of electricity and natural gas | Central Maryland, including the City of Baltimore (electricity and natural gas) | ||||||||||||
| Transmission and distribution of electricity and distribution of natural gas to retail customers | ||||||||||||||
| Pepco Holdings LLC | Utility services holding company engaged, through its reportable segments Pepco, DPL, and ACE | Service Territories of Pepco, DPL, and ACE | ||||||||||||
| Potomac Electric Power Company | Purchase and regulated retail sale of electricity | District of Columbia, and major portions of Montgomery and Prince George’s Counties, Maryland | ||||||||||||
| Transmission and distribution of electricity to retail customers | ||||||||||||||
| Delmarva Power & Light Company | Purchase and regulated retail sale of electricity and natural gas | Portions of Delaware and Maryland (electricity) | ||||||||||||
| Transmission and distribution of electricity and distribution of natural gas to retail customers | Portions of New Castle County, Delaware (natural gas) | |||||||||||||
| Atlantic City Electric Company | Purchase and regulated retail sale of electricity | Portions of Southern New Jersey | ||||||||||||
| Transmission and distribution of electricity to retail customers | ||||||||||||||
Basis of Presentation
This is a combined quarterly report of all Registrants. The Notes to the Consolidated Financial Statements apply to the Registrants as indicated parenthetically next to each corresponding disclosure. When appropriate, the Registrants are named specifically for their related activities and disclosures. Each of the Registrant’s Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated, except for the historical transactions between the Utility Registrants and Generation for the purposes of presenting discontinued operations in all periods presented in the Consolidated Statements of Operations and Comprehensive Income.
Through its business services subsidiary, BSC, Exelon provides its subsidiaries with a variety of support services at cost, including legal, human resources, financial, information technology, and supply management services. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services at cost, including legal, accounting, engineering, customer operations, distribution and transmission planning, asset management, system operations, and power procurement, to PHI operating companies. The costs of BSC and PHISCO are directly charged or allocated to the applicable subsidiaries. The results of Exelon’s corporate operations are presented as “Other” in the consolidated financial statements and include intercompany eliminations unless otherwise disclosed.
The accompanying consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are unaudited but, in the opinion of the management of each Registrant include all adjustments that are considered necessary for a fair statement of the Registrants’ respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The
49
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise noted)
Note 1 — Significant Accounting Policies
December 31, 2021 Consolidated Balance Sheets were derived from audited financial statements. The interim financial statements are to be read in conjunction with prior annual financial statements and notes. Additionally, financial results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. These Combined Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.
The separation of Constellation, including Generation and its subsidiaries, meets the criteria for discontinued operations and as such, results of operations are presented as discontinued operations and have been excluded from continuing operations for all periods presented. Accounting rules require that certain BSC costs previously allocated to Generation be presented as part of Exelon’s continuing operations as these costs do not qualify as expenses of the discontinued operations. Comprehensive income, shareholders' equity, and cash flows related to Constellation have not been segregated and are included in the Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows, respectively, for all periods presented. See Note 2 — Discontinued Operations for additional information.
Prior Period Adjustments and Reclassifications (Exelon, PHI, ACE)
In the first quarter of 2022, management identified an error related to an overstatement of the regulatory liability associated with ACE’s mechanism to recover the cost of Transition Bonds issued in 2002 and 2003 by ACE Funding. Management has concluded that the error was not material to previously issued financial statements for Exelon, PHI or ACE.
The error was corrected through a revision to ACE’s financial statements contained herein. The impact of the error correction was an $8 million increase to ACE’s opening Retained earnings as of January 1, 2021 with a corresponding reduction to Regulatory liabilities of $11 million and an increase to Deferred income taxes and unamortized investment tax credits of $3 million. The impact of the error to ACE’s Total operating revenues and Net income was less than $1 million for the three months ended March 31, 2021. The error did not impact net cash flows provided by operating activities, net cash flows used in investing activities or net cash flows provided by financing activities for the three months ended March 31, 2021.
The error was corrected in the Exelon and PHI financial statements for the three months ended March 31, 2022 as it was not material, resulting in an increase to Net income of $8 million.
2. Discontinued Operations (Exelon)
On February 21, 2021, Exelon's Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies ("the separation"). Exelon completed the separation on February 1, 2022, through the distribution of 326,663,937 common stock shares of Constellation, the new publicly traded company, to Exelon shareholders. Under the separation plan, Exelon shareholders retained their current shares of Exelon stock and received one share of Constellation common stock for every three shares of Exelon common stock held on January 20, 2022, the record date for the distribution, in a transaction that is tax-free to Exelon and its shareholders for U.S. federal income tax purposes.
Constellation was newly formed and incorporated in Pennsylvania on June 15, 2021 for the purposes of separation and holds Generation (including Generation's subsidiaries).
Pursuant to the separation:
•Exelon entered into four term loans consisting of a 364-day term loan for $1.15 billion and three 18-month term loans for $300 million, $300 million and $250 million, respectively. Exelon issued these term loans primarily to fund the cash payment to Constellation and for general corporate purposes. See Note 10 — Debt and Credit Agreements for additional information.
•Exelon made a cash payment of $1.75 billion to Constellation on January 31, 2022.
50
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 2 — Discontinued Operations
•Exelon contributed its equity ownership interest in Generation to Constellation. Exelon no longer retains any equity ownership interest in Generation or Constellation.
•Exelon transferred certain corporate assets and employee-related obligations to Constellation.
•Exelon received cash from Generation of $258 million to settle the intercompany loan on January 31, 2022. See Note 10 — Debt and Credit Agreements for additional information.
Continuing Involvement
In order to govern the ongoing relationships between Exelon and Constellation after the separation, and to facilitate an orderly transition, Exelon and Constellation have entered into several agreements, including the following:
•Separation Agreement – governs the rights and obligations between Exelon and Constellation regarding certain actions to be taken in connection with the separation, among others, including the allocation of assets and liabilities between Exelon and Constellation.
•Transition Services Agreement (TSA) – governs the terms and conditions of the services that Exelon will provide to Constellation and Constellation will provide to Exelon for an expected period of two years, provided that certain services may be longer than the term and services may be extended with approval from both parties. The services include specified accounting, finance, information technology, human resources, employee benefits and other services that have historically been provided on a centralized basis by BSC. For the period from February 1, 2022 to March 31, 2022, the amounts Exelon billed Constellation and Constellation billed Exelon for these services were $56 million recorded in Other income, net and $9 million recorded in Operating and maintenance expense, respectively.
•Tax Matters Agreement (TMA) – governs the respective rights, responsibilities and obligations of Exelon and Constellation with respect to all tax matters, including tax liabilities and benefits, tax attributes, tax returns, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns. See Note 7. Income Taxes for additional information.
In addition, the Utility Registrants will continue to incur expenses from transactions with Generation after the separation. Prior to the separation, such expenses were primarily recorded as Purchased power from affiliates and an immaterial amount recorded as Operating and maintenance expense from affiliates at the Utility Registrants. After the separation, such expenses are primarily recorded as Purchased power and an immaterial amount recorded as Operating and maintenance expense at the Utility Registrants.
•ComEd had an ICC-approved RFP contract with Generation to provide a portion of ComEd’s electric supply requirements. ComEd also purchased RECs and ZECs from Generation.
•PECO received electric supply from Generation under contracts executed through PECO’s competitive procurement process. In addition, PECO had a ten-year agreement with Generation to sell solar AECs.
•BGE received a portion of its energy requirements from Generation under its MDPSC-approved market-based SOS and gas commodity programs.
•Pepco received electric supply from Generation under contracts executed through Pepco’s competitive procurement process approved by the MDPSC and DCPSC.
•DPL received a portion of its energy requirements from Generation under its MDPSC and DEPSC approved market-based SOS commodity programs.
•ACE received electric supply from Generation under contracts executed through ACE’s competitive procurement process approved by the NJBPU.
ComEd and PECO also have receivables with Generation as a result of the nuclear decommissioning contractual construct whereby, to the extent NDT funds are greater than the underlying ARO at the end of decommissioning, such amounts are due back to ComEd and PECO, as applicable, for payment to their respective customers. See Note 10 — Asset Retirement Obligations of the Combined Notes to Consolidated Financial Statements of the Exelon 2021 Form 10-K and Note 15 — Related Party Transactions for additional information.
51
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 2 — Discontinued Operations
Discontinued Operations
The separation represented a strategic shift that would have a major effect on Exelon’s operations and financial results. Accordingly, the separation meets the criteria for discontinued operations.
The following table presents the results of Constellation that have been reclassified from continuing operations and included in discontinued operations within Exelon’s Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2022 and March 31, 2021.
These results are primarily Generation, which is comprised of Exelon’s Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions reportable segments, and include the impact of transaction costs, certain BSC costs, including any transition costs, that were historically allocated and directly attributable to Generation, transactions between Generation and the Utility Registrants, and tax-related adjustments. Transaction costs include costs for external bankers, accountants, appraisers, lawyers, external counsels and other advisors, among others, who are involved in the negotiation, appraisal, due diligence and regulatory approval of the separation. Transition costs are primarily employee-related costs such as recruitment expenses, costs to establish certain stand-alone functions and information technology systems, professional services fees and other separation-related costs during the transition to separate Generation. For the purposes of reporting discontinued operations, these results also include transactions between Generation and the Utility Registrants that were historically eliminated within Exelon’s Consolidated Statements of Operations as these transactions will be ongoing after the separation. Certain BSC costs that were historically allocated to Generation are presented as part of continuing operations in Exelon’s Consolidated Statements of Operations as these costs do not qualify as expenses of the discontinued operations per the accounting rules.
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operating revenues | |||||||||||
| Competitive business revenues | $ | $ | |||||||||
| Competitive business revenues from affiliates | |||||||||||
| Total operating revenues | |||||||||||
| Operating expenses | |||||||||||
| Competitive businesses purchased power and fuel | |||||||||||
Operating and maintenance(a) | |||||||||||
| Depreciation and amortization | |||||||||||
| Taxes other than income taxes | |||||||||||
| Total operating expenses | |||||||||||
| Gain on sales of assets and businesses | |||||||||||
| Operating income (loss) | ( | ||||||||||
| Other income and (deductions) | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Other, net | ( | ||||||||||
| Total other income and (deductions) | ( | ||||||||||
| Income (loss) before income taxes | ( | ||||||||||
| Income taxes | ( | ( | |||||||||
| Equity in losses of unconsolidated affiliates | ( | ( | |||||||||
| Net income (loss) | ( | ||||||||||
| Net income attributable to noncontrolling interests | |||||||||||
| Net income (loss) from discontinued operations | $ | $ | ( | ||||||||
52
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 2 — Discontinued Operations
__________
(a)Includes transaction and transition costs related to the separation of $52 million and $3 million for the three months ended March 31, 2022 and 2021, respectively. $50 million and $2 million of transaction costs and $2 million and less than $1 million of transition costs are included in the results of discontinued operations in the table presented above for the three months ended March 31, 2022 and March 31, 2021, respectively. See discussion above for additional information.
There were no assets and liabilities of discontinued operations included in Exelon’s Consolidated Balance Sheet as of March 31, 2022. Constellation had net assets of $11,573 million that separated on February 1, 2022 that resulted in a reduction to Exelon’s equity during the three months ended March 31, 2022. Refer to the Distribution of Constellation line in Exelon’s Consolidated Statement of Changes in Shareholders’ Equity for further information.
The following table presents the assets and liabilities of discontinued operations in Exelon’s Consolidated Balance Sheet as of December 31, 2021:
| December 31, 2021 | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | |||||||
| Restricted cash and cash equivalents | ||||||||
| Accounts receivable | ||||||||
| Customer accounts receivable | ||||||||
| Customer allowance for credit losses | ( | |||||||
| Customer accounts receivable, net | ||||||||
| Other accounts receivable | ||||||||
| Other allowance for credit losses | ( | |||||||
| Other accounts receivable, net | ||||||||
| Mark-to-market derivative assets | ||||||||
| Inventories, net | ||||||||
| Fossil fuel and emission allowances | ||||||||
| Materials and supplies | ||||||||
| Renewable energy credits | ||||||||
| Assets held for sale | ||||||||
| Other | ||||||||
| Total current assets of discontinued operations | ||||||||
Property, plant, and equipment (net of accumulated depreciation and amortization of $ | ||||||||
| Deferred debits and other assets | ||||||||
| Nuclear decommissioning trust funds | ||||||||
| Investments | ||||||||
| Mark-to-market derivative assets | ||||||||
| Other | ||||||||
| Total property, plant, and equipment, deferred debits, and other assets of discontinued operations | ||||||||
| Total assets of discontinued operations | $ | |||||||
53
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 2 — Discontinued Operations
| December 31, 2021 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Short-term borrowings | $ | |||||||
| Long-term debt due within one year | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Mark-to-market derivative liabilities | ||||||||
| Renewable energy credit obligation | ||||||||
| Liabilities held for sale | ||||||||
| Other | ||||||||
| Total current liabilities of discontinued operations | ||||||||
| Long-term debt | ||||||||
| Deferred credits and other liabilities | ||||||||
| Deferred income taxes and unamortized investment tax credits | ||||||||
| Asset retirement obligations | ||||||||
| Pension obligations | ||||||||
| Non-pension postretirement benefit obligations | ||||||||
| Spent nuclear fuel obligation | ||||||||
| Mark-to-market derivative liabilities | ||||||||
| Other | ||||||||
| Total long-term debt, deferred credits, and other liabilities of discontinued operations | ||||||||
| Total liabilities of discontinued operations | $ | |||||||
The following table presents selected financial information regarding cash flows of the discontinued operations that are included within Exelon’s Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and March 31, 2021.
| Three Months Ended March 31, 2022 | |||||||||||
| 2022 | 2021 | ||||||||||
| Non-cash items included in net income (loss) from discontinued operations: | |||||||||||
| Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization | $ | $ | |||||||||
| Gain on sales of assets and businesses | ( | ||||||||||
| Deferred income taxes and amortization of investment tax credits | ( | ( | |||||||||
| Net fair value changes related to derivatives | ( | ( | |||||||||
| Net realized and unrealized losses (gains) on NDT fund investments | ( | ||||||||||
| Net unrealized losses on equity investments | |||||||||||
| Other decommissioning-related activity | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Collection of DPP | |||||||||||
| Supplemental cash flow information: | |||||||||||
| Decrease in capital expenditures not paid | ( | ( | |||||||||
| Increase in DPP | |||||||||||
| Increase in PP&E related to ARO update | |||||||||||
54
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 3 — Regulatory Matters
3. Regulatory Matters (All Registrants)
As discussed in Note 3 — Regulatory Matters of the Exelon 2021 Form 10-K, the Registrants are involved in rate and regulatory proceedings at FERC and their state commissions. The following discusses developments in 2022 and updates to the 2021 Form 10-K.
Distribution Base Rate Case Proceedings
The following tables show the completed and pending distribution base rate case proceedings in 2022.
Completed Distribution Base Rate Case Proceedings
| Registrant/Jurisdiction | Filing Date | Service | Requested Revenue Requirement Increase | Approved Revenue Requirement Increase | Approved ROE | Approval Date | Rate Effective Date | |||||||||||||||||||||||||||||||||||||
ComEd - Illinois(a) | April 16, 2021 | Electric | $ | $ | % | December 1, 2021 | January 1, 2022 | |||||||||||||||||||||||||||||||||||||
| PECO - Pennsylvania | March 30, 2021 | Electric | N/A(b) | November 18, 2021 | January 1, 2022 | |||||||||||||||||||||||||||||||||||||||
BGE - Maryland(c) | May 15, 2020 (amended September 11, 2020) | Electric | % | December 16, 2020 | January 1, 2021 | |||||||||||||||||||||||||||||||||||||||
| Natural Gas | % | |||||||||||||||||||||||||||||||||||||||||||
Pepco - District of Columbia(d) | May 30, 2019 (amended June 1, 2020) | Electric | % | June 8, 2021 | July 1, 2021 | |||||||||||||||||||||||||||||||||||||||
Pepco - Maryland(e) | October 26, 2020 (amended March 31, 2021) | Electric | % | June 28, 2021 | June 28, 2021 | |||||||||||||||||||||||||||||||||||||||
DPL - Maryland(f) | September 1, 2021 (amended December 23, 2021) | Electric | % | March 2, 2022 | March 2, 2022 | |||||||||||||||||||||||||||||||||||||||
ACE - New Jersey(g) | December 9, 2020 (amended February 26, 2021) | Electric | % | July 14, 2021 | January 1, 2022 | |||||||||||||||||||||||||||||||||||||||
__________
(a)ComEd's 2022 approved revenue requirement reflects an increase of $37 million for the initial year revenue requirement for 2022 and an increase of $9 million related to the annual reconciliation for 2020. The revenue requirement for 2022 provides for a weighted average debt and equity return on distribution rate base of 5.72 %, inclusive of an allowed ROE of 7.36 %, reflecting the monthly average yields for 30-year treasury bonds plus 580 basis points. The reconciliation revenue requirement for 2020 provides for a weighted average debt and equity return on distribution rate base of 5.69 %, inclusive of an allowed ROE of 7.29 %, reflecting the monthly yields on 30-year treasury bonds plus 580 basis points less a performance metrics penalty of 7 basis points.
(b)The PECO electric base rate case proceeding was resolved through a settlement agreement, which did not specify an approved ROE.
(c)Reflects a three-year cumulative multi-year plan for 2021 through 2023. The MDPSC awarded BGE electric revenue requirement increases of $59 million, $39 million, and $42 million, before offsets, in 2021, 2022, and 2023, respectively, and natural gas revenue requirement increases of $53 million, $11 million, and $10 million, before offsets, in 2021, 2022, and 2023, respectively. BGE proposed to use certain tax benefits to fully offset the increases in 2021 and 2022 and partially offset the increase in 2023. However, the MDPSC utilized the tax benefits to fully offset the increases in 2021 and January 2022 such that customer rates remained unchanged. For the remainder of 2022, the MDPSC chose to offset only 25 % of the cumulative 2021 and 2022 electric revenue requirement increases and 50 % of the cumulative gas revenue requirement increases. Whether certain tax benefits will be used to offset the customer rate increases in 2023 has not been decided, and BGE cannot predict the outcome.
(d)Reflects a cumulative multi-year plan with 18-months remaining in 2021 through 2022. The DCPSC awarded Pepco electric incremental revenue requirement increases of $42 million and $67 million, before offsets, for 2021 and 2022, respectively. However, the DCPSC utilized the acceleration of refunds for certain tax benefits along with other rate relief to partially offset the customer rate increases by $22 million and $40 million for 2021 and 2022, respectively.
55
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 3 — Regulatory Matters
(e)Reflects a three-year cumulative multi-year plan for April 1, 2021 through March 31, 2024. The MDPSC awarded Pepco electric incremental revenue requirement increases of $21 million, $16 million, and $15 million, before offsets, for the 12-month periods ending March 31, 2022, 2023, and 2024, respectively. Pepco proposed to utilize certain tax benefits to fully offset the increase through 2023 and partially offset customer rate increases in 2024. However, the MDPSC only utilized the acceleration of refunds for certain tax benefits to fully offset the increases such that customer rates remain unchanged through March 31, 2022. On February 23, 2022, the MDPSC chose to offset 25 % of the cumulative revenue requirement increase for the 12-month period ending March 31, 2023. Whether certain tax benefits will be used to offset the customer rate increases for the 12-month period ending March 31, 2024 has not been decided, and Pepco cannot predict the outcome.
(f)The approved settlement reflects a 9.60 % ROE, which is solely for the purposes of calculating AFUDC and regulatory asset carrying costs.
(g)Requested and approved increases are before New Jersey sales and use tax. The order allows ACE to retain approximately $11 million of certain tax benefits which resulted in a decrease to income tax expense in Exelon's, PHI's, and ACE's Consolidated Statements of Operations and Comprehensive Income in the third quarter of 2021.
Pending Distribution Base Rate Case Proceedings
| Registrant/Jurisdiction | Filing Date | Service | Requested Revenue Requirement Increase | Requested ROE | Expected Approval Timing | |||||||||||||||||||||||||||
ComEd - Illinois(a) | April 15, 2022 | Electric | $ | % | Fourth quarter of 2022 | |||||||||||||||||||||||||||
| PECO - Pennsylvania | March 31, 2022 | Natural Gas | % | Fourth quarter of 2022 | ||||||||||||||||||||||||||||
DPL - Delaware(b) | January 14, 2022 (amended February 28, 2022) | Natural Gas | % | First quarter of 2023 | ||||||||||||||||||||||||||||
(a)ComEd's 2023 requested revenue requirement reflects an increase of $144 million for the initial year revenue requirement for 2023 and an increase of $55 million related to the annual reconciliation for 2021. The revenue requirement for 2023 provides for a weighted average debt and equity return on distribution rate base of 5.94 %, inclusive of an allowed ROE of 7.85 %, reflecting the average monthly yields for 30-year treasury bonds plus 580 basis points. The reconciliation revenue requirement for 2021 provides for a weighted average debt and equity return on distribution rate base of 5.91 %, inclusive of an allowed ROE of 7.78 %, reflecting the average monthly yields for 30-year treasury bonds plus 580 basis points less a performance metrics penalty of 7 basis points. This is ComEd's last performance-based electric distribution formula rate update filing under EIMA as a result of the law authorizing the rate setting process sunsetting at the end of 2022. See Note 3. - Regulatory Matters of the Exelon 2021 Form 10-K for additional information on ComEd's transition away from the electric distribution formula rate.
(b)The rates will go into effect on August 14, 2022, subject to refund.
Transmission Formula Rates
The Utility Registrants' transmission rates are each established based on a FERC-approved formula. ComEd, BGE, Pepco, DPL, and ACE are required to file an annual update to the FERC-approved formula on or before May 15, and PECO is required to file on or before May 31, with the resulting rates effective on June 1 of the same year. The annual update for ComEd is based on prior year actual costs and current year projected capital additions (initial year revenue requirement). The update for ComEd also reconciles any differences between the revenue requirement in effect beginning June 1 of the prior year and actual costs incurred for that year (annual reconciliation). The annual update for BGE is based on prior year actual costs and current year projected capital additions, accumulated depreciation, depreciation and amortization expense, and accumulated deferred income taxes. The update for BGE also reconciles any differences between the actual costs and actual revenues for the calendar year (annual reconciliation).
For 2022, the following total increases were included in ComEd’s and BGE's electric transmission formula rate update. PECO, Pepco, DPL, and ACE intend to file by the required deadline for the annual update.
Registrant(a) | Initial Revenue Requirement Increase | Annual Reconciliation Decrease | Total Revenue Requirement Increase | Allowed Return on Rate Base(c) | Allowed ROE(d) | |||||||||||||||||||||||||||
| ComEd | $ | $ | ( | $ | % | % | ||||||||||||||||||||||||||
| BGE | ( | (b) | % | % | ||||||||||||||||||||||||||||
56
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 3 — Regulatory Matters
(a)All rates are effective June 1, 2022 - May 31, 2023, subject to review by interested parties pursuant to review protocols of ComEd's and BGE's tariff.
(b)The increase in BGE's transmission revenue requirement includes a $5 million reduction related to a FERC-approved dedicated facilities charge to recover the costs of providing transmission service to specifically designated load by BGE.
(c)Represents the weighted average debt and equity return on transmission rate bases.
Other State Regulatory Matters
Illinois Regulatory Matters
CEJA (Exelon and ComEd). On September 15, 2021, the Governor of Illinois signed into law CEJA. CEJA includes, among other features, (1) procurement of CMCs from qualifying nuclear-powered generating facilities, (2) a requirement to file a general rate case or a new four-year multi-year plan no later than January 20, 2023 to establish rates effective after ComEd’s existing performance-based distribution formula rate sunsets, (3) an extension of and certain adjustments to ComEd’s energy efficiency MWh savings goals, (4) revisions to the Illinois RPS requirements, including expanded charges for the procurement of RECs from wind and solar generation, (5) a requirement to accelerate amortization of ComEd’s unprotected excess deferred income taxes ("EDIT") that ComEd was previously directed by the ICC to amortize using the average rate assumption method which equates to approximately 39.5 years, and (6) requirements that the ICC initiate and conduct various regulatory proceedings on subjects including ethics, spending, grid investments, and performance metrics. Regulatory or legal challenges regarding the validity or implementation of CEJA are possible and Exelon and ComEd cannot reasonably predict the outcome of any such challenges.
The ICC initiated a docket to accelerate and fully credit to customers TCJA unprotected property-related EDIT no later than December 31, 2025. On April 13, 2022, a stipulation and agreement on the schedule for the acceleration of EDIT amortization was submitted by ComEd, the Illinois Attorney General's Office, and the Citizens Utility Board. At this time, ComEd cannot predict an outcome of these proceedings.
See Note 3 — Regulatory Matters of the Exelon 2021 Form 10-K for additional information on CEJA (referred to as Clean Energy Law).
New Jersey Regulatory Matters
Termination of Energy Procurement Provisions of PPAs (Exelon, PHI, and ACE).
On December 22, 2021, ACE filed with the NJBPU a petition to terminate the provisions in the PPAs to purchase electricity from two coal-powered generation facilities located in the state of New Jersey. The petition was approved by the NJBPU on March 23, 2022. Upon closing of the transaction on March 31, 2022, ACE recognized a liability of $203 million for the contract termination fee, which is to be paid by the end of 2024, and recognized a corresponding regulatory asset of $203 million.
As of March 31, 2022, the $203 million liability for the contract termination fee consists of $85 million and $118 million included in Other current liabilities and Other deferred credits and other liabilities, respectively, in Exelon's Consolidated Balance Sheet. As of March 31, 2022, the current and noncurrent liability is included in PPA termination obligation and Other deferred credits and other liabilities, respectively, in PHI's and ACE's Consolidated Balance Sheets.
Regulatory Assets and Liabilities
The Utility Registrants' regulatory assets and liabilities have not changed materially since December 31, 2021, unless noted below. See Note 3 — Regulatory Matters of the Exelon 2021 Form 10-K for additional information on the specific regulatory assets and liabilities.
57
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 3 — Regulatory Matters
PECO. Regulatory assets increased $66 million primarily due to an increase of $60 million in the Deferred Income Taxes regulatory asset. Regulatory liabilities decreased by $112 million primarily due to a decrease of $111 million in the Nuclear Decommissioning regulatory liability.
BGE. Regulatory assets decreased $50 million primarily due to a decrease of $19 million in the Electric Energy and Natural Gas Costs regulatory asset and $16 million in the Energy Efficiency and Demand Response Programs regulatory asset. Regulatory liabilities decreased $53 million primarily due to a decrease of $65 million in the Deferred Income Taxes regulatory liability.
ACE. Regulatory assets increased $205 million primarily due to an increase in the Electric Energy Costs regulatory asset as a result of the PPA termination. Regulatory liabilities decreased $19 million primarily due to a decrease of $9 million in the Deferred Income Taxes regulatory liability and $5 million in the Electric Energy Costs regulatory liability.
Capitalized Ratemaking Amounts Not Recognized
The following table presents authorized amounts capitalized for ratemaking purposes related to earnings on shareholders' investment that are not recognized for financial reporting purposes in the Registrants' Consolidated Balance Sheets. These amounts will be recognized as revenues in the related Consolidated Statements of Operations and Comprehensive Income in the periods they are billable to the Utility Registrants' customers.
| Exelon | ComEd(a) | PECO | BGE(b) | PHI | Pepco(c) | DPL(c) | ACE | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)Reflects ComEd's unrecognized equity returns earned for ratemaking purposes on its energy efficiency and electric distribution formula rate regulatory assets.
(b)BGE's authorized amounts capitalized for ratemaking purposes primarily relate to earnings on shareholder's investment on its AMI programs.
(c)Pepco's and DPL's authorized amounts capitalized for ratemaking purposes relate to earnings on shareholder's investment on their respective AMI Programs and Energy Efficiency and Demand Response Programs, and for Pepco District of Columbia revenue decoupling program. The earnings on energy efficiency are on Pepco District of Columbia and DPL Delaware programs only.
4. Revenue from Contracts with Customers (All Registrants)
The Registrants recognize revenue from contracts with customers to depict the transfer of goods or services to customers at an amount that the entities expect to be entitled to in exchange for those goods or services. The primary sources of revenue include regulated electric and gas tariff sales, distribution, and transmission services.
See Note 4 — Revenue from Contracts with Customers of the Exelon 2021 Form 10-K for additional information regarding the primary sources of revenue for the Registrants.
Contract Liabilities
The Registrants record contract liabilities when consideration is received or due prior to the satisfaction of the performance obligations. The Registrants record contract liabilities in Other current liabilities and Other noncurrent liabilities in their Consolidated Balance Sheets.
For PHI, Pepco, DPL, and ACE these contract liabilities primarily relate to upfront consideration received in the third quarter of 2020 for a collaborative arrangement with an unrelated owner and manager of communication infrastructure. The revenue attributable to this arrangement will be recognized as operating revenue over the 35 years under the collaborative arrangement.
Revenues recognized were immaterial for Exelon, PHI, Pepco, DPL, and ACE for the three months ended March 31, 2022 and 2021. As of March 31, 2022 and December 31, 2021, ComEd's, PECO's, and BGE's contract liabilities were immaterial.
58
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 4 — Revenue from Contracts with Customers
Transaction Price Allocated to Remaining Performance Obligations
The following table shows the amounts of future revenues expected to be recorded in each year for performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2022. This disclosure only includes contracts for which the total consideration is fixed and determinable at contract inception. The average contract term varies by customer type and commodity but ranges from one month to several years.
This disclosure excludes the Utility Registrants' gas and electric tariff sales contracts and transmission revenue contracts as they generally have an original expected duration of one year or less and, therefore, do not contain any future, unsatisfied performance obligations to be included in this disclosure.
| 2022 | 2023 | 2024 | 2025 | 2026 and thereafter | Total | ||||||||||||||||||||||||||||||
| Exelon | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| PHI | |||||||||||||||||||||||||||||||||||
| Pepco | |||||||||||||||||||||||||||||||||||
| DPL | |||||||||||||||||||||||||||||||||||
| ACE | |||||||||||||||||||||||||||||||||||
Revenue Disaggregation
The Registrants disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. See Note 5 — Segment Information for the presentation of the Registrant's revenue disaggregation.
5. Segment Information (All Registrants)
Operating segments for each of the Registrants are determined based on information used by the CODMs in deciding how to evaluate performance and allocate resources at each of the Registrants.
Exelon has six reportable segments, which include ComEd, PECO, BGE, and PHI's three reportable segments consisting of Pepco, DPL, and ACE. ComEd, PECO, BGE, Pepco, DPL, and ACE each represent a single reportable segment, and as such, no separate segment information is provided for these Registrants. Exelon, ComEd, PECO, BGE, Pepco, DPL, and ACE's CODMs evaluate the performance of and allocate resources to ComEd, PECO, BGE, Pepco, DPL, and ACE based on net income.
59
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 5 — Segment Information
Three Months Ended March 31, 2022 and 2021
| ComEd | PECO | BGE | PHI | Other(a) | Intersegment Eliminations | Exelon | |||||||||||||||||||||||||||||||||||
Operating revenues(b): | |||||||||||||||||||||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||||||||||||||||||||
| Electric revenues | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Natural gas revenues | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Shared service and other revenues | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Total operating revenues | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||||||||
| Electric revenues | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Natural gas revenues | |||||||||||||||||||||||||||||||||||||||||
| Shared service and other revenues | ( | ||||||||||||||||||||||||||||||||||||||||
| Total operating revenues | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Intersegment revenues(c): | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||||||||
| Interest expense, net: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
| 2021 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Income Taxes: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| 2021 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) from continuing operations: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||
| 2021 | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Capital Expenditures: | |||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||||||||
| Total assets: | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| December 31, 2021 | ( | ||||||||||||||||||||||||||||||||||||||||
__________
(a)Other primarily includes Exelon’s corporate operations, shared service entities, and other financing and investment activities.
(b)Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses in the Registrants’ Consolidated Statements of Operations and Comprehensive Income. See Note 14 — Supplemental Financial Information for additional information on total utility taxes.
60
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 5 — Segment Information
(c)See Note 15 — Related Party Transactions for additional information on intersegment revenues.
PHI:
| Pepco | DPL | ACE | Other(a) | Intersegment Eliminations | PHI | ||||||||||||||||||||||||||||||
Operating revenues(b): | |||||||||||||||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||||||||||||||
| Electric revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Natural gas revenues | |||||||||||||||||||||||||||||||||||
| Shared service and other revenues | ( | ||||||||||||||||||||||||||||||||||
| Total operating revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||
| Electric revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Natural gas revenues | |||||||||||||||||||||||||||||||||||
| Shared service and other revenues | ( | ||||||||||||||||||||||||||||||||||
| Total operating revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Intersegment revenues(c): | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||
| Interest expense, net: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||
| Income Taxes: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||
| Net income (loss): | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| 2021 | ( | ||||||||||||||||||||||||||||||||||
| Capital Expenditures: | |||||||||||||||||||||||||||||||||||
| 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||||||||
| Total assets: | |||||||||||||||||||||||||||||||||||
| March 31, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| December 31, 2021 | ( | ||||||||||||||||||||||||||||||||||
__________
(a)Other primarily includes PHI’s corporate operations, shared service entities, and other financing and investment activities.
(b)Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses in the Registrants’ Consolidated Statements of Operations and Comprehensive Income. See Note 14 — Supplemental Financial Information for additional information on total utility taxes.
(c)Includes intersegment revenues with ComEd, BGE, and PECO, which are eliminated at Exelon.
61
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 5 — Segment Information
The following tables disaggregate the Registrants' revenues recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. For the Utility Registrants, the disaggregation of revenues reflects the two primary utility services of electric sales and natural gas sales (where applicable), with further disaggregation of these tariff sales provided by major customer groups. Exelon’s disaggregated revenues are consistent with the Utility Registrants, but exclude any intercompany revenues.
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
| Revenues from contracts with customers | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||
| Electric revenues | |||||||||||||||||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Small commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Large commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Public authorities & electric railroads | |||||||||||||||||||||||||||||||||||||||||
Other(a) | |||||||||||||||||||||||||||||||||||||||||
Total electric revenues(b) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Natural gas revenues | |||||||||||||||||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Small commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Large commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||||||||
Other(c) | |||||||||||||||||||||||||||||||||||||||||
Total natural gas revenues(d) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Other revenues | |||||||||||||||||||||||||||||||||||||||||
| Revenues from alternative revenue programs | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Other electric revenues(e) | |||||||||||||||||||||||||||||||||||||||||
Other natural gas revenues(e) | |||||||||||||||||||||||||||||||||||||||||
| Total other revenues | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Total revenues for reportable segments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
62
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 5 — Segment Information
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Revenues from contracts with customers | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||
| Electric revenues | |||||||||||||||||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Small commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Large commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Public authorities & electric railroads | |||||||||||||||||||||||||||||||||||||||||
Other(a) | |||||||||||||||||||||||||||||||||||||||||
Total electric revenues(b) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Natural gas revenues | |||||||||||||||||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Small commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Large commercial & industrial | |||||||||||||||||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||||||||
Other(c) | |||||||||||||||||||||||||||||||||||||||||
Total natural gas revenues(d) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total revenues from contracts with customers | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Other revenues | |||||||||||||||||||||||||||||||||||||||||
| Revenues from alternative revenue programs | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Other electric revenues(e) | |||||||||||||||||||||||||||||||||||||||||
| Total other revenues | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total revenues for reportable segments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
__________
(a)Includes revenues from transmission revenue from PJM, wholesale electric revenue and mutual assistance revenue.
(b)Includes operating revenues from affiliates in 2022 and 2021 respectively of:
•$6 million, $6 million at ComEd
•$1 million, $1 million at PECO
•$2 million, $2 million at BGE
•$3 million, $3 million at PHI
•$1 million, $1 million at Pepco
•$2 million, $2 million at DPL
•$1 million, $1 million at ACE
(c)Includes revenues from off-system natural gas sales.
(d)Includes operating revenues from affiliates in 2022 and 2021 respectively of:
•less than $1 million, less than $1 million at PECO
•$6 million, $4 million at BGE
(e)Includes late payment charge revenues.
63
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 6 — Accounts Receivable
6. Accounts Receivable (All Registrants)
Allowance for Credit Losses on Accounts Receivable
The following tables present the rollforward of Allowance for Credit Losses on Customer Accounts Receivable.
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Plus: Current period provision for expected credit losses(a) | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Write-offs, net of recoveries(b)(c) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Plus: Current period provision for expected credit losses(d) | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Write-offs, net of recoveries(b) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
__________
(a)For PECO, BGE and ACE, the increase is primarily as a result of increased receivable balances due to the increased aging of receivables. For BGE, also reflects increased receivable balance due to colder weather.
(b)Recoveries were not material to the Registrants.
(c)For ACE, the increase in 2022 is primarily related to the termination of the moratorium, which beginning in March 2020, prevented customer disconnections for non-payment. With disconnection activities restarting in January 2022, write-offs of aging accounts receivable increased throughout the year.
(d)The increase is primarily as a result of increased receivable balances due to the colder weather and the increased aging of receivables, the temporary suspension of customer disconnections for non-payment, temporary cessation of new late payment fees, and reconnection of service for customers previously disconnected due to COVID-19.
The following tables present the rollforward of Allowance for Credit Losses on Other Accounts Receivable.
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Plus: Current period provision for expected credit losses | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Write-offs, net of recoveries(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Plus: Current period provision for expected credit losses | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Write-offs, net of recoveries(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
64
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 6 — Accounts Receivable
__________
(a)Recoveries were not material to the Registrants.
Unbilled Customer Revenue
The following table provides additional information about unbilled customer revenues recorded in the Registrants' Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.
Unbilled customer revenues(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)Unbilled customer revenues are classified in Customer accounts receivables, net in the Registrants' Consolidated Balance Sheets.
Other Purchases of Customer and Other Accounts Receivables
The Utility Registrants are required, under separate legislation and regulations in Illinois, Pennsylvania, Maryland, District of Columbia, Delaware, and New Jersey, to purchase certain receivables from alternative retail electric and, as applicable, natural gas suppliers that participate in the utilities' consolidated billing. The following tables present the total receivables purchased.
| Total receivables purchased | |||||||||||||||||||||||||||||||||||||||||||||||
Exelon(a) | ComEd | PECO | BGE(a) | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
65
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 7 — Income Taxes
7. Income Taxes (All Registrants)
Rate Reconciliation
The effective income tax rate from continuing operations varies from the U.S. federal statutory rate principally due to the following:
Three Months Ended March 31, 2022(a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO(b) | BGE(b) | PHI | Pepco(b) | DPL | ACE(b) | ||||||||||||||||||||||||||||||||||||||||
| U.S. Federal statutory rate | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||
State income taxes, net of Federal income tax benefit(c) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Plant basis differences | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Excess deferred tax amortization | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Amortization of investment tax credit, including deferred taxes on basis difference | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Tax credits(d) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
Other(e) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | % | % | % | % | % | ( | % | % | % | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2021(a) | |||||||||||||||||||||||||||||||||||||||||||||||
Exelon | ComEd | PECO(f) | BGE(f) | PHI | Pepco | DPL | ACE(f) | ||||||||||||||||||||||||||||||||||||||||
| U.S. Federal statutory rate | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||||||||||||||||||||||||||
| State income taxes, net of Federal income tax benefit | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Plant basis differences | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Excess deferred tax amortization | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Amortization of investment tax credit, including deferred taxes on basis difference | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Tax credits | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | % | % | % | ( | % | % | % | % | % | ||||||||||||||||||||||||||||||||||||||
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. For BGE, the lower effective tax rate is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. For Pepco, the income tax benefit is primarily due to the Maryland and Washington, D.C. multi-year plans which resulted in the acceleration of certain income tax benefits. For ACE, the lower effective tax rate is primarily due to the acceleration of certain income tax benefits due to distribution rate case settlements.
(c)For Exelon, the higher state income taxes, net of federal income tax benefit, is primarily due to the long-term marginal state income tax rate change of approximately $67 million and the recognition of a valuation allowance of approximately $40 million against the net deferred tax asset position for certain standalone state filing jurisdictions as a result of the separation.
(d)For Exelon, reflects the income tax expense related to the write-off of federal tax credits subject to recapture of approximately $15 million as a result of the separation.
(e)For Exelon, primarily reflects the nondeductible transaction costs of approximately $19 million arising as part of the separation.
(f)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. For BGE, the income tax benefit is primarily due to the Maryland multi-year plan which resulted in the acceleration of
66
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 7 — Income Taxes
Unrecognized Tax Benefits
Exelon, PHI and ACE have the following unrecognized tax benefits as of March 31, 2022 and December 31, 2021. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
| Exelon | PHI | ACE | |||||||||||||||
| March 31, 2022 | $ | $ | $ | ||||||||||||||
| December 31, 2021 | |||||||||||||||||
Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
As of March 31, 2022, ACE has approximately $14 million of unrecognized state tax benefits that could significantly decrease within the 12 months after the reporting date based on the outcome of pending court cases involving other taxpayers. The unrecognized tax benefit, if recognized, may be included in future base rates and that portion would have no impact to the effective tax rate.
Other Tax Matters
Separation (Exelon)
In connection with the separation, Exelon recorded an income tax expense related to continuing operations of approximately $148 million primarily due to the long-term marginal state income tax rate change of approximately $67 million discussed further below, the recognition of valuation allowances of approximately $40 million against the net deferred tax assets positions for certain standalone state filing jurisdictions, the write-off of federal and state tax credits subject to recapture of approximately $17 million, and nondeductible transaction costs for federal and state taxes of approximately $24 million.
Tax Matters Agreement (Exelon)
In connection with the separation, Exelon entered into a TMA with Constellation. The TMA governs the respective rights, responsibilities, and obligations between Exelon and Constellation after the separation with respect to tax liabilities, refunds and attributes for open tax years that Constellation was part of Exelon’s consolidated group for U.S. federal, state, and local tax purposes.
Indemnification for Taxes. As a former subsidiary of Exelon, Constellation has joint and several liability with Exelon to the IRS and certain state jurisdictions relating to the taxable periods prior to the separation. The TMA specifies that Constellation is liable for their share of taxes required to be paid by Exelon with respect to taxable periods prior to the separation to the extent Constellation would have been responsible for such taxes under the existing Exelon tax sharing agreement. As of March 31, 2022, Exelon recorded a receivable of approximately $55 million in Current other assets in the Consolidated Balance Sheet for Constellation’s share of taxes for periods prior to the separation.
Tax Refunds. The TMA specifies that Constellation is entitled to their share of any future tax refunds claimed by Exelon with respect to taxable periods prior to the separation to the extent that Constellation would have received such tax refunds under the existing Exelon tax sharing agreement.
Tax Attributes. At the date of separation certain tax attributes, primarily pre-closing tax credit carryforwards, that were generated by Constellation were required by law to be allocated to Exelon. The TMA also provides that Exelon will reimburse Constellation when those allocated tax credit carryforwards are utilized. As of March 31, 2022, Exelon recorded a payable of approximately $11 million and $484 million in Current other liabilities and Noncurrent other liabilities, respectively, in the Consolidated Balance Sheet for tax credit carryforwards that are expected to be utilized and reimbursed to Constellation.
67
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 7 — Income Taxes
8. Retirement Benefits (All Registrants)
Defined Benefit Pension and OPEB
Effective February 1, 2022, in connection with the separation, pension and OPEB obligations and assets for current and former employees of the Constellation business and certain other former employees of Exelon and its subsidiaries transferred to pension and OPEB plans and trusts maintained by Constellation or its subsidiaries. The Exelon New England Union Employees Pension Plan and Constellation Mystic Power, LLC Union Employees Pension Plan Including Plan A and Plan B were transferred. The following OPEB plans were also transferred: Constellation Mystic Power, LLC Post-Employment Medical Account Savings Plan, Exelon New England Union Post-Employment Medical Savings Account Plan, and the Nine Mile Point Nuclear Station, LLC Medical Care and Prescription Drug Plan for Retired Employees.
As a result of the separation, Exelon restructured certain of its qualified pension plans. Pension obligations and assets for current and former employees continuing with Exelon and who are participants in the Exelon Employee Pension Plan for Clinton, TMI, and Oyster Creek, Pension Plan of Constellation Energy Nuclear Group, LLC, and Nine Mile Point Pension Plan were merged into the Pension Plan of Constellation Energy Group, Inc, which was subsequently renamed, Exelon Pension Plan (EPP). Exelon employees who participated in these plans prior to the separation now participate in the EPP. The merging of the plans did not change the benefits offered to the plan participants and, thus, had no impact on Exelon's pension obligations.
68
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 8 — Retirement Benefits
The tables below show the pension and OPEB plans in which employees of each operating company participated as of March 31, 2022:
Operating Company(a) | ||||||||||||||||||||||||||||||||||||||||||||
| Name of Plan: | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||
| Qualified Pension Plans: | ||||||||||||||||||||||||||||||||||||||||||||
| Exelon Corporation Retirement Program | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
| Exelon Corporation Pension Plan for Bargaining Unit Employees | X | |||||||||||||||||||||||||||||||||||||||||||
| Exelon Pension Plan | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
| Pepco Holdings LLC Retirement Plan | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
| Non-Qualified Pension Plans: | ||||||||||||||||||||||||||||||||||||||||||||
| Exelon Corporation Supplemental Pension Benefit Plan and 2000 Excess Benefit Plan | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Exelon Corporation Supplemental Management Retirement Plan | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||
| Constellation Energy Group, Inc. Senior Executive Supplemental Plan | X | X | ||||||||||||||||||||||||||||||||||||||||||
| Constellation Energy Group, Inc. Supplemental Pension Plan | X | X | ||||||||||||||||||||||||||||||||||||||||||
| Constellation Energy Group, Inc. Benefits Restoration Plan | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Baltimore Gas & Electric Company Executive Benefit Plan | X | |||||||||||||||||||||||||||||||||||||||||||
| Baltimore Gas & Electric Company Manager Benefit Plan | X | X | ||||||||||||||||||||||||||||||||||||||||||
| Pepco Holdings LLC 2011 Supplemental Executive Retirement Plan | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||
| Conectiv Supplemental Executive Retirement Plan | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Pepco Holdings LLC Combined Executive Retirement Plan | X | X | ||||||||||||||||||||||||||||||||||||||||||
| Atlantic City Electric Director Retirement Plan | X | X | ||||||||||||||||||||||||||||||||||||||||||
69
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 8 — Retirement Benefits
Operating Company(a) | ||||||||||||||||||||||||||||||||||||||||||||
| Name of Plan: | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||
| OPEB Plans: | ||||||||||||||||||||||||||||||||||||||||||||
| PECO Energy Company Retiree Medical Plan | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
| Exelon Corporation Health Care Program | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
| Exelon Corporation Employees’ Life Insurance Plan | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Exelon Corporation Health Reimbursement Arrangement Plan | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| BGE Retiree Medical Plan | X | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||
| BGE Retiree Dental Plan | X | |||||||||||||||||||||||||||||||||||||||||||
| Exelon Employee Life Insurance Plan and Family Life Insurance Plan | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||
| Exelon Retiree Medical Plan of Constellation Energy Nuclear Group, LLC | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Exelon Retiree Dental Plan of Constellation Energy Nuclear Group, LLC | X | X | X | |||||||||||||||||||||||||||||||||||||||||
| Pepco Holdings LLC Welfare Plan for Retirees | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||
__________
(a)Employees generally remain in their legacy benefit plans when transferring between operating companies.
As of February 1, 2022, in connection with the separation, Exelon's pension and OPEB plans were remeasured. The remeasurement and separation resulted in a decrease to the pension obligation, net of plan assets, of $921 million and a decrease to the OPEB obligation of $893 million. Additionally, accumulated other comprehensive loss, decreased by $1,994 million (after-tax) and regulatory assets and liabilities increased by $14 million and $5 million respectively. Key assumptions were held consistent with the year end December 31, 2021 assumptions with the exception of the discount rate.
The majority of the 2022 pension benefit cost for the Exelon-sponsored plans is calculated using an expected long-term rate of return on plan assets of 7.00 % and a discount rate of 3.24 %. The majority of the 2022 OPEB cost is calculated using an expected long-term rate of return on plan assets of 6.44 % for funded plans and a discount rate of 3.20 %.
During the first quarter of 2022, Exelon received an updated valuation of its pension and OPEB to reflect actual census data as of February 1, 2022. This valuation resulted in a decrease to the pension obligation of $24 million and an increase to the OPEB obligation of $5 million. Additionally, accumulated other comprehensive loss increased by $5 million (after-tax) and regulatory assets and liabilities decreased by $30 million and $3 million, respectively.
70
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 8 — Retirement Benefits
| Pension Benefits | OPEB | ||||||||||||||||||||||
| Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Components of net periodic benefit cost: | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||
| Prior service cost (credit) | ( | ( | |||||||||||||||||||||
| Actuarial loss | |||||||||||||||||||||||
| Curtailment benefits | ( | ||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | |||||||||||||||||||
The amounts below represent the Registrants' allocated pension and OPEB costs. For Exelon, the service cost component is included in Operating and maintenance expense and Property, plant, and equipment, net while the non-service cost components are included in Other, net and Regulatory assets. For the Utility Registrants, the service cost and non-service cost components are included in Operating and maintenance expense and Property, plant, and equipment, net in their consolidated financial statements.
| Three Months Ended March 31, | ||||||||||||||
| Pension and OPEB Costs | 2022 | 2021 | ||||||||||||
| Exelon | $ | $ | ||||||||||||
| ComEd | ||||||||||||||
| PECO | ( | |||||||||||||
| BGE | ||||||||||||||
| PHI | ||||||||||||||
| Pepco | ||||||||||||||
| DPL | ||||||||||||||
| ACE | ||||||||||||||
Defined Contribution Savings Plan
The Registrants participate in a 401(k) defined contribution savings plan that is sponsored by Exelon. The plan is qualified under applicable sections of the IRC and allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. All Registrants match a percentage of the employee contributions up to certain limits. The following table presents the matching contributions to the savings plans for the three months ended March 31, 2022 and 2021, respectively.
| Three Months Ended March 31, | ||||||||||||||
| Savings Plans Matching Contributions | 2022 | 2021 | ||||||||||||
| Exelon | $ | $ | ||||||||||||
| ComEd | ||||||||||||||
| PECO | ||||||||||||||
| BGE | ||||||||||||||
| PHI | ||||||||||||||
| Pepco | ||||||||||||||
| DPL | ||||||||||||||
| ACE | ||||||||||||||
71
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 9 — Derivative Financial Instruments
9. Derivative Financial Instruments (All Registrants)
The Registrants use derivative instruments to manage commodity price risk related to ongoing business operations.
Authoritative guidance requires that derivative instruments be recognized as either assets or liabilities at fair value, with changes in fair value of the derivative recognized in earnings immediately. Other accounting treatments are available through special election and designation, provided they meet specific, restrictive criteria both at the time of designation and on an ongoing basis. These alternative permissible accounting treatments include NPNS, cash flow hedges, and fair value hedges. At ComEd, derivative economic hedges related to commodities are recorded at fair value and offset by a corresponding regulatory asset or liability. For all NPNS derivative instruments, accounts receivable or accounts payable are recorded when derivatives settle and revenue or expense is recognized in earnings as the underlying physical commodity is sold or consumed.
ComEd’s use of cash collateral is generally unrestricted unless ComEd is downgraded below investment grade. Cash collateral held by PECO, BGE, Pepco, DPL, and ACE must be deposited in an unaffiliated major U.S. commercial bank or foreign bank with a U.S. branch office that meet certain qualifications.
Commodity Price Risk
The Registrants employ established policies and procedures to manage their risks associated with market fluctuations in commodity prices by entering into physical and financial derivative contracts, which are either determined to be non-derivative or classified as economic hedges. The Utility Registrants procure electric and natural gas supply through a competitive procurement process approved by each of the respective state utility commissions. The Utility Registrants’ hedging programs are intended to reduce exposure to energy and natural gas price volatility and have no direct earnings impact as the costs are fully recovered from customers through
72
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 9 — Derivative Financial Instruments
regulatory-approved recovery mechanisms. The following table provides a summary of the Utility Registrants’ primary derivative hedging instruments, listed by commodity and accounting treatment.
| Registrant | Commodity | Accounting Treatment | Hedging Instrument | ||||||||
| ComEd | Electricity | NPNS | Fixed price contracts based on all requirements in the IPA procurement plans. | ||||||||
| Electricity | Changes in fair value of economic hedge recorded to an offsetting regulatory asset or liability(a) | 20-year floating-to-fixed energy swap contracts beginning June 2012 based on the renewable energy resource procurement requirements in the Illinois Settlement Legislation of approximately | |||||||||
| PECO | Electricity | NPNS | Fixed price contracts for default supply requirements through full requirements contracts. | ||||||||
| Gas | NPNS | Fixed price contracts to cover about 10% of planned natural gas purchases in support of projected firm sales. | |||||||||
| BGE | Electricity | NPNS | Fixed price contracts for all SOS requirements through full requirements contracts. | ||||||||
| Gas | NPNS | Fixed price contracts for between 10-20% of forecasted system supply requirements for flowing (i.e., non-storage) gas for the November through March period. | |||||||||
| Pepco | Electricity | NPNS | Fixed price contracts for all SOS requirements through full requirements contracts. | ||||||||
| DPL | Electricity | NPNS | Fixed price contracts for all SOS requirements through full requirements contracts. | ||||||||
| Gas | NPNS | Fixed and index priced contracts through full requirements contracts. | |||||||||
Changes in fair value of economic hedge recorded to an offsetting regulatory asset or liability(b) | Exchange traded future contracts for up to 50% of estimated monthly purchase requirements each month, including purchases for storage injections. | ||||||||||
| ACE | Electricity | NPNS | Fixed price contracts for all BGS requirements through full requirements contracts. | ||||||||
__________
(a)See Note 3 — Regulatory Matters of the 2021 Form 10-K for additional information.
(b)The fair value of the DPL economic hedge is not material as of March 31, 2022 and December 31, 2021.
The fair value of derivative economic hedges is presented in current and noncurrent Mark-to-market derivative liabilities in Exelon's and ComEd's Consolidated Balance Sheets.
Credit Risk
The Registrants would be exposed to credit-related losses in the event of non-performance by counterparties on executed derivative instruments. The credit exposure of derivative contracts, before collateral, is represented by the fair value of contracts at the reporting date. The Utility Registrants have contracts to procure electric and natural gas supply that provide suppliers with a certain amount of unsecured credit. If the exposure on the supply contract exceeds the amount of unsecured credit, the suppliers may be required to post collateral. The net credit exposure is mitigated primarily by the ability to recover procurement costs through customer rates. As of March 31, 2022, the amount of cash collateral held with external counterparties by Exelon, ComEd, PHI, and DPL was $192 million, $72 million, $86 million, and $73 million, respectively, which is recorded in Other current liabilities in Exelon's, ComEd's, PHI's, and DPL's Consolidated Balance Sheets. The amounts for PECO, BGE, Pepco, and ACE were not material as of March 31, 2022. As of December 31, 2021, the amounts for ComEd and DPL were $41 million and $43 million, respectively. The amounts for Exelon, PECO, BGE, PHI, Pepco, and ACE were not material as of December 31, 2021.
73
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 9 — Derivative Financial Instruments
10. Debt and Credit Agreements (All Registrants)
Short-Term Borrowings
Exelon Corporate, ComEd, and BGE meet their short-term liquidity requirements primarily through the issuance of commercial paper. PECO meets their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings from the Exelon intercompany money pool. Pepco, DPL, and ACE meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings from the PHI intercompany money pool. PHI Corporate meets its short-term liquidity requirements primarily through the issuance of short-term notes and borrowings from the Exelon intercompany money pool. The Registrants may use their respective credit facilities for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of credit.
Commercial Paper
The following table reflects the Registrants' commercial paper programs as of March 31, 2022 and December 31, 2021. PECO and ComEd had no
| Outstanding Commercial Paper as of | Average Interest Rate on Commercial Paper Borrowings as of | ||||||||||||||||||||||
| Commercial Paper Issuer | March 31, 2022 | December 31, 2021 | March 31, 2022 | December 31, 2021 | |||||||||||||||||||
Exelon(a) | $ | $ | % | % | |||||||||||||||||||
| BGE | % | % | |||||||||||||||||||||
PHI(b) | % | % | |||||||||||||||||||||
| Pepco | % | % | |||||||||||||||||||||
| DPL | % | % | |||||||||||||||||||||
| ACE | % | % | |||||||||||||||||||||
__________
(a)Exelon Corporate had no
(b)Represents the consolidated amounts of Pepco, DPL, and ACE.
Revolving Credit Agreements
On February 1, 2022, Exelon Corporate and the Utility Registrants' each entered into a new 5-year revolving credit facility that replaced its existing syndicated revolving credit facility. The following table reflects the credit agreements:
| Borrower | Aggregate Bank Commitment | Interest Rate | ||||||||||||
| Exelon Corporate | SOFR plus | % | ||||||||||||
| ComEd | SOFR plus | % | ||||||||||||
| PECO | SOFR plus | % | ||||||||||||
| BGE | SOFR plus | % | ||||||||||||
| Pepco | SOFR plus | % | ||||||||||||
| DPL | SOFR plus | % | ||||||||||||
| ACE | SOFR plus | % | ||||||||||||
See Note 17 — Debt and Credit Agreements of the Exelon 2021 Form 10-K for additional information on the Registrants' credit facilities.
74
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 10 — Debt and Credit Agreements
Short-Term Loan Agreements
On March 23, 2017, Exelon Corporate entered into a term loan agreement for $500 million. The loan agreement was renewed on March 14, 2022 and will expire on March 16, 2023. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal to SOFR plus 0.65 % and all indebtedness thereunder is unsecured. The loan agreement is reflected in Exelon's Consolidated Balance Sheets within Short-term borrowings.
On March 31, 2021, Exelon Corporate entered into a 364-day term loan agreement for $150 million with a variable interest rate of LIBOR plus 0.65 % and an expiration date of March 30, 2022. Exelon Corporate repaid the term loan on March 30, 2022.
In connection with the separation, on January 24, 2022, Exelon Corporate entered into a 364-day term loan agreement for $1.15 billion. The loan agreement will expire on January 23, 2023. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal to SOFR plus 0.75 % with a 22.5 basis point increase commencing on July 24, 2022. All indebtedness pursuant to the loan agreement is unsecured.
Long-Term Debt
Issuance of Long-Term Debt
75
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 10 — Debt and Credit Agreements
During the three months ended March 31, 2022, the following long-term debt was issued:
| Company | Type | Interest Rate | Maturity | Amount | Use of Proceeds | |||||||||||||||||||||||||||
| Exelon | SMBC Term Loan Agreement | SOFR plus | July 21, 2023 | $ | Fund a cash payment to Constellation and for general corporate purposes. | |||||||||||||||||||||||||||
| Exelon | U.S. Bank Term Loan Agreement | SOFR plus | July 21, 2023 | Fund a cash payment to Constellation and for general corporate purposes. | ||||||||||||||||||||||||||||
| Exelon | PNC Term Loan Agreement | SOFR plus | July 24, 2023 | Fund a cash payment to Constellation and for general corporate purposes. | ||||||||||||||||||||||||||||
| Exelon | Notes | March 15, 2027 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| Exelon | Notes | March 15, 2032 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| Exelon | Notes | March 15, 2052 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| ComEd | First Mortgage Bonds, Series 132 | March 15, 2032 | Repay outstanding commercial paper obligations and to fund other general corporate purposes. | |||||||||||||||||||||||||||||
| ComEd | First Mortgage Bonds, Series 133 | March 15, 2052 | Repay outstanding commercial paper obligations and to fund other general corporate purposes. | |||||||||||||||||||||||||||||
Pepco(a) | First Mortgage Bonds | March 24, 2052 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| DPL | First Mortgage Bonds | February 15, 2052 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| ACE | First Mortgage Bonds | February 15, 2032 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
| ACE | First Mortgage Bonds | February 15, 2052 | Repay existing indebtedness and for general corporate purposes. | |||||||||||||||||||||||||||||
__________
(a)On March 24, 2022, Pepco entered into a purchase agreement of First Mortgage Bonds of $225 million at 3.35 % due on September 15, 2032. The closing date of the issuance is expected to occur in September 2022.
Long-Term Debt to Affiliates
As of December 31, 2021, Exelon Corporate had $319 million recorded to intercompany notes receivable from Generation. See Note 17 — Debt and Credit Agreements of the Exelon 2021 Form 10-K for additional information. In connection with the separation, on January 31, 2022, Exelon Corporate received cash from Generation of $258 million to settle the intercompany loan.
Debt Covenants
As of March 31, 2022, the Registrants are in compliance with debt covenants.
76
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
11. Fair Value of Financial Assets and Liabilities (All Registrants)
Exelon measures and classifies fair value measurements in accordance with the hierarchy as defined by GAAP. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
•Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Registrants have the ability to liquidate as of the reporting date.
•Level 2 - inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
•Level 3 - unobservable inputs, such as internally developed pricing models or third-party valuations for the asset or liability due to little or no market activity for the asset or liability.
Fair Value of Financial Liabilities Recorded at Amortized Cost
The following tables present the carrying amounts and fair values of the Registrants’ short-term liabilities, long-term debt, and trust preferred securities (long-term debt to financing trusts or junior subordinated debentures) as of March 31, 2022 and December 31, 2021. The Registrants have no
The carrying amounts of the Registrants’ short-term liabilities as presented in their Consolidated Balance Sheets are representative of their fair value (Level 2) because of the short-term nature of these instruments.
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||
| Level 2 | Level 3 | Total | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt, including amounts due within one year(a) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| ComEd | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PECO | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BGE | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PHI | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Pepco | ||||||||||||||||||||||||||||||||||||||||||||||||||
| DPL | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ACE | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt to Financing Trusts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| ComEd | ||||||||||||||||||||||||||||||||||||||||||||||||||
| PECO | ||||||||||||||||||||||||||||||||||||||||||||||||||
__________
77
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
Recurring Fair Value Measurements
The following tables present assets and liabilities measured and recorded at fair value in the Registrants' Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy as of March 31, 2022 and December 31, 2021:
Exelon
| As of March 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | |||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Mark-to-market derivative liabilities | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Total net assets (liabilities) | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||
__________
(a)Exelon excludes cash of $470 million and $464 million as of March 31, 2022 and December 31, 2021, respectively, and restricted cash of $110 million and $49 million as of March 31, 2022 and December 31, 2021, respectively, and includes long-term restricted cash of $92 million and $44 million as of March 31, 2022 and December 31, 2021, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets.
78
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
ComEd, PECO, and BGE
| ComEd | PECO | BGE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of March 31, 2022 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark-to-market derivative liabilities(b) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net assets (liabilities) | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ComEd | PECO | BGE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark-to-market derivative liabilities(b) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net assets (liabilities) | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)ComEd excludes cash of $71 million and $105 million as of March 31, 2022 and December 31, 2021, respectively, and restricted cash of $73 million and $42 million as of March 31, 2022 and December 31, 2021, respectively, and includes long-term restricted cash of $92 43 million as of March 31, 2022 and December 31, 2021, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets. PECO excludes cash of $25 million and $35 million as of March 31, 2022 and December 31, 2021, respectively. BGE excludes cash of $41 million and $51 million as of March 31, 2022 and December 31, 2021, respectively, and restricted cash of $34 million and $4 million as of March 31, 2022 and December 31, 2021, respectively.
(b)The Level 3 balance consists of the current and noncurrent liability of none and $144 million, respectively, as of March 31, 2022 and $18 million and $201 million, respectively, as of December 31, 2021 related to floating-to-fixed energy swap contracts with unaffiliated suppliers.
79
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
PHI, Pepco, DPL, and ACE
| As of March 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| PHI | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | |||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total net assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of March 31, 2022 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net assets | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
80
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
| Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rabbi trust investments subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation obligation | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net assets | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)PHI excludes cash of $300 million and $100 million as of March 31, 2022 and December 31, 2021, respectively, and restricted cash of $3 million as of both March 31, 2022 and December 31, 2021. Pepco excludes cash of $239 million and $34 million as of March 31, 2022 and December 31, 2021, respectively, and restricted cash of $3 million as of both March 31, 2022 and December 31, 2021. DPL excludes cash of $41 million and $28 million as of March 31, 2022 and December 31, 2021, respectively. ACE excludes cash of $15 million and $29 million as of March 31, 2022 and December 31, 2021, respectively.
81
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
Reconciliation of Level 3 Assets and Liabilities
The following tables present the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis during the three months ended March 31, 2022 and 2021:
| Exelon | ComEd | PHI and Pepco | |||||||||||||||
| Three months ended March 31, 2022 | Total | Mark-to-Market Derivatives | Life Insurance Contracts | ||||||||||||||
| Balance as of January 1, 2022 | $ | ( | $ | ( | $ | ||||||||||||
| Total realized / unrealized gains | |||||||||||||||||
Included in net income(a) | |||||||||||||||||
| Included in regulatory assets | (b) | ||||||||||||||||
| Transfers out of Level 3 | ( | ||||||||||||||||
| Balance as of March 31, 2022 | $ | ( | $ | ( | $ | ||||||||||||
| The amount of total gains included in income attributed to the change in unrealized gains related to assets and liabilities as of March 31, 2022 | $ | $ | $ | ||||||||||||||
| Exelon | ComEd | PHI and Pepco | |||||||||||||||
| Three Months Ended March 31, 2021 | Total | Mark-to-Market Derivatives | Life Insurance Contracts | ||||||||||||||
| Balance as of January 1, 2021 | $ | ( | $ | ( | $ | ||||||||||||
| Total realized / unrealized gains | |||||||||||||||||
Included in net income(a) | |||||||||||||||||
| Included in regulatory assets | (b) | ||||||||||||||||
| Balance as of March 31, 2021 | $ | ( | $ | ( | $ | ||||||||||||
| The amount of total gains included in income attributed to the change in unrealized gain related to assets and liabilities as of March 31, 2021 | $ | $ | $ | ||||||||||||||
(a)Classified in Operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income.
Valuation Techniques Used to Determine Fair Value
Exelon’s valuation techniques used to measure the fair value of the assets and liabilities shown in the tables below are in accordance with the policies discussed in Note 18 — Fair Value of Financial Assets and Liabilities of the Exelon 2021 Form 10-K.
82
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 11 — Fair Value of Financial Assets and Liabilities
Mark-to-Market Derivatives (Exelon and ComEd)
The table below discloses the significant inputs to the forward curve used to value mark-to-market derivatives.
| Type of trade | Fair Value as of March 31, 2022 | Fair Value as of December 31, 2021 | Valuation Technique | Unobservable Input | 2022 Range & Arithmetic Average | 2021 Range & Arithmetic Average | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mark-to-market derivatives | $ | ( | $ | ( | Discounted Cash Flow | Forward heat rate(a) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Marketability reserve | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renewable factor | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)Quoted forward natural gas rates are utilized to project the forward power curve for the delivery of energy at specified future dates.
12. Commitments and Contingencies (All Registrants)
The following is an update to the current status of commitments and contingencies set forth in Note 19 — Commitments and Contingencies of the Exelon 2021 Form 10-K.
Commitments
PHI Merger Commitments (Exelon, PHI, Pepco, DPL, and ACE). Approval of the PHI Merger in Delaware, New Jersey, Maryland, and the District of Columbia was conditioned upon Exelon and PHI agreeing to certain commitments. The following amounts represent total commitment costs that have been recorded since the acquisition date and the total remaining obligations for Exelon, PHI, Pepco, DPL, and ACE as of March 31, 2022:
| Description | Exelon | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||
| Total commitments | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Remaining commitments(a) | |||||||||||||||||||||||||||||
__________
(a)Remaining commitments extend through 2026 and include rate credits, energy efficiency programs and delivery system modernization.
In addition, Exelon has committed to purchase 100 MWs of wind energy in PJM. DPL has committed to conducting three RFPs to procure up to a total of 120 MWs of wind RECs for the purpose of meeting Delaware's renewable portfolio standards. DPL has conducted two of the three wind REC RFPs. The first 40 MW wind REC tranche was conducted in 2017 and did not result in a purchase agreement. The second 40 MW wind REC tranche was conducted in 2018 and resulted in a proposed REC purchase agreement that was approved by the DEPSC in 2019. The RFP for the third and final 40 MW wind REC tranche will be conducted in the second half of 2022.
83
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
Commercial Commitments (All Registrants). The Registrants’ commercial commitments as of March 31, 2022, representing commitments potentially triggered by future events were as follows:
| Expiration within | |||||||||||||||||||||||||||||||||||||||||
| Total | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 and beyond | |||||||||||||||||||||||||||||||||||
| Exelon | |||||||||||||||||||||||||||||||||||||||||
| Letters of credit | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Surety bonds(a) | |||||||||||||||||||||||||||||||||||||||||
| Financing trust guarantees | |||||||||||||||||||||||||||||||||||||||||
Guaranteed lease residual values(b) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| ComEd | |||||||||||||||||||||||||||||||||||||||||
| Letters of credit | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Surety bonds(a) | |||||||||||||||||||||||||||||||||||||||||
| Financing trust guarantees | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| PECO | |||||||||||||||||||||||||||||||||||||||||
| Letters of credit | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Surety bonds(a) | |||||||||||||||||||||||||||||||||||||||||
| Financing trust guarantees | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| BGE | |||||||||||||||||||||||||||||||||||||||||
| Letters of credit | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Surety bonds(a) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| PHI | |||||||||||||||||||||||||||||||||||||||||
Surety bonds(a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Guaranteed lease residual values(b) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Pepco | |||||||||||||||||||||||||||||||||||||||||
Surety bonds(a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Guaranteed lease residual values(b) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| DPL | |||||||||||||||||||||||||||||||||||||||||
Surety bonds(a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Guaranteed lease residual values(b) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| ACE | |||||||||||||||||||||||||||||||||||||||||
Surety bonds(a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Guaranteed lease residual values(b) | |||||||||||||||||||||||||||||||||||||||||
| Total commercial commitments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
__________
(a)Surety bonds — Guarantees issued related to contract and commercial agreements, excluding bid bonds.
84
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
Environmental Remediation Matters
General (All Registrants). The Registrants’ operations have in the past, and may in the future, require substantial expenditures to comply with environmental laws. Additionally, under Federal and state environmental laws, the Registrants are generally liable for the costs of remediating environmental contamination of property now or formerly owned by them and of property contaminated by hazardous substances generated by them. The Registrants own or lease a number of real estate parcels, including parcels on which their operations or the operations of others may have resulted in contamination by substances that are considered hazardous under environmental laws. In addition, the Registrants are currently involved in a number of proceedings relating to sites where hazardous substances have been deposited and may be subject to additional proceedings in the future. Unless otherwise disclosed, the Registrants cannot reasonably estimate whether they will incur significant liabilities for additional investigation and remediation costs at these or additional sites identified by the Registrants, environmental agencies or others, or whether such costs will be recoverable from third parties, including customers. Additional costs could have a material, unfavorable impact on the Registrants' financial statements.
MGP Sites (All Registrants). ComEd, PECO, BGE, and DPL have identified sites where former MGP or gas purification activities have or may have resulted in actual site contamination. For almost all of these sites, there are additional PRPs that may share responsibility for the ultimate remediation of each location.
•ComEd has 21 sites that are currently under some degree of active study and/or remediation. ComEd expects the majority of the remediation at these sites to continue through at least 2031.
•PECO has 6 sites that are currently under some degree of active study and/or remediation. PECO expects the majority of the remediation at these sites to continue through at least 2023.
•BGE has 4 sites that currently require some level of remediation and/or ongoing activity. BGE expects the majority of the remediation at these sites to continue through at least 2023.
•DPL has 1 site that is currently under study and the required cost at the site is not expected to be material.
The historical nature of the MGP and gas purification sites and the fact that many of the sites have been buried and built over, impacts the ability to determine a precise estimate of the ultimate costs prior to initial sampling and determination of the exact scope and method of remedial activity. Management determines its best estimate of remediation costs using all available information at the time of each study, including probabilistic and deterministic modeling for ComEd and PECO, and the remediation standards currently required by the applicable state environmental agency. Prior to completion of any significant clean up, each site remediation plan is approved by the appropriate state environmental agency.
ComEd, pursuant to an ICC order, and PECO, pursuant to a PAPUC order, are currently recovering environmental remediation costs of former MGP facility sites through customer rates. While BGE and DPL do not have riders for MGP clean-up costs, they have historically received recovery of actual clean-up costs in distribution rates.
85
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
As of March 31, 2022 and December 31, 2021, the Registrants had accrued the following undiscounted amounts for environmental liabilities in Other current liabilities and Other deferred credits and other liabilities in their respective Consolidated Balance Sheets:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Total environmental investigation and remediation liabilities | Portion of total related to MGP investigation and remediation | Total environmental investigation and remediation liabilities | Portion of total related to MGP investigation and remediation | ||||||||||||||||||||
| Exelon | $ | $ | $ | $ | |||||||||||||||||||
| ComEd | |||||||||||||||||||||||
| PECO | |||||||||||||||||||||||
| BGE | |||||||||||||||||||||||
| PHI | |||||||||||||||||||||||
| Pepco | |||||||||||||||||||||||
| DPL | |||||||||||||||||||||||
| ACE | |||||||||||||||||||||||
Benning Road Site (Exelon, PHI, and Pepco). In September 2010, PHI received a letter from EPA identifying the Benning Road site as one of six land-based sites potentially contributing to contamination of the lower Anacostia River. A portion of the site, which is owned by Pepco, was formerly the location of an electric generating facility owned by Pepco subsidiary, Pepco Energy Services, which became a part of Generation, following the 2016 merger between PHI and Exelon. This generating facility was deactivated in June 2012. The remaining portion of the site consists of a Pepco transmission and distribution service center that remains in operation. In December 2011, the U.S. District Court for the District of Columbia approved a Consent Decree entered into by Pepco and Pepco Energy Services (hereinafter "Pepco Entities") with the DOEE, which requires the Pepco Entities to conduct a Remedial Investigation and Feasibility Study (RI/FS) for the Benning Road site and an approximately 10 to 15-acre portion of the adjacent Anacostia River. The purpose of this RI/FS is to define the nature and extent of contamination from the Benning Road site and to evaluate remedial alternatives.
Pursuant to an internal agreement between the Pepco Entities, since 2013, Pepco has performed the work required by the Consent Decree and has been reimbursed for that work by an agreed upon allocation of costs between the Pepco Entities. In September 2019, the Pepco Entities issued a draft “final” RI report which DOEE approved on February 3, 2020. The Pepco Entities are developing a FS to evaluate possible remedial alternatives for submission to DOEE. The Court has established a schedule for completion of the FS, and approval by the DOEE, by September 16, 2022. After completion and approval of the FS, DOEE will prepare a Proposed Plan for public comment and then issue a Record of Decision (ROD) identifying any further response actions determined to be necessary. As part of the separation between Exelon and Constellation in February 2022, the internal agreement between the Pepco Entities for completion and payment for the remaining Consent Decree work was memorialized in a formal agreement for post-separation activities. A second post-separation assumption agreement between Exelon and Constellation transferred any of the potential remaining remediation liability, if any, of PES/Generation to a non-utility subsidiary of Exelon which going forward will be responsible for those liabilities. Exelon, PHI, and Pepco have determined that a loss associated with this matter is probable and have accrued an estimated liability, which is included in the table above.
Anacostia River Tidal Reach (Exelon, PHI, and Pepco). Contemporaneous with the Benning Road site RI/FS, being performed by the Pepco Entities, DOEE and National Park Service ("NPS") have been conducting a separate RI/FS focused on the entire tidal reach of the Anacostia River extending from just north of the Maryland-District of Columbia boundary line to the confluence of the Anacostia and Potomac Rivers. The river-wide RI incorporated the results of the river sampling performed by the Pepco Entities as part of the Benning RI/FS, as well as similar sampling efforts conducted by owners of other sites adjacent to this segment of the river and supplemental river sampling conducted by DOEE’s contractor. In April 2018, DOEE released a draft RI report for public review and comment. Pepco submitted written comments to the draft RI and participated in a public hearing.
Exelon, PHI, and Pepco have determined that it is probable that costs for remediation will be incurred and recorded a liability in the third quarter 2019 for management’s best estimate of its share of those costs. On September 30, 2020, DOEE released its Interim ROD. The Interim ROD reflects an adaptive management
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
approach which will require several identified “hot spots” in the river to be addressed first while continuing to conduct studies and to monitor the river to evaluate improvements and determine potential future remediation plans. The adaptive management process chosen by DOEE is less intrusive, provides more long-term environmental certainty, is less costly, and allows for site specific remediation plans already underway, including the plan for the Benning Road site to proceed to conclusion. Pepco concluded that incremental exposure remains reasonably possible, but management cannot reasonably estimate a range of loss beyond the amounts recorded, which are included in the table above.
On July 12, 2021, DOEE and NPS held a virtual meeting with the PRP's in response to a General Notice Letter sent by each agency inviting the PRP's to participate in discussions, which Pepco attended.
In addition to the activities associated with the remedial process outlined above, CERCLA separately requires federal and state (here including Washington, D.C.) Natural Resource Trustees (federal or state agencies designated by the President or the relevant state, respectively, or Indian tribes) to conduct an assessment of any damages to natural resources within their jurisdiction as a result of the contamination that is being remediated. The Trustees can seek compensation from responsible parties for such damages, including restoration costs. During the second quarter of 2018, Pepco became aware that the Trustees are in the beginning stages of a Natural Resources Damages (NRD) assessment, a process that often takes many years beyond the remedial decision to complete. Pepco has entered into negotiations with the Trustees to evaluate possible incorporation of NRD assessment and restoration as part of its remedial activities associated with the Benning site to accelerate the NRD benefits for that portion of the Anacostia River Sediment Project ("ARSP") assessment. Pepco has concluded that a loss associated with the eventual NRD assessment is reasonably possible. Due to the very early stage of the assessment process, Pepco cannot reasonably estimate the final range of loss potentially resulting from this process.
As noted in the Benning Road Site disclosure above, as part of the separation of Exelon and Constellation in February 2022, an assumption agreement was executed transferring any potential future remediation liabilities associated with the Benning Site remediation to a non-utility subsidiary of Exelon. Similarly, any potential future liability associated with the ARSP was also assumed by this entity.
Litigation and Regulatory Matters
Deferred Prosecution Agreement (DPA) and Related Matters (Exelon and ComEd). Exelon and ComEd received a grand jury subpoena in the second quarter of 2019 from the U.S. Attorney’s Office for the Northern District of Illinois (USAO) requiring production of information concerning their lobbying activities in the State of Illinois. On October 4, 2019, Exelon and ComEd received a second grand jury subpoena from the USAO requiring production of records of any communications with certain individuals and entities. On October 22, 2019, the SEC notified Exelon and ComEd that it had also opened an investigation into their lobbying activities. On July 17, 2020, ComEd entered into a DPA with the USAO to resolve the USAO investigation. Under the DPA, the USAO filed a single charge alleging that ComEd improperly gave and offered to give jobs, vendor subcontracts, and payments associated with those jobs and subcontracts for the benefit of the Speaker of the Illinois House of Representatives and the Speaker’s associates, with the intent to influence the Speaker’s action regarding legislation affecting ComEd’s interests. The DPA provides that the USAO will defer any prosecution of such charge and any other criminal or civil case against ComEd in connection with the matters identified therein for a three-year period subject to certain obligations of ComEd, including payment to the U.S. Treasury of $200 million, which was paid in November 2020. Exelon was not made party to the DPA, and therefore the investigation by the USAO into Exelon’s activities ended with no charges being brought against Exelon. The SEC’s investigation remains ongoing and Exelon and ComEd have cooperated fully and intend to continue to cooperate fully with the SEC. Exelon and ComEd cannot predict the outcome of the SEC investigation. No loss contingency has been reflected in Exelon's and ComEd's consolidated financial statements with respect to the SEC investigation, as this contingency is neither probable nor reasonably estimable at this time.
Subsequent to Exelon announcing the receipt of the subpoenas, various lawsuits were filed, and various demand letters were received related to the subject of the subpoenas, the conduct described in the DPA and the SEC's investigation, including:
•Four putative class action lawsuits against ComEd and Exelon were filed in federal court on behalf of ComEd customers in the third quarter of 2020 alleging, among other things, civil violations of federal racketeering laws. In addition, the Citizens Utility Board (CUB) filed a motion to intervene in these cases
87
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
on October 22, 2020 which was granted on December 23, 2020. On December 2, 2020, the court appointed interim lead plaintiffs in the federal cases which consisted of counsel for three of the four federal cases. These plaintiffs filed a consolidated complaint on January 5, 2021. CUB also filed its own complaint against ComEd only on the same day. The remaining federal case, Potter, et al. v. Exelon et al, differed from the other lawsuits as it named additional individual defendants not named in the consolidated complaint. However, the Potter plaintiffs voluntarily dismissed their complaint without prejudice on April 5, 2021. ComEd and Exelon moved to dismiss the consolidated class action complaint and CUB’s complaint on February 4, 2021 and briefing was completed on March 22, 2021. On March 25, 2021, the parties agreed, along with state court plaintiffs, discussed below, to jointly engage in mediation. The parties participated in a one-day mediation on June 7, 2021 but no settlement was reached. On September 9, 2021, the federal court granted Exelon’s and ComEd’s motion to dismiss and dismissed the plaintiffs’ and CUB’s federal law claim with prejudice. The federal court also dismissed the related state law claims made by the federal plaintiffs and CUB on jurisdictional grounds. Plaintiffs appealed dismissal of the federal law claim to the Seventh Circuit Court of Appeals. Plaintiffs and CUB also refiled their state law claims in state court and moved to consolidate them with the already pending consumer state court class action, discussed below. Plaintiffs' opening appeal brief in the Seventh Circuit was filed on January 14, 2022. Exelon and ComEd filed their response brief on March 7, 2022, and plaintiffs filed their reply brief on April 6, 2022. The court has scheduled oral argument for May 17, 2022.
•Three putative class action lawsuits against ComEd and Exelon were filed in Illinois state court in the third quarter of 2020 seeking restitution and compensatory damages on behalf of ComEd customers. The cases were consolidated into a single action in October of 2020. In November 2020, CUB filed a motion to intervene in the cases pursuant to an Illinois statute allowing CUB to intervene as a party or otherwise participate on behalf of utility consumers in any proceeding which affects the interest of utility consumers. On November 23, 2020, the court allowed CUB’s intervention, but denied CUB's request to stay these cases. Plaintiffs subsequently filed a consolidated complaint, and ComEd and Exelon filed a motion to dismiss on jurisdictional and substantive grounds on January 11, 2021. Briefing on that motion was completed on March 2, 2021. The parties agreed, on March 25, 2021, along with the federal court, plaintiffs discussed above, to jointly engage in mediation. The parties participated in a one-day mediation on June 7, 2021 but no settlement was reached. On December 23, 2021, the state court granted ComEd and Exelon's motion to dismiss with prejudice. On December 30, 2021, plaintiffs filed a motion to reconsider that dismissal and for permission to amend their complaint. The court denied the plaintiffs' motion on January 21, 2022. Plaintiffs have appealed the court's ruling dismissing their complaint to the First District Court of Appeals. On February 15, 2022, Exelon and ComEd moved to dismiss the federal plaintiffs' refiled state law claims, seeking dismissal on the same legal grounds asserted in their motion to dismiss the original state court plaintiffs' complaint. The court granted dismissal of the refiled state claims on February 16, 2022. The original federal plaintiffs appealed that dismissal on February 18, 2022. The two state appeals were consolidated on March 21, 2022. Plaintiffs' opening appellate briefs are currently due June 3, 2022.
•A putative class action lawsuit against Exelon and certain officers of Exelon and ComEd was filed in federal court in December 2019 alleging misrepresentations and omissions in Exelon’s SEC filings related to ComEd’s lobbying activities and the related investigations. The complaint was amended on September 16, 2020, to dismiss two of the original defendants and add other defendants, including ComEd. Defendants filed a motion to dismiss in November 2020. The court denied the motion in April 2021. On May 26, 2021, defendants moved the court to certify its order denying the motion to dismiss for interlocutory appeal. Briefing on the motion was completed in June 2021. That motion was denied on January 28, 2022. In May 2021, the parties each filed respective initial discovery disclosures. On June 9, 2021, defendants filed their answer and affirmative defenses to the complaint and the parties engaged thereafter in discovery. On September 9, 2021, the U.S. government moved to intervene in the lawsuit and stay discovery until the parties entered into an amendment to their protective order that would prohibit the parties from requesting discovery into certain matters, including communications with the U.S. government. The court ordered said amendment to the protective order on November 15, 2021 and discovery resumed. On February 10, 2022, the court granted an extension of the amendment to the protective order, at the U.S. government's request, to May 15, 2022 and directed the parties to submit a proposed joint schedule for the additional case proceedings by May 13, 2022.
88
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
•Several shareholders have sent letters to the Exelon Board of Directors from 2020 through May 2022 demanding, among other things, that the Exelon Board of Directors investigate and address alleged breaches of fiduciary duties and other alleged violations by Exelon and ComEd officers and directors related to the conduct described in the DPA. In the first quarter of 2021, the Exelon Board of Directors appointed a Special Litigation Committee (“SLC”) consisting of disinterested and independent parties to investigate and address these shareholders’ allegations and make recommendations to the Exelon Board of Directors based on the outcome of the SLC’s investigation. In July 2021, one of the demand letter shareholders filed a derivative action against current and former Exelon and ComEd officers and directors, and against Exelon, as nominal defendant, asserting the same claims made in its demand letter. On October 12, 2021, the parties to the derivative action filed an agreed motion to stay that litigation for 120 days in order to allow the SLC to continue its investigation, which the court granted. On January 31, 2022, the parties jointly moved the court to extend the stay an additional 120 days.
•Two separate shareholder requests seeking review of certain Exelon books and records were received in August 2021 and January 2022. Exelon responded to both requests and both shareholders have since sent formal shareholder demands to the Exelon Board, as discussed above.
No loss contingencies have been reflected in Exelon’s and ComEd’s consolidated financial statements with respect to these matters, as such contingencies are neither probable nor reasonably estimable at this time.
The ICC continues to conduct an investigation into rate impacts of conduct admitted in the DPA initiated on August 12, 2021. On December 16, 2021, ComEd filed direct testimony addressing the costs recovered from customers related to the DPA and Exelon's funding of the fine paid by ComEd. In that testimony, ComEd proposed to voluntarily refund to customers compensation costs of the former officers charged with wrongdoing in connection with events described in the DPA for the period during which those events occurred as well as costs, previously proposed to be returned, of individuals and entities specifically identified in the DPA, as well as individuals and entities who were referred to ComEd as part of the conduct described in the DPA and who failed, during their tenure at ComEd, to perform work to management expectations. The testimony supports the calculation of the refund amount and proposes a refund mechanism (one-time bill credit in April 2023) and also addresses other topics outlined by statute and the ICC orders initiating the investigation. On April 14, 2022, in response to rebuttal testimony from ICC staff and the Illinois Attorney General, City of Chicago, and CUB, ComEd filed surrebuttal testimony, in which ComEd proposed to increase its voluntary customer refund to $38 million of ICC and FERC jurisdictional amounts, and estimated interest to resolve the issue of the potential expenditure of customer monies on activities identified in the DPA in this matter. An accrual for the amount of the voluntary customer refund has been recorded in Other deferred credits and other liabilities in Exelon’s and ComEd’s Consolidated Balance Sheets as of March 31, 2022. The voluntary customer refund will not be recovered in rates or charged to customers and ComEd will not seek or accept reimbursement or indemnification from any source other than Exelon. The evidentiary hearing on the remaining contested issue was held on April 28, 2022. A final order is expected by September 9, 2022.
Savings Plan Claim (Exelon). On December 6, 2021, seven current and former employees filed a putative ERISA class action suit in U.S. District Court for the Northern District of Illinois against Exelon, its Board of Directors, the former Board Investment Oversight Committee, the Corporate Investment Committee, individual defendants, and other unnamed fiduciaries of the Exelon Corporation Employee Savings Plan (“Plan”). The complaint alleges that the defendants violated their fiduciary duties under the Plan by including certain investment options that allegedly were more expensive than and underperformed similar passively-managed or other funds available in the marketplace and permitting a third-party administrative service provider/recordkeeper and an investment adviser to charge excessive fees for the services provided. The plaintiffs seek declaratory, equitable and monetary relief on behalf of the Plan and participants. On February 16, 2022, the court granted the parties' stipulated dismissal of the individual named defendants without prejudice. The remaining defendants filed a motion to dismiss the complaint on February 25, 2022. The plaintiffs filed their response brief on March 28, 2022 and the defendants filed their reply on April 11, 2022. On March 4, 2022, the Chamber of Commerce filed a brief of amicus curiae in support of the defendants' motion to dismiss. No loss contingencies have been reflected in Exelon’s consolidated financial statements with respect to this matter, as such contingencies are neither probable nor reasonably estimable at this time.
General (All Registrants). The Registrants are involved in various other litigation matters that are being defended and handled in the ordinary course of business. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex
89
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 12 — Commitments and Contingencies
13. Changes in Accumulated Other Comprehensive Income (Exelon)
The following tables present changes in Exelon's AOCI, net of tax, by component:
| Three Months Ended March 31, 2022 | Cash Flow Hedges | Pension and Non-Pension Postretirement Benefit Plan Items(a) | Foreign Currency Items | Total | |||||||||||||||||||
| Balance at December 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Separation of Constellation | |||||||||||||||||||||||
| Amounts reclassified from AOCI | |||||||||||||||||||||||
| Net current-period OCI | |||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Three Months Ended March 31, 2021 | Losses on Cash Flow Hedges | Pension and Non-Pension Postretirement Benefit Plan Items(a) | Foreign Currency Items | Total | |||||||||||||||||||
| Balance at December 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| OCI before reclassifications | ( | ( | |||||||||||||||||||||
| Amounts reclassified from AOCI | |||||||||||||||||||||||
| Net current-period OCI | |||||||||||||||||||||||
| Balance at March 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The following table presents income tax benefit (expense) allocated to each component of Exelon's other comprehensive income (loss):
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Pension and non-pension postretirement benefit plans: | |||||||||||
| Prior service benefit reclassified to periodic benefit cost | $ | $ | |||||||||
| Actuarial loss reclassified to periodic benefit cost | ( | ( | |||||||||
14. Supplemental Financial Information (All Registrants)
Supplemental Statement of Operations Information
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 14 — Supplemental Financial Information
| Taxes other than income taxes | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Utility taxes(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Property | |||||||||||||||||||||||||||||||||||||||||||||||
| Payroll | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Utility taxes(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Property | |||||||||||||||||||||||||||||||||||||||||||||||
| Payroll | |||||||||||||||||||||||||||||||||||||||||||||||
_________
(a)The Registrants' utility taxes represent municipal and state utility taxes and gross receipts taxes related to their operating revenues. The offsetting collection of utility taxes from customers is recorded in revenues in the Registrants’ Consolidated Statements of Operations and Comprehensive Income.
| Other, net | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| AFUDC — Equity | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Non-service net periodic benefit cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| AFUDC — Equity | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Non-service net periodic benefit cost | |||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information
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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 14 — Supplemental Financial Information
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||||||||
Exelon(a) | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Property, plant, and equipment(b) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Amortization of regulatory assets(b) | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets, net(b) | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of energy contract assets and liabilities(c) | |||||||||||||||||||||||||||||||||||||||||||||||
Nuclear fuel(d) | |||||||||||||||||||||||||||||||||||||||||||||||
ARO accretion(e) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total depreciation, amortization, and accretion | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Property, plant, and equipment(b) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Amortization of regulatory assets(b) | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets, net(b) | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of energy contract assets and liabilities(c) | |||||||||||||||||||||||||||||||||||||||||||||||
Nuclear fuel(d) | |||||||||||||||||||||||||||||||||||||||||||||||
ARO accretion(e) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total depreciation, amortization, and accretion | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
__________
(a)Exelon's amounts include amounts related to Generation prior to the separation. See Note 2 — Discontinued Operations for additional information.
(b)Included in Depreciation and amortization in the Registrants' Consolidated Statements of Operations and Comprehensive Income.
(c)Included in Operating revenues or Purchased power and fuel expense in the Registrants’ Consolidated Statements of Operations and Comprehensive Income.
(d)Included in Purchased fuel expense in Exelon's Consolidated Statement of Operations and Comprehensive Income.
(e)Included in Operating and maintenance expense in Exelon's Consolidated Statement of Operations and Comprehensive Income.
92
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 14 — Supplemental Financial Information
| Other non-cash operating activities | |||||||||||||||||||||||||||||||||||||||||||||||
Exelon(a) | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Pension and non-pension postretirement benefit costs | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||
| Other decommissioning-related activity | |||||||||||||||||||||||||||||||||||||||||||||||
| Energy-related options | |||||||||||||||||||||||||||||||||||||||||||||||
True-up adjustments to decoupling mechanisms and formula rates(b) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Long-term incentive plan | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of operating ROU asset | |||||||||||||||||||||||||||||||||||||||||||||||
| AFUDC — Equity | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Pension and non-pension postretirement benefit costs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||
| Other decommissioning-related activity | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Energy-related options | |||||||||||||||||||||||||||||||||||||||||||||||
True-up adjustments to decoupling mechanisms and formula rates(b) | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Long-term incentive plan | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of operating ROU asset | |||||||||||||||||||||||||||||||||||||||||||||||
| AFUDC — Equity | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
__________
(a)Exelon's amounts include amounts related to Generation prior to the separation. See Note 2 — Discontinued Operations for additional information.
(b)For ComEd, reflects the true-up adjustments in regulatory assets and liabilities associated with its distribution, energy efficiency, distributed generation, and transmission formula rates. For BGE, Pepco, DPL, and ACE, reflects the change in regulatory assets and liabilities associated with their decoupling mechanisms and transmission formula rates. For PECO, reflects the change in regulatory assets and liabilities associated with its transmission formula rates. See Note 3 — Regulatory Matters of the Exelon Form 10-K for additional information.
93
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 14 — Supplemental Financial Information
The following tables provide a reconciliation of cash, cash equivalents, and restricted cash reported within the Registrants’ Consolidated Balance Sheets that sum to the total of the same amounts in their Consolidated Statements of Cash Flows.
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted cash included in other long-term assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Total cash, restricted cash, and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted cash included in other long-term assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash, restricted cash, and cash equivalents from discontinued operations | |||||||||||||||||||||||||||||||||||||||||||||||
| Total cash, restricted cash, and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted cash included in other long-term assets | |||||||||||||||||||||||||||||||||||||||||||||||
Total cash, restricted cash, and cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted cash included in other long-term assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash, restricted cash, and cash equivalents - Held for Sale | |||||||||||||||||||||||||||||||||||||||||||||||
Total cash, restricted cash, and cash equivalents(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
__________
(a)Exelon's amounts include amounts related to Generation prior to the separation. See Note 2 — Discontinued Operations for additional information.
For additional information on restricted cash see Note 1 — Significant Accounting Policies of the Exelon 2021 Form 10-K.
94
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 14 — Supplemental Financial Information
Supplemental Balance Sheet Information
The following table provides additional information about material items recorded in the Registrants' Consolidated Balance Sheets.
| Accrued expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Compensation-related accruals(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Taxes accrued | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest accrued | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Compensation-related accruals(a) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Taxes accrued | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest accrued | |||||||||||||||||||||||||||||||||||||||||||||||
__________
(a)Primarily includes accrued payroll, bonuses and other incentives, vacation, and benefits.
15. Related Party Transactions (All Registrants)
Utility Registrants' expense with Generation
The Utility Registrants incurred expenses from transactions with the Generation affiliate as described in the footnotes to the table below prior to separation on February 1, 2022. Such expenses were primarily recorded as Purchased power from affiliates and an immaterial amount recorded as Operating and maintenance expense from affiliates at the Utility Registrants:
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
ComEd(a) | $ | $ | |||||||||
PECO(b) | |||||||||||
BGE(c) | |||||||||||
| PHI | |||||||||||
Pepco(d) | |||||||||||
DPL(e) | |||||||||||
ACE(f) | |||||||||||
(a)ComEd had an ICC-approved RFP contract with Generation to provide a portion of ComEd’s electric supply requirements. ComEd also purchased RECs and ZECs from Generation.
(b)PECO received electric supply from Generation under contracts executed through PECO’s competitive procurement process. In addition, PECO had a ten-year agreement with Generation to sell solar AECs.
(c)BGE received a portion of its energy requirements from Generation under its MDPSC-approved market-based SOS and gas commodity programs.
(d)Pepco received electric supply from Generation under contracts executed through Pepco's competitive procurement process approved by the MDPSC and DCPSC.
(e)DPL received a portion of its energy requirements from Generation under its MDPSC and DEPSC approved market-based SOS commodity programs.
(f)ACE received electric supply from Generation under contracts executed through ACE's competitive procurement process approved by the NJBPU.
95
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 15 — Related Party Transactions
Service Company Costs for Corporate Support
The Registrants receive a variety of corporate support services from BSC. Pepco, DPL, and ACE also receive corporate support services from PHISCO. See Note 1 — Significant Accounting Policies for additional information regarding BSC and PHISCO.
The following table presents the service company costs allocated to the Registrants:
| Operating and maintenance from affiliates | Capitalized costs | |||||||||||||||||||||||||
| Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Exelon | ||||||||||||||||||||||||||
| BSC | $ | $ | ||||||||||||||||||||||||
| PHISCO | ||||||||||||||||||||||||||
| ComEd | ||||||||||||||||||||||||||
| BSC | $ | $ | ||||||||||||||||||||||||
| PECO | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| BGE | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| PHI | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| PHISCO | ||||||||||||||||||||||||||
| Pepco | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| PHISCO | ||||||||||||||||||||||||||
| DPL | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| PHISCO | ||||||||||||||||||||||||||
| ACE | ||||||||||||||||||||||||||
| BSC | ||||||||||||||||||||||||||
| PHISCO | ||||||||||||||||||||||||||
96
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 15 — Related Party Transactions
Current Receivables from/Payables to affiliates
The following tables present current receivables from affiliates and current payables to affiliates:
March 31, 2022
| Receivables from affiliates: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables to affiliates: | ComEd | PECO | BGE | Pepco | DPL | ACE | BSC | PHISCO | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| ComEd | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| PECO | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BGE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PHI | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pepco | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DPL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021
| Receivables from affiliates: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables to affiliates: | ComEd | PECO | BGE | Pepco | DPL | ACE | Generation | BSC | PHISCO | Other | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ComEd | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PECO | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BGE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PHI | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pepco | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DPL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Generation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings from Exelon/PHI intercompany money pool
To provide an additional short-term borrowing option that will generally be more favorable to the borrowing participants than the cost of external financing both Exelon and PHI operate an intercompany money pool. ComEd, PECO, and PHI Corporate participate in the Exelon money pool. Pepco, DPL, and ACE participate in the PHI intercompany money pool.
Noncurrent Receivables from affiliates
ComEd and PECO have noncurrent receivables with Generation as a result of the nuclear decommissioning contractual construct whereby, to the extent NDT funds are greater than the underlying ARO at the end of decommissioning, such amounts are due back to ComEd and PECO, as applicable, for payment to their respective customers. The receivables are recorded in Receivable related to Regulatory Agreement Units as of March 31, 2022 and in noncurrent Receivables from affiliates as of December 31, 2021. See Note 10 — Asset Retirement Obligations of the Combined Notes to Consolidated Financial Statements of the Exelon 2021 Form 10-K for additional information.
Long-term debt to financing trusts
97
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Dollars in millions, except per share data, unless otherwise noted)
Note 15 — Related Party Transactions
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Exelon | ComEd | PECO | Exelon | ComEd | PECO | ||||||||||||||||||||||||||||||
| ComEd Financing III | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| PECO Trust III | |||||||||||||||||||||||||||||||||||
| PECO Trust IV | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
98
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions except per share data, unless otherwise noted)
Exelon
Executive Overview
Exelon is a utility services holding company engaged in the energy distribution and transmission businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.
Exelon has six reportable segments consisting of ComEd, PECO, BGE, Pepco, DPL, and ACE. See Note 1 — Significant Accounting Policies and Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for additional information regarding Exelon's principal subsidiaries and reportable segments.
Exelon’s consolidated financial information includes the results of its seven separate operating subsidiary registrants, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE, which, along with Exelon, are collectively referred to as the Registrants. The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE. However, none of the Registrants makes any representation as to information related solely to any of the other Registrants.
Financial Results of Operations
GAAP Results of Operations. The following table sets forth Exelon's GAAP consolidated Net income attributable to common shareholders from continuing operations and the Utility Registrants' Net income for the three months ended March 31, 2022 compared to the same period in 2021. For additional information regarding the financial results for the three months ended March 31, 2022 and 2021 see the discussions of Results of Operations by Registrant.
| Three Months Ended March 31, | (Unfavorable) Favorable Variance | ||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Exelon | $ | 481 | $ | $ | (44) | ||||||||||||
| ComEd | 188 | 197 | (9) | ||||||||||||||
| PECO | 206 | 167 | 39 | ||||||||||||||
| BGE | 198 | 209 | (11) | ||||||||||||||
| PHI | 130 | 128 | 2 | ||||||||||||||
| Pepco | 46 | 59 | (13) | ||||||||||||||
| DPL | 56 | 56 | — | ||||||||||||||
| ACE | 26 | 14 | 12 | ||||||||||||||
Other(a) | (241) | (176) | (65) | ||||||||||||||
__________
(a)Primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities and other financing and investing activities.
The separation of Constellation, including Generation and its subsidiaries, meets the criteria for discontinued operations and as such, Generation's results of operations are presented as discontinued operations and have been excluded from Exelon's continuing operations for all periods presented.
Accounting rules require that certain BSC costs previously allocated to Generation be presented as part of Exelon’s continuing operations as these costs do not qualify as expenses of the discontinued operations. Such costs are included in Other in the table above. See further discussion below.
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income attributable to common shareholders from continuing operations decreased by $44 million and diluted
99
earnings per average common share from continuing operations decreased to $0.49 in 2022 from $0.53 in 2021 primarily due to:
•An income tax expense recorded in connection with the separation primarily due to the long-term marginal state income tax rate change, the recognition of valuation allowances against the net deferred tax assets positions for certain standalone state filing jurisdictions, and nondeductible transaction costs;
•Higher depreciation expense at BGE and PHI; and
•Higher storm costs at PHI.
The decreases were partially offset by:
•Higher electric distribution earnings from higher rate base and higher allowed electric distribution ROE due to an increase in treasury rates at ComEd;
•The favorable impacts of regulatory rate increases at PECO, BGE, and PHI; and
•Lower BSC costs presented in Exelon’s continuing operations, which were previously allocated to Generation but do not qualify as expenses of the discontinued operation per the accounting rules. Such costs, on a pre-tax basis, were $28 million for the period in 2022 prior to the separation on February 1, 2022 (January 1, 2022 to January 31, 2022) and $106 million for the three months ended March 31, 2021.
Adjusted (non-GAAP) Operating Earnings. In addition to net income, Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) operating earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) operating earnings exclude certain costs, expenses, gains and losses, and other specified items. This information is intended to enhance an investor’s overall understanding of year-to-year operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. Adjusted (non-GAAP) operating earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.
100
The following table provides a reconciliation between net income attributable to common shareholders from continuing operations as determined in accordance with GAAP and adjusted (non-GAAP) operating earnings for the three months ended March 31, 2022 compared to the same period in 2021.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| (In millions, except per share data) | Earnings per Diluted Share | Earnings per Diluted Share | |||||||||||||||||||||
| Net Income Attributable to Common Shareholders from Continuing Operations | $ | 481 | $ | 0.49 | $ | $ | 0.53 | ||||||||||||||||
| Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $1) | — | — | (1) | — | |||||||||||||||||||
COVID-19 Direct Costs (net of taxes of $1)(a) | — | — | 2 | — | |||||||||||||||||||
Acquisition Related Costs (net of taxes of $2)(b) | — | — | 6 | 0.01 | |||||||||||||||||||
ERP System Implementation Costs (net of taxes of $0 and $2, respectively)(c) | 1 | — | 5 | 0.01 | |||||||||||||||||||
Separation Costs (net of taxes of $7 and $1, respectively)(d) | 17 | 0.02 | 5 | 0.01 | |||||||||||||||||||
Income Tax-Related Adjustments (entire amount represents tax expense)(e) | 134 | 0.14 | — | — | |||||||||||||||||||
| Adjusted (non-GAAP) Operating Earnings | $ | 634 | $ | 0.64 | $ | 542 | $ | 0.55 | |||||||||||||||
__________
Note:
Amounts may not sum due to rounding.
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income from Continuing Operations and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. The marginal statutory income tax rates for 2022 and 2021 ranged from 24.0% to 29.0%.
(a)Represents direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees, which are recorded in Operating and maintenance expense.
(b)Reflects certain BSC costs related to the acquisition of Electricite de France SA's (EDF's) interest in CENG, which was completed in the third quarter of 2021, that were historically allocated to Generation but are presented as part of continuing operations in Exelon’s results as these costs do not qualify as expenses of the discontinued operations per the accounting rules.
(c)Reflects costs related to a multi-year Enterprise Resource Program (ERP) system implementation, which are recorded in Operating and maintenance expense.
(d)Represents costs related to the separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation, and employee-related severance costs, which are recorded in Operating and maintenance expense.
(e)In connection with the separation, Exelon recorded an income tax expense primarily due to the long-term marginal state income tax rate change, the recognition of valuation allowances against the net deferred tax assets positions for certain standalone state filing jurisdictions, and nondeductible transaction costs.
Significant 2022 Transactions and Developments
Separation
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies (“the separation”). Exelon completed the separation on February 1, 2022. Constellation was newly formed and incorporated in Pennsylvania on June 15, 2021 for the purpose of separation and holds Generation. The separation represented a strategic shift that would have a major effect on Exelon’s operations and financial results. Accordingly, the separation meets the criteria for discontinued operations. See Note 2 — Discontinued Operations of the Combined Notes to Consolidated Financial Statements for additional information on the separation and discontinued operations.
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In connection with the separation, Exelon incurred separation costs impacting continuing operations of $24 million and $4 million on a pre-tax basis for the three months ended March 31, 2022 and March 31, 2021, respectively, which are recorded in Operating and maintenance expense. Total separation costs impacting continuing operations for the remainder of 2022 are not expected to be material. These costs are excluded from Adjusted (non-GAAP) Operating Earnings. The separation costs are primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation, and employee-related severance costs.
Distribution Base Rate Case Proceedings
The Utility Registrants file base rate cases with their regulatory commissions seeking increases or decreases to their electric transmission and distribution, and gas distribution rates to recover their costs and earn a fair return on their investments. The outcomes of these regulatory proceedings impact the Utility Registrants’ current and future financial statements.
The following tables show the Utility Registrants’ completed and pending distribution base rate case proceedings in 2022. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on these and other regulatory proceedings.
Completed Distribution Base Rate Case Proceedings
| Registrant/Jurisdiction | Filing Date | Service | Requested Revenue Requirement Increase | Approved Revenue Requirement Increase | Approved ROE | Approval Date | Rate Effective Date | |||||||||||||||||||||||||||||||||||||
| ComEd - Illinois | April 16, 2021 | Electric | $ | 51 | $ | 46 | 7.36 | % | December 1, 2021 | January 1, 2022 | ||||||||||||||||||||||||||||||||||
| PECO - Pennsylvania | March 30, 2021 | Electric | 246 | 132 | N/A | November 18, 2021 | January 1, 2022 | |||||||||||||||||||||||||||||||||||||
| BGE - Maryland | May 15, 2020 (amended September 11, 2020) | Electric | 203 | 140 | 9.50 | % | December 16, 2020 | January 1, 2021 | ||||||||||||||||||||||||||||||||||||
| Natural Gas | 108 | 74 | 9.65 | % | ||||||||||||||||||||||||||||||||||||||||
| Pepco - District of Columbia | May 30, 2019 (amended June 1, 2020) | Electric | 136 | 109 | 9.28 | % | June 8, 2021 | July 1, 2021 | ||||||||||||||||||||||||||||||||||||
| Pepco - Maryland | October 26, 2020 (amended March 31, 2021) | Electric | 104 | 52 | 9.55 | % | June 28, 2021 | June 28, 2021 | ||||||||||||||||||||||||||||||||||||
| DPL - Maryland | September 1, 2021 (amended December 23, 2021) | Electric | 27 | 13 | 9.60 | % | March 2, 2022 | March 2, 2022 | ||||||||||||||||||||||||||||||||||||
| ACE - New Jersey | December 9, 2020 (amended February 26, 2021) | Electric | 67 | 41 | 9.60 | % | July 14, 2021 | January 1, 2022 | ||||||||||||||||||||||||||||||||||||
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Pending Distribution Base Rate Case Proceedings
| Registrant/Jurisdiction | Filing Date | Service | Requested Revenue Requirement Increase | Requested ROE | Expected Approval Timing | |||||||||||||||||||||||||||
| ComEd - Illinois | April 15, 2022 | Electric | $ | 199 | 7.85 | % | Fourth quarter of 2022 | |||||||||||||||||||||||||
| PECO - Pennsylvania | March 31, 2022 | Natural Gas | 82 | 10.95 | % | Fourth quarter of 2022 | ||||||||||||||||||||||||||
| DPL - Delaware | January 14, 2022 (amended February 28, 2022) | Natural Gas | 15 | 10.30 | % | First quarter of 2023 | ||||||||||||||||||||||||||
Transmission Formula Rates
For 2022, the following total increases were included in ComEd’s and BGE's electric transmission formula rate update. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on these and other regulatory proceedings.
| Registrant | Initial Revenue Requirement Increase | Annual Reconciliation Decrease | Total Revenue Requirement Increase | Allowed Return on Rate Base | Allowed ROE | |||||||||||||||||||||||||||
| ComEd | $ | 24 | $ | (24) | $ | — | 8.11 | % | 11.50 | % | ||||||||||||||||||||||
| BGE | 25 | (4) | 16 | 7.30 | % | 10.50 | % | |||||||||||||||||||||||||
Other Key Business Drivers and Management Strategies
The following discussion of other key business driver and management strategies includes current developments of previously disclosed matters and new issues arising during the period that may impact future financial statements. This section should be read in conjunction with ITEM 1. Business and ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Other Key Business Drivers and Management Strategies in the Registrants' combined 2021 Form 10-K and Note 12 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements in this report for additional information on various environmental matters.
Legislative and Regulatory Developments
Infrastructure Investment and Jobs Act
On November 15, 2021, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) into law. IIJA provides for approximately $550 billion in new federal spending. Categories of funding include funding for a variety of infrastructure needs, including but not limited to: (1) power and grid reliability and resilience, (2) resilience for cybersecurity to address critical infrastructure needs, and (3) electric vehicle charging infrastructure for alternative fuel corridors. Federal agencies are in the process of developing guidelines to implement spending programs under IIJA. The time needed to develop these guidelines will vary with some limited program applications opened as early as the first quarter of 2022. The Registrants are analyzing the legislation and considering possible opportunities to apply for funding, either directly or in potential collaborations with state and/or local agencies and key stakeholders. The Registrants cannot predict the ultimate timing and success of securing funding from programs under IIJA.
Critical Accounting Policies and Estimates
Management of each of the Registrants makes a number of significant estimates, assumptions, and judgments in the preparation of its financial statements. At March 31, 2022, the Registrants’ critical accounting policies and estimates had not changed significantly from December 31, 2021 except for critical accounting policies and estimates that relate to Generation, which are no longer applicable to the Registrants. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Critical Accounting Policies and Estimates in the Registrants' 2021 Form 10-K for further information.
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Results of Operations by Registrant
Results of Operations — ComEd
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 1,734 | $ | 1,535 | $ | 199 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power | 638 | 527 | (111) | |||||||||||||||||
| Operating and maintenance | 351 | 316 | (35) | |||||||||||||||||
| Depreciation and amortization | 321 | 292 | (29) | |||||||||||||||||
| Taxes other than income taxes | 96 | 75 | (21) | |||||||||||||||||
| Total operating expenses | 1,406 | 1,210 | (196) | |||||||||||||||||
| Operating income | 328 | 325 | 3 | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (100) | (96) | (4) | |||||||||||||||||
| Other, net | 12 | 7 | 5 | |||||||||||||||||
| Total other income and (deductions) | (88) | (89) | 1 | |||||||||||||||||
| Income before income taxes | 240 | 236 | 4 | |||||||||||||||||
| Income taxes | 52 | 39 | (13) | |||||||||||||||||
| Net income | $ | 188 | $ | 197 | $ | (9) | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income decreased by $9 million as compared to the same period in 2021, primarily due to the voluntary customer refund related to the ICC investigation of matters identified in the Deferred Prosecution Agreement, partially offset by increases in electric distribution formula rate earnings (reflecting the impacts of higher rate base and higher allowed electric distribution ROE due to an increase in treasury rates). See Note 12 - Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information related to the Deferred Prosecution Agreement.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
| Distribution | $ | 45 | ||||||
| Transmission | 21 | |||||||
| Energy efficiency | 7 | |||||||
| Other | 3 | |||||||
| 76 | ||||||||
| Regulatory required programs | 123 | |||||||
| Total increase | $ | 199 | ||||||
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. Operating revenues are not impacted by abnormal weather, usage per customer or number of customers as a result of revenue decoupling mechanisms implemented pursuant to FEJA.
Distribution Revenue. EIMA and FEJA provide for a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs that the ICC determines are prudently and reasonably incurred in a given year. Electric distribution revenue varies from year to year based upon fluctuations in the underlying costs, (e.g., severe weather and storm restoration), investments being recovered, and allowed ROE. Electric distribution revenue increased for the three months ended March 31, 2022 as compared to the
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same period in 2021, due to the impact of higher rate base, higher allowed ROE due to an increase in treasury rates, and higher fully recoverable costs.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs, capital investments being recovered, and the highest daily peak load, which is updated annually in January based on the prior calendar year. Generally, increases/decreases in the highest daily peak load will result in higher/lower transmission revenue. Transmission revenue increased for the three months ended March 31, 2022 as compared to the same periods in 2021 primarily due to the impact of higher rate base and higher fully recoverable costs.
Energy Efficiency Revenue. FEJA provides for a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs that the ICC determines are prudently and reasonably incurred in a given year. Under FEJA, energy efficiency revenue varies from year to year based upon fluctuations in the underlying costs, investments being recovered, and allowed ROE. Energy efficiency revenue increased for the three months ended March 31, 2022 as compared to the same period in 2021, primarily due to increased regulatory asset amortization, which is fully recoverable.
Other Revenue primarily includes assistance provided to other utilities through mutual assistance programs. Other revenue remained relatively the same for the three months ended March 31, 2022 as compared to the same period in 2021.
Regulatory Required Programs represents revenues collected under approved riders to recover costs incurred for regulatory programs such as recoveries under the credit loss expense tariff, environmental costs associated with MGP sites, Energy Transition Assistance Charge ("ETAC"), and costs related to electricity, ZEC and REC procurement. ETAC is a retail customer surcharge collected by electric utilities operating in Illinois established by CEJA and remitted to an Illinois state agency for programs to support clean energy jobs and training. The riders are designed to provide full and current cost recovery. The costs of these programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense and Taxes other than income. Customers have the choice to purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries as ComEd remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, ComEd either acts as the billing agent or the competitive supplier separately bills its own customers, and therefore does not record Operating revenues or Purchased power expense related to the electricity. For customers that choose to purchase electric generation from ComEd, ComEd is permitted to recover the electricity, ZEC, and REC procurement costs without mark-up and therefore records equal and offsetting amounts in Operating revenues and Purchased power expense related to the electricity, ZECs, and RECs.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of ComEd's revenue disaggregation.
The increase of $111 million for the three months ended March 31, 2022 compared to the same period in 2021, in Purchased power expense is offset in Operating revenues as part of regulatory required programs.
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The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
| Storm-related costs | $ | 1 | ||||||
| Pension and non-pension postretirement benefits expense | (7) | |||||||
| Labor, other benefits, contracting and materials | 2 | |||||||
| BSC costs | 14 | |||||||
Other(a) | 21 | |||||||
| 31 | ||||||||
Regulatory required programs(b) | 4 | |||||||
| Total increase | $ | 35 | ||||||
__________
(a)The increase is primarily due to the voluntary customer refund related to the ICC investigation of matters identified in the Deferred Prosecution Agreement. See Note 12 - Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information related to the Deferred Prosecution Agreement.
(b)ComEd is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through a rider mechanism.
The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
Depreciation and amortization(a) | $ | 15 | ||||||
Regulatory asset amortization(b) | 14 | |||||||
| Total increase | $ | 29 | ||||||
__________
(a)Reflects ongoing capital expenditures.
(b)Includes amortization of ComEd's energy efficiency formula rate regulatory asset
Taxes other than income taxes increased by $21 million for the three months ended March 31, 2022 compared to the same period in 2021, primarily due to taxes related to ETAC, which is recovered through Operating revenues.
Effective income tax rates were 21.7% and 16.5% for the three months ended March 31, 2022 and 2021, respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations — PECO
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 1,047 | $ | 889 | $ | 158 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power and fuel | 407 | 316 | (91) | |||||||||||||||||
| Operating and maintenance | 247 | 234 | (13) | |||||||||||||||||
| Depreciation and amortization | 92 | 86 | (6) | |||||||||||||||||
| Taxes other than income taxes | 47 | 43 | (4) | |||||||||||||||||
| Total operating expenses | 793 | 679 | (114) | |||||||||||||||||
| Operating income | 254 | 210 | 44 | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (41) | (38) | (3) | |||||||||||||||||
| Other, net | 7 | 5 | 2 | |||||||||||||||||
| Total other income and (deductions) | (34) | (33) | (1) | |||||||||||||||||
| Income before income taxes | 220 | 177 | 43 | |||||||||||||||||
| Income taxes | 14 | 10 | (4) | |||||||||||||||||
| Net income | $ | 206 | $ | 167 | $ | 39 | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income increased by $39 million, primarily due to increases in electric and gas distribution rates, and volume.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
| (Decrease) Increase | ||||||||||||||||||||
| Electric | Gas | Total | ||||||||||||||||||
| Weather | $ | (4) | $ | (5) | $ | (9) | ||||||||||||||
| Volume | 7 | 7 | 14 | |||||||||||||||||
| Pricing | 33 | 17 | 50 | |||||||||||||||||
| Transmission | 5 | — | 5 | |||||||||||||||||
| Other | 5 | 3 | 8 | |||||||||||||||||
| 46 | 22 | 68 | ||||||||||||||||||
| Regulatory required programs | 36 | 54 | 90 | |||||||||||||||||
| Total increase | $ | 82 | $ | 76 | $ | 158 | ||||||||||||||
Weather. The demand for electricity and natural gas is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the electric and natural gas businesses, very cold weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity and natural gas. Conversely, mild weather reduces demand. During the three months ended March 31, 2022 compared to the same period in 2021, Operating revenues related to weather decreased by the impact of unfavorable weather conditions in PECO's service territory.
Heating and cooling degree-days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average heating and cooling degree-days for a 30-year period in PECO's service territory. The changes in heating and cooling degree-days in
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PECO’s service territory for the three months ended March 31, 2022 compared to the same period in 2021 and normal weather consisted of the following:
| Three Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| PECO Service Territory | 2022 | 2021 | Normal | 2022 vs. 2021 | 2022 vs. Normal | ||||||||||||||||||||||||
| Heating Degree-Days | 2,228 | 2,302 | 2,416 | (3.2) | % | (7.8) | % | ||||||||||||||||||||||
| Cooling Degree-Days | 1 | 5 | 1 | (80.0) | % | — | % | ||||||||||||||||||||||
Volume. Electric volume, exclusive of the effects of weather, for the three months ended March 31, 2022, compared to the same period in 2021, increased on a net basis due to an increase in overall usage for customers further increased by customer growth. Natural gas volume for the three months ended March 31, 2022 compared to the same period in 2021, increased due to retail load growth.
| Electric Retail Deliveries to Customers (in GWhs) | Three Months Ended March 31, | % Change | Weather - Normal % Change(b) | |||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| Residential | 3,758 | 3,767 | (0.2) | % | 1.1 | % | ||||||||||||||||||||
| Small commercial & industrial | 1,937 | 1,881 | 3.0 | % | 3.4 | % | ||||||||||||||||||||
| Large commercial & industrial | 3,332 | 3,272 | 1.8 | % | 1.9 | % | ||||||||||||||||||||
| Public authorities & electric railroads | 182 | 149 | 22.1 | % | 22.4 | % | ||||||||||||||||||||
Total electric retail deliveries(a) | 9,209 | 9,069 | 1.5 | % | 2.2 | % | ||||||||||||||||||||
| As of March 31, | |||||||||||
| Number of Electric Customers | 2022 | 2021 | |||||||||
| Residential | 1,521,255 | 1,512,255 | |||||||||
| Small commercial & industrial | 155,485 | 154,637 | |||||||||
| Large commercial & industrial | 3,102 | 3,109 | |||||||||
| Public authorities & electric railroads | 10,342 | 10,237 | |||||||||
| Total | 1,690,184 | 1,680,238 | |||||||||
__________
(a)Reflects delivery volumes from customers purchasing electricity directly from PECO and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed distribution charges.
(b)Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
| Natural Gas Deliveries to Customers (in mmcf) | Three Months Ended March 31, | % Change | Weather - Normal % Change(b) | |||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| Residential | 20,837 | 20,674 | 0.8 | % | 4.3 | % | ||||||||||||||||||||
| Small commercial & industrial | 10,546 | 10,170 | 3.7 | % | 5.8 | % | ||||||||||||||||||||
| Large commercial & industrial | 10 | 7 | 42.9 | % | 10.2 | % | ||||||||||||||||||||
| Transportation | 7,639 | 7,650 | (0.1) | % | 0.7 | % | ||||||||||||||||||||
Total natural gas retail deliveries(a) | 39,032 | 38,501 | 1.4 | % | 4.0 | % | ||||||||||||||||||||
| As of March 31, | |||||||||||
| Number of Natural Gas Customers | 2022 | 2021 | |||||||||
| Residential | 499,188 | 493,857 | |||||||||
| Small commercial & industrial | 44,959 | 44,604 | |||||||||
| Large commercial & industrial | 5 | 5 | |||||||||
| Transportation | 664 | 685 | |||||||||
| Total | 544,816 | 539,151 | |||||||||
__________
(a)Reflects delivery volumes from customers purchasing natural gas directly from PECO and customers purchasing natural gas from a competitive natural gas supplier as all customers are assessed distribution charges.
(b)Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
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Pricing for the three months ended March 31, 2022 compared to the same period in 2021 increased primarily due to an increase in electric and gas distribution rates charged to customers.
Transmission Revenue. Under a FERC approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered.
Other revenue primarily includes revenue related to late payment charges. Other revenues for the three months ended March 31, 2022 compared to the same period in 2021, remained relatively consistent.
Regulatory Required Programs represents revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency, PGC, and the GSA. The riders are designed to provide full and current cost recovery as well as a return. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Income taxes. Customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as PECO remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, PECO either acts as the billing agent or the competitive supplier separately bills its own customers and therefore PECO does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase electric generation or natural gas from PECO, PECO is permitted to recover the electricity, natural gas, and REC procurement costs without mark-up and therefore records equal and offsetting amounts in Operating revenues and Purchased power and fuel expense related to the electricity, natural gas, and RECs.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of PECO's revenue disaggregation.
The increase of $91 million for the three months ended March 31, 2022 compared to the same period in 2021, respectively, in Purchased power and fuel expense is offset in Operating revenues as part of regulatory required programs.
The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
| BSC costs | $ | 10 | ||||||
| Credit loss expense | 3 | |||||||
| Storm-related costs | 2 | |||||||
| Labor, other benefits, contracting and materials | (2) | |||||||
| Pension and non-pension post retirement benefit expense | (1) | |||||||
| Other | (2) | |||||||
| 10 | ||||||||
| Regulatory required programs | 3 | |||||||
| Total increase | $ | 13 | ||||||
The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
Depreciation and amortization(a) | $ | 6 | ||||||
| Regulatory asset amortization | — | |||||||
| Total increase | $ | 6 | ||||||
__________
(a)Depreciation and amortization increased primarily due to ongoing capital expenditures.
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Interest expense, net increased $3 million for the three months ended March 31, 2022 compared to the same period in 2021, primarily due to the issuance of debt in 2021.
Effective income tax rates were 6.4% and 5.6% for the three months ended March 31, 2022 and 2021 respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations — BGE
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 1,154 | $ | 974 | $ | 180 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power and fuel | 454 | 331 | (123) | |||||||||||||||||
| Operating and maintenance | 218 | 197 | (21) | |||||||||||||||||
| Depreciation and amortization | 171 | 152 | (19) | |||||||||||||||||
| Taxes other than income taxes | 76 | 72 | (4) | |||||||||||||||||
| Total operating expenses | 919 | 752 | (167) | |||||||||||||||||
| Operating income | 235 | 222 | 13 | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (35) | (34) | (1) | |||||||||||||||||
| Other, net | 7 | 8 | (1) | |||||||||||||||||
| Total other income and (deductions) | (28) | (26) | (2) | |||||||||||||||||
| Income before income taxes | 207 | 196 | 11 | |||||||||||||||||
| Income taxes | 9 | (13) | (22) | |||||||||||||||||
| Net income | $ | 198 | $ | 209 | $ | (11) | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income decreased $11 million primarily due to an increase in depreciation expense and credit loss expense, partially offset by favorable impacts of the multi-year plans. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on the three-year electric and natural gas distribution multi-year plans.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
| Increase | ||||||||||||||||||||
| Electric | Gas | Total | ||||||||||||||||||
| Distribution | $ | 14 | $ | 10 | $ | 24 | ||||||||||||||
| Transmission | 5 | — | 5 | |||||||||||||||||
| Other | 8 | 2 | 10 | |||||||||||||||||
| 27 | 12 | 39 | ||||||||||||||||||
| Regulatory required programs | 78 | 63 | 141 | |||||||||||||||||
| Total increase | $ | 105 | $ | 75 | $ | 180 | ||||||||||||||
Revenue Decoupling. The demand for electricity and natural gas is affected by weather and customer usage. However, Operating revenues are not impacted by abnormal weather or usage per customer as a result of a monthly rate adjustment that provides for fixed distribution revenue per customer by customer class. While Operating revenues are not impacted by abnormal weather or usage per customer, they are impacted by changes in the number of customers.
| As of March 31, | |||||||||||
| Number of Electric Customers | 2022 | 2021 | |||||||||
| Residential | 1,199,272 | 1,192,470 | |||||||||
| Small commercial & industrial | 115,363 | 114,819 | |||||||||
| Large commercial & industrial | 12,674 | 12,505 | |||||||||
| Public authorities & electric railroads | 268 | 266 | |||||||||
| Total | 1,327,577 | 1,320,060 | |||||||||
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| As of March 31, | |||||||||||
| Number of Natural Gas Customers | 2022 | 2021 | |||||||||
| Residential | 653,397 | 648,824 | |||||||||
| Small commercial & industrial | 38,356 | 38,318 | |||||||||
| Large commercial & industrial | 6,193 | 6,120 | |||||||||
| Total | 697,946 | 693,262 | |||||||||
Distribution Revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, due to favorable impacts of the multi-year plans.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to the increases in underlying costs and capital investments.
Other Revenue includes revenue related to late payment charges, mutual assistance, off-system sales, and service application fees. Other revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to an increase in late fees charged to customers.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as conservation, demand response, STRIDE, and the POLR mechanism. The riders are designed to provide full and current cost recovery, as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as BGE remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, BGE acts as the billing agent and therefore does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase electric generation or natural gas from BGE, BGE is permitted to recover the electricity and natural gas procurement costs from customers and therefore records the amounts related to the electricity and/or natural gas in Operating revenues and Purchased power and fuel expense. BGE recovers electricity and natural gas procurement costs from customers with a slight mark-up.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of BGE's revenue disaggregation.
The increase of $123 million for the three months ended March 31, 2022 compared to the same period in 2021, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
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The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
| Labor, other benefits, contracting, and materials | $ | 4 | ||||||
| Pension and non-pension postretirement benefits expense | (3) | |||||||
| BSC costs | 8 | |||||||
| Credit loss expense | 14 | |||||||
| Other | (3) | |||||||
| 20 | ||||||||
| Regulatory required programs | 1 | |||||||
| Total increase | $ | 21 | ||||||
The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
Depreciation and amortization(a) | $ | 9 | ||||||
| Regulatory required programs | 7 | |||||||
| Regulatory asset amortization | 3 | |||||||
| Total increase | $ | 19 | ||||||
__________
(a)Depreciation and amortization increased primarily due to ongoing capital expenditures.
Effective income tax rates were 4.3% and (6.6)% for the three months ended March 31, 2022 and 2021, respectively. The change is primarily due to decreases in the multi-year plans' accelerated income tax benefits in 2022 as compared to 2021. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on the three-year electric and natural gas distribution multi-year plans and Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations — PHI
PHI’s Results of Operations include the results of its three reportable segments, Pepco, DPL, and ACE. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services and the costs are directly charged or allocated to the applicable subsidiaries. Additionally, the results of PHI’s corporate operations include interest costs from various financing activities. All material intercompany accounts and transactions have been eliminated in consolidation. The following table sets forth PHI's GAAP consolidated Net income, by Registrant, for the three months ended March 31, 2022 compared to the same period in 2021. See the Results of Operations for Pepco, DPL, and ACE for additional information.
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| PHI | $ | 130 | $ | 128 | $ | 2 | ||||||||||||||
| Pepco | 46 | 59 | (13) | |||||||||||||||||
DPL | 56 | 56 | — | |||||||||||||||||
| ACE | 26 | 14 | 12 | |||||||||||||||||
Other(a) | 2 | (1) | 3 | |||||||||||||||||
_________
(a)Primarily includes eliminating and consolidating adjustments, PHI's corporate operations, shared service entities, and other financing and investing activities.
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net Income increased by $2 million primarily due to favorable impacts as a result of Pepco's Maryland and District of Columbia multi-year plans and higher electric distribution rates at DPL and ACE, partially offset by an increase in storm costs and depreciation expense.
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Results of Operations — Pepco
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 614 | $ | 553 | $ | 61 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power | 213 | 166 | (47) | |||||||||||||||||
| Operating and maintenance | 131 | 108 | (23) | |||||||||||||||||
| Depreciation and amortization | 108 | 102 | (6) | |||||||||||||||||
| Taxes other than income taxes | 95 | 90 | (5) | |||||||||||||||||
| Total operating expenses | 547 | 466 | (81) | |||||||||||||||||
| Operating income | 67 | 87 | (20) | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (36) | (34) | (2) | |||||||||||||||||
| Other, net | 13 | 12 | 1 | |||||||||||||||||
| Total other income and (deductions) | (23) | (22) | (1) | |||||||||||||||||
| Income before income taxes | 44 | 65 | (21) | |||||||||||||||||
| Income taxes | (2) | 6 | 8 | |||||||||||||||||
| Net income | $ | 46 | $ | 59 | $ | (13) | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income decreased $13 million primarily due to an increase in storm costs, depreciation expense, and credit loss expense, partially offset by the favorable impacts of the Maryland and District of Columbia multi-year plans.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
| Distribution | $ | 6 | ||||||
| Transmission | 3 | |||||||
| Other | (3) | |||||||
| 6 | ||||||||
| Regulatory required programs | 55 | |||||||
| Total increase | $ | 61 | ||||||
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in both Maryland and the District of Columbia are not impacted by abnormal weather or usage per customer as a result of a bill stabilization adjustment (BSA) that provides for a fixed distribution charge per customer by customer class. While Operating revenues are not impacted by abnormal weather or usage per customer, they are impacted by changes in the number of customers.
| As of March 31, | |||||||||||
| Number of Electric Customers | 2022 | 2021 | |||||||||
| Residential | 846,258 | 835,415 | |||||||||
| Small commercial & industrial | 54,509 | 53,738 | |||||||||
| Large commercial & industrial | 22,620 | 22,492 | |||||||||
| Public authorities & electric railroads | 184 | 174 | |||||||||
| Total | 923,571 | 911,819 | |||||||||
Distribution Revenue increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to favorable impacts of the Maryland and District of Columbia multi-year plans.
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Transmission Revenue Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to increases in underlying costs.
Other Revenue includes rental revenue, revenue related to late payment charges, mutual assistance revenues, and recoveries of other taxes.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, DC PLUG, and SOS procurement and administrative costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries, as Pepco remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, Pepco acts as the billing agent and therefore, Pepco does not record Operating revenues or Purchased power expense related to the electricity. For customers that choose to purchase electric generation from Pepco, Pepco is permitted to recover the electricity and REC procurement costs from customers and therefore records the amounts related to the electricity and RECs in Operating revenues and Purchased power expense. Pepco recovers electricity and REC procurement costs from customers with a slight mark-up.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of Pepco's revenue disaggregation.
The increase of $47 million for the three months ended March 31, 2022 compared to the same period in 2021, in Purchased power expense is fully offset in Operating revenues as part of regulatory required programs.
The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
| Storm-related costs | $ | 6 | ||||||
| BSC and PHISCO Costs | 6 | |||||||
| Credit loss expense | 4 | |||||||
| Labor, other benefits, contracting and materials | 4 | |||||||
| Other | 3 | |||||||
| 23 | ||||||||
| Regulatory required programs | — | |||||||
| Total increase | $ | 23 | ||||||
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The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
Depreciation and amortization(a) | $ | 5 | ||||||
| Regulatory asset amortization | (4) | |||||||
| Regulatory required programs | 5 | |||||||
| Total increase | $ | 6 | ||||||
_________
(a)Depreciation and amortization increased primarily due to ongoing capital expenditures.
Effective income tax rates were (4.5)% and 9.2% for the three months ended March 31, 2022 and 2021, respectively. The change is primarily due to the acceleration of certain income tax benefits as a result of the Maryland and District of Columbia multi-year plans. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statement for additional information on the three-year electric distribution multi-year plans and Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations — DPL
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 431 | $ | 382 | $ | 49 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power and fuel | 189 | 156 | (33) | |||||||||||||||||
| Operating and maintenance | 93 | 83 | (10) | |||||||||||||||||
| Depreciation and amortization | 57 | 53 | (4) | |||||||||||||||||
| Taxes other than income taxes | 18 | 17 | (1) | |||||||||||||||||
| Total operating expenses | 357 | 309 | (48) | |||||||||||||||||
| Operating income | 74 | 73 | 1 | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (16) | (15) | (1) | |||||||||||||||||
| Other, net | 2 | 3 | (1) | |||||||||||||||||
| Total other income and (deductions) | (14) | (12) | (2) | |||||||||||||||||
| Income before income taxes | 60 | 61 | (1) | |||||||||||||||||
| Income taxes | 4 | 5 | 1 | |||||||||||||||||
| Net income | $ | 56 | $ | 56 | $ | — | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income remained consistent.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
| Increase | ||||||||||||||||||||
| Electric | Gas | Total | ||||||||||||||||||
| Volume | $ | 5 | $ | 1 | $ | 6 | ||||||||||||||
| Distribution | 6 | 2 | 8 | |||||||||||||||||
| Transmission | 2 | — | 2 | |||||||||||||||||
| 13 | 3 | 16 | ||||||||||||||||||
| Regulatory required programs | 25 | 8 | 33 | |||||||||||||||||
| Total increase | $ | 38 | $ | 11 | $ | 49 | ||||||||||||||
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in Maryland are not impacted by abnormal weather or usage per customer as a result of a bill stabilization adjustment (BSA) that provides for a fixed distribution charge per customer by customer class. While Operating revenues from electric distribution customers in Maryland are not impacted by abnormal weather or usage per customer, they are impacted by changes in the number of customers.
Weather. The demand for electricity and natural gas in Delaware is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the electric and natural gas businesses, very cold weather in winter months are referred to as "favorable weather conditions” because these weather conditions result in increased deliveries of electricity and natural gas. Conversely, mild weather reduces demand. During the three months ended March 31, 2022 compared to the same period in 2021, Operating revenues related to weather remained consistent.
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Heating and cooling degree days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average heating and cooling degree days for a 20-year period in DPL's Delaware electric service territory and a 30-year period in DPL's Delaware natural gas service territory. The changes in heating and cooling degree days in DPL’s Delaware service territory for the three months ended March 31, 2022 compared to same period in 2021 and normal weather consisted of the following:
| Three Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| Delaware Electric Service Territory | 2022 | 2021 | Normal | 2022 vs. 2021 | 2022 vs. Normal | ||||||||||||||||||||||||
| Heating Degree-Days | 2,355 | 2,358 | 2,480 | (0.1) | % | (5.0) | % | ||||||||||||||||||||||
| Cooling Degree-Days | 3 | 3 | — | — | % | — | % | ||||||||||||||||||||||
| Three Months Ended March 31, | % Change | ||||||||||||||||||||||||||||
| Delaware Natural Gas Service Territory | 2022 | 2021 | Normal | 2022 vs. 2021 | 2022 vs. Normal | ||||||||||||||||||||||||
| Heating Degree-Days | 2,355 | 2,358 | 2,500 | (0.1) | % | (5.8) | % | ||||||||||||||||||||||
Volume, exclusive of the effects of weather, increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to customer growth and usage.
| Electric Retail Deliveries to Delaware Customers (in GWhs) | Three Months Ended March 31, | % Change | Weather - Normal % Change(b) | |||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| Residential | 895 | 854 | 4.8 | % | 4.2 | % | ||||||||||||||||||||
| Small commercial & industrial | 370 | 342 | 8.2 | % | 7.7 | % | ||||||||||||||||||||
| Large commercial & industrial | 765 | 689 | 11.0 | % | 11.0 | % | ||||||||||||||||||||
| Public authorities & electric railroads | 9 | 9 | — | % | 5.3 | % | ||||||||||||||||||||
Total electric retail deliveries(a) | 2,039 | 1,894 | 7.7 | % | 7.3 | % | ||||||||||||||||||||
| As of March 31, | |||||||||||
| Number of Total Electric Customers (Maryland and Delaware) | 2022 | 2021 | |||||||||
| Residential | 478,009 | 473,917 | |||||||||
| Small commercial & industrial | 63,296 | 62,647 | |||||||||
| Large commercial & industrial | 1,221 | 1,208 | |||||||||
| Public authorities & electric railroads | 603 | 608 | |||||||||
| Total | 543,129 | 538,380 | |||||||||
_________
(a)Reflects delivery volumes from customers purchasing electricity directly from DPL and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed distribution charges.
(b)Reflects the change in delivery volumes assuming normalized weather based on the historical 20-year average.
| Natural Gas Retail Deliveries to Delaware Customers (in mmcf) | Three Months Ended March 31, | % Change | Weather - Normal % Change(b) | |||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| Residential | 4,453 | 4,394 | 1.3 | % | 0.3 | % | ||||||||||||||||||||
| Small commercial & industrial | 1,983 | 1,868 | 6.2 | % | 6.0 | % | ||||||||||||||||||||
| Large commercial & industrial | 457 | 457 | — | % | 0.1 | % | ||||||||||||||||||||
| Transportation | 2,207 | 2,224 | (0.8) | % | (0.7) | % | ||||||||||||||||||||
Total natural gas deliveries(a) | 9,100 | 8,943 | 1.8 | % | 1.3 | % | ||||||||||||||||||||
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| As of March 31, | |||||||||||
| Number of Delaware Natural Gas Customers | 2022 | 2021 | |||||||||
| Residential | 128,695 | 127,522 | |||||||||
| Small commercial & industrial | 10,097 | 10,043 | |||||||||
| Large commercial & industrial | 17 | 19 | |||||||||
| Transportation | 159 | 160 | |||||||||
| Total | 138,968 | 137,744 | |||||||||
__________
(a)Reflects delivery volumes from customers purchasing natural gas directly from DPL and customers purchasing natural gas from a competitive natural gas supplier as all customers are assessed distribution charges.
(b)Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
Distribution Revenue increased for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to higher electric distribution rates in Maryland that became effective in March 2022, higher Distribution System Improvement Charge (DSIC) rates in Delaware that became effective in January 2022, and higher approved electric distribution rates in Delaware that became effective in September 2021.
Transmission Revenues. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to increases in underlying costs.
Other Revenue includes rental revenue, revenue related to late payment charges, mutual assistance revenues, and recoveries of other taxes.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, DE Renewable Portfolio Standards, SOS procurement and administrative costs, and GCR costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. All customers have the choice to purchase electricity from competitive electric generation suppliers; however, only certain commercial and industrial customers have the choice to purchase natural gas from competitive natural gas suppliers. Customer choice programs do not impact the volume of deliveries as DPL remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, DPL either acts as the billing agent or the competitive supplier separately bills its own customers, and therefore does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase electric generation or natural gas from DPL, DPL is permitted to recover the electricity, natural gas, and REC procurement costs from customers and therefore records the amounts related to the electricity, natural gas, and RECs in Operating revenues and Purchased power and fuel expense. DPL recovers electricity and REC procurement costs from customers with a slight mark-up, and natural gas costs without mark-up.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of DPL's revenue disaggregation.
The increase of $33 million for the three months ended March 31, 2022, compared to the same period in 2021, respectively, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
120
The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
BSC and PHISCO costs | $ | 3 | ||||||
Storm-related costs | 3 | |||||||
Credit loss expense | 2 | |||||||
Labor, other benefits, contracting and materials | (2) | |||||||
Other | 3 | |||||||
| 9 | ||||||||
| Regulatory required programs | 1 | |||||||
| Total increase | $ | 10 | ||||||
The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
Depreciation and amortization(a) | $ | 3 | ||||||
| Regulatory asset amortization | — | |||||||
| Regulatory required programs | 1 | |||||||
| Total increase | $ | 4 | ||||||
_________
(a)Depreciation and amortization increased primarily due to ongoing capital expenditures.
Effective income tax rates were 6.7% and 8.2% for the three months ended March 31, 2022 and 2021, respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations — ACE
| Three Months Ended March 31, | Favorable (Unfavorable) Variance | |||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Operating revenues | $ | 349 | $ | 310 | $ | 39 | ||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Purchased power | 178 | 157 | (21) | |||||||||||||||||
| Operating and maintenance | 84 | 76 | (8) | |||||||||||||||||
| Depreciation and amortization | 47 | 47 | — | |||||||||||||||||
| Taxes other than income taxes | 2 | 2 | — | |||||||||||||||||
| Total operating expenses | 311 | 282 | (29) | |||||||||||||||||
| Operating income | 38 | 28 | 10 | |||||||||||||||||
| Other income and (deductions) | ||||||||||||||||||||
| Interest expense, net | (14) | (15) | 1 | |||||||||||||||||
| Other, net | 3 | 1 | 2 | |||||||||||||||||
| Total other income and (deductions) | (11) | (14) | 3 | |||||||||||||||||
| Income before income taxes | 27 | 14 | 13 | |||||||||||||||||
| Income taxes | 1 | — | (1) | |||||||||||||||||
| Net income | $ | 26 | $ | 14 | $ | 12 | ||||||||||||||
Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021. Net income increased $12 million primarily due to increases in distribution rates.
The changes in Operating revenues consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase | ||||||||
| Weather | $ | 1 | ||||||
| Volume | 2 | |||||||
| Distribution | 11 | |||||||
| Transmission | 5 | |||||||
| 19 | ||||||||
| Regulatory required programs | 20 | |||||||
| Total increase | $ | 39 | ||||||
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in New Jersey are not impacted by abnormal weather or usage per customer as a result of the Conservation Incentive Program (CIP) which became effective, prospectively, in the third quarter of 2021. The CIP compares current distribution revenues by customer class to approved target revenues established in ACE’s most recent distribution base rate case. The CIP is calculated annually, and recovery is subject to certain conditions, including an earnings test and ceilings on customer rate increases. While Operating revenues are not impacted by abnormal weather or usage per customer, they are impacted by changes in the number of customers. See Note 3 — Regulatory Matters of the Combined Notes to the Consolidated Financial Statements for additional information.
Weather. Prior to the third quarter of 2021, the demand for electricity was affected by weather conditions. With respect to the electric business, very warm weather in summer months and very cold weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity. Conversely, mild weather reduces demand. During the three months ended March 31, 2022 compared to the same period in 2021, Operating revenues related to weather increased due to the absence of impacts in the first quarter of 2022 as a result of the CIP.
122
Heating and cooling degree days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average heating and cooling degree days for a 20-year period in ACE’s service territory. The changes in heating and cooling degree days in ACE’s service territory for the three months ended March 31, 2022 compared to same period in 2021 and normal weather consisted of the following:
| Three Months Ended March 31, | Normal | % Change | |||||||||||||||||||||||||||
| Heating and Cooling Degree-Days | 2022 | 2021 | 2022 vs. 2021 | 2022 vs. Normal | |||||||||||||||||||||||||
| Heating Degree-Days | 2,436 | 2,348 | 2,454 | 3.7 | % | (0.7) | % | ||||||||||||||||||||||
| Cooling Degree-Days | 2 | 4 | 1 | (50.0) | % | 100.0 | % | ||||||||||||||||||||||
Volume, exclusive of the effects of weather, increased for the three months ended March 31, 2022 compared to the same period in 2021, due to the absence of impacts in the first quarter of 2022 as a result of the CIP.
| Electric Retail Deliveries to Customers (in GWhs) | Three Months Ended March 31, | % Change | Weather - Normal % Change(b) | |||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||
| Residential | 918 | 928 | (1.1) | % | (2.3) | % | ||||||||||||||||||||
| Small commercial & industrial | 339 | 305 | 11.1 | % | 9.7 | % | ||||||||||||||||||||
| Large commercial & industrial | 703 | 716 | (1.8) | % | (2.4) | % | ||||||||||||||||||||
| Public authorities & electric railroads | 14 | 13 | 7.7 | % | 6.2 | % | ||||||||||||||||||||
Total electric retail deliveries(a) | 1,974 | 1,962 | 0.6 | % | (0.4) | % | ||||||||||||||||||||
| As of March 31, | |||||||||||
| Number of Electric Customers | 2022 | 2021 | |||||||||
| Residential | 500,511 | 498,396 | |||||||||
| Small commercial & industrial | 62,124 | 61,771 | |||||||||
| Large commercial & industrial | 3,124 | 3,267 | |||||||||
| Public authorities & electric railroads | 724 | 704 | |||||||||
| Total | 566,483 | 564,138 | |||||||||
_________
(a)Reflects delivery volumes from customers purchasing electricity directly from ACE and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed distribution charges.
(b)Reflects the change in delivery volumes assuming normalized weather based on the historical 20-year average.
Distribution Revenue increased for the three months ended March 31, 2022 compared to the same period in 2021 due to higher distribution rates that become effective in January 2022.
Transmission Revenues. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to increases in capital investment and underlying costs.
Other Revenue includes rental revenue, service connection fees, and mutual assistance revenues.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, Societal Benefits Charge, Transition Bonds, and BGS procurement and administrative costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries, as ACE remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, ACE acts as the billing agent and therefore, ACE does not record Operating revenues or Purchased power expense related to the electricity. For customers that choose to purchase electric generation from ACE, ACE is permitted to recover the
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electricity, ZEC, and REC procurement costs without mark-up and therefore records equal and offsetting amounts in Operating revenues and Purchased power expense related to the electricity, ZECs, and RECs.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of ACE's revenue disaggregation.
The increase of $21 million for the three months ended March 31, 2022 compared to the same period in 2021, respectively, in Purchased power expense is fully offset in Operating revenues as part of regulatory required programs.
The changes in Operating and maintenance expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
Increase | ||||||||
| BSC and PHISCO costs | $ | 2 | ||||||
| Labor, other benefits, contracting and materials | 1 | |||||||
| Storm-related costs | 1 | |||||||
| 4 | ||||||||
Regulatory required programs(a) | 4 | |||||||
| Total increase | $ | 8 | ||||||
_________
(a)ACE is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through the Societal Benefits Charge.
The changes in Depreciation and amortization expense consisted of the following:
| Three Months Ended March 31, 2022 | ||||||||
| Increase (Decrease) | ||||||||
Depreciation and amortization(a) | $ | 3 | ||||||
| Regulatory asset amortization | 1 | |||||||
| Regulatory required programs | (4) | |||||||
| Total | $ | — | ||||||
_________
(a)Depreciation and amortization increased primarily due to ongoing capital expenditures.
Effective income tax rates were 3.7% and 0.0% for the three months ended March 31, 2022 and 2021, respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Liquidity and Capital Resources (All Registrants)
All results included throughout the liquidity and capital resources section are presented on a GAAP basis.
The Registrants’ operating and capital expenditures requirements are provided by internally generated cash flows from operations, as well as funds from external sources in the capital markets and through bank borrowings. The Registrants’ businesses are capital intensive and require considerable capital resources. Each of the Registrants annually evaluates its financing plan, dividend practices, and credit line sizing, focusing on maintaining its investment grade ratings while meeting its cash needs to fund capital requirements, including construction expenditures, retire debt, pay dividends, and fund pension and OPEB obligations. The Registrants spend a significant amount of cash on capital improvements and construction projects that have a long-term return on investment. Additionally, the Utility Registrants operate in rate-regulated environments in which the amount of new investment recovery may be delayed or limited and where such recovery takes place over an extended period of time. Each Registrant’s access to external financing on reasonable terms depends on its credit ratings and current overall capital market business conditions, including that of the utility industry in general. If these conditions deteriorate to the extent that the Registrants no longer have access to the capital markets at reasonable terms, the Registrants have access to credit facilities with aggregate bank commitments of $4.0 billion. The Registrants utilize their credit facilities to support their commercial paper programs, provide for other short-term borrowings and to issue letters of credit. See the “Credit Matters and Cash Requirements” section below for additional information. The Registrants expect cash flows to be sufficient to meet operating expenses, financing costs, and capital expenditure requirements. See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ debt and credit agreements.
Cash flows related to Constellation have not been presented as discontinued operations and are included in the Consolidated Statements of Cash Flows for all periods presented. The Exelon Consolidated Statement of Cash Flows for the three months ended March 31, 2022 includes one month of cash flows from Generation. The Exelon Consolidated Statement of Cash Flows for the three months ended March 31, 2021 includes three months of cash flows from Generation. This is the primary reason for the changes in cash flows as shown in the tables unless otherwise noted below.
Cash Flows from Operating Activities
The Utility Registrants' cash flows from operating activities primarily result from the transmission and distribution of electricity and, in the case of PECO, BGE, and DPL, gas distribution services. The Utility Registrants' distribution services are provided to an established and diverse base of retail customers. The Utility Registrants' future cash flows may be affected by the economy, weather conditions, future legislative initiatives, future regulatory proceedings with respect to their rates or operations, and their ability to achieve operating cost reductions.
See Note 3 — Regulatory Matters of the Exelon 2021 Form 10-K and Note 12 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information on regulatory and legal proceedings and proposed legislation.
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The following table provides a summary of the change in cash flows from operating activities for the three months ended March 31, 2022 and 2021 by Registrant:
| Increase (decrease) in cash flows from operating activities | Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 862 | $ | (9) | $ | 39 | $ | (11) | $ | 2 | $ | (13) | $ | — | $ | 12 | |||||||||||||||||||||||||||||||
| Adjustments to reconcile net income to cash: | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash operating activities | 69 | 20 | 17 | 70 | 66 | 37 | 17 | 11 | |||||||||||||||||||||||||||||||||||||||
| Option premiums (paid), net | (55) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Collateral received, net | 869 | 38 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Income taxes | (36) | 21 | (3) | 13 | 2 | (1) | (4) | (1) | |||||||||||||||||||||||||||||||||||||||
| Pension and non-pension postretirement benefit contributions | (37) | (5) | 4 | 9 | (31) | — | (1) | (4) | |||||||||||||||||||||||||||||||||||||||
| Changes in working capital and other noncurrent assets and liabilities | 1,371 | 53 | (41) | 67 | (16) | — | 31 | (28) | |||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in cash flows from operating activities | $ | 3,043 | $ | 118 | $ | 16 | $ | 148 | $ | 23 | $ | 23 | $ | 43 | $ | (10) | |||||||||||||||||||||||||||||||
Changes in the Registrants' cash flows from operations were generally consistent with changes in each Registrant’s respective results of operations, as adjusted by changes in working capital in the normal course of business, except as discussed below. See above for additional information related to cash flows from Generation. Significant operating cash flow impacts for the Registrants and Generation for the three months ended March 31, 2022 and 2021 were as follows:
•See Note 14 — Supplemental Financial Information of the Combined Notes to Consolidated Financial Statements and the Registrants’ Consolidated Statements of Cash Flows for additional information on non-cash operating activities.
•Changes in collateral depended upon whether Generation was in a net mark-to-market liability or asset position, and collateral may have been required to be posted with or collected from its counterparties. In addition, the collateral posting and collection requirements differed depending on whether the transactions were on an exchange or in the over-the-counter markets.
•See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements and the Registrants' Consolidated Statements of Cash Flows for additional information on income taxes.
•Changes in working capital and other noncurrent assets and liabilities for the Utility Registrants and Exelon Corporate total $88 million and for Generation total $1,283 million. The change for Generation primarily relates to the revolving accounts receivable financing arrangement. See Note 6 — Accounts Receivable of the Exelon 2021 Form 10-K and the Collection of DPP discussion below for additional information.
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Cash Flows from Investing Activities
The following table provides a summary of the change in cash flows from investing activities for the three months ended March 31, 2022 and 2021 by Registrant:
| (Decrease) increase in cash flows from investing activities | Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 218 | $ | (4) | $ | (49) | $ | 33 | $ | 47 | $ | 2 | $ | 9 | $ | 36 | |||||||||||||||||||||||||||||||
| Investment in NDT fund sales, net | 3 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Collection of DPP | (1,405) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Proceeds from sales of assets and businesses | (664) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Changes in intercompany money pool | — | — | 48 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other investing activities | (66) | — | 1 | 1 | 1 | — | 1 | — | |||||||||||||||||||||||||||||||||||||||
| (Decrease) increase in cash flows from investing activities | $ | (1,914) | $ | (4) | $ | — | $ | 34 | $ | 48 | $ | 2 | $ | 10 | $ | 36 | |||||||||||||||||||||||||||||||
Significant investing cash flow impacts for the Registrants for three months ended March 31, 2022 and 2021 were as follows:
•Variances in capital expenditures are primarily due to the timing of cash expenditures for capital projects. See the "Credit Matters and Cash Requirements" section below for additional information on projected capital expenditure spending. See Note 2 — Discontinued Operations of the Combined Notes to Consolidated Financial Statements for capital expenditures related to Generation prior to the separation.
•Collection of DPP relates to the revolving accounts receivable financing agreement which Generation entered into in April of 2020. See Note 6 — Accounts Receivable of the Exelon 2021 Form 10-K for additional information on the transaction and the DPP, including the $400 million of additional funding received in February and March of 2021.
•Proceeds from sales of assets and businesses decreased primarily due to the sale of a significant portion of Generation's solar business in 2021. See Note 2 — Mergers, Acquisitions, and Dispositions of the Exelon 2021 Form 10-K for additional information.
•Changes in intercompany money pool are driven by short-term borrowing needs. Refer below for more information regarding the intercompany money pool.
Cash Flows from Financing Activities
The following table provides a summary of the change in cash flows from financing activities for the three months ended March 31, 2022 and 2021 by Registrant:
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| Increase (decrease) in cash flows from financing activities | Exelon | ComEd | PECO | BGE | PHI | Pepco | DPL | ACE | |||||||||||||||||||||||||||||||||||||||
| Changes in short-term borrowings, net | $ | (997) | $ | 188 | $ | — | $ | (36) | $ | (100) | $ | (140) | $ | (3) | $ | 43 | |||||||||||||||||||||||||||||||
| Long-term debt, net | 2,669 | 50 | (375) | — | 119 | 250 | — | (131) | |||||||||||||||||||||||||||||||||||||||
| Changes in intercompany money pool | — | — | 105 | — | 36 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Dividends paid on common stock | 42 | (17) | (15) | (2) | — | (14) | (1) | (5) | |||||||||||||||||||||||||||||||||||||||
| Distributions to member | — | — | — | — | (21) | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Contributions from(to) parent/member | — | (31) | 227 | — | 144 | 249 | 24 | (130) | |||||||||||||||||||||||||||||||||||||||
| Transfer of cash, restricted cash, and cash equivalents to Constellation | (2,594) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other financing activities | (38) | (1) | 3 | (1) | (4) | (4) | — | — | |||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in cash flows from financing activities | $ | (918) | $ | 189 | $ | (55) | $ | (39) | $ | 174 | $ | 341 | $ | 20 | $ | (223) | |||||||||||||||||||||||||||||||
Significant financing cash flow impacts for the Registrants for the three months ended March 31, 2022 and 2021 were as follows:
•Changes in short-term borrowings, net, is driven by repayments on and issuances of notes due in less than 365 days. Refer to Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on short-term borrowings for the Registrants. These changes also included repayments of $552 million in commercial paper and term loans by Generation prior to the separation.
•Long-term debt, net, varies due to debt issuances and redemptions each year. Refer to Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on debt issuances. Refer to the debt redemptions table below for additional information.
•Changes in intercompany money pool are driven by short-term borrowing needs. Refer below for more information regarding the intercompany money pool.
•Exelon’s ability to pay dividends on its common stock depends on the receipt of dividends paid by its operating subsidiaries. The payments of dividends to Exelon by its subsidiaries in turn depend on their results of operations and cash flows and other items affecting retained earnings. See Note 19 — Commitments and Contingencies of the Exelon 2021 Form 10-K for additional information on dividend restrictions. See below for quarterly dividends declared.
•Refer to Note 2 - Discontinued Operations for the transfer of cash, restricted cash, and cash equivalents to Constellation related to the separation.
•For the three months ended March 31, 2022, other financing activities primarily consists of debt issuance costs. See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information of the Registrants’ debt issuances.
Debt
See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ debt issuances.
During the three months ended March 31, 2022, there were no long-term debt retirements or redemptions. However, as of May 9, 2022, the following long-term debt was retired and/or redeemed:
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| Company | Type | Interest Rate | Maturity | Amount | ||||||||||||||||||||||
| Pepco | First Mortgage Bonds | 3.05 | % | April 1, 2022 | $ | 200 | ||||||||||||||||||||
| Exelon | Junior Subordinated Notes | 3.50 | % | May 2, 2022 | 1,150 | |||||||||||||||||||||
Dividends
Quarterly dividends declared by the Exelon Board of Directors during the three months ended March 31, 2022 and for the second quarter of 2022 were as follows:
| Period | Declaration Date | Shareholder of Record Date | Dividend Payable Date | Cash per Share(a) | ||||||||||||||||||||||
| First Quarter 2022 | February 8, 2022 | February 25, 2022 | March 10, 2022 | $ | 0.3375 | |||||||||||||||||||||
| Second Quarter 2022 | April 26, 2022 | May 13, 2022 | June 10, 2022 | $ | 0.3375 | |||||||||||||||||||||
_________
(a)Exelon's Board of Directors approved an updated dividend policy for 2022. The 2022 quarterly dividend will be $0.3375 per share.
Credit Matters and Cash Requirements
The Registrants fund liquidity needs for capital investment, working capital, energy hedging, and other financial commitments through cash flows from continuing operations, public debt offerings, commercial paper markets, and large, diversified credit facilities. The credit facilities include $4.0 billion in aggregate total commitments of which $3.7 billion was available to support additional commercial paper as of March 31, 2022, and of which no financial institution has more than 7% of the aggregate commitments for the Registrants. The Registrants had access to the commercial paper markets and had availability under their revolving credit facilities during the three months ended March 31, 2022 to fund their short-term liquidity needs, when necessary. On February 1, 2022, Exelon Corporate and the Utility Registrants each entered into a new 5-year revolving credit facility that replaced its existing syndicated revolving credit facility. See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information. The Registrants routinely review the sufficiency of their liquidity position, including appropriate sizing of credit facility commitments, by performing various stress test scenarios, such as commodity price movements, increases in margin-related transactions, changes in hedging levels, and the impacts of hypothetical credit downgrades. The Registrants have continued to closely monitor events in the financial markets and the financial institutions associated with the credit facilities, including monitoring credit ratings and outlooks, credit default swap levels, capital raising, and merger activity. See PART I. ITEM 1A. RISK FACTORS of the Exelon 2021 Form 10-K for additional information regarding the effects of uncertainty in the capital and credit markets.
The Registrants believe their cash flows from operating activities, access to credit markets, and their credit facilities provide sufficient liquidity to support the estimated future cash requirements.
Pursuant to the Separation Agreement between Exelon and Constellation, Exelon made a cash payment of $1.75 billion to Generation on January 31, 2022. See Note 2 — Discontinued Operations of the Combined Notes to Consolidated Financial Statements for additional information on the separation.
The following table presents the incremental collateral that each Utility Registrant would have been required to provide in the event each Utility Registrant lost its investment grade credit rating at March 31, 2022 and available credit facility capacity prior to any incremental collateral at March 31, 2022:
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| PJM Credit Policy Collateral | Other Incremental Collateral Required(a) | Available Credit Facility Capacity Prior to Any Incremental Collateral | |||||||||||||||
| ComEd | $ | 40 | $ | — | $ | 998 | |||||||||||
| PECO | 2 | 39 | 600 | ||||||||||||||
| BGE | 2 | 62 | 350 | ||||||||||||||
| Pepco | 2 | — | 300 | ||||||||||||||
| DPL | 2 | 16 | 300 | ||||||||||||||
| ACE | 1 | — | 300 | ||||||||||||||
_________
(a)Represents incremental collateral related to natural gas procurement contracts.
Capital Expenditure Spending
As of March 31, 2022, the most recent estimates of capital expenditures for plant additions and improvements for 2022 are as follows:
| (In millions) | Transmission | Distribution | Gas | Total(a) | |||||||||||||||||||
| Exelon | N/A | N/A | N/A | $ | 6,900 | ||||||||||||||||||
| ComEd | 475 | 2,000 | N/A | 2,475 | |||||||||||||||||||
| PECO | 200 | 800 | 325 | 1,325 | |||||||||||||||||||
| BGE | 250 | 500 | 475 | 1,225 | |||||||||||||||||||
| PHI | 575 | 1,200 | 75 | 1,850 | |||||||||||||||||||
| Pepco | 275 | 675 | N/A | 950 | |||||||||||||||||||
| DPL | 125 | 250 | 75 | 450 | |||||||||||||||||||
| ACE | 175 | 275 | N/A | 450 | |||||||||||||||||||
(a)Numbers rounded to the nearest $25M and may not sum due to rounding.
Projected capital expenditures and other investments are subject to periodic review and revision to reflect changes in economic conditions and other factors.
Pension and Other Postretirement Benefits
Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution requirements under ERISA, contributions required to avoid benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006 (the Act), management of the pension obligation, and regulatory implications. The Act requires the attainment of certain funding levels to avoid benefit restrictions (such as an inability to pay lump sums or to accrue benefits prospectively), and at-risk status (which triggers higher minimum contribution requirements and participant notification). The projected contributions reflect a funding strategy to make levelized annual contributions with the objective of achieving 100% funded status on an ABO basis over time. This level funding strategy helps minimize volatility of future period required pension contributions. Post-separation, Exelon's estimated annual qualified pension contributions will be approximately $313 million in 2022. In connection with the separation, additional qualified pension contributions of $207 million and $33 million were completed on February 1, 2022 and March 2, 2022, respectively. Unlike the qualified pension plans, Exelon’s non-qualified pension plans are not funded, given that they are not subject to statutory minimum contribution requirements.
While OPEB plans are also not subject to statutory minimum contribution requirements, Exelon does fund certain of its plans. For Exelon's funded OPEB plans, contributions generally equal accounting costs, however, Exelon’s management has historically considered several factors in determining the level of contributions to its OPEB plans, including liabilities management, levels of benefit claims paid, and regulatory implications (amounts deemed prudent to meet regulatory expectations and best assure continued rate recovery).
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Credit Facilities
Exelon Corporate, ComEd, and BGE meet their short-term liquidity requirements primarily through the issuance of commercial paper. PECO meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings from the Exelon intercompany money pool. Pepco, DPL, and ACE meet their short-term liquidity requirements primarily through the issuance of commercial paper and borrowings from the PHI intercompany money pool. PHI Corporate meets its short-term liquidity requirements primarily through the issuance of short-term notes and the Exelon intercompany money pool. The Registrants may use their respective credit facilities for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of credit.
See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ credit facilities and short term borrowing activity.
Security Ratings
The Registrants’ access to the capital markets, including the commercial paper market, and their respective financing costs in those markets, may depend on the securities ratings of the entity that is accessing the capital markets.
The Registrants’ borrowings are not subject to default or prepayment as a result of a downgrading of securities, although such a downgrading of a Registrant’s securities could increase fees and interest charges under that Registrant’s credit agreements.
As part of the normal course of business, the Registrants enter into contracts that contain express provisions or otherwise permit the Registrants and their counterparties to demand adequate assurance of future performance when there are reasonable grounds for doing so. In accordance with the contracts and applicable contracts law, if the Registrants are downgraded by a credit rating agency, it is possible that a counterparty would attempt to rely on such a downgrade as a basis for making a demand for adequate assurance of future performance, which could include the posting of collateral. See Note 9 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on collateral provisions.
The credit ratings for ComEd, PECO, BGE, and DPL did not change for the three months ended March 31, 2022. On January 14, 2022, Fitch lowered Exelon Corporate's long-term and senior unsecured ratings from BBB+ to BBB and affirmed the short-term rating of F2. In addition, Fitch upgraded Pepco, ACE, and PHI's long-term rating from BBB to BBB+ and upgraded Pepco and ACE's senior secured rating from A- to A.
Intercompany Money Pool
To provide an additional short-term borrowing option that will generally be more favorable to the borrowing participants than the cost of external financing, both Exelon and PHI operate an intercompany money pool. Maximum amounts contributed to and borrowed from the money pool by participant and the net contribution or borrowing as of March 31, 2022, are presented in the following table. Pepco, ACE, and DPL had no activity within the PHI intercompany money pool during the three months ended March 31, 2022.
| During the Three Months Ended March 31, 2022 | As of March 31, 2022 | |||||||||||||||||||
| Exelon Intercompany Money Pool | Maximum Contributed | Maximum Borrowed | Contributed (Borrowed) | |||||||||||||||||
| Exelon Corporate | $ | 396 | $ | — | $ | 312 | ||||||||||||||
| PECO | — | (95) | (65) | |||||||||||||||||
| BSC | — | (377) | (246) | |||||||||||||||||
| PHI Corporate | — | (54) | (46) | |||||||||||||||||
| PCI | 50 | — | 45 | |||||||||||||||||
Shelf Registration Statements
Exelon and the Utility Registrants have a currently effective combined shelf registration statement unlimited in amount, filed with the SEC, that will expire in August 2022. The ability of each Registrant to sell securities off the
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shelf registration statement or to access the private placement markets will depend on a number of factors at the time of the proposed sale, including other required regulatory approvals, as applicable, the current financial condition of the Registrant, its securities ratings and market conditions.
Regulatory Authorizations
The Utility Registrants are required to obtain short-term and long-term financing authority from Federal and State Commissions as follows:
| As of March 31, 2022 | ||||||||||||||||||||||||||||||||||||||
| Short-term Financing Authority | Remaining Long-term Financing Authority | |||||||||||||||||||||||||||||||||||||
| Commission | Expiration Date | Amount | Commission | Expiration Date | Amount | |||||||||||||||||||||||||||||||||
ComEd(a) | FERC | December 31, 2023 | $ | 2,500 | ICC | January 1, 2025 | $ | 1,343 | ||||||||||||||||||||||||||||||
PECO(b) | FERC | December 31, 2023 | 1,500 | PAPUC | December 31, 2024 | 1,900 | ||||||||||||||||||||||||||||||||
| BGE | FERC | December 31, 2023 | 700 | MDPSC | N/A | 500 | ||||||||||||||||||||||||||||||||
| Pepco | FERC | December 31, 2023 | 500 | MDPSC / DCPSC | December 31, 2022 | 225 | ||||||||||||||||||||||||||||||||
| DPL | FERC | December 31, 2023 | 500 | MDPSC / DEPSC | December 31, 2022 | 47 | ||||||||||||||||||||||||||||||||
ACE(c) | NJBPU | December 31, 2023 | 350 | NJBPU | December 31, 2022 | — | ||||||||||||||||||||||||||||||||
_________
(a)On November 18, 2021, ComEd received approval from the ICC for $2 billion in new money long-term debt financing authority with an effective date of January 1, 2022.
(b)On December 2, 2021, PECO received approval from the PAPUC for $2.5 billion in new long-term debt financing authority with an effective date of January 1, 2022.
(c)ACE is currently in the process of renewing its long-term financing authority with the NJBPU and expects approval by August 1, 2022.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Registrants hold commodity and financial instruments that are exposed to the following market risks:
•Commodity price risk, which is discussed further below.
•Counterparty credit risk associated with non-performance by counterparties on executed derivative instruments and participation in all, or some of the established, wholesale spot energy markets that are administered by PJM. The credit policies of PJM may, under certain circumstances, require that losses arising from the default of one member on spot energy market transactions be shared by the remaining participants. See Note 9 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for a detailed discussion of counterparty credit risk related to derivative instruments.
•Equity price and interest rate risk associated with Exelon’s pension and OPEB plan trusts. See Note 15 — Retirement Benefits of the Exelon 2021 Form 10-K for additional information.
•Interest rate risk associated with changes in interest rates for the Registrants’ outstanding long-term debt. This risk is significantly reduced as substantially all of the Registrants’ outstanding debt has fixed interest rates. There is inherent interest rate risk related to refinancing maturing debt by issuing new long-term debt. The Registrants use a combination of fixed-rate and variable-rate debt to manage interest rate exposure. See Note 10 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information.
The Registrants operate primarily under cost-based rate regulation limiting exposure to the effects of market risk. Hedging programs are utilized to reduce exposure to energy and natural gas price volatility and have no direct earnings impacts as the costs are fully recovered through regulatory-approved recovery mechanisms.
Exelon manages these risks through risk management policies and objectives for risk assessment, control and valuation, counterparty credit approval, and the monitoring and reporting of risk exposures. Risk management issues are reported to Exelon’s Executive Committee, the Risk Management Committees of each Utility Registrant, and the Audit and Risk Committee of Exelon’s Board of Directors.
Commodity Price Risk
Commodity price risk is associated with price movements resulting from changes in supply and demand, fuel costs, market liquidity, weather conditions, governmental regulatory and environmental policies, and other factors. To the extent the total amount of energy Exelon purchases differs from the amount of energy it has contracted to sell, Exelon is exposed to market fluctuations in commodity prices. Exelon seeks to mitigate its commodity price risk through the sale and purchase of electricity and natural gas.
ComEd entered into 20-year floating-to-fixed renewable energy swap contracts beginning in June 2012, which are considered an economic hedge and have changes in fair value recorded to an offsetting regulatory asset or liability. ComEd has block energy contracts to procure electric supply that are executed through a competitive procurement process, which are considered derivatives and qualify for NPNS, and as a result are accounted for on an accrual basis of accounting. PECO, BGE, Pepco, DPL, and ACE have contracts to procure electric supply that are executed through a competitive procurement process. BGE, Pepco, DPL, and ACE have certain full requirements contracts, which are considered derivatives and qualify for NPNS, and as a result are accounted for on an accrual basis of accounting. Other full requirements contracts are not derivatives.
PECO, BGE, and DPL also have executed derivative natural gas contracts, which either qualify for NPNS or have no mark-to-market balances because the derivatives are index priced, to hedge their long-term price risk in the natural gas market. The hedging programs for natural gas procurement have no direct impact on their financial statements.
For additional information on these contracts, see Note 9 — Derivative Financial Instruments and Note 11 — Fair Value of Financial Assets and Liabilities of the Combined Notes to Consolidated Financial Statements.
The following table presents the maturity and source of fair value for Exelon’s and ComEd’s mark-to-market commodity contract liabilities. These liabilities are associated with ComEd’s floating-to-fixed energy swap
133
contracts with unaffiliated suppliers. The table provides two fundamental pieces of information. First, the table provides the source of fair value used in determining the carrying amount of Exelon's and ComEd's total mark-to-market liabilities. Second, the table shows the maturity, by year, of Exelon's and ComEd's commodity contract liabilities giving an indication of when these mark-to-market amounts will settle and either generate or require cash. See Note 11 — Fair Value of Financial Assets and Liabilities of the Combined Notes to Consolidated Financial Statements for additional information regarding fair value measurements and the fair value hierarchy.
| Maturities Within | Total Fair Value | ||||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | 2024 | 2025 | 2026 | 2027 and Beyond | ||||||||||||||||||||||||||||||||||||
| Prices based on model or other valuation methods (Level 3) | $ | (1) | $ | (8) | $ | (18) | $ | (18) | $ | (18) | $ | (81) | $ | (144) | |||||||||||||||||||||||||||
ITEM 4. CONTROLS AND PROCEDURES
During the first quarter of 2022, each of the Registrants' management, including its principal executive officer and principal financial officer, evaluated its disclosure controls and procedures related to the recording, processing, summarizing, and reporting of information in its periodic reports that it files with the SEC. These disclosure controls and procedures have been designed by the Registrants to ensure that (a) material information relating to that Registrant, including its consolidated subsidiaries, is accumulated and made known to that Registrant's management, including its principal executive officer and principal financial officer, by other employees of that Registrant and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and (b) this information is recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC’s rules and forms. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people.
Accordingly, as of March 31, 2022, the principal executive officer and principal financial officer of each of the Registrants concluded that such Registrant’s disclosure controls and procedures were effective to accomplish its objectives. The Registrants continually strive to improve their disclosure controls and procedures to enhance the quality of its financial reporting and to maintain dynamic systems that change as conditions warrant. There were no changes in internal control over financial reporting during the first quarter of 2022 that materially affected, or are reasonably likely to materially affect, any of the Registrants' internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrants are parties to various lawsuits and regulatory proceedings in the ordinary course of their respective businesses. For information regarding material lawsuits and proceedings, see (a) ITEM 3. LEGAL PROCEEDINGS of Exelon’s 2021 Form 10-K and (b) Notes 3 — Regulatory Matters and 12 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements in PART I, ITEM 1. FINANCIAL STATEMENTS of this Report. Such descriptions are incorporated herein by these references.
ITEM 1A. RISK FACTORS
Risks Related to All Registrants
At March 31, 2022, the Registrants' risk factors were consistent with the risk factors described in the Registrants' combined 2021 Form 10-K in ITEM 1A. RISK FACTORS.
ITEM 4. MINE SAFETY DISCLOSURES
All Registrants
Not applicable to the Registrants.
134
ITEM 5. OTHER INFORMATION
All Registrants
None.
ITEM 6. EXHIBITS
Certain of the following exhibits are incorporated herein by reference under Rule 12b-32 of the Securities and Exchange Act of 1934, as amended. Certain other instruments which would otherwise be required to be listed below have not been so listed because such instruments do not authorize securities in an amount which exceeds 10% of the total assets of the applicable Registrant and its subsidiaries on a consolidated basis and the relevant Registrant agrees to furnish a copy of any such instrument to the Commission upon request.
| Exhibit No. | Description | ||||
4.1* | |||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | ||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||
*Filed herewith
135
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 filed by the following officers for the following companies:
| Exhibit No. | Description | ||||
136
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code (Sarbanes — Oxley Act of 2002) as to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 filed by the following officers for the following companies:
| Exhibit No. | Description | ||||
137
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
EXELON CORPORATION
| /s/ CHRISTOPHER M. CRANE | /s/ JOSEPH NIGRO | |||||||
| Christopher M. Crane | Joseph Nigro | |||||||
| President, Chief Executive Officer (Principal Executive Officer) and Director | Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||
| /s/ FABIAN E. SOUZA | ||||||||
| Fabian E. Souza | ||||||||
| Senior Vice President and Corporate Controller (Principal Accounting Officer) | ||||||||
May 9, 2022
138
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COMMONWEALTH EDISON COMPANY
| /s/ GIL C. QUINIONES | /s/ ELISABETH J. GRAHAM | |||||||
| Gil C. Quiniones | Elisabeth J. Graham | |||||||
| Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ STEVEN J. CICHOCKI | ||||||||
| Steven J. Cichocki | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
139
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PECO ENERGY COMPANY
| /s/ MICHAEL A. INNOCENZO | /s/ ROBERT J. STEFANI | |||||||
| Michael A. Innocenzo | Robert J. Stefani | |||||||
| President and Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ CAROLINE FULGINITI | ||||||||
| Caroline Fulginiti | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
140
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
| /s/ CARIM V. KHOUZAMI | /s/ DAVID M. VAHOS | |||||||
| Carim V. Khouzami | David M. Vahos | |||||||
| Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ JASON T. JONES | ||||||||
| Jason T. Jones | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
141
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PEPCO HOLDINGS LLC
| /s/ J. TYLER ANTHONY | /s/ PHILLIP S. BARNETT | |||||||
| J. Tyler Anthony | Phillip S. Barnett | |||||||
| President and Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ JULIE E. GIESE | ||||||||
| Julie E. Giese | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
142
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
POTOMAC ELECTRIC POWER COMPANY
| /s/ J. TYLER ANTHONY | /s/ PHILLIP S. BARNETT | |||||||
| J. Tyler Anthony | Phillip S. Barnett | |||||||
| President and Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ JULIE E. GIESE | ||||||||
| Julie E. Giese | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
143
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DELMARVA POWER & LIGHT COMPANY
| /s/ J. TYLER ANTHONY | /s/ PHILLIP S. BARNETT | |||||||
| J. Tyler Anthony | Phillip S. Barnett | |||||||
| President and Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ JULIE E. GIESE | ||||||||
| Julie E. Giese | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
144
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ATLANTIC CITY ELECTRIC COMPANY
| /s/ J. TYLER ANTHONY | /s/ PHILLIP S. BARNETT | |||||||
| J. Tyler Anthony | Phillip S. Barnett | |||||||
| President and Chief Executive Officer (Principal Executive Officer) | Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) | |||||||
| /s/ JULIE E. GIESE | ||||||||
| Julie E. Giese | ||||||||
| Director, Accounting (Principal Accounting Officer) | ||||||||
May 9, 2022
145
1 This Instrument Prepared By: /s/Christie D. Cannon Christie D. Cannon Delmarva Power & Light Company Mailstop 92DC42 500 N. Wakefield Drive Newark, DE 19702-5440 DELMARVA POWER & LIGHT COMPANY TO THE BANK OF NEW YORK MELLON, Trustee. ONE HUNDRED AND THIRTIETH SUPPLEMENTAL INDENTURE Dated as of January 1, 2022 (but executed on the dates shown on the execution page)
2 This ONE HUNDRED AND THIRTIETH SUPPLEMENTAL INDENTURE, dated as of the first day of January, 2022 (but executed on the dates hereinafter shown), made and entered into by and between DELMARVA POWER & LIGHT COMPANY, a corporation of the State of Delaware and the Commonwealth of Virginia, hereinafter called the Company and THE BANK OF NEW YORK MELLON, a New York banking corporation, hereinafter called the Trustee; WITNESSETH: WHEREAS, the Company heretofore executed and delivered its Indenture of Mortgage and Deed of Trust (hereinafter in this One Hundred and Thirtieth Supplemental Indenture called the “Original Indenture”), dated as of October 1, 1943, to The New York Trust Company, a corporation of the State of New York, as Trustee, to which The Bank of New York Mellon is successor Trustee, to secure the First Mortgage Bonds of the Company, unlimited in aggregate principal amount and issuable in series, from time to time, in the manner and subject to the conditions set forth in the Original Indenture granted and conveyed unto the Trustee, upon the trusts, uses and purposes specifically therein set forth, certain real estate, franchises and other property therein described, including property acquired after the date thereof, except as therein otherwise provided; and WHEREAS, the Original Indenture has been supplemented by one hundred and twenty-nine supplemental indentures specifically subjecting to the lien of the Original Indenture as though included in the granting clause thereof certain property in said supplemental indentures specifically described and amending and modifying the provisions of the Original Indenture (the Original Indenture, as amended, modified and supplemented by all of the indentures supplemental thereto, including this One Hundred and Thirtieth Supplemental Indenture, is hereinafter in this One Hundred and Thirtieth Supplemental Indenture called the “Indenture”); and WHEREAS, the execution and delivery of this One Hundred and Thirtieth Supplemental Indenture has been duly authorized by Unanimous Written Consent of the Board of Directors of the Company, and all conditions and requirements necessary to make this One Hundred and Thirtieth Supplemental Indenture a valid, binding and legal instrument in accordance with its terms, for the purposes herein expressed, and the execution and delivery hereof, have been in all respects duly authorized; and WHEREAS, it is provided in and by the Original Indenture, inter alia, as follows: “IT IS HEREBY AGREED by the Company that all the property, rights and franchises acquired by the Company after the date hereof (except any hereinbefore or hereinafter expressly excepted) shall (subject to the provisions of Section 9.01 hereof and to the extent permitted by law) be as fully embraced within the lien hereof as if such property, rights and franchises were now owned by the Company and/or specifically described herein and conveyed hereby;” and WHEREAS, the Company has acquired certain other property, real, personal and mixed, which heretofore has not been specifically conveyed to the Trustee; NOW, THEREFORE, this ONE HUNDRED AND THIRTIETH SUPPLEMENTAL INDENTURE WITNESSETH that for and in consideration of the premises and in pursuance of the provisions of the Indenture, the Company has granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and granted a security interest therein, and by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm, and grant a security interest therein, subject to the provisions of the Indenture, unto the Trustee and to its successors in the trust in the Indenture created, to its and their assigns forever, all the following described properties of the Company, and does confirm that the Company will not cause or consent to a
3 partition, either voluntary or through legal proceedings, of property, whether herein described or heretofore or hereafter acquired, in which its ownership shall be as tenants in common, except as permitted by, and in conformity with, the provisions of the Indenture and particularly of Article IX thereof: MARYLAND Worcester County Property Name Instrument Date Deed Records Tax Map No. Liber Folio Purchased Wetland Mitigation Easement site to offset wetland disturbances resultant the Culver Substation rebuild – Lewis Road, W/S Berlin, MD 21811 12/28/2021 8309 304 Tax Map 22 Parcel 71 Together with all other property, real, personal and mixed, tangible and intangible (except such property as in said Indenture expressly excepted from the lien and operation thereof), acquired by the Company on or prior to December 31, 2021, and not heretofore specifically subjected to the lien of the Indenture. Also without limitation of the generality of the foregoing, the easements and rights-of-way and other rights in or relating to real estate or the occupancy of the same owned by the Company, and whether used or not used in connection with the Company’s operations, which are conveyed to the Company and recorded in the following Real Property Deed Records to which reference is made for a more particular description, to wit: DELAWARE New Castle County Instrument Date Deed Records Tax ID No. 08/31/20 20210430-0051705 11-054.00-026-083, 11-057.00-245- 290, 11-058.00-012 10/02/20 20210226-0023389 10-028.00-020 10/9/2020 20210415-0044698 15-010.00-160 11/5/2020 20210415-0044710 12-003.00-015 1/18/2021 20210415-0044697 10-050.00-006 1/21/2021 20210524-0061459 10-45.00-007 02/01/21 20210415-0044759 07-042.10-143 2/1/2021 20210315-0030723 11-041.00-085 2/3/2021 20210415-0044800 07-042.30-058 & 618 2/19/2021 20210524-0061443 07-042.30-617 2/23/2021 20210800-0090708 07-032.20-003, 061-069 3/2/2021 20210430-0051704 26-035.30-298, 328 & 329 3/3/2021 20210524-0061444 10-024.00-042 3/16/2021 20210524-0061446 12-026.00-001 & others 3/18/2021 20210524-0061445 12-019.00-320 3/22/2021 20210430-0051703 12-026.00-215 3/23/2021 20210430-0051705 08-040.00-021
4 Instrument Date Deed Records Tax ID No. 3/23/2021 20210524-0061458 12-013.00-093 3/31/2021 20210524-0061455 26-027.30-208 4/6/2021 20210524-0061457 10-048.00-043 4/7/2021 20210524-0061442 26-058.00-019 4/8/2021 20210524-0061441 18-033.00-005 4/14/2021 20210070-0116929 10-005.30-111 4/16/2021 20210524-0061456 08-023.00-001 4/22/2021 20210610-0068389 07-010.00-083 4/28/2021 20210610-0068381 11-033.00-282 4/30/2021 20210524-0061440 09-016.00-016 5/14/2021 20210070-0116928 09-015.00-011 5/19/2021 20210070-0116926 06-049.00-002 6/9/2021 20210804-0090709 13-003.00-001 7/16/2021 20210070-0116927 06-100.00-067 8/2/2021 20211116-0132621 11-023.00-121 8/5/2021 20211214-0143041 09-022.40-227 8/6/2021 20211116-0132616 14-019.00-232 8/6/2021 20211116-0132617 15-012.00-045 8/15/2021 20211116-0132620 08-039.10-160, 258-260 8/17/2021 20211214-0143040 12-026.00-055 8/19/2021 20211116-0132623 08-012.10-195 – 252 8/20/2021 20211116-0132618 11-036.10-151 8/24/2021 20211214-0143039 09-018.00-011 8/25/2021 20211214-0143038 06-136.00-028 9/15/2021 20211116-0132619 11-031.30-040 & 041 9/21/2021 20211116-0132622 11-025.20-233, 11-020.10-035 – 115, 11-025.00-006, 11-025.20-198-235 10/19/2021 20211214-0143051 09-024.00-032 11/1/2021 20211214-0143053 26-035.30-376 11/2/2021 20211214-0143052 08-054.30-102 12/14/2020 20210121-0008763 09-029.00-012 DELAWARE Sussex County Instrument Date Deed Records Tax ID No. Book Page 11/25/2020 5429 230 334-13.00-27.00 2/4/2021 5429 233 134-12.00-433.00 2/10/2021 5431 66 334-20.09-80.00 2/12/2021 5438 296 133-17.17-109 to 133-17.17-273 3/10/2021 5482 286 133-17.17-108.00 4/8/2021 5447 133 234-21.00-138.11 4/14/2021 5462 279 135-11.00-33.00 4/30/2021 5490 181 532-13.00-24.00
5 Instrument Date Deed Records Tax ID No. Book Page 5/27/2021 5490 178 134-5.00-185.00 6/7/2021 5508 274 334-19.00-170.02 6/10/2021 5597 301 234-32.00-117.00 6/11/2021 5489 155 233-5.00-105.00 9/29/2021 5611 208 334-12.00-127.06 9/30/2021 5562 146 334-12.00-127.01, 127.11 & 127.12 10/13/2021 5596 111 235-7.00-161.00 10/26/2020 5384 145 334-19.00-170.03 12/15/2020 5384 141 532-13.00-78.00 MARYLAND Caroline County Instrument Date Deed Records Tax Parcel Book Page 1/13/2021 1544 205 0005 4/8/2021 1500 170 0103 6/9/2021 1511 468 0103 7/13/2021 1526 394 0011 8/12/2021 1544 210 0028 MARYLAND Cecil County Instrument Date Deed Records Map Parcel Book Page 7/29/2020 4988 337 062C 0106 11/17/2020 4805 143 0049 '0002, 0023, 0033, 0034 12/14/2020 4805 135 034E 0559 1/5/2021 4805 139 034E 0834 2/19/2021 4844 377 0013 0736 3/2/2021 4840 10 0020 0049 3/5/2021 4840 6 031A 1284 3/9/2021 4840 3 0035 0598 3/16/2021 4840 13 0025 0729 3/23/2021 4839 92 0321 0106 3/30/2021 4878 39 0007 0244 4/1/2021 4878 33 0042 0350 4/8/2021 4878 36 0013 0241 4/14/2021 4879 180 0009 0725 5/12/2021 4896 238 0019 0376
6 Instrument Date Deed Records Map Parcel Book Page 5/13/2021 4896 241 035C 0617 5/20/2021 4918 459 0017 0611 5/28/2021 4918 455 0035 0276 6/7/2021 4918 462 031E 0618 6/28/2021 4968 106 0024 0241 6/28/2021 4968 103 0002 0045 6/29/2021 4968 99 0036 0591 7/19/2021 4968 68 0031 1224 7/20/2021 4968 71 0003 0004 7/28/2021 4968 74 0251 0128 8/6/2021 4994 246 0013 0161 8/13/2021 4994 262 0025 0031 8/16/2021 4994 242 0035 0577 8/16/2021 4994 253 0041 0392 8/23/2021 4994 257 034E 0857 8/31/2021 4994 249 034E 0548 9/10/2021 5006 314 0012 0411 9/21/2021 5006 306 0042 0429 9/23/2021 5006 303 0026 0630 9/24/2021 5006 300 0020 0131 9/24/2021 5006 296 0037 0567 9/30/2021 5006 310 0012 0313 10/5/2021 5045 98 0014 0623 10/18/2021 5041 336 0020 0667 10/26/2021 5058 210 0020 0076 10/30/2021 5058 206 029E 0070 11/2/2021 5041 339 0031 0564 11/18/2021 5058 218 0024 0064 11/23/2021 5058 214 031D 0183 11/23/2021 5058 223 031D 0184 11/27/2021 5058 226 0019 0203
7 MARYLAND Dorchester County Instrument Date Deed Records Map Parcel Liber Folio 11/2/2020 1699 274 0030 0250 2/24/2021 1659 419 0303 5413 2/25/2021 1635 215 0035 0147 2/25/2021 1659 49 0303 8004 2/26/2021 1659 59 0303 8009 3/1/2021 1659 35 0303 4981 4/7/2021 1659 54 0030 0159 4/7/2021 1659 44 030C 0436 4/7/2021 1659 39 030C 0436 6/16/2021 1659 82 0301 4487 6/18/2021 1675 297 0021 0333 8/10/2021 1675 300 0051 0272 9/1/2021 1700 160 0017 0010 9/17/2021 1684 312 0035 0146 10/20/2021 1700 156 0400 0354 MARYLAND Harford County Instrument Date Deed Records Map Parcel Liber Folio 8/11/2021 15111 438 0027 0074 8/16/2021 15199 17 0026 0057 8/23/2021 15199 14 0011 0357 10/6/2021 15111 443 0020 0236 11/10/2021 15247 259 0020 0236 11/10/2021 15247 252 0027 0074 MARYLAND Kent County Instrument Date Deed Records Map Parcel Liber Folio 12/8/2020 1192 129 0056 0031 10/18/2021 1210 1 0048 0007 10/21/20 1117 1 0300 1728
8 MARYLAND Queen Anne’s County Instrument Date Deed Records Map Parcel Lot Liber Folio 1/14/2021 3615 264 0005 0015 1/26/2021 3924 108 0037 0007 2,3,4 4/6/2021 3705 181 0064 0002 6/3/2021 3850 3 0046 0032 28 6/22/2021 3904 73 058H 0201 8/2/2021 3865 91 0046 0030 8/10/2021 3813 59 044F 0060 8/10/2021 3813 55 0056 0321 8/10/2021 3813 86 044C 0775 8/19/2021 3865 95 0028 0012 8/24/2021 3850 7 0029 0053 3 8/30/2021 3903 195 0023 0196 MARYLAND Somerset County Instrument Date Deed Records Map Parcel Liber Folio 8/18/2020 1134 156 0040 0036 1/19/2021 1139 70 015F 0110 1/19/2021 1139 70 015F 0110 5/17/2021 1163 130 0032 0236 10/15/2021 1198 111 064H 0222, 0223, 0840, 0841 10/26/2021 1109 107 023C 0172 1/13/2021 1127 105 0040 0174 1/13/2021 1127 102 0040 0167 1/13/2021 1127 99 0040 0157&0158 3/30/2021 1142 24 0040 0147 3/30/2021 1142 18 0049 0131 3/30/2021 1142 35 0040 0142 3/30/2021 1142 29 0049 0138 3/30/2021 1142 32 0040 0129 3/30/2021 1142 38 0049 0118 3/30/2021 1142 21 0058 0267 4/6/2021 1144 56 0040 0171 7/27/2021 1167 267 0040 0177 7/27/2021 1167 276 0049 0011 7/27/2021 1167 292 0040 0012 7/27/2021 1167 284 0040 0156 7/27/2021 1167 280 0040 0280
9 Instrument Date Deed Records Map Parcel Liber Folio 7/27/2021 1167 306 0040 0062 7/27/2021 1167 271 0049 0023, lot 2 7/27/2021 1167 301 0049 0144 7/27/2021 1167 296 0040 0048 8/9/2021 1171 193 0040 0061 12/10/2021 1198 53 0058 0050 12/10/2021 1198 58 0058 0023, Lots 2&3 12/10/2021 1198 64 0058 0021 12/10/2021 1198 68 0058 0039 12/10/2021 1198 72 0058 0042 12/10/2021 1198 76 0058 0045 12/10/2021 1198 80 0058 0234 12/10/2021 1198 98 0040 0063 12/10/2021 1198 103 0058 0025 MARYLAND Talbot County Instrument Date Deed Records Map Parcel Liber Folio 1/19/2021 2930 263 0300 1664 2/1/2021 2834 499 0055, 0054, 0059 0085 & others 2/4/2021 5429 223 0030 0130 2/22/21 2827 430 0030 0106 MARYLAND Wicomico County Instrument Date Deed Records Map Parcel Lot Liber Folio 1/7/2021 4771 442 0111 1443 1/7/2021 4771 445 0111 1444 1/7/2021 4771 448 0111 1445 1/7/2021 4771 451 0111 1446 1/12/2021 4796 396 0041 0122 1/28/2021 4813 335 0117 3117 1/28/2021 4813 344 0048 0358 1/28/2021 4813 379 0048 0358 4/13/2021 4851 131 0301 0509 4/26/2021 4865 153 0037 0212 4/26/2021 4866 81 0115 3267 5/17/2021 4888 173 0037 0163
10 Instrument Date Deed Records Map Parcel Lot Liber Folio 9/13/2021 4963 352 0048 0358 9/20/2021 4963 371 0049 0065 5A & 6A 9/28/2021 4963 366 0030 0223 1, 2, 3, 4 11/4/2021 4990 372 0109 2585 PAR 1 MARYLAND Worcester County Instrument Date Deed Records Map Parcel Lot Liber Folio 10/23/2020 7940 198 0063 0182 3/24/2021 8102 476 0055 37 4/14/2021 8103 436 0401 0577 & 0566 6/13/2021 8267 440 0115 0116A 2 6/23/2021 8102 484 0026 0473 A 6/23/2021 8102 480 0026 0473 B 6/23/2021 8102 488 0026 0274 & 0473 multi 6/23/2021 8102 493 0026 0248, 0274 & 0473 multi 6/28/2021 8114 494 0100 0116 6/28/2021 8114 498 0049 0114 8/9/2021 8187 122 0073 0123 8/10/2021 8187 119 0019 0129 10/15/2021 8256 41 0009 0346 10/29/20 7892 81 0010 0153 9/29/20 7892 85 0026 0258 10/09/20 7892 93 0049 0114 10/09/20 7897 294 0063 0140 10/09/20 7897 303 0063 0140 10/31/20 7892 89 0079 0215 11/12/20 7897 299 0113 7975 11/12/20 7909 455 0401 0717
11 The following is a schedule of bonds issued under the Eighty-Eighth Supplemental Indenture and Credit Line Deed of Trust, effective as of October 1, 1994, that can be designated as First Mortgage Bonds, Series I, which may also be designated as Secured Medium Term Notes, Series I; and First Mortgage Bonds, Pledged Series I. First Mortgage Bonds, Series I/Secured Medium Term Notes, Series I Issuance Date Tranche Maturity Principal 06/19/95 7.71% Bonds 06/01/25 $100,000,000 06/19/95 6.95% Amortizing Bonds 06/01/08 $ 25,800,000 11/25/08 6.40% Bonds 12/01/13 $250,000,000 First Mortgage Bonds, Pledged Series I Issuance Date Tranche Maturity Principal 10/12/94 1994 10/01/29 $ 33,750,000 Total Bonds Issued: $409,550,000 As supplemented and amended by this One Hundred and Thirtieth Supplemental Indenture, the Original Indenture and all indentures supplemental thereto are in all respects ratified and confirmed and the Original Indenture and the aforesaid supplemental indentures and this One Hundred and Thirtieth Supplemental Indenture shall be read, taken and construed as one and the same instrument. This One Hundred and Thirtieth Supplemental Indenture shall be simultaneously executed in several counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. The recitals of fact contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The debtor and its mailing address are Delmarva Power & Light Company, Mailstop 92DC42, 500 N. Wakefield Drive, Newark, Delaware 19702-5440. The secured party and its address, from which information concerning the security interest hereunder may be obtained, is The Bank of New York Mellon, 500 Ross Street, 12th Floor, Pittsburgh, Pennsylvania 15262, Attn: Corporate Trust Administration. The Company acknowledges that it received a true and correct copy of this One Hundred and Thirtieth Supplemental Indenture. This One Hundred and Thirtieth Supplemental Indenture is executed and delivered pursuant to the provisions of Section 5.11 and paragraph (a) of Section 17.01 of the Indenture for the purpose of conveying, transferring and assigning to the Trustee and of subjecting to the lien of the Indenture with the same force and effect as though included in the granting clause thereof the above described property so acquired by the Company on or prior to the date of execution, and not heretofore specifically subject to the lien of the Indenture; but nothing contained in this One Hundred and Thirtieth Supplemental Indenture shall be deemed in any manner to affect (except for such purposes) or to impair the provisions, terms and conditions of the Original Indenture, or of any indenture supplemental thereto and the provisions, terms and conditions thereof are hereby expressly confirmed.
12 IN WITNESS WHEREOF, each of the Company and the Trustee has caused this instrument to be signed in its name and behalf by an Authorized Officer, effective as of the 1st day of January, 2022. DELMARVA POWER & LIGHT COMPANY Date of Execution By /s/Elizabeth Hensen March 22, 2022 Elizabeth Hensen Authorized Officer STATE OF ILLINOIS ) ) SS. COUNTY OF COOK ) BE IT REMEMBERED that as of the 22nd day of March, 2022, personally came before me, a notary public for the State of Illinois, Elizabeth Hensen, Authorized Officer of DELMARVA POWER & LIGHT COMPANY, a corporation of the State of Delaware and the Commonwealth of Virginia (the “Company”), party to the foregoing instrument, known to me personally to be such, and acknowledged the instrument to be her own act and deed and the act and deed of the Company; that her signature is in her own proper handwriting; and that her act of signing, executing and delivering such instrument was duly authorized by resolution of the Board of Directors of the Company. GIVEN under my hand and official seal the day and year aforesaid. /s/Helene A. Menaglia Notary Public, State of Illinois My commission expires 4/14/2023 . [OFFICIAL NOTARIAL SEAL]
13 THE BANK OF NEW YORK MELLON, as Trustee Date of Execution By /s/Francine Kincaid March 29, 2022 Francine Kincaid______________ Vice President STATE OF NEW YORK ) ) SS. COUNTY OF NEW YORK ) BE IT REMEMBERED that as of the 29th day of March, 2022, personally came before me, a Notary Public for the State of New York, Francine Kincaid, Vice President of THE BANK OF NEW YORK MELLON, a New York banking corporation (the “Trustee”), party to the foregoing instrument, known to me personally to be such, and acknowledged the instrument to be her own act and deed and the act and deed of the Trustee; that her signature is her own proper handwriting; and that her act of signing, executing and delivering said instrument was duly authorized by resolution of the Board of Directors of the Trustee. GIVEN under my hand and official seal the day and year aforesaid. /s/Helen Choi Helen Choi Notary Public, State of New York No. 01CH6291290 Qualified in New York County Commission Expires October 15, 2025 [OFFICIAL NOTARIAL SEAL]
14 CERTIFICATE OF RESIDENCE THE BANK OF NEW YORK MELLON, successor Trustee to the Trustee within named, hereby certifies that it has a residence at 240 Greenwich Street, in the Borough of Manhattan, in The City of New York, in the State of New York. THE BANK OF NEW YORK MELLON By/s/Francine Kincaid Francine Kincaid Vice President
15 Certification This document was prepared under the supervision of an attorney admitted to practice before the Court of Appeals of Maryland, or by or on behalf of one of the parties named in the within instrument. /s/Christie D. Cannon Christie D. Cannon
Exhibit 31-1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Christopher M. Crane, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Exelon Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ CHRISTOPHER M. CRANE | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Joseph Nigro, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Exelon Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ JOSEPH NIGRO | |||||
| Senior Executive Vice President and Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-3
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Gil C. Quiniones, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Commonwealth Edison Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ GIL C. QUINIONES | |||||
| Chief Executive Officer (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-4
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Elisabeth J. Graham, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Commonwealth Edison Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ ELISABETH J. GRAHAM | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-5
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Michael A. Innocenzo, certify that:
1.I have reviewed this quarterly report on Form 10-Q of PECO Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ MICHAEL A. INNOCENZO | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-6
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Robert J. Stefani, certify that:
1.I have reviewed this quarterly report on Form 10-Q of PECO Energy Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ ROBERT J. STEFANI | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-7
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Carim V. Khouzami, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Baltimore Gas and Electric Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ CARIM V. KHOUZAMI | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-8
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, David M. Vahos, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Baltimore Gas and Electric Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ DAVID M. VAHOS | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-9
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, J. Tyler Anthony, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Pepco Holdings LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ J. TYLER ANTHONY | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-10
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Phillip S. Barnett, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Pepco Holdings LLC;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ PHILLIP S. BARNETT | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-11
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, J. Tyler Anthony, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Potomac Electric Power Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ J. TYLER ANTHONY | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-12
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Phillip S. Barnett, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Potomac Electric Power Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ PHILLIP S. BARNETT | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-13
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, J. Tyler Anthony, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Delmarva Power & Light Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ J. TYLER ANTHONY | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-14
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Phillip S. Barnett, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Delmarva Power & Light Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ PHILLIP S. BARNETT | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 31-15
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, J. Tyler Anthony, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Atlantic City Electric Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ J. TYLER ANTHONY | |||||
| President and Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
Date: May 9, 2022
Exhibit 31-16
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
I, Phillip S. Barnett, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Atlantic City Electric Company;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ PHILLIP S. BARNETT | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
| (Principal Financial Officer) | |||||
Date: May 9, 2022
Exhibit 32-1
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Exelon Corporation for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Exelon Corporation.
| /s/ CHRISTOPHER M. CRANE | |||||
| Christopher M. Crane | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-2
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Exelon Corporation for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Exelon Corporation.
| /s/ JOSEPH NIGRO | |||||
| Joseph Nigro | |||||
| Senior Executive Vice President and Chief Financial Officer | |||||
Date: May 9, 2022
Exhibit 32-3
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Commonwealth Edison Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Commonwealth Edison Company.
| /s/ GIL C. QUINIONES | |||||
| Gil C. Quiniones | |||||
| Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-4
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Commonwealth Edison Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Commonwealth Edison Company.
| /s/ ELISABETH J. GRAHAM | |||||
| Elisabeth J. Graham | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-5
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of PECO Energy Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of PECO Energy Company.
| /s/ MICHAEL A. INNOCENZO | |||||
| Michael A. Innocenzo | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-6
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of PECO Energy Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of PECO Energy Company.
| /s/ ROBERT J. STEFANI | |||||
| Robert J. Stefani | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-7
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Baltimore Gas and Electric Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Baltimore Gas and Electric Company.
| /s/ CARIM V. KHOUZAMI | |||||
| Carim V. Khouzami | |||||
| Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-8
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Baltimore Gas and Electric Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Baltimore Gas and Electric Company.
| /s/ DAVID M. VAHOS | |||||
| David M. Vahos | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-9
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Pepco Holdings LLC for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Pepco Holdings LLC.
| /s/ J. TYLER ANTHONY | |||||
| J. Tyler Anthony | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-10
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Pepco Holdings LLC for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Pepco Holdings LLC.
| /s/ PHILLIP S. BARNETT | |||||
| Phillip S. Barnett | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-11
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Potomac Electric Power Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Potomac Electric Power Company.
| /s/ J. TYLER ANTHONY | |||||
| J. Tyler Anthony | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-12
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Potomac Electric Power Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Potomac Electric Power Company.
| /s/ PHILLIP S. BARNETT | |||||
| Phillip S. Barnett | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-13
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Delmarva Power & Light Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Delmarva Power & Light Company.
| /s/ J. TYLER ANTHONY | |||||
| J. Tyler Anthony | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-14
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Delmarva Power & Light Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Delmarva Power & Light Company.
| /s/ PHILLIP S. BARNETT | |||||
| Phillip S. Barnett | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022
Exhibit 32-15
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Atlantic City Electric Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Atlantic City Electric Company.
| /s/ J. TYLER ANTHONY | |||||
| J. Tyler Anthony | |||||
| President and Chief Executive Officer | |||||
Date: May 9, 2022
Exhibit 32-16
Certificate Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the quarterly report on Form 10-Q of Atlantic City Electric Company for the quarterly period ended March 31, 2022, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Atlantic City Electric Company.
| /s/ PHILLIP S. BARNETT | |||||
| Phillip S. Barnett | |||||
| Senior Vice President, Chief Financial Officer and Treasurer | |||||
Date: May 9, 2022