Docoh
Loading...

EXC Exelon Generation

Filed: 4 Aug 20, 3:55pm
0001109357 exc:GenerationAllOtherSegmentsMember 2020-01-01 2020-06-30 0001109357 exc:BaltimoreGasAndElectricCompanyMember exc:PublicAuthoritiesElectricRailroadsMember us-gaap:ElectricityUsRegulatedMember us-gaap:RegulatedOperationMember 2019-01-01 2019-06-30 0001109357 exc:CommonwealthEdisonCoMember us-gaap:CommercialPaperMember 2020-06-30 0001109357 exc:ExelonGenerationCoLLCMember srt:MaximumMember us-gaap:DerivativeMember us-gaap:FairValueInputsLevel3Member us-gaap:IncomeApproachValuationTechniqueMember 2019-12-31 0001109357 srt:MaximumMember us-gaap:DerivativeMember us-gaap:FairValueInputsLevel3Member exc:OptionModelValuationTechniqueMember 2020-06-30
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and Telephone Number IRS Employer Identification Number
     
001-16169 EXELON CORPORATION 23-2990190
  
(a Pennsylvania corporation)
10 South Dearborn Street
P.O. Box 805379
Chicago, Illinois 60680-5379
(800) 483-3220
  
     
333-85496 EXELON GENERATION COMPANY, LLC 23-3064219
  
(a Pennsylvania limited liability company)
300 Exelon Way
Kennett Square, Pennsylvania 19348-2473
(610) 765-5959
  
     
001-01839 COMMONWEALTH EDISON COMPANY 36-0938600
  
(an Illinois corporation)
440 South LaSalle Street
Chicago, Illinois 60605-1028
(312) 394-4321
  
     
000-16844 PECO ENERGY COMPANY 23-0970240
  
(a Pennsylvania corporation)
P.O. Box 8699
2301 Market Street
Philadelphia, Pennsylvania 19101-8699
(215) 841-4000
  
     
001-01910 BALTIMORE GAS AND ELECTRIC COMPANY 52-0280210
  
(a Maryland corporation)
2 Center Plaza
110 West Fayette Street
Baltimore, Maryland 21201-3708
(410) 234-5000
  
     
001-31403 PEPCO HOLDINGS LLC 52-2297449
  
(a Delaware limited liability company)
701 Ninth Street, N.W.
Washington, District of Columbia 20068
(202) 872-2000
  
     
001-01072 POTOMAC ELECTRIC POWER COMPANY 53-0127880
  
(a District of Columbia and Virginia corporation)
701 Ninth Street, N.W.
Washington, District of Columbia 20068
(202) 872-2000
  
     
001-01405 DELMARVA POWER & LIGHT COMPANY 51-0084283
  
(a Delaware and Virginia corporation)
500 North Wakefield Drive
Newark, Delaware 19702
(202) 872-2000
  
     
001-03559 ATLANTIC CITY ELECTRIC COMPANY 21-0398280
  
(a New Jersey corporation)
500 North Wakefield Drive
Newark, Delaware 19702
(202) 872-2000
  




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:    
Common Stock, without par value EXC The Nasdaq Stock Market LLC
     
PECO ENERGY COMPANY:    
Trust Receipts of PECO Energy Capital Trust III, each representing a 7.38% Cumulative Preferred Security, Series D, $25 stated value, issued by PECO Energy Capital, L.P. and unconditionally guaranteed by PECO Energy Company EXC/28 New York Stock Exchange

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 CorporationLarge Accelerated FilerxAccelerated FilerNon-accelerated FilerSmaller Reporting CompanyEmerging Growth Company
Exelon Generation Company, LLCLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Commonwealth Edison CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
PECO Energy CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Baltimore Gas and Electric CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Pepco Holdings LLCLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Potomac Electric Power CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Delmarva Power & Light CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging Growth Company
Atlantic City Electric CompanyLarge Accelerated FilerAccelerated FilerNon-accelerated FilerxSmaller Reporting CompanyEmerging 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 June 30, 2020 was:
Exelon Corporation Common Stock, without par value974,503,895
Exelon Generation Company, LLCnot applicable
Commonwealth Edison Company Common Stock, $12.50 par value127,021,354
PECO Energy Company Common Stock, without par value170,478,507
Baltimore Gas and Electric Company Common Stock, without par value1,000
Pepco Holdings LLCnot applicable
Potomac Electric Power Company Common Stock, $0.01 par value100
Delmarva Power & Light Company Common Stock, $2.25 par value1,000
Atlantic City Electric Company Common Stock, $3.00 par value8,546,017



TABLE OF CONTENTS

 Page No.
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 

1



2



3


GLOSSARY OF TERMS AND ABBREVIATIONS
Exelon Corporation and Related Entities
Exelon Exelon Corporation
Generation Exelon Generation Company, LLC
ComEd Commonwealth Edison Company
PECO PECO Energy Company
BGE Baltimore Gas and Electric Company
Pepco Holdings or PHI Pepco Holdings LLC (formerly Pepco Holdings, Inc.)
Pepco Potomac Electric Power Company
DPL Delmarva Power & Light Company
ACE Atlantic City Electric Company
Registrants Exelon, Generation, 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
Antelope Valley Antelope Valley Solar Ranch One
BSC Exelon Business Services Company, LLC
CENG Constellation Energy Nuclear Group, LLC
Constellation Constellation Energy Group, Inc.
EGR IV ExGen Renewables IV, LLC
EGRP ExGen Renewables Partners, LLC
Exelon Corporate Exelon in its corporate capacity as a holding company
FitzPatrick James A. FitzPatrick nuclear generating station
NER NewEnergy Receivables LLC
PCI Potomac Capital Investment Corporation and its subsidiaries
PECO Trust III PECO Capital Trust III
PECO Trust IV PECO Energy Capital Trust IV
Pepco Energy Services Pepco Energy Services, Inc. and its subsidiaries
PHI Corporate PHI in its corporate capacity as a holding company
PHISCO PHI Service Company
SolGen SolGen, LLC
TMI Three Mile Island nuclear facility

4


GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations  
Note "—" of the 2019 Form 10-K Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2019 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
AESO Alberta Electric Systems Operator
AFUDC Allowance for Funds Used During Construction
AMI Advanced Metering Infrastructure
AOCI Accumulated Other Comprehensive Income (Loss)
ARC Asset Retirement Cost
ARO Asset Retirement Obligation
BGS Basic Generation Service
CBA 
Collective Bargaining Agreement

CERCLA Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CES Clean Energy Standard
Clean Water Act Federal Water Pollution Control Amendments of 1972, as amended
CODM Chief operating decision maker(s)
D.C. Circuit Court United States Court of Appeals for the District of Columbia Circuit
DC PLUG District of Columbia Power Line Undergrounding Initiative
DCPSC Public Service Commission of the District of Columbia
DOE United States Department of Energy
DOEE Department of Energy & Environment
DOJ United States Department of Justice
DPP Deferred Purchase Price
DPSC Delaware Public Service Commission
EDF Electricite de France SA and its subsidiaries
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
FASB Financial Accounting Standards Board
FEJA Illinois Public Act 99-0906 or Future Energy Jobs Act
FERC Federal Energy Regulatory Commission
FRCC Florida Reliability Coordinating Council
FRR Fixed Resource Requirement
GAAP Generally Accepted Accounting Principles in the United States
GCR Gas Cost Rate
GSA Generation Supply Adjustment
IBEW 
International Brotherhood of Electrical Workers

ICC Illinois Commerce Commission
ICE Intercontinental Exchange
   

5


GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations  
IPA Illinois Power Agency
IRC Internal Revenue Code
IRS Internal Revenue Service
ISO Independent System Operator
ISO-NE Independent System Operator New England Inc.
LIBOR London Interbank Offered Rate
MDE Maryland Department of the Environment
MDPSC Maryland Public Service Commission
MGP Manufactured Gas Plant
MISO Midcontinent Independent System Operator, Inc.
mmcf Million Cubic Feet
MOPR Minimum Offer Price Rule
MW Megawatt
MWh Megawatt hour
NDT Nuclear Decommissioning Trust
NERC North American Electric Reliability Corporation
NGX Natural Gas Exchange
NJBPU New Jersey Board of Public Utilities
Non-Regulatory Agreements Units Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting
NOSA Nuclear Operating Services Agreement
NPNS Normal Purchase Normal Sale scope exception
NRC Nuclear Regulatory Commission
NYISO New York Independent System Operator Inc.
NYMEX New York Mercantile Exchange
NYPSC New York Public Service Commission
OCI Other Comprehensive Income
OIESO Ontario Independent Electricity System Operator
OPEB Other Postretirement Employee Benefits
PAPUC Pennsylvania Public Utility Commission
PGC Purchased Gas Cost Clause
PG&E Pacific Gas and Electric Company
PJM PJM Interconnection, LLC
POLR Provider of Last Resort
PPA Power Purchase Agreement
PPE Property, plant and equipment
Price-Anderson Act Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP Potentially Responsible Parties
PSDAR Post-Shutdown Decommissioning Activities Report
PSEG Public Service Enterprise Group Incorporated
REC Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source

6


GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations  
RNF Revenues Net of Purchased Power and Fuel Expense
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
RMC Risk Management Committee
ROE Return on equity
ROU Right-of-use
RTO Regional Transmission Organization
S&P Standard & Poor’s Ratings Services
SEC United States Securities and Exchange Commission
SERC SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
SNF Spent Nuclear Fuel
SOS Standard Offer Service
SPFPA 
International Union, Security, Police and Fire Professionals of America

TCJA Tax Cuts and Jobs Act
Transition Bonds Transition Bonds issued by ACE Funding
VIE Variable Interest Entity
WECC Western Electric Coordinating Council
ZEC Zero Emission Credit, or Zero Emission Certificate
ZES Zero Emission Standard

7


FILING FORMAT
This combined Form 10-Q is being filed separately by Exelon Corporation, Exelon Generation Company, LLC, 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 including among others those related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of various governments and regulatory bodies, our customers, and the company, on our business, financial condition and results of operations; any such forward-looking statements, whether concerning the COVID-19 pandemic or otherwise, involve risks, assumptions 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 2019 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 18, 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 14, 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, whether written or oral, 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.

8


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

9



EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions, except per share data)2020 2019 2020 2019
Operating revenues       
Competitive businesses revenues$3,611
 $3,959
 $8,014
 $8,938
Rate-regulated utility revenues3,832
 3,743
 8,108
 8,247
Revenues from alternative revenue programs(122) (13) (55) (19)
Operating revenue from affiliates1
 
 2
 
Total operating revenues7,322
 7,689
 16,069
 17,166
Operating expenses       
Competitive businesses purchased power and fuel1,945
 2,289
 4,655
 5,493
Rate-regulated utility purchased power and fuel979
 936
 2,136
 2,285
Operating and maintenance2,433
 2,159
 4,637
 4,347
Depreciation and amortization1,001
 1,079
 2,023
 2,154
Taxes other than income taxes411
 418
 847
 863
Total operating expenses6,769

6,881

14,298

15,142
Gain on sales of assets and businesses12
 33
 13
 36
Operating income565

841

1,784

2,060
Other income and (deductions)    
 
Interest expense, net(421) (403) (824) (800)
Interest expense to affiliates(6) (6) (13) (13)
Other, net656
 212
 (68) 679
Total other income and (deductions)229

(197)
(905)
(134)
Income before income taxes794
 644
 879
 1,926
Income taxes219
 144
 (75) 454
Equity in losses of unconsolidated affiliates(1) (6) (4) (12)
Net income574

494

950

1,460
Net income (loss) attributable to noncontrolling interests53
 10
 (153) 69
Net income attributable to common shareholders$521

$484

$1,103

$1,391
Comprehensive income, net of income taxes       
Net income$574
 $494
 $950
 $1,460
Other comprehensive income (loss), net of income taxes       
Pension and non-pension postretirement benefit plans:       
Prior service benefit reclassified to periodic benefit cost(10) (16) (20) (32)
Actuarial loss reclassified to periodic benefit cost47
 36
 94
 74
Pension and non-pension postretirement benefit plan valuation adjustment2
 
 (5) (39)
Unrealized loss on cash flow hedges
 
 (1) 
Unrealized loss on investments in unconsolidated affiliates
 (2) 
 (4)
Unrealized gain (loss) on foreign currency translation2
 3
 (6) 4
Other comprehensive income41

21

62

3
Comprehensive income615

515

1,012

1,463
Comprehensive income (loss) attributable to noncontrolling interests53
 9
 (153) 67
Comprehensive income attributable to common shareholders$562
 $506
 $1,165
 $1,396
        
Average shares of common stock outstanding:       
Basic976
 972
 975
 972
Assumed exercise and/or distributions of stock-based awards
 2
 1
 1
Diluted(a)
976
 974
 976
 973
        
Earnings per average common share:       
Basic$0.53
 $0.50
 $1.13
 $1.43
Diluted$0.53
 $0.50
 $1.13
 $1.43
__________
(a)The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 1 million and immaterial for the three and six months ended June 30, 2020, respectively, and immaterial for the three and six months ended June 30, 2019.

See the Combined Notes to Consolidated Financial Statements
10


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$950
 $1,460
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization2,741
 2,922
Asset impairments33
 9
Gain on sales of assets and businesses(13) (33)
Deferred income taxes and amortization of investment tax credits33
 284
Net fair value changes related to derivatives(194) 107
Net realized and unrealized losses (gains) on NDT funds196
 (404)
Other non-cash operating activities671
 277
Changes in assets and liabilities:   
Accounts receivable1,318
 618
Inventories(14) 19
Accounts payable and accrued expenses(798) (924)
Option premiums (paid) received, net(102) 48
Collateral received (posted), net340
 (311)
Income taxes(114) 151
Pension and non-pension postretirement benefit contributions(558) (355)
Other assets and liabilities(1,809) (970)
Net cash flows provided by operating activities2,680

2,898
Cash flows from investing activities   
Capital expenditures(3,773) (3,572)
Proceeds from NDT fund sales2,488
 6,920
Investment in NDT funds(2,540) (6,847)
Collection of DPP1,102
 
Proceeds from sales of assets and businesses
 14
Other investing activities4
 26
Net cash flows used in investing activities(2,719)
(3,459)
Cash flows from financing activities   
Changes in short-term borrowings(751) 470
Proceeds from short-term borrowings with maturities greater than 90 days500
 
Repayments on short-term borrowings with maturities greater than 90 days
 (125)
Issuance of long-term debt6,526
 850
Retirement of long-term debt(3,894) (574)
Dividends paid on common stock(746) (704)
Proceeds from employee stock plans46
 75
Other financing activities(84) (34)
Net cash flows provided by (used in) financing activities1,597

(42)
Increase (decrease) in cash, cash equivalents and restricted cash1,558
 (603)
Cash, cash equivalents and restricted cash at beginning of period1,122
 1,781
Cash, cash equivalents and restricted cash at end of period$2,680

$1,178
    
Supplemental cash flow information   
Decrease in capital expenditures not paid$(105) $(133)
Increase in DPP1,754
 
Increase in PPE related to ARO update
 301

See the Combined Notes to Consolidated Financial Statements
11


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$2,129
 $587
Restricted cash and cash equivalents373
 358
Accounts receivable   
Customer accounts receivable3,075 4,835
Customer allowance for credit losses(261) (243)
Customer accounts receivable, net2,814
 4,592
Other accounts receivable1,549 1,631
Other allowance for credit losses(61) (48)
Other accounts receivable, net1,488
 1,583
Mark-to-market derivative assets573
 679
Unamortized energy contract assets43
 47
Inventories, net   
Fossil fuel and emission allowances273
 312
Materials and supplies1,508
 1,456
Regulatory assets1,193
 1,170
Other2,139
 1,253
Total current assets12,533

12,037
Property, plant and equipment (net of accumulated depreciation and amortization of $24,798 and $23,979 as of June 30, 2020 and December 31, 2019, respectively)81,748
 80,233
Deferred debits and other assets   
Regulatory assets8,313
 8,335
Nuclear decommissioning trust funds12,730
 13,190
Investments424
 464
Goodwill6,677
 6,677
Mark-to-market derivative assets466
 508
Unamortized energy contract assets321
 336
Other3,101
 3,197
Total deferred debits and other assets32,032

32,707
Total assets(a)
$126,313

$124,977

See the Combined Notes to Consolidated Financial Statements
12


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities   
Short-term borrowings$1,119
 $1,370
Long-term debt due within one year2,514
 4,710
Accounts payable3,047
 3,560
Accrued expenses1,616
 1,981
Payables to affiliates5
 5
Regulatory liabilities495
 406
Mark-to-market derivative liabilities204
 247
Unamortized energy contract liabilities113
 132
Renewable energy credit obligation478
 443
Other1,474
 1,331
Total current liabilities11,065
 14,185
Long-term debt36,112
 31,329
Long-term debt to financing trusts390
 390
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits12,720
 12,351
Asset retirement obligations11,059
 10,846
Pension obligations3,659
 4,247
Non-pension postretirement benefit obligations2,121
 2,076
Spent nuclear fuel obligation1,206
 1,199
Regulatory liabilities9,414
 9,986
Mark-to-market derivative liabilities440
 393
Unamortized energy contract liabilities292
 338
Other2,964
 3,064
Total deferred credits and other liabilities43,875
 44,500
Total liabilities(a)
91,442

90,404
Commitments and contingencies

 

Shareholders’ equity   
Common stock (No par value, 2,000 shares authorized, 975 shares and 973 shares outstanding at June 30, 2020 and December 31, 2019, respectively)19,336
 19,274
Treasury stock, at cost (2 shares at June 30, 2020 and December 31, 2019)(123) (123)
Retained earnings16,622
 16,267
Accumulated other comprehensive loss, net(3,132) (3,194)
Total shareholders’ equity32,703

32,224
Noncontrolling interests2,168
 2,349
Total equity34,871

34,573
Total liabilities and shareholders’ equity$126,313

$124,977
__________
(a)Exelon’s consolidated assets include $9,937 million and $9,532 million at June 30, 2020 and December 31, 2019, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $3,542 million and $3,473 million at June 30, 2020 and December 31, 2019, respectively, of certain VIEs for which the VIE creditors do not have recourse to Exelon. See Note 16 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements
13


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(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, 2019974,416
 $19,274
 $(123) $16,267
 $(3,194) $2,349
 $34,573
Net income (loss)
 
 
 582
 
 (206) 376
Long-term incentive plan activity1,354
 (4) 
 
 
 
 (4)
Employee stock purchase plan issuances470
 31
 
 
 
 
 31
Changes in equity of noncontrolling interests
 
 
 
 
 (9) (9)
Sale of noncontrolling interests
 2
 
 
 
 
 2
Common stock dividends
($0.38/common share)

 
 
 (374) 
 
 (374)
Other comprehensive income, net of income taxes
 
 
 
 21
 
 21
Balance, March 31, 2020976,240

$19,303

$(123)
$16,475

$(3,173)
$2,134

$34,616
Net income
 
 
 521
 
 53
 574
Long-term incentive plan activity148
 17
 
 
 
 
 17
Employee stock purchase plan issuances(51) 15
 
 
 
 
 15
Changes in equity of noncontrolling interests
 
 
 
 
 (19) (19)
Sale of noncontrolling interests
 1
 
 
 
 
 1
Common stock dividends
($0.38/common share)

 
 
 (374) 
 
 (374)
Other comprehensive income, net of income taxes
 
 
 
 41
 
 41
Balance, June 30, 2020976,337
 $19,336
 $(123) $16,622
 $(3,132) $2,168
 $34,871





















See the Combined Notes to Consolidated Financial Statements
14


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
 Six Months Ended June 30, 2019
(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, 2018970,020
 $19,116
 $(123) $14,766
 $(2,995) $2,306
 $33,070
Net income
 
 
 907
 
 59
 966
Long-term incentive plan activity2,446
 (3) 
 
 
 
 (3)
Employee stock purchase plan issuances320
 51
 
 
 
 
 51
Changes in equity of noncontrolling interests
 
 
 
 
 (17) (17)
Sale of noncontrolling interests
 7
 
 
 
 
 7
Common stock dividends
($0.36/common share)

 
 
 (352) 
 
 (352)
Other comprehensive loss, net of income taxes
 
 
 
 (17) (1) (18)
Balance, March 31, 2019972,786
 $19,171
 $(123) $15,321
 $(3,012) $2,347
 $33,704
Net income
 
 
 484
 
 10
 494
Long-term incentive plan activity320
 14
 
 
 
 
 14
Employee stock purchase plan issuances311
 24
 
 
 
 
 24
Changes in equity of noncontrolling interests
 
 
 
 
 3
 3
Common stock dividends
($0.36/common share)

 
 
 (353) 
 
 (353)
Other comprehensive income, net of income taxes
 
 
 
 22
 (1) 21
Balance, June 30, 2019973,417
 $19,209
 $(123) $15,452
 $(2,990) $2,359
 $33,907

See the Combined Notes to Consolidated Financial Statements
15



EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Operating revenues$3,609
 $3,958
 $8,012
 $8,937
Operating revenues from affiliates271
 252
 601
 569
Total operating revenues3,880

4,210

8,613

9,506
Operating expenses       
Purchased power and fuel1,945
 2,289
 4,655
 5,493
Purchased power and fuel from affiliates(3) 3
 (9) 4
Operating and maintenance1,053
 1,117
 2,174
 2,185
Operating and maintenance from affiliates136
 149
 277
 299
Depreciation and amortization300
 409
 604
 814
Taxes other than income taxes116
 129
 246
 264
Total operating expenses3,547

4,096

7,947

9,059
Gain on sales of assets and businesses12
 33
 12
 33
Operating income345

147

678

480
Other income and (deductions)       
Interest expense, net(78) (107) (179) (209)
Interest expense to affiliates(9) (9) (18) (18)
Other, net602
 171
 (168) 601
Total other income and (deductions)515

55

(365)
374
Income before income taxes860
 202
 313
 854
Income taxes329
 78
 (59) 301
Equity in losses of unconsolidated affiliates(2) (6) (4) (13)
Net income529

118

368

540
Net income (loss) attributable to noncontrolling interests53
 10
 (153) 68
Net income attributable to membership interest$476

$108

$521

$472
Comprehensive income, net of income taxes       
Net income$529
 $118
 $368
 $540
Other comprehensive income (loss), net of income taxes       
Unrealized loss on cash flow hedges
 (1) (1) 
Unrealized loss on investments in unconsolidated affiliates
 (2) 
 (4)
Unrealized gain (loss) on foreign currency translation2
 2
 (6) 4
Other comprehensive income (loss)2

(1)
(7)

Comprehensive income531

117

361

540
Comprehensive income (loss) attributable to noncontrolling interests53
 9
 (153) 66
Comprehensive income attributable to membership interest$478
 $108
 $514
 $474

See the Combined Notes to Consolidated Financial Statements
16


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$368
 $540
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization1,320
 1,580
Asset impairments18
 9
Gain on sales of assets and businesses(12) (33)
Deferred income taxes and amortization of investment tax credits(54) 151
Net fair value changes related to derivatives(193) 114
Net realized and unrealized losses (gains) on NDT funds196
 (404)
Other non-cash operating activities136
 (50)
Changes in assets and liabilities:
 
Accounts receivable1,443
 472
Receivables from and payables to affiliates, net68
 (18)
Inventories(34) 32
Accounts payable and accrued expenses(666) (507)
Option premiums (paid) received, net(102) 48
Collateral posted, net342
 (318)
Income taxes26
 321
Pension and non-pension postretirement benefit contributions(243) (158)
Other assets and liabilities(1,332) (351)
Net cash flows provided by operating activities1,281

1,428
Cash flows from investing activities   
Capital expenditures(930) (890)
Proceeds from NDT fund sales2,488
 6,920
Investment in NDT funds(2,540) (6,847)
Collection of DPP1,102
 
Proceeds from sales of assets and businesses
 14
Changes in Exelon intercompany money pool
 (179)
Other investing activities6
 8
Net cash flows provided by (used in) investing activities126

(974)
Cash flows from financing activities   
Changes in short-term borrowings(220) 
Proceeds from short-term borrowings with maturities greater than 90 days500
 
Issuance of long-term debt2,403
 40
Retirement of long-term debt(2,936) (130)
Changes in Exelon intercompany money pool
 (100)
Distributions to member(937) (449)
Other financing activities(30) (21)
Net cash flows used in financing activities(1,220)
(660)
Increase (decrease) in cash, cash equivalents and restricted cash187
 (206)
Cash, cash equivalents and restricted cash at beginning of period449
 903
Cash, cash equivalents and restricted cash at end of period$636

$697
    
Supplemental cash flow information   
Decrease in capital expenditures not paid$(108) $(30)
Increase in DPP1,754
 
Increase in PPE related to ARO update
 301
    

See the Combined Notes to Consolidated Financial Statements
17


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$483
 $303
Restricted cash and cash equivalents153
 146
Accounts receivable   
Customer accounts receivable1,117 2,973
Customer allowance for credit losses(33) (80)
Customer accounts receivable, net1,084
 2,893
Other accounts receivable360 619
Other accounts receivable, net360
 619
Mark-to-market derivative assets570
 675
Receivables from affiliates118
 190
Unamortized energy contract assets44
 47
Inventories, net   
Fossil fuel and emission allowances220
 236
Materials and supplies1,075
 1,026
Renewable energy credits399
 336
Other1,343
 605
Total current assets5,849

7,076
Property, plant and equipment (net of accumulated depreciation and amortization of $12,051 and $12,017 as of June 30, 2020 and December 31, 2019, respectively)23,954
 24,193
Deferred debits and other assets   
Nuclear decommissioning trust funds12,730
 13,190
Investments192
 235
Goodwill47
 47
Mark-to-market derivative assets466
 508
Prepaid pension asset1,613
 1,438
Unamortized energy contract assets320
 336
Deferred income taxes11
 12
Other1,821
 1,960
Total deferred debits and other assets17,200

17,726
Total assets(a)
$47,003

$48,995

See the Combined Notes to Consolidated Financial Statements
18


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND EQUITY   
Current liabilities   
Short-term borrowings$600
 $320
Long-term debt due within one year785
 2,624
Long-term debt to affiliates due within one year554
 558
Accounts payable1,075
 1,692
Accrued expenses621
 786
Payables to affiliates113
 117
Mark-to-market derivative liabilities173
 215
Unamortized energy contract liabilities9
 17
Renewable energy credit obligation478
 443
Other430
 517
Total current liabilities4,838
 7,289
Long-term debt5,768
 4,464
Long-term debt to affiliates326
 328
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits3,701
 3,752
Asset retirement obligations10,819
 10,603
Non-pension postretirement benefit obligations868
 878
Spent nuclear fuel obligation1,206
 1,199
Payables to affiliates2,751
 3,103
Mark-to-market derivative liabilities154
 123
Unamortized energy contract liabilities10
 11
Other1,335
 1,415
Total deferred credits and other liabilities20,844
 21,084
Total liabilities(a)
31,776
 33,165
Commitments and contingencies

 

Equity   
Member’s equity   
Membership interest9,569
 9,566
Undistributed earnings3,534
 3,950
Accumulated other comprehensive loss, net(39) (32)
Total member’s equity13,064
 13,484
Noncontrolling interests2,163
 2,346
Total equity15,227
 15,830
Total liabilities and equity$47,003
 $48,995
__________
(a)Generation’s consolidated assets include $9,916 million and $9,512 million at June 30, 2020 and December 31, 2019, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $3,505 million and $3,429 million at June 30, 2020 and December 31, 2019, respectively, of certain VIEs for which the VIE creditors do not have recourse to Generation. See Note 16 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements
19


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
 Member’s Equity    
(In millions)
Membership
Interest
 
Undistributed
Earnings
 
Accumulated
Other
Comprehensive
Loss, net
 
Noncontrolling
Interests
 Total Equity
Balance, December 31, 2019$9,566
 $3,950
 $(32) $2,346
 $15,830
Net income (loss)
 45
 
 (206) (161)
Changes in equity of noncontrolling interests
 
 
 (11) (11)
Sale of noncontrolling interests2
 
 
 
 2
Distributions to member
 (468) 
 
 (468)
Other comprehensive loss, net of income taxes
 
 (9) 
 (9)
Balance, March 31, 2020$9,568

$3,527

$(41)
$2,129

$15,183
Net income
 476
 
 53
 529
Changes in equity of noncontrolling interests
 
 
 (19) (19)
Sale of noncontrolling interests1
 
 
 
 1
Distributions to member
 (469) 
 
 (469)
Other comprehensive income, net of income taxes
 
 2
 
 2
Balance, June 30, 2020$9,569
 $3,534
 $(39) $2,163
 $15,227

 Six Months Ended June 30, 2019
 Member’s Equity    
(In millions)
Membership
Interest
 
Undistributed
Earnings
 
Accumulated
Other
Comprehensive
Loss, net
 
Noncontrolling
Interests
 Total Equity
Balance, December 31, 2018$9,518
 $3,724
 $(38) $2,304
 $15,508
Net income
 363
 
 59
 422
Changes in equity of noncontrolling interests
 
 
 (17) (17)
Sale of noncontrolling interests7
 
 
 
 7
Distributions to member
 (225) 
 
 (225)
Other comprehensive income, net of income taxes
 
 2
 (1) 1
Balance, March 31, 2019$9,525
 $3,862
 $(36) $2,345
 $15,696
Net income
 108
 
 10
 118
Changes in equity of noncontrolling interests
 
 
 3
 3
Distributions to member
 (224) 
 
 (224)
Other comprehensive loss, net of income taxes
 
 
 (1) (1)
Balance, June 30, 2019$9,525
 $3,746
 $(36) $2,357
 $15,592


See the Combined Notes to Consolidated Financial Statements
20


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Electric operating revenues$1,431
 $1,360
 $2,853
 $2,792
Revenues from alternative revenue programs(25) (14) (13) (42)
Operating revenues from affiliates11
 5
 16
 9
Total operating revenues1,417

1,351

2,856

2,759
Operating expenses       
Purchased power380
 316
 770
 705
Purchased power from affiliate84
 91
 181
 187
Operating and maintenance469
 245
 713
 504
Operating and maintenance from affiliate67
 60
 140
 122
Depreciation and amortization274
 257
 547
 508
Taxes other than income taxes71
 71
 146
 148
Total operating expenses1,345

1,040

2,497

2,174
Gain on sales of assets
 
 
 3
Operating income72

311

359

588
Other income and (deductions)       
Interest expense, net(95) (86) (186) (171)
Interest expense to affiliates(3) (3) (6) (7)
Other, net11
 10
 22
 19
Total other income and (deductions)(87)
(79)
(170)
(159)
(Loss) income before income taxes(15) 232
 189
 429
Income taxes46
 46
 82
 85
Net (loss) income$(61)
$186

$107

$344
Comprehensive (loss) income$(61) $186
 $107
 $344


21


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$107
 $344
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation, amortization and accretion547
 508
Asset impairments15
 
Deferred income taxes and amortization of investment tax credits129
 64
Other non-cash operating activities283
 87
Changes in assets and liabilities:   
Accounts receivable(92) 56
Receivables from and payables to affiliates, net(6) (16)
Inventories(7) (5)
Accounts payable and accrued expenses4
 (121)
Collateral received (posted), net(3) 11
Income taxes(90) 43
Pension and non-pension postretirement benefit contributions(144) (68)
Other assets and liabilities(245) (236)
Net cash flows provided by operating activities498

667
Cash flows from investing activities   
Capital expenditures(1,029) (961)
Other investing activities(4) 17
Net cash flows used in investing activities(1,033)
(944)
Cash flows from financing activities   
Changes in short-term borrowings(130) 303
Issuance of long-term debt1,000
 400
Retirement of long-term debt
 (300)
Dividends paid on common stock(249) (254)
Contributions from parent249
 124
Other financing activities(14) (10)
Net cash flows provided by financing activities856

263
Increase (decrease) in cash, cash equivalents and restricted cash321
 (14)
Cash, cash equivalents and restricted cash at beginning of period403
 330
Cash, cash equivalents and restricted cash at end of period$724

$316
    
Supplemental cash flow information   
Increase (decrease) in capital expenditures not paid$18
 $(77)

See the Combined Notes to Consolidated Financial Statements
22


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
   Cash and cash equivalents$403
 $90
   Restricted cash and cash equivalents155
 150
   Accounts receivable   
   Customer accounts receivable706 604
   Customer allowance for credit losses(72) (59)
       Customer accounts receivable, net634
 545
   Other accounts receivable361 306
   Other allowance for credit losses(22) (20)
       Other accounts receivable, net339
 286
   Receivables from affiliates23
 28
   Inventories, net166
 159
   Regulatory assets271
 281
   Other59
 44
   Total current assets2,050

1,583
Property, plant and equipment (net of accumulated depreciation and amortization of $5,424 and $5,168 as of June 30, 2020 and December 31, 2019, respectively)23,717
 23,107
Deferred debits and other assets   
   Regulatory assets1,610
 1,480
   Investments6
 6
   Goodwill2,625
 2,625
   Receivables from affiliates2,374
 2,622
   Prepaid pension asset1,079
 995
   Other435
 347
   Total deferred debits and other assets8,129

8,075
Total assets$33,896

$32,765

See the Combined Notes to Consolidated Financial Statements
23


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities   
   Short-term borrowings$
 $130
   Long-term debt due within one year500
 500
   Accounts payable579
 527
   Accrued expenses330
 385
   Payables to affiliates92
 103
   Customer deposits116
 118
   Regulatory liabilities175
 200
   Mark-to-market derivative liabilities31
 32
   Deferred Prosecution Agreement payments200
 
   Other122
 122
   Total current liabilities2,145
 2,117
Long-term debt8,980
 7,991
Long-term debt to financing trust205
 205
Deferred credits and other liabilities   
   Deferred income taxes and unamortized investment tax credits4,201
 4,021
   Asset retirement obligations127
 128
   Non-pension postretirement benefits obligations177
 180
   Regulatory liabilities6,309
 6,542
   Mark-to-market derivative liabilities287
 269
   Other681
 635
   Total deferred credits and other liabilities11,782
 11,775
   Total liabilities23,112
 22,088
Commitments and contingencies

 

Shareholders’ equity   
   Common stock1,588
 1,588
   Other paid-in capital7,821
 7,572
   Retained deficit unappropriated(1,700) (1,639)
   Retained earnings appropriated3,075
 3,156
   Total shareholders’ equity10,784
 10,677
Total liabilities and shareholders’ equity$33,896
 $32,765

See the Combined Notes to Consolidated Financial Statements
24


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)
Common
Stock
 
Other
Paid-In
Capital
 
Retained Deficit
Unappropriated
 
Retained
Earnings
Appropriated
 
Total
Shareholders’
Equity
Balance, December 31, 2019$1,588
 $7,572
 $(1,639) $3,156
 $10,677
Net income
 
 168
 
 168
Appropriation of retained earnings for future dividends
 
 (168) 168
 
Common stock dividends
 
 
 (125) (125)
Contributions from parent
 125
 
 
 125
Balance, March 31, 2020$1,588
 $7,697
 $(1,639) $3,199
 $10,845
Net loss
 
 (61) 
 (61)
Common stock dividends
 
 
 (124) (124)
Contributions from parent
 124
 
 
 124
Balance, June 30, 2020$1,588
 $7,821
 $(1,700) $3,075
 $10,784
          
 Six Months Ended June 30, 2019
(In millions)
Common
Stock
 
Other
Paid-In
Capital
 
Retained Deficit
Unappropriated
 
Retained
Earnings
Appropriated
 
Total
Shareholders’
Equity
Balance, December 31, 2018$1,588
 $7,322
 $(1,639) $2,976
 $10,247
Net income
 
 157
 
 157
Appropriation of retained earnings for future dividends
 
 (157) 157
 
Common stock dividends
 
 
 (127) (127)
Contributions from parent
 63
 
 
 63
Balance, March 31, 2019$1,588
 $7,385
 $(1,639) $3,006
 $10,340
Net income
 
 186
 
 186
Appropriation of retained earnings for future dividends
 
 (186) 186
 
Common stock dividends
 
 
 (127) (127)
Contributions from parent
 61
 
 
 61
Balance, June 30, 2019$1,588
 $7,446
 $(1,639) $3,065
 $10,460

See the Combined Notes to Consolidated Financial Statements
25



PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Electric operating revenues$580
 $567
 $1,180
 $1,188
Natural gas operating revenues95
 89
 304
 369
Revenues from alternative revenue programs4
 (3) 5
 (6)
Operating revenues from affiliates2
 2
 4
 3
Total operating revenues681

655

1,493

1,554
Operating expenses       
Purchased power142
 124
 306
 275
Purchased fuel34
 32
 117
 166
Purchased power from affiliate40
 35
 76
 79
Operating and maintenance235
 162
 414
 349
Operating and maintenance from affiliates40
 37
 78
 75
Depreciation and amortization88
 83
 173
 164
Taxes other than income taxes39
 37
 78
 79
Total operating expenses618

510

1,242

1,187
Operating income63

145

251

367
Other income and (deductions)       
Interest expense, net(33) (30) (65) (61)
Interest expense to affiliates(3) (3) (6) (6)
Other, net5
 3
 7
 7
Total other income and (deductions)(31)
(30)
(64)
(60)
Income before income taxes32
 115
 187

307
Income taxes(7) 13
 9
 37
Net income$39

$102

$178

$270
Comprehensive income$39
 $102
 $178
 $270

See the Combined Notes to Consolidated Financial Statements
26


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$178
 $270
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization173
 164
Deferred income taxes and amortization of investment tax credits6
 8
Other non-cash operating activities25
 15
Changes in assets and liabilities:   
Accounts receivable22
 39
Receivables from and payables to affiliates, net3
 (4)
Inventories10
 12
Accounts payable and accrued expenses27
 (31)
Income taxes15
 (11)
Pension and non-pension postretirement benefit contributions(18) (27)
Other assets and liabilities(48) (117)
Net cash flows provided by operating activities393

318
Cash flows from investing activities   
Capital expenditures(512) (447)
Changes in Exelon intercompany money pool68
 
Other investing activities3
 4
Net cash flows used in investing activities(441)
(443)
Cash flows from financing activities   
Issuance of long-term debt350
 
Changes in Exelon intercompany money pool
 52
Dividends paid on common stock(170) (180)
Contributions from parent231
 145
Other financing activities(3) (1)
Net cash flows provided by financing activities408

16
Increase (decrease) in cash, cash equivalents and restricted cash360
 (109)
Cash, cash equivalents and restricted cash at beginning of period27
 135
Cash, cash equivalents and restricted cash at end of period$387

$26
    
Supplemental cash flow information   
Increase in capital expenditures not paid$42
 $33

See the Combined Notes to Consolidated Financial Statements
27


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$380
 $21
Restricted cash and cash equivalents7
 6
Accounts receivable   
Customer accounts receivable379 412
Customer allowance for credit losses(71) (55)
Customer accounts receivable, net308
 357
Other accounts receivable128 145
Other allowance for credit losses(7) (7)
Other accounts receivable, net121
 138
Receivables from affiliates
 1
Receivable from Exelon intercompany money pool
 68
Inventories, net   
Fossil fuel26
 36
Materials and supplies35
 35
Prepaid utility taxes76
 
Regulatory assets46
 41
Other21
 19
Total current assets1,020

722
Property, plant and equipment (net of accumulated depreciation and amortization of $3,782 and $3,718 as of June 30, 2020 and December 31, 2019, respectively)9,688
 9,292
Deferred debits and other assets   
Regulatory assets604
 554
Investments27
 27
Receivables from affiliates376
 480
Prepaid pension asset379
 365
Other26
 29
Total deferred debits and other assets1,412

1,455
Total assets$12,120

$11,469

See the Combined Notes to Consolidated Financial Statements
28


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDER'S EQUITY   
Current liabilities   
Accounts payable$463
 $387
Accrued expenses92
 101
Payables to affiliates57
 55
Customer deposits67
 69
Regulatory liabilities116
 91
Other29
 19
Total current liabilities824
 722
Long-term debt3,752
 3,405
Long-term debt to financing trusts184
 184
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits2,139
 2,080
Asset retirement obligations26
 28
Non-pension postretirement benefits obligations287
 288
Regulatory liabilities404
 510
Other86
 74
Total deferred credits and other liabilities2,942
 2,980
Total liabilities7,702
 7,291
Commitments and contingencies

 

Shareholder’s equity   
Common stock2,997
 2,766
Retained earnings1,421
 1,412
Total shareholder’s equity4,418
 4,178
Total liabilities and shareholder's equity$12,120
 $11,469

See the Combined Notes to Consolidated Financial Statements
29


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(Unaudited)
 Six months ended June 30, 2020
(In millions)
Common
Stock
 
Retained
Earnings
 
Total
Shareholder's
Equity
Balance, December 31, 2019$2,766
 $1,412
 $4,178
Net income
 140
 140
Common stock dividends
 (85) (85)
Contributions from parent231
 
 231
Balance, March 31, 2020$2,997
 $1,467
 $4,464
Net income
 39
 39
Common stock dividends
 (85) (85)
Balance, June 30, 2020$2,997
 $1,421
 $4,418
      
 Six months ended June 30, 2019
(In millions)Common
Stock
 Retained
Earnings
 Total
Shareholder's
Equity
Balance, December 31, 2018$2,578
 $1,242
 $3,820
Net income
 168
 168
Common stock dividends
 (90) (90)
Contributions from parent145
 
 145
Balance, March 31, 2019$2,723
 $1,320
 $4,043
Net income
 102
 102
Common stock dividends
 (90) (90)
Balance, June 30, 2019$2,723
 $1,332
 $4,055

See the Combined Notes to Consolidated Financial Statements
30



BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Electric operating revenues$530
 $540
 $1,125
 $1,191
Natural gas operating revenues119
 97
 419
 405
Revenues from alternative revenue programs(37) 6
 
 17
Operating revenues from affiliates4
 6
 10
 12
Total operating revenues616

649

1,554

1,625
Operating expenses       
Purchased power107
 131
 221
 322
Purchased fuel18
 21
 95
 116
Purchased power and fuel from affiliate69
 56
 167
 132
Operating and maintenance146
 142
 293
 294
Operating and maintenance from affiliates41
 40
 83
 78
Depreciation and amortization129
 117
 272
 252
Taxes other than income taxes63
 62
 132
 131
Total operating expenses573

569

1,263

1,325
Operating income43

80

291

300
Other income and (deductions)       
Interest expense, net(32) (29) (64) (58)
Other, net6
 5
 10
 11
Total other income and (deductions)(26)
(24)
(54)
(47)
Income before income taxes17
 56
 237

253
Income taxes(22) 11
 18
 47
Net income$39

$45

$219

$206
Comprehensive income$39
 $45
 $219
 $206

See the Combined Notes to Consolidated Financial Statements
31


BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$219
 $206
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization272
 252
Deferred income taxes and amortization of investment tax credits22
 47
Other non-cash operating activities50
 41
Changes in assets and liabilities:   
Accounts receivable19
 85
Receivables from and payables to affiliates, net(26) (14)
Inventories10
 5
Accounts payable and accrued expenses(15) (73)
Collateral posted, net
 (5)
Income taxes26
 (29)
Pension and non-pension postretirement benefit contributions(68) (42)
Other assets and liabilities(5) (21)
Net cash flows provided by operating activities504

452
Cash flows from investing activities   
Capital expenditures(548) (542)
Other investing activities(4) 4
Net cash flows used in investing activities(552)
(538)
Cash flows from financing activities   
Changes in short-term borrowings(76) 194
Issuance of long-term debt400
 
Dividends paid on common stock(123) (112)
Contributions from parent26
 
Other financing activities(8) 
Net cash flows provided by financing activities219

82
Increase (decrease) in cash, cash equivalents and restricted cash171
 (4)
Cash, cash equivalents and restricted cash at beginning of period25
 13
Cash, cash equivalents and restricted cash at end of period$196

$9
    
Supplemental cash flow information   
(Decrease) increase in capital expenditures not paid$(14) $24

See the Combined Notes to Consolidated Financial Statements
32


BALTIMORE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$195
 $24
Restricted cash and cash equivalents1
 1
Accounts receivable   
Customer accounts receivable318 329
Customer allowance for credit losses(23) (12)
    Customer accounts receivable, net295
 317
Other accounts receivable121 152
Other allowance for credit losses(6) (5)
     Other accounts receivable, net115
 147
Receivables from affiliates
 1
Inventories, net   
Fossil fuel22
 30
Materials and supplies44
 46
Prepaid utility taxes
 78
Regulatory assets177
 183
Other6
 6
Total current assets855

833
Property, plant and equipment (net of accumulated depreciation and amortization of $3,906 and $3,834 as of June 30, 2020 and December 31, 2019, respectively)9,332
 8,990
Deferred debits and other assets   
Regulatory assets464
 454
Investments10
 7
Prepaid pension asset295
 264
Other71
 86
Total deferred debits and other assets840

811
Total assets$11,027

$10,634

See the Combined Notes to Consolidated Financial Statements
33


BALTIMORE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDER'S EQUITY   
Current liabilities   
Short-term borrowings$
 $76
Accounts payable244
 243
Accrued expenses120
 152
Payables to affiliates41
 66
Customer deposits118
 120
Regulatory liabilities44
 33
Other63
 63
Total current liabilities630
 753
Long-term debt3,663
 3,270
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits1,480
 1,396
Asset retirement obligations22
 22
Non-pension postretirement benefits obligations193
 199
Regulatory liabilities1,131
 1,195
Other103
 116
Total deferred credits and other liabilities2,929
 2,928
Total liabilities7,222
 6,951
Commitments and contingencies

 

Shareholder's equity   
Common stock1,933
 1,907
Retained earnings1,872
 1,776
Total shareholder's equity3,805
 3,683
Total liabilities and shareholder's equity$11,027
 $10,634



See the Combined Notes to Consolidated Financial Statements
34


BALTIMORE GAS AND ELECTRIC COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)
Common
Stock
 
Retained
Earnings
 
Total
Shareholder's
Equity
Balance, December 31, 2019$1,907
 $1,776
 $3,683
Net income
 181
 181
Common stock dividends
 (62) (62)
Balance, March 31, 2020$1,907
 $1,895
 $3,802
Net income
 39
 39
Common stock dividends
 (62) (62)
Contributions from parent26
 
 26
Balance, June 30, 2020$1,933

$1,872
 $3,805
      
 Six Months Ended June 30, 2019
(In millions)
Common
Stock
 
Retained
Earnings
 
Total
Shareholder's
Equity
Balance, December 31, 2018$1,714
 $1,640
 $3,354
Net income
 160
 160
Common stock dividends
 (56) (56)
Balance, March 31, 2019$1,714
 $1,744
 $3,458
Net income
 45
 45
Common stock dividends
 (55) (55)
Balance, June 30, 2019$1,714
 $1,734
 $3,448

See the Combined Notes to Consolidated Financial Statements
35



PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Electric operating revenues$1,047
 $1,067
 $2,133
 $2,205
Natural gas operating revenues30
 24
 94
 95
Revenues from alternative revenue programs(64) (3) (47) 12
Operating revenues from affiliates3
 3
 7
 7
Total operating revenues1,016
 1,091
 2,187
 2,319
Operating expenses       
Purchased power286
 303
 586
 658
Purchased fuel11
 9
 42
 43
Purchased power from affiliates78
 70
 182
 171
Operating and maintenance245
 213
 464
 452
Operating and maintenance from affiliates36
 35
 74
 68
Depreciation and amortization191
 188
 385
 369
Taxes other than income taxes109
 108
 222
 220
Total operating expenses956
 926
 1,955
 1,981
Gain on sales of assets
 
 2
 
Operating income60
 165

234
 338
Other income and (deductions)       
Interest expense, net(67) (67) (134) (131)
Other, net14
 14
 26
 27
Total other income and (deductions)(53) (53) (108) (104)
Income before income taxes7
 112
 126
 234
Income taxes(87) 6
 (76) 11
Net income$94
 $106
 $202
 $223
Comprehensive income$94
 $106
 $202
 $223

See the Combined Notes to Consolidated Financial Statements
36


PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities  
Net income$202
 $223
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization385
 369
Deferred income taxes and amortization of investment tax credits(74) 2
Other non-cash operating activities107
 54
Changes in assets and liabilities:   
Accounts receivable(64) (34)
Receivables from and payables to affiliates, net(22) (8)
Inventories6
 (25)
Accounts payable and accrued expenses14
 (25)
Income taxes(30) (12)
Pension and non-pension postretirement benefit contributions(31) (11)
Other assets and liabilities(146) (114)
Net cash flows provided by operating activities347
 419
Cash flows from investing activities   
Capital expenditures(686) (698)
Other investing activities2
 2
Net cash flows used in investing activities(684)
(696)
Cash flows from financing activities   
Changes in short-term borrowings(189) (27)
Repayments of short-term borrowings with maturities greater than 90 days
 (125)
Issuance of long-term debt373
 410
Retirement of long-term debt(35) (125)
Changes in Exelon intercompany money pool10
 3
Distributions to member(268) (216)
Contributions from member359
 283
Other financing activities(8) (4)
Net cash flows provided by financing activities242
 199
Decrease in cash, cash equivalents and restricted cash(95) (78)
Cash, cash equivalents and restricted cash at beginning of period181
 186
Cash, cash equivalents and restricted cash at end of period$86
 $108
    
Supplemental cash flow information   
Decrease in capital expenditures not paid$(24) $(74)

See the Combined Notes to Consolidated Financial Statements
37


PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$39
 $131
Restricted cash and cash equivalents36
 36
Accounts receivable   
Customer accounts receivable554 516
Customer allowance for credit losses(62) (37)
Customer accounts receivable, net492
 479
Other accounts receivable234 190
Other allowance for credit losses(26) (16)
Other accounts receivable, net208
 174
Receivables from affiliates1
 1
Inventories, net   
Fossil fuel5
 8
Materials and supplies187
 190
Regulatory assets449
 412
Other75
 49
Total current assets1,492

1,480
Property, plant and equipment (net of accumulated depreciation and amortization of $1,591 and $1,213 as of June 30, 2020 and December 31, 2019, respectively)14,692
 14,296
Deferred debits and other assets   
Regulatory assets1,962
 2,061
Investments135
 135
Goodwill4,005
 4,005
Prepaid pension asset396
 406
Deferred income taxes13
 13
Other309
 323
Total deferred debits and other assets6,820

6,943
Total assets(a)
$23,004

$22,719

See the Combined Notes to Consolidated Financial Statements
38


PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND MEMBER'S EQUITY   
Current liabilities   
Short-term borrowings$19
 $208
Long-term debt due within one year350
 103
Accounts payable486
 462
Accrued expenses238
 296
Payables to affiliates76
 98
Borrowings from Exelon intercompany money pool22
 12
Customer deposits115
 117
Regulatory liabilities148
 70
Unamortized energy contract liabilities103
 115
Other128
 131
Total current liabilities1,685
 1,612
Long-term debt6,540
 6,460
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits2,350
 2,278
Asset retirement obligations57
 57
Non-pension postretirement benefit obligations87
 93
Regulatory liabilities1,553
 1,707
Unamortized energy contract liabilities282
 327
Other549
 577
Total deferred credits and other liabilities4,878
 5,039
Total liabilities(a)
13,103
 13,111
Commitments and contingencies

 

Member's equity   
Membership interest9,977
 9,618
Undistributed losses(76) (10)
Total member's equity9,901

9,608
Total liabilities and member's equity$23,004

$22,719
__________
(a)PHI’s consolidated total assets include $21 million and $20 million at June 30, 2020 and December 31, 2019, respectively, of PHI's consolidated VIE that can only be used to settle the liabilities of the VIE. PHI’s consolidated total liabilities include $37 million and $44 million at June 30, 2020 and December 31, 2019, respectively, of PHI's consolidated VIE for which the VIE creditors do not have recourse to PHI. See Note 16 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements
39


PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)Membership Interest Undistributed Earnings (Losses) Member's Equity
Balance, December 31, 2019$9,618
 $(10) $9,608
Net income
 108
 108
Distributions to member
 (134) (134)
Contributions from member144
 
 144
Balance, March 31, 2020$9,762
 $(36) $9,726
Net income
 94
 94
Distributions to member
 (134) (134)
Contributions from member215
 
 215
Balance, June 30, 2020$9,977
 $(76) $9,901
 Six Months Ended June 30, 2019
(In millions)Membership Interest Undistributed Earnings (Losses) Member's Equity
Balance, December 31, 2018$9,220
 $62
 $9,282
Net income
 117
 117
Distributions to member
 (128) (128)
Contributions from member19
 
 19
Balance, March 31, 2019$9,239
 $51
 $9,290
Net income
 106
 106
Distributions to member
 (88) (88)
Contributions from member264
 
 264
Balance, June 30, 2019$9,503
 $69
 $9,572

See the Combined Notes to Consolidated Financial Statements
40



POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020
2019 2020 2019
Operating revenues       
Electric operating revenues$506
 $531
 $1,034
 $1,090
Revenues from alternative revenue programs(13) (1) 2
 13
Operating revenues from affiliates1
 1
 3
 3
Total operating revenues494
 531
 1,039
 1,106
Operating expenses       
Purchased power78
 92
 164
 209
Purchased power from affiliate60
 52
 139
 122
Operating and maintenance67
 59
 128
 123
Operating and maintenance from affiliates52
 52
 103
 107
Depreciation and amortization92
 93
 186
 186
Taxes other than income taxes87
 90
 179
 182
Total operating expenses436
 438
 899
 929
Operating income58
 93
 140
 177
Other income and (deductions)       
Interest expense, net(34) (34) (68) (68)
Other, net9
 7
 18
 14
Total other income and (deductions)(25) (27) (50) (54)
Income before income taxes33
 66
 90
 123
Income taxes(24) 2
 (19) 4
Net income$57
 $64
 $109
 $119
Comprehensive income$57
 $64
 $109
 $119

See the Combined Notes to Consolidated Financial Statements
41


POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020 2019
Cash flows from operating activities   
Net income$109
 $119
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization186
 186
Deferred income taxes and amortization of investment tax credits(22) 10
Other non-cash operating activities11
 8
Changes in assets and liabilities:   
Accounts receivable(45) (36)
Receivables from and payables to affiliates, net(22) 4
Inventories3
 (20)
Accounts payable and accrued expenses11
 (25)
Income taxes(18) (23)
Pension and non-pension postretirement benefit contributions(6) (6)
Other assets and liabilities(52) (40)
Net cash flows provided by operating activities155
 177
Cash flows from investing activities   
Capital expenditures(324) (298)
Changes in PHI intercompany money pool
 (38)
Other investing activities(3) 1
Net cash flows used in investing activities(327) (335)
Cash flows from financing activities   
Changes in short-term borrowings(68) (40)
Issuance of long-term debt150
 260
Retirement of long-term debt(1) (117)
Changes in PHI intercompany money pool50
 
Dividends paid on common stock(101) (72)
Contributions from parent137
 129
Other financing activities(6) (3)
Net cash flows provided by financing activities161
 157
Decrease in cash, cash equivalents and restricted cash(11) (1)
Cash, cash equivalents and restricted cash at beginning of period63
 53
Cash, cash equivalents and restricted cash at end of period$52
 $52
    
Supplemental cash flow information   
Decrease in capital expenditures not paid$(28) $(18)

See the Combined Notes to Consolidated Financial Statements
42


POTOMAC ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020
December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$19
 $30
Restricted cash and cash equivalents33
 33
Accounts receivable   
Customer accounts receivable272 244
Customer allowance for credit losses(24) (13)
Customer accounts receivable, net248
 231
Other accounts receivable121 98
Other allowance for credit losses(11) (7)
Other accounts receivable, net110
 91
Receivables from affiliates2
 
Inventories, net109
 112
Regulatory assets215
 188
Other11
 11
Total current assets747

696
Property, plant and equipment (net of accumulated depreciation and amortization of $3,604 and $3,517 as of June 30, 2020 and December 31, 2019, respectively)7,102
 6,909
Deferred debits and other assets   
Regulatory assets556
 584
Investments111
 110
Prepaid pension asset290
 296
Other63
 66
Total deferred debits and other assets1,020

1,056
Total assets$8,869

$8,661

See the Combined Notes to Consolidated Financial Statements
43


POTOMAC ELECTRIC POWER COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDER'S EQUITY   
Current liabilities   
Short-term borrowings$14
 $82
Long-term debt due within one year3
 2
Accounts payable195
 195
Accrued expenses123
 156
Payables to affiliates46
 66
Borrowings from PHI intercompany money pool50
 
Customer deposits57
 57
Regulatory liabilities48
 8
Merger related obligation39
 39
Current portion of DC PLUG obligation30
 30
Other16
 22
Total current liabilities621

657
Long-term debt3,010
 2,862
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits1,168
 1,131
Asset retirement obligations41
 41
Non-pension postretirement benefit obligations15
 20
Regulatory liabilities686
 746
Other276
 297
Total deferred credits and other liabilities2,186

2,235
Total liabilities5,817

5,754
Commitments and contingencies

 

Shareholder's equity   
Common stock1,933
 1,796
Retained earnings1,119
 1,111
Total shareholder's equity3,052
 2,907
Total liabilities and shareholder's equity$8,869
 $8,661

See the Combined Notes to Consolidated Financial Statements
44


POTOMAC ELECTRIC POWER COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2019$1,796
 $1,111
 $2,907
Net income
 52
 52
Common stock dividends
 (28) (28)
Contributions from parent137
 
 137
Balance, March 31, 2020$1,933
 $1,135
 $3,068
Net income
 57
 57
Common stock dividends
 (73) (73)
Balance, June 30, 2020$1,933
 $1,119
 $3,052
 Six Months Ended June 30, 2019
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2018$1,636
 $1,104
 $2,740
Net income
 55
 55
Common stock dividends
 (24) (24)
Contributions from parent14
 
 14
Balance, March 31, 2019$1,650
 $1,135
 $2,785
Net income
 64
 64
Common stock dividends
 (48) (48)
Contributions from parent115
 
 115
Balance, June 30, 2019$1,765
 $1,151
 $2,916


See the Combined Notes to Consolidated Financial Statements
45



DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,

Six Months Ended
June 30,
(In millions)2020
2019
2020
2019
Operating revenues       
Electric operating revenues$260
 $261
 $543
 $568
Natural gas operating revenues30
 24
 94
 95
Revenues from alternative revenue programs(25) 
 (24) 1
Operating revenues from affiliates2
 2
 4
 3
Total operating revenues267

287

617

667
Operating expenses       
Purchased power80
 86
 169
 193
Purchased fuel11
 9
 42
 43
Purchased power from affiliates16
 12
 38
 35
Operating and maintenance54
 39
 97
 84
Operating and maintenance from affiliates38
 38
 75
 76
Depreciation and amortization47
 45
 94
 91
Taxes other than income taxes17
 14
 32
 28
Total operating expenses263

243

547

550
Operating income4

44

70

117
Other income and (deductions)       
Interest expense, net(15) (15) (31) (30)
Other, net2
 5
 5
 7
Total other income and (deductions)(13)
(10)
(26)
(23)
(Loss) income before income taxes(9) 34
 44
 94
Income taxes(28) 4
 (20) 11
Net income$19

$30

$64

$83
Comprehensive income$19
 $30
 $64
 $83

See the Combined Notes to Consolidated Financial Statements
46


DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020
2019
Cash flows from operating activities   
Net income$64
 $83
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization94
 91
Deferred income taxes and amortization of investment tax credits(19) (5)
Other non-cash operating activities40
 11
Changes in assets and liabilities:   
Accounts receivable6
 15
Receivables from and payables to affiliates, net(2) (11)
Inventories
 (3)
Accounts payable and accrued expenses3
 6
Income taxes(12) 11
Pension and non-pension postretirement benefit contributions
 (1)
Other assets and liabilities(21) (26)
Net cash flows provided by operating activities153

171
Cash flows from investing activities   
Capital expenditures(184) (160)
Changes in PHI intercompany money pool(55) 
Other investing activities(3) 1
Net cash flows used in investing activities(242)
(159)
Cash flows from financing activities   
Changes in short-term borrowings(56) 
Issuance of long-term debt100
 
Retirement of long-term debt(1) 
Changes in PHI intercompany money pool
 38
Dividends paid on common stock(66) (70)
Contributions from parent106
 
Other financing activities(1) 
Net cash flows provided by (used in) financing activities82

(32)
Decrease in cash, cash equivalents and restricted cash(7) (20)
Cash, cash equivalents and restricted cash at beginning of period13
 24
Cash, cash equivalents and restricted cash at end of period$6

$4
    
Supplemental cash flow information   
Decrease in capital expenditures not paid$(4) $(17)

See the Combined Notes to Consolidated Financial Statements
47


DELMARVA POWER & LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$6
 $13
Accounts receivable   
Customer accounts receivable145 152
Customer allowance for credit losses(18) (11)
Customer accounts receivable, net127
 141
Other accounts receivable48 42
Other allowance for credit losses(7) (4)
Other accounts receivable, net41
 38
Receivables from affiliates1
 
Receivable from PHI intercompany pool55
 
Inventories, net   
Fossil fuel5
 8
Materials and supplies47
 44
Prepaid utility taxes2
 18
Regulatory assets55
 52
Renewable energy credits21
 9
Other3
 2
Total current assets363

325
Property, plant and equipment (net of accumulated depreciation and amortization of $1,476 and $1,425 as of June 30, 2020 and December 31, 2019, respectively)4,143
 4,035
Deferred debits and other assets   
Regulatory assets222
 222
Goodwill8
 8
Prepaid pension asset166
 171
Other64
 69
Total deferred debits and other assets460

470
Total assets$4,966

$4,830

See the Combined Notes to Consolidated Financial Statements
48


DELMARVA POWER & LIGHT COMPANY
BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDER'S EQUITY   
Current liabilities   
Short-term borrowings$
 $56
Long-term debt due within one year81
 80
Accounts payable113
 112
Accrued expenses34
 46
Payables to affiliates27
 32
Customer deposits35
 36
Regulatory liabilities60
 37
Other17
 15
Total current liabilities367
 414
Long-term debt1,594
 1,487
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits680
 655
Non-pension postretirement benefits obligations15
 16
Regulatory liabilities526
 574
Other100
 104
Total deferred credits and other liabilities1,321

1,349
Total liabilities3,282

3,250
Commitments and contingencies

 

Shareholder's equity   
Common stock1,083
 977
Retained earnings601
 603
Total shareholder's equity1,684

1,580
Total liabilities and shareholder's equity$4,966

$4,830

See the Combined Notes to Consolidated Financial Statements
49


DELMARVA POWER & LIGHT COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2019$977
 $603
 $1,580
Net income
 45
 45
Common stock dividends
 (52) (52)
Contributions from parent6
 
 6
Balance, March 31, 2020983
 596
 1,579
Net income
 19
 19
Common stock dividends
 (14) (14)
Contributions from parent100
 
 100
Balance, June 30, 2020$1,083
 $601
 $1,684

 Six Months Ended June 30, 2019
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2018$914
 $595
 $1,509
Net income
 53
 53
Common stock dividends
 (41) (41)
Balance, March 31, 2019914
 607
 1,521
Net income
 30
 30
Common stock dividends
 (29) (29)
Balance, June 30, 2019$914
 $608
 $1,522


See the Combined Notes to Consolidated Financial Statements
50



ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
(In millions)2020 2019 2020 2019
Operating revenues       
Electric operating revenues$281
 $275
 $556
 $547
Revenues from alternative revenue programs(26) (2) (25) (1)
Operating revenues from affiliates1
 1
 1
 1
Total operating revenues256
 274
 532
 547
Operating expenses       
Purchased power128
 125
 254
 257
Purchased power from affiliate2
 6
 5
 13
Operating and maintenance48
 41
 94
 88
Operating and maintenance from affiliates34
 33
 66
 67
Depreciation and amortization44
 40
 86
 71
Taxes other than income taxes2
 1
 4
 2
Total operating expenses258
 246
 509
 498
Gain on sale of assets
 
 2
 
Operating (loss) income(2)
28
 25
 49
Other income and (deductions)       
Interest expense, net(15) (15) (29) (28)
Other, net2
 1
 3
 4
Total other income and (deductions)(13) (14) (26) (24)
(Loss) income before income taxes(15) 14
 (1) 25
Income taxes(33) 
 (32) 1
Net income$18

$14
 $31
 $24
Comprehensive income$18
 $14
 $31
 $24

See the Combined Notes to Consolidated Financial Statements
51


ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
June 30,
(In millions)2020
2019
Cash flows from operating activities   
Net income$31
 $24
Adjustments to reconcile net income to net cash flows provided by operating activities:   
Depreciation and amortization86
 71
Deferred income taxes and amortization of investment tax credits(30) 2
Other non-cash operating activities34
 7
Changes in assets and liabilities:   
Accounts receivable(23) (11)
Receivables from and payables to affiliates, net9
 (9)
Inventories2
 (1)
Accounts payable and accrued expenses17
 16
Income taxes2
 6
Pension and non-pension postretirement benefit contributions(2) 
Other assets and liabilities(68) (44)
Net cash flows provided by operating activities58
 61
Cash flows from investing activities   
Capital expenditures(178) (227)
Other investing activities5
 
Net cash flows used in investing activities(173) (227)
Cash flows from financing activities   
Changes in short-term borrowings(65) 13
Repayments of short-term borrowings with maturities greater than 90 days
 (125)
Issuance of long-term debt123
 150
Retirement of long-term debt(34) (9)
Changes in PHI intercompany money pool5


Dividends paid on common stock(35) (24)
Contributions from parent116
 155
Other financing activities(1) (1)
Net cash flows provided by financing activities109
 159
Decrease in cash, cash equivalents and restricted cash(6) (7)
Cash, cash equivalents and restricted cash at beginning of period28
 30
Cash, cash equivalents and restricted cash at end of period$22

$23
    
Supplemental cash flow information   
Increase (decrease) in capital expenditures not paid$7
 $(35)

See the Combined Notes to Consolidated Financial Statements
52


ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)June 30, 2020 December 31, 2019
ASSETS   
Current assets   
Cash and cash equivalents$8
 $12
Restricted cash and cash equivalents3
 2
Accounts receivable   
Customer accounts receivable137 121
Customer allowance for credit losses(20) (13)
Customer accounts receivable, net117
 108
Other accounts receivable59 53
Other allowance for credit losses(8) (5)
Other accounts receivable, net51
 48
Receivables from affiliates1
 4
Inventories, net32
 34
Prepaid utility taxes34
 
Regulatory assets71
 57
Other4
 5
Total current assets321
 270
Property, plant and equipment (net of accumulated depreciation and amortization of $1,261 and $1,210 as of June 30, 2020 and December 31, 2019, respectively)3,302
 3,190
Deferred debits and other assets   
Regulatory assets369
 368
Prepaid pension asset47
 52
Other50
 53
Total deferred debits and other assets466
 473
Total assets(a)
$4,089
 $3,933

See the Combined Notes to Consolidated Financial Statements
53


ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In millions)June 30, 2020 December 31, 2019
LIABILITIES AND SHAREHOLDER'S EQUITY   
Current liabilities   
Short-term borrowings$5
 $70
Long-term debt due within one year260
 20
Accounts payable170
 144
Accrued expenses39
 42
Payables to affiliates31
 25
Borrowings from PHI intercompany money pool

5
 
Customer deposits24
 25
Regulatory liabilities40
 25
Other8
 9
Total current liabilities582
 360
Long-term debt1,160
 1,307
Deferred credits and other liabilities   
Deferred income taxes and unamortized investment tax credits590
 577
Non-pension postretirement benefit obligations17
 17
Regulatory liabilities312
 357
Other40
 39
Total deferred credits and other liabilities959
 990
Total liabilities(a)
2,701
 2,657
Commitments and contingencies

 

Shareholder's equity   
Common stock1,270
 1,154
Retained earnings118
 122
Total shareholder's equity1,388

1,276
Total liabilities and shareholder's equity$4,089

$3,933
__________
(a)ACE’s consolidated total assets include $14 million and $17 million at June 30, 2020 and December 31, 2019, respectively, of ACE's consolidated VIE that can only be used to settle the liabilities of the VIE. ACE’s consolidated total liabilities include $31 million and $41 million at June 30, 2020 and December 31, 2019, respectively, of ACE's consolidated VIE for which the VIE creditors do not have recourse to ACE. See Note 16 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements
54


ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
 Six Months Ended June 30, 2020
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2019$1,154
 $122
 $1,276
Net income
 13
 13
Common stock dividends
 (23) (23)
Contributions from parent1
 
 1
Balance, March 31, 20201,155
 112
 1,267
Net income
 18
 18
Common stock dividends
 (12) (12)
Contributions from parent115
 
 115
Balance, June 30, 2020$1,270

$118
 $1,388

 Six Months Ended June 30, 2019
(In millions)Common Stock Retained Earnings Total Shareholder's Equity
Balance, December 31, 2018$979
 $147
 $1,126
Net income
 10
 10
Common stock dividends
 (12) (12)
Contributions from parent5
 
 5
Balance, March 31, 2019984
 145
 1,129
Net income
 14
 14
Common stock dividends
 (12) (12)
Contributions from parent150
 
 150
Balance, June 30, 2019$1,134

$147
 $1,281


See the Combined Notes to Consolidated Financial Statements
55

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 (All Registrants)
Exelon is a utility services holding company engaged in the generation, delivery and marketing of energy through Generation and the energy distribution and transmission businesses through ComEd, PECO, BGE, Pepco, DPL and ACE.
Name of Registrant  Business  Service Territories
Exelon Generation
Company, LLC
 Generation, physical delivery and marketing of power across multiple geographical regions through its customer-facing business, Constellation, which sells electricity to both wholesale and retail customers. Generation also sells natural gas, renewable energy and other energy-related products and services. Five reportable segments: Mid-Atlantic, Midwest, New York, ERCOT and Other Power Regions
     
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 (All Registrants)
Each of the Registrant’s Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated.
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” within the consolidated financial statements and include intercompany eliminations unless otherwise disclosed.
The accompanying consolidated financial statements as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 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 December 31, 2019 Consolidated Balance Sheets were derived from audited financial statements. Financial results for interim periods are not necessarily indicative of results that may be expected for any other

56

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise noted)

Note 1 — Significant Accounting Policies

interim period or for the fiscal year ending December 31, 2020. 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.
COVID-19 (All Registrants)
The Registrants have taken steps to mitigate the potential risks posed by the global outbreak (pandemic) of the 2019 novel coronavirus (COVID-19). The Registrants provide a critical service to their customers and have taken measures to keep employees who operate the business safe and minimize unnecessary risk of exposure to the virus, including extra precautions for employees who work in the field. The Registrants have implemented work from home policies where appropriate and imposed travel limitations on employees. In addition, the Registrants have updated their existing business continuity plans.

Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and accompanying notes, and the amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. Management assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of June 30, 2020 and through the date of this report. The Registrants' future assessment of our current expectations of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to their consolidated financial statements in future reporting periods.
New Accounting Standards (All Registrants)
New Accounting Standards Adopted as of January 1, 2020: The following new authoritative accounting guidance issued by the FASB was adopted as of January 1, 2020 and was reflected by the Registrants in their consolidated financial statements beginning in the first quarter of 2020.
Impairment of Financial Instruments (Issued June 2016). Provides for a new Current Expected Credit Loss (CECL) impairment model for specified financial instruments including loans, trade receivables, debt securities classified as held-to-maturity investments and net investments in leases recognized by a lessor. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts. The standard was effective January 1, 2020 and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. This standard was primarily applicable to Generation's and the Utility Registrants' Customer accounts receivables balances. This guidance did not have a significant impact on the Registrants’ consolidated financial statements.
Goodwill Impairment (Issued January 2017). Simplifies the accounting for goodwill impairment by removing Step 2 of the current test, which requires calculation of a hypothetical purchase price allocation. Under the revised guidance, goodwill impairment will be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill (currently Step 1 of the two-step impairment test). Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The standard was effective January 1, 2020 and must be applied on a prospective basis. Exelon, Generation, ComEd, PHI and DPL will apply the new guidance for their goodwill impairment assessments in 2020 and do not expect the updated guidance to have a material impact to their financial statements.
Allowance for Credit Losses on Accounts Receivables (All Registrants)

The allowance for credit losses reflects the Registrants’ best estimates of losses on the customers' accounts receivable balances based on historical experience, current information, and reasonable and supportable forecasts.

The allowance for credit losses for Generation’s retail customers is based on accounts receivable aging historical experience coupled with specific identification through a credit monitoring process, which considers current conditions and forward-looking information such as industry trends, macroeconomic factors, changes in the regulatory environment, external credit ratings, publicly available news, payment status, payment history, and the

57

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise noted)

Note 1 — Significant Accounting Policies

exercise of collateral calls. The allowance for credit losses for Generation wholesale customers is developed using a credit monitoring process, similar to that used for retail customers. When a wholesale customer’s risk characteristics are no longer aligned with the pooled population, Generation uses specific identification to develop an allowance for credit losses. Adjustments to the allowance for credit losses are recorded in Operating and maintenance expense on Generation’s Consolidated Statements of Operations and Comprehensive Income.

The allowance for credit losses for the Utility Registrants’ customers is developed by applying loss rates for each Utility Registrant, based on historical loss experience, current conditions and forward-looking risk factors, to the outstanding receivable balance by customer risk segment. Utility Registrants' customer accounts are written off consistent with approved regulatory requirements. Adjustments to the allowance for credit losses are primarily recorded to Operating and maintenance expense on the Utility Registrants' Consolidated Statements of Operations and Comprehensive Income and Regulatory assets on ComEd, BGE, Pepco, DPL and ACE’s Consolidated Balance Sheets. See Note 3 - Regulatory Matters of the 2019 Form 10-K for additional information regarding the regulatory recovery of credit losses on customer accounts receivable at ComEd, BGE, Pepco, DPL and ACE.

The Registrants have certain non-customer receivables in Other deferred debits and other assets which primarily are with governmental agencies and other high-quality counterparties with no history of default.  As such, the allowance for credit losses related to these receivables is not material.  The Registrants monitor these balances and will record an allowance if there are indicators of a decline in credit quality.

2. Regulatory Matters (All Registrants)
As discussed in Note 3 — Regulatory Matters of the Exelon 2019 Form 10-K, the Registrants are involved in rate and regulatory proceedings at the FERC and their state commissions. The following discusses developments in 2020 and updates to the 2019 Form 10-K.
Utility Regulatory Matters (Exelon and the Utility Registrants)
Distribution Base Rate Case Proceedings
The following tables show the completed and pending distribution base rate case proceedings in 2020.

58

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

Completed Distribution Base Rate Case Proceedings
Registrant/JurisdictionFiling DateRequested Revenue Requirement (Decrease) Increase Approved Revenue Requirement (Decrease) Increase Approved ROE Approval DateRate Effective Date
ComEd - Illinois (Electric)(a)
April 8, 2019$(6) $(17) 8.91% December 4, 2019January 1, 2020
DPL - Maryland (Electric)December 5, 2019 (amended April 23, 2020)17
 12
 9.60% July 14, 2020July 16, 2020

__________
(a)Reflects an increase of $51 million for the initial revenue requirement for 2019 and a decrease of $68 million related to the annual reconciliation for 2018. The revenue requirement for 2019 and annual reconciliation for 2018 provides for a weighted average debt and equity return on distribution rate base of 6.51%, inclusive of an allowed ROE of 8.91%, reflecting the average rate on 30-year treasury notes plus 580 basis points.
Pending Distribution Base Rate Case Proceedings
Registrant/JurisdictionFiling DateRequested Revenue Requirement (Decrease) IncreaseRequested ROEExpected Approval Timing
ComEd - Illinois (Electric)(a)
April 16, 2020$(11)8.38%Fourth quarter of 2020
BGE - Maryland (Electric and Natural Gas)(b)
May 15, 2020235
10.1%Fourth quarter of 2020
Pepco - District of Columbia (Electric)(c)
May 30, 2019 (amended June 1, 2020)136
9.7%Fourth quarter of 2020
DPL - Delaware (Natural Gas)(d)
February 21, 2020 (amended March 17, 2020)9
10.3%First quarter of 2021
DPL - Delaware (Electric)(e)
March 6, 2020 (amended April 16, 2020)24
10.3%Second quarter of 2021
__________
(a)Reflects an increase of $51 million for the initial revenue requirement for 2020 and a decrease of $62 million related to the annual reconciliation for 2019. The revenue requirement for 2020 and annual reconciliation for 2019 provides for a weighted average debt and equity return on distribution rate base of 6.28%, inclusive of an allowed ROE of 8.38%, reflecting the average rate on 30-year treasury notes plus 580 basis points.
(b)Reflects a three-year cumulative multi-year plan for 2021 through 2023 and total requested revenue requirement increases in 2023 of $140 million related to electric distribution and $95 million related to natural gas distribution to recover capital investments made in late 2019 and planned capital investments from 2020 to 2023.
(c)Pepco filed the multi-year plan enhanced proposal as an alternative to address the impacts of COVID-19. Reflects a three-year cumulative multi-year plan and requested revenue requirement increases of $73 million and $63 million for 2022 and 2023, respectively, to recover capital investments made in 2018 and 2019 and planned capital investments from 2020 to 2022.
(d)The rates will go into effect on September 21, 2020, subject to refund.
(e)The rates will go into effect on October 6, 2020, subject to refund.
Transmission Formula Rates

59

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

Transmission Formula Rate (Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL and ACE). ComEd’s, PECO's, BGE’s, Pepco's, DPL's and ACE's 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, BGE, DPL and ACE is based on prior year actual costs and current year projected capital additions (initial year revenue requirement). The annual update for PECO is based on prior year actual costs and current year projected capital additions, accumulated depreciation, and accumulated deferred income taxes. The annual update for Pepco 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 ComEd, BGE, DPL and ACE 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 update for PECO and Pepco also reconciles any differences between the actual costs and actual revenues for the calendar year (annual reconciliation).
For 2020, the following total increases/(decreases) were included in ComEd’s, PECO's, BGE’s, Pepco's, DPL's and ACE's electric transmission formula rate filings:
Registrant(a)
Initial Revenue Requirement Increase (Decrease)Annual Reconciliation Decrease
Total Revenue Requirement Increase (Decrease)(c)
 
Allowed Return on Rate Base(d)
Allowed ROE(e)
ComEd$18
$(4)$14
 8.17%11.50%
PECO(b)
5
(28)(23) 7.47%10.35%
BGE16
(3)4
 7.26%10.50%
Pepco2
(46)(44) 7.81%10.50%
DPL(4)(40)(44) 7.20%10.50%
ACE5
(25)(20) 7.40%10.50%
__________
(a)All rates are effective June 2020, subject to review by interested parties, which is anticipated to be completed by the fourth quarter of 2020 or first quarter of 2021 for ComEd, BGE, Pepco, DPL and ACE and second quarter of 2021 for PECO.
(b)PECO posted a revised filing to the PJM website on July 17, 2020 reflecting updates to the formula rate based on the FERC order dated July 9, 2020.
(c)
The decrease in PECO's transmission revenue requirement relates to refunds from December 1, 2017, in accordance with the settlement agreement dated July 22, 2019. The change in BGE's transmission revenue requirement includes a $9 million reduction related to a FERC-approved dedicated facilities charge to recover the costs of providing transmission service to specifically designated load by BGE. ComEd, BGE, Pepco, DPL and ACE’s transmission revenue requirement include a decrease related to the April 24, 2020 settlement agreement related to excess deferred income taxes. Refer to Transmission-Related Income Tax Regulatory Assets below for additional information.
(d)Represents the weighted average debt and equity return on transmission rate bases.
(e)As part of the FERC-approved settlements of ComEd’s 2007 and PECO's 2017 transmission rate cases, the rate of return on common equity is 11.50% and 10.35%, respectively, inclusive of a 50-basis-point incentive adder for being a member of a RTO, and the common equity component of the ratio used to calculate the weighted average debt and equity return for the transmission formula rate is currently capped at 55% and 55.75%, respectively. As part of the FERC-approved settlement of the ROE complaint against BGE, Pepco, DPL and ACE, the rate of return on common equity is 10.50%, inclusive of a 50-basis-point incentive adder for being a member of a RTO.

60

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

Other State Regulatory Matters
Illinois Regulatory Matters
Energy Efficiency Formula Rate (Exelon and ComEd). ComEd filed its annual energy efficiency formula rate update with the ICC on May 21, 2020.  The filing establishes the revenue requirement used to set the rates that will take effect in January 2021 after the ICC’s review and approval. The revenue requirement requested is based on a reconciliation of the 2019 actual costs plus projected 2020 and 2021 expenditures.
Initial Revenue Requirement IncreaseAnnual Reconciliation IncreaseTotal Revenue Requirement Increase Requested Return on Rate BaseRequested ROE
$45
$3
$48
(a) 
6.28%8.38%
__________
(a)The requested revenue requirement increase provides for a weighted average debt and equity return on rate base of 6.28% inclusive of an allowed ROE of 8.38%. The ROE reflects the average rate on 30-year treasury notes plus 580 basis points. The ROE applicable to the 2019 reconciliation year is 8.96% and the return on rate base is 6.56%, which includes a performance adjustment that can either increase or decrease the ROE.
Other Federal Regulatory Matters
Transmission-Related Income Tax Regulatory Assets (Exelon, ComEd, BGE, PHI, Pepco, DPL and ACE). On December 13, 2016 (and as amended on March 13, 2017), BGE filed with FERC to begin recovering certain existing and future transmission-related income tax regulatory assets through its transmission formula rate. BGE’s existing regulatory assets included (1) amounts that, if BGE’s transmission formula rate provided for recovery, would have been previously amortized and (2) amounts that would be amortized and recovered prospectively. On November 16, 2017, FERC issued an order rejecting BGE’s proposed revisions to its transmission formula rate to recover these transmission-related income tax regulatory assets. In the fourth quarter of 2017, ComEd, BGE, Pepco, DPL, and ACE fully impaired their associated transmission-related income tax regulatory asset for the portion of the income tax regulatory asset that would have been previously amortized.
On February 23, 2018 (as amended on July 9, 2018), ComEd, Pepco, DPL, and ACE each filed with FERC to revise their transmission formula rate mechanisms to permit recovery of transmission-related income tax regulatory assets, including those amounts that would have been previously amortized and recovered through rates had the transmission formula rate provided for such recovery.
On September 7, 2018, FERC issued orders rejecting 1) BGE's rehearing request of FERC's November 16, 2017 order; and 2) February 23, 2018 (as amended on July 9, 2018) filing by ComEd, Pepco, DPL and ACE for similar recovery.
On November 2, 2018, BGE filed an appeal of FERC’s September 7, 2018 order to the Court of Appeals for the D.C. Circuit. On March 27, 2020, the Court of Appeals denied BGE’s November 2, 2018 appeal.
On October 1, 2018, ComEd, BGE, Pepco, DPL, and ACE submitted filings to recover only ongoing non-TCJA amortization amounts and credit TCJA transmission-related income tax regulatory liabilities to customers for the prospective period starting on October 1, 2018. On April 26, 2019, FERC issued an order accepting ComEd’s, BGE’s, Pepco’s, DPL’s, and ACE’s October 1, 2018 filings, effective October 1, 2018, subject to refund and established hearing and settlement judge procedures. On April 24, 2020, ComEd, BGE, Pepco, DPL, ACE and other parties filed a settlement agreement with FERC. The settlement agreement provides for the recovery of ongoing transmission-related income tax regulatory assets and establishes the amount and amortization period for excess deferred income taxes resulting from TCJA. The settlement resulted in a reduction to Operating revenues and an offsetting reduction to Income tax expense in the second quarter of 2020.
While FERC has no deadline by which it must rule on the settlement, a final order from FERC is expected in the third quarter of 2020. Exelon cannot predict the outcome of this proceeding. If FERC ultimately rules that the future, ongoing non-TCJA amortization amounts are not recoverable, Exelon, ComEd, BGE, PHI, Pepco, DPL and ACE would record additional charges to Income tax expense, which could be up to approximately $83 million, $51 million, $19 million, $13 million, $5 million, $6 million and $2 million, respectively, as of June 30, 2020.

61

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

Regulatory Assets and Liabilities
The Utility Registrants' regulatory assets and liabilities have not changed materially since December 31, 2019, unless noted below. See Note 3 — Regulatory Matters of the Exelon 2019 Form 10-K for additional information on the specific regulatory assets and liabilities.
ComEd. Regulatory assets increased $120 million primarily due to an increase of $94 million in the Energy Efficiency Costs regulatory asset and $17 million in the Renewable Energy regulatory asset.
PECO. Regulatory assets increased $55 million primarily due to an increase of $54 million in the Deferred Income Taxes regulatory asset. Regulatory liabilities decreased $81 million primarily due to a decrease of $104 million in the Nuclear Decommissioning regulatory liability offset by a $25 million increase in the Electric Energy and Natural Gas Costs regulatory liability.
ACE. Regulatory liabilities decreased $30 million primarily due to a decrease of $44 million in the Deferred Income Taxes regulatory liability offset by a $18 million increase in Transmission FERC Formula Rate regulatory liability.
Capitalized Ratemaking Amounts Not Recognized (Exelon and the Utility Registrants)
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 Exelon's and the Utility Registrant's 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 our customers.
 Exelon 
ComEd(a)
 PECO 
BGE(b)
 PHI 
Pepco(c)
 
DPL(c)
 ACE
June 30, 2020$57
 $1
 $
 $49
 $7
 $4
 $3
 $
December 31, 201963
 3
 
 53
 7
 4
 3
 
_________
(a)Reflects ComEd's unrecognized equity returns earned for ratemaking purposes on its electric distribution formula rate regulatory assets.
(b)BGE's authorized amounts capitalized for ratemaking purposes primarily relate to earnings on shareholders' investment on its AMI programs.
(c)Pepco's and DPL's authorized amounts capitalized for ratemaking purposes relate to earnings on shareholders' investment on their respective AMI Programs and Energy Efficiency and Demand Response Programs. The earnings on energy efficiency are on Pepco DC and DPL DE programs only.
Generation Regulatory Matters (Exelon and Generation)
New Jersey Regulatory Matters
New Jersey Clean Energy Legislation. On May 23, 2018, New Jersey enacted legislation that established a ZEC program that provides compensation for nuclear plants that demonstrate to the NJBPU that they meet certain requirements, including that they make a significant contribution to air quality in the state and that their revenues are insufficient to cover their costs and risks. Under the legislation, the NJBPU will issue ZECs to qualifying nuclear power plants and the electric distribution utilities in New Jersey, including ACE, will be required to purchase those ZECs. On April 18, 2019, the NJBPU approved the award of ZECs to Salem 1 and Salem 2. Upon approval, Generation began recognizing revenue for the sale of New Jersey ZECs in the month they are generated and has recognized $17 million and $35 million for the three and six months ended June 30, 2020 and $10 million for the three and six months ended June 30, 2019. On May 15, 2019, New Jersey Rate Counsel appealed the NJBPU's decision to the New Jersey Superior Court. Exelon and Generation cannot predict the outcome of the appeal. See Note 6 — Early Plant Retirements for additional information related to Salem.
New York Regulatory Matters
New York Clean Energy Standard. On August 1, 2016, the NYPSC issued an order establishing the New York CES, a component of which is a Tier 3 ZEC program targeted at preserving the environmental attributes of zero-emissions nuclear-powered generating facilities that meet the criteria demonstrating public necessity as determined by the NYPSC to be Generation's FitzPatrick, Ginna and Nine Mile Point nuclear facilities.

62

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

On November 30, 2016 (as amended on January 13, 2017), a group of parties filed a Petition in New York State court seeking to invalidate the ZEC program, which argued that the NYPSC did not have authority to establish the program, that it violated state environmental law and that it violated certain technical provisions of the State Administrative Procedures Act when adopting the ZEC program. On January 22, 2018, the court dismissed the environmental claims and the majority of the plaintiffs from the case but denied the motions to dismiss with respect to the remaining five plaintiffs and claims, without commenting on the merits of the case. On October 8, 2019, the court dismissed all remaining claims. The petitioners filed a notice of appeal on November 4, 2019 and originally had until May 4, 2020 to file their brief. Due to COVID-19 related restrictions, the court extended the deadline to July 29, 2020 and, as of August 4, 2020, no brief has been received.
See Note 6 — Early Plant Retirements for additional information related to Ginna and Nine Mile Point.
Federal Regulatory Matters
PJM and NYISO MOPR Proceedings. PJM and NYISO capacity markets include a Minimum Offer Price Rule (MOPR). If a resource is subjected to a MOPR, its offer is adjusted to effectively remove the revenues it receives through a state government-provided financial support program - resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the MOPR in PJM applied only to certain new gas-fired resources. Currently, the MOPR in NYISO applies only to certain resources in downstate New York.
For Generation’s facilities in PJM and NYISO that are currently receiving ZEC compensation, an expanded MOPR would require exclusion of ZEC compensation when bidding into future capacity auctions, resulting in an increased risk of these facilities not receiving capacity revenues in future auctions. While FERC issued a set of orders on MOPR in NYISO on February 20, 2020, it did not expand mitigation to include Generation's nuclear assets in upstate New York. However, FERC has taken action to expand the MOPR in PJM.
On December 19, 2019, FERC required PJM to broadly apply the MOPR to all new and existing resources including nuclear, renewables, demand response, energy efficiency, storage and all resources owned by vertically-integrated utilities. This greatly expands the breadth and scope of PJM’s MOPR, which is effective as of PJM’s next capacity auction. While FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources.
FERC provided no new mechanism for accommodating state-supported resources other than the existing FRR mechanism (under which an entire utility zone would be removed from PJM’s capacity auction along with sufficient resources to support the load in such zone). In response to FERC’s order PJM submitted a compliance filing on March 18, 2020 wherein PJM proposes tariff language interpreting and implementing FERC's directives and proposes a schedule for resuming capacity auctions that is contingent on the timing of FERC's action on the compliance filing. FERC has no deadline for such action, and FERC could accept, reject or direct further revisions to all or part of PJM's proposed tariff revisions and auction schedule.
On April 16, 2020, FERC issued an order largely denying requests for rehearing of FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing that could also delay the timing for FERC to issue its compliance order(s) which PJM submitted on June 1, 2020. PJM cannot resume activities related to its capacity auctions until FERC acts on these compliance filings.
FERC issued an order on May 21, 2020 involving reforms to PJM’s day-ahead and real-time reserves markets that may require further changes to the MOPR levels pending before FERC in the PJM MOPR Proceeding. In approving reforms to PJM’s reserves markets, FERC also directed PJM to develop a new methodology for estimating revenues that resources will receive for sales of energy and related services (referred to as the Energy and Ancillary Services Offset) and to use that new methodology in calculating a number of parameters and assumptions used in the capacity market, including MOPR levels. FERC directed PJM to submit its new Energy and Ancillary Services Offset revenue projection methodology no later than August 5, 2020. On review of this compliance filing, FERC will address how these additional reforms will impact MOPR levels and the timeline for implementing the new revenue projection methodology, including any potential impacts on auction timing.
Unless Illinois and New Jersey can implement an FRR program in their PJM zones, the MOPR will apply in the next capacity auction to Generation's owned or jointly owned nuclear plants in those states receiving a benefit under the Illinois ZES or the New Jersey ZEC program, as applicable, increasing the risk that those units may not clear the capacity market.

63

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Regulatory Matters

Exelon is currently working with PJM and other stakeholders to pursue the FRR option prior to the next capacity auction in PJM. If Illinois implements the FRR option, Generation’s Illinois nuclear plants could be removed from PJM’s capacity auction and instead supply capacity and be compensated under the FRR program, which has the potential to mitigate the current economic distress being experienced by Generation's nuclear plants in Illinois, as discussed in Note 6 - Early Plant Retirements. Implementing the FRR program in Illinois will require both legislative and regulatory changes. Legislation may be introduced in New Jersey as well. Exelon cannot predict whether or when such legislative and regulatory changes can be implemented.
If Generation’s state-supported nuclear plants in PJM are subjected to the MOPR or equivalent without compensation under an FRR or similar program, it could have a material adverse impact on Exelon's and Generation's financial statements, which Exelon and Generation cannot reasonably estimate at this time.
Operating License Renewals
Conowingo Hydroelectric Project. On August 29, 2012, Generation submitted a hydroelectric license application to FERC for a new license for the Conowingo Hydroelectric Project (Conowingo). In connection with Generation’s efforts to obtain a water quality certification pursuant to Section 401 of the Clean Water Act (401 Certification) from MDE for Conowingo, Generation has been working with MDE and other stakeholders to resolve water quality licensing issues, including: (1) water quality, (2) fish habitat, and (3) sediment.
On October 29, 2019, Generation and MDE filed with FERC a Joint Offer of Settlement (Offer of Settlement) that would resolve all outstanding issues relating to the 401 Certification. Pursuant to the Offer of Settlement, the parties submitted Proposed License Articles to FERC to be incorporated by FERC into the new license in accordance with FERC’s discretionary authority under the Federal Power Act. Among the Proposed License Articles are modifications to river flows to improve aquatic habitat, eel passage improvements and initiatives to support rare, threatened and endangered wildlife. If FERC approves the Offer of Settlement and incorporates the Proposed License Articles into the new license without modification, then MDE would waive its rights to issue a 401 Certification and Generation would agree, pursuant to a separate agreement with MDE (MDE Settlement), to implement additional environmental protection, mitigation and enhancement measures over the anticipated 50-year term of the new license. These measures address mussel restoration and other ecological and water quality matters, among other commitments. Exelon’s commitments under the various provisions of the Offer of Settlement and MDE Settlement are not effective unless and until FERC approves the Offer of Settlement and issues the new license with the Proposed License Articles. Generation cannot currently predict when FERC will issue the new license.
Peach Bottom Units 2 and 3. On July 10, 2018, Generation submitted a second 20-year license renewal application with the NRC for Peach Bottom Units 2 and 3, which was approved on March 6, 2020. Peach Bottom Units 2 and 3 are now licensed to operate through 2053 and 2054, respectively.
3. 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. Generation’s primary sources of revenue include competitive sales of power, natural gas, and other energy-related products and services. The Utility Registrants’ 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 2019 Form 10-K for additional information regarding the primary sources of revenue for the Registrants.
Contract Balances (All Registrants)
Contract Assets and Liabilities
Generation records contract assets for the revenue recognized on the construction and installation of energy efficiency assets and new power generating facilities before Generation has an unconditional right to bill for and receive the consideration from the customer. These contract assets are subsequently reclassified to receivables when the right to payment becomes unconditional. Generation records contract assets and contract receivables within Other current assets and Customer accounts receivable, net, respectively, within Exelon’s and Generation’s Consolidated Balance Sheets.

64

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Revenue from Contracts with Customers

Generation records contract liabilities when consideration is received or due prior to the satisfaction of the performance obligations. These contract liabilities primarily relate to upfront consideration received or due for equipment service plans, solar panel leases and the Illinois ZEC program that introduces a cap on the total consideration to be received by Generation. Generation records contract liabilities within Other current liabilities and Other noncurrent liabilities within Exelon's and Generation's Consolidated Balance Sheets.
The following table provides a rollforward of the contract assets and liabilities reflected in Exelon's and Generation's Consolidated Balance Sheets for the three and six months ended June 30, 2020 and 2019.
  Contract Assets Contract Liabilities
  Exelon Generation Exelon Generation
Balance as of December 31, 2019 $174
 $174
 $33
 $71
Consideration received or due (19) (19) 20
 55
Revenues recognized (a)
 17
 17
 (24) (70)
Balance at March 31, 2020 $172
 $172
 $29
 $56
Consideration received or due (26) (26) 13
 34
Revenues recognized (a)
 13
 13
 (22) (63)
Balance at June 30, 2020 $159
 $159
 $20
 $27
    ��    
Balance as of December 31, 2018 $187
 $187
 $27
 $42
Consideration received or due (26) (26) 21
 63
Revenues recognized (b)
 26
 26
 (23) (66)
Balance at March 31, 2019 $187
 $187
 $25
 $39
Consideration received or due (18) (18) 17
 52
Revenues recognized (b)
 27
 27
 (21) (65)
Balance at June 30, 2019 $196
 $196
 $21
 $26

__________
(a)Revenues recognized in the three and six months ended June 30, 2020, which were included in contract liabilities at December 31, 2019, were approximately $14 million and $23 million, respectively, for Exelon and $42 million and $61 million, respectively, for Generation.
(b)Revenues recognized in the three and six months ended June 30, 2019, which were included in contract liabilities at December 31, 2018, were approximately $9 million and $14 million, respectively, for Exelon and $24 million and $28 million, respectively, for Generation.
The Utility Registrants do not have any contract assets. The Utility Registrants also record contract liabilities when consideration is received prior to the satisfaction of the performance obligations. As of June 30, 2020 and December 31, 2019, the Utility Registrants' contract liabilities were not material.
Transaction Price Allocated to Remaining Performance Obligations (All Registrants)
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 June 30, 2020. 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 Generation's power and gas sales contracts as they contain variable volumes and/or variable pricing. This disclosure also 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.

65

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Revenue from Contracts with Customers

 2020 2021 2022 2023 2024 and thereafter Total
Exelon$169
 $194
 $73
 $43
 $189
 $668
Generation231
 282
 105
 48
 189
 855

Revenue Disaggregation (All Registrants)
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 4 — Segment Information for the presentation of the Registrant's revenue disaggregation.
4. Segment Information (All Registrants)
Operating segments for each of the Registrants are determined based on information used by the CODM in deciding how to evaluate performance and allocate resources at each of the Registrants.
Exelon has 11 reportable segments, which include Generation's 5 reportable segments consisting of the Mid-Atlantic, Midwest, New York, ERCOT and all other power regions referred to collectively as “Other Power Regions” and ComEd, PECO, BGE, and PHI's 3 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.
The basis for Generation's reportable segments is the integrated management of its electricity business that is located in different geographic regions, and largely representative of the footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Generation's hedging strategies and risk metrics are also aligned to these same geographic regions. Descriptions of each of Generation’s 5 reportable segments are as follows:
Mid-Atlantic represents operations in the eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia and parts of Pennsylvania and North Carolina.
Midwest represents operations in the western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region.
New York represents operations within NYISO.
ERCOT represents operations within Electric Reliability Council of Texas.
Other Power Regions:
New England represents the operations within ISO-NE.
South represents operations in the FRCC, MISO’s Southern Region, and the remaining portions of the SERC not included within MISO or PJM.
West represents operations in the WECC, which includes California ISO.
Canada represents operations across the entire country of Canada and includes AESO, OIESO and the Canadian portion of MISO.
The CODMs for Exelon and Generation evaluate the performance of Generation’s electric business activities and allocate resources based on RNF. Generation believes that RNF is a useful measurement of operational performance. RNF 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. Generation’s operating revenues include all sales to third parties and affiliated sales to the Utility Registrants. Purchased power costs include all costs associated with the procurement and supply of electricity including capacity, energy and ancillary services. Fuel expense includes the fuel costs for Generation’s owned generation and fuel costs associated with tolling agreements. The results of Generation's other business activities are not regularly reviewed by the

66

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

CODM and are therefore not classified as operating segments or included in the regional reportable segment amounts. These activities include natural gas, as well as other miscellaneous business activities that are not significant to Generation's overall operating revenues or results of operations. Further, Generation’s unrealized mark-to-market gains and losses on economic hedging activities and its amortization of certain intangible assets and liabilities relating to commodity contracts recorded at fair value from mergers and acquisitions are also excluded from the regional reportable segment amounts. Exelon and Generation do not use a measure of total assets in making decisions regarding allocating resources to or assessing the performance of these reportable segments.
An analysis and reconciliation of the Registrants’ reportable segment information to the respective information in the consolidated financial statements for the three and six months ended June 30, 2020 and 2019 is as follows:
Three Months Ended June 30, 2020 and 2019
 Generation ComEd PECO BGE PHI 
Other(a)
 Intersegment
Eliminations
 Exelon
Operating revenues(b):
2020               
Competitive businesses electric revenues$3,414
 $
 $
 $
 $
 $
 $(268) $3,146
Competitive businesses natural gas revenues353
 
 
 
 
 
 
 353
Competitive businesses other revenues113
 
 
 
 
 
 (1) 112
Rate-regulated electric revenues
 1,417
 586
 504
 983
 
 (15) 3,475
Rate-regulated natural gas revenues
 
 95
 112
 30
 
 (1) 236
Shared service and other revenues
 
 
 
 3
 472
 (475) 
Total operating revenues$3,880
 $1,417
 $681
 $616
 $1,016
 $472
 $(760) $7,322
2019               
Competitive businesses electric revenues$3,718
 $
 $
 $
 $
 $
 $(250) $3,468
Competitive businesses natural gas revenues333
 
 
 
 
 
 
 333
Competitive businesses other revenues159
 
 
 
 
 
 (1) 158
Rate-regulated electric revenues
 1,351
 566
 540
 1,063
 
 (8) 3,512
Rate-regulated natural gas revenues
 
 89
 109
 24
 
 (4) 218
Shared service and other revenues
 
 
 
 4
 484
 (488) 
Total operating revenues$4,210
 $1,351
 $655
 $649
 $1,091
 $484
 $(751) $7,689
Intersegment revenues(c):
               
2020$271
 $11
 $2
 $4
 $3
 $470
 $(760) $1
2019252
 5
 2
 6
 3
 482
 (750) 
Depreciation and amortization:               
2020$300
 $274
 $88
 $129
 $191
 $19
 $
 $1,001
2019409
 257
 83
 117
 188
 25
 
 1,079

67

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

 Generation ComEd PECO BGE PHI 
Other(a)
 Intersegment
Eliminations
 Exelon
Operating expenses:               
2020$3,547
 $1,345
 $618
 $573
 $956
 $478
 $(748) $6,769
20194,096
 1,040
 510
 569
 926
 484
 (744) 6,881
Interest expense, net:               
2020$87
 $98
 $36
 $32
 $67
 $107
 $
 $427
2019116
 89
 33
 29
 67
 75
 
 409
Income (loss) before income taxes:               
2020$860
 $(15) $32
 $17
 $7
 $(108) $1
 $794
2019202
 232
 115
 56
 112
 (73) 
 644
Income Taxes:               
2020$329
 $46
 $(7) $(22) $(87) $(40) $
 $219
201978
 46
 13
 11
 6
 (10) 
 144
Net income (loss):               
2020$529
 $(61) $39
 $39
 $94
 $(67) $1
 $574
2019118
 186
 102
 45
 106
 (63) 
 494
Capital Expenditures               
2020$372
 $523
 $253
 $265
 $310
 $34
 $
 $1,757
2019383
 459
 225
 284
 340
 11
 
 1,702
__________
(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 17 — Supplemental Financial Information for additional information on total utility taxes.
(c)Intersegment revenues exclude sales to unconsolidated affiliates. The intersegment profit associated with Generation’s sale of certain products and services by and between Exelon’s segments is not eliminated in consolidation due to the recognition of intersegment profit in accordance with regulatory accounting guidance. For Exelon, these amounts are included in Operating revenues in the Consolidated Statements of Operations and Comprehensive Income. See Note 18 — Related Party Transactions for additional information on intersegment revenues.



68

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

PHI:
 Pepco DPL ACE 
Other(a)
 Intersegment
Eliminations
 PHI
Operating revenues(b):
           
2020           
Rate-regulated electric revenues$494
 $237
 $256
 $
 $(4) $983
Rate-regulated natural gas revenues
 30
 
 
 
 30
Shared service and other revenues
 
 
 97
 (94) 3
Total operating revenues$494
 $267
 $256
 $97
 $(98) $1,016
2019           
Rate-regulated electric revenues$531
 $261
 $274
 $
 $(3) $1,063
Rate-regulated natural gas revenues
 24
 
 
 
 24
Shared service and other revenues
 2
 
 97
 (95) 4
Total operating revenues$531
 $287
 $274
 $97
 $(98) $1,091
Intersegment revenues(c):
           
2020$1
 $2
 $1
 $97
 $(98) $3
20191
 2
 1
 98
 (99) 3
Depreciation and amortization:           
2020$92
 $47
 $44
 $8
 $
 $191
201993
 45
 40
 10
 
 188
Operating expenses:           
2020$436
 $263
 $258
 $97
 $(98) $956
2019438
 243
 246
 100
 (101) 926
Interest expense, net:           
2020$34
 $15
 $15
 $3
 $
 $67
201934
 15
 15
 3
 
 67
Income (loss) before income taxes:           
2020$33
 $(9) $(15) $(2) $
 $7
2019(d)
66
 34
 14
 (2) 
 112
Income Taxes:           
2020$(24) $(28) $(33) $(2) $
 $(87)
20192
 4
 
 
 
 6
Net income (loss):           
2020$57
 $19
 $18
 $
 $
 $94
201964
 30
 14
 (2) 
 106
Capital Expenditures           
2020$144
 $89
 $77
 $
 $
 $310
2019154
 82
 99
 5
 
 340
__________
(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 17 — Supplemental Financial Information for additional information on total utility taxes.
(c)Includes intersegment revenues with ComEd, BGE and PECO, which are eliminated at Exelon.
(d)
The Income (loss) before income taxes amounts in Other and Intersegment Eliminations have been adjusted by an offsetting $108 million for consistency with the Exelon consolidating disclosure above.


69

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information


The following tables disaggregate the Registrants' 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. For Generation, the disaggregation of revenues reflects Generation’s two primary products of power sales and natural gas sales, with further disaggregation of power sales provided by geographic region. For the Utility Registrants, the disaggregation of revenues reflects the two primary utility services of rate-regulated electric sales and rate-regulated natural gas sales (where applicable), with further disaggregation of these tariff sales provided by major customer groups. Exelon’s disaggregated revenues are consistent with Generation and the Utility Registrants, but exclude any intercompany revenues.
Competitive Business Revenues (Generation):
 Three Months Ended June 30, 2020
 
Revenues from external customers(a)
 
Intersegment
Revenues
 
Total
Revenues
 Contracts with customers 
Other(b)
 Total  
Mid-Atlantic$1,100
 $(35) $1,065
 $9
 $1,074
Midwest855
 107
 962
 
 962
New York336
 5
 341
 (1) 340
ERCOT175
 52
 227
 7
 234
Other Power Regions776
 43
 819
 (15) 804
Total Competitive Businesses Electric Revenues3,242
 172
 3,414
 
 3,414
Competitive Businesses Natural Gas Revenues209
 144
 353
 
 353
Competitive Businesses Other Revenues(c)
86
 27
 113
 
 113
Total Generation Consolidated Operating Revenues$3,537
 $343
 $3,880
 $
 $3,880
 Three Months Ended June 30, 2019
 
Revenues from external customers(a)
 Intersegment
revenues
 Total
Revenues
 Contracts with customers 
Other(b)
 Total  
Mid-Atlantic$1,162
 $21
 $1,183
 $6
 $1,189
Midwest974
 68
 1,042
 (8) 1,034
New York373
 17
 390
 
 390
ERCOT178
 47
 225
 4
 229
Other Power Regions814
 64
 878
 (17) 861
Total Competitive Businesses Electric Revenues3,501
 217
 3,718
 (15) 3,703
Competitive Businesses Natural Gas Revenues177
 156
 333
 15
 348
Competitive Businesses Other Revenues(c)
108
 51
 159
 
 159
Total Generation Consolidated Operating Revenues$3,786
 $424
 $4,210
 $
 $4,210
__________
(a)Includes all wholesale and retail electric sales to third parties and affiliated sales to the Utility Registrants.
(b)Includes revenues from derivatives and leases.
(c)Other represents activities not allocated to a region. See text above for a description of included activities. Includes unrealized mark-to-market gains of $21 million and $38 million in 2020 and 2019, respectively, and elimination of intersegment revenues.


70

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

Revenues net of purchased power and fuel expense (Generation):
 Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
 
RNF
from external
customers(a)
 
Intersegment
RNF
 Total RNF 
RNF
from external
customers(a)
 
Intersegment
RNF
 Total RNF
Mid-Atlantic$516
 $9
 $525
 $644
 $8
 $652
Midwest702
 1
 703
 738
 (8) 730
New York243
 3
 246
 250
 3
 253
ERCOT92
 5
 97
 80
 (1) 79
Other Power Regions181
 (24) 157
 154
 (20) 134
Total Revenues net of purchased power and fuel expense for Reportable Segments1,734

(6)
1,728

1,866

(18)
1,848
Other(b)
204
 6
 210
 52
 18
 70
Total Generation Revenues net of purchased power and fuel expense$1,938
 $
 $1,938
 $1,918
 $
 $1,918
__________
(a)Includes purchases and sales from/to third parties and affiliated sales to the Utility Registrants.
(b)Other represents activities not allocated to a region. See text above for a description of included activities. Includes unrealized mark-to-market gains of $85 million and losses of $74 million in 2020 and 2019, respectively and the elimination of intersegment RNF.



71

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

Electric and Gas Revenue by Customer Class (Utility Registrants):
 Three Months Ended June 30, 2020
Revenues from contracts with customersComEd PECO BGE PHI Pepco DPL ACE
Rate-regulated electric revenues             
Residential$767
 $377
 $304
 $529
 $237
 $147
 $145
Small commercial & industrial327
 88
 51
 105
 29
 39
 37
Large commercial & industrial119
 55
 94
 240
 175
 22
 43
Public authorities & electric railroads11
 7
 7
 15
 8
 3
 4
Other(a)
218
 55
 76
 161
 58
 51
 53
Total rate-regulated electric revenues(b)
$1,442
 $582
 $532
 $1,050
 $507
 $262
 $282
Rate-regulated natural gas revenues             
Residential$
 $70
 $81
 $17
 $
 $17
 $
Small commercial & industrial
 19
 12
 8
 
 8
 
Large commercial & industrial
 
 24
 1
 
 1
 
Transportation
 6
 
 3
 
 3
 
Other(c)

 1
 3
 1
 
 1
 
Total rate-regulated natural gas revenues(d)
$
 $96
 $120
 $30
 $
 $30
 $
Total rate-regulated revenues from contracts with customers$1,442
 $678
 $652
 $1,080
 $507
 $292
 $282
              
Other revenues             
Revenues from alternative revenue programs$(25) $4
 $(37) $(64) $(13) $(25) $(26)
Other rate-regulated electric revenues(e)

 
 1
 
 
 
 
Other rate-regulated natural gas revenues(e)

 (1) 
 
 
 
 
Total other revenues$(25) $3
 $(36) $(64) $(13) $(25) $(26)
Total rate-regulated revenues for reportable segments$1,417
 $681
 $616
 $1,016
 $494
 $267
 $256

72

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

 Three Months Ended June 30, 2019
Revenues from contracts with customersComEd PECO BGE PHI Pepco DPL ACE
Rate-regulated electric revenues             
Residential$647
 $343
 $282
 $494
 $224
 $135
 $135
Small commercial & industrial349
 99
 59
 120
 35
 44
 41
Large commercial & industrial127
 52
 109
 278
 207
 25
 46
Public authorities & electric railroads10
 7
 6
 16
 8
 4
 4
Other(a)
227
 62
 82
 159
 56
 54
 50
Total rate-regulated electric revenues(b)
$1,360
 $563
 $538
 $1,067
 $530
 $262
 $276
Rate-regulated natural gas revenues             
Residential$
 $49
 $60
 $11
 $
 $11
 $
Small commercial & industrial
 33
 11
 7
 
 7
 
Large commercial & industrial
 
 23
 2
 
 2
 
Transportation
 6
 
 3
 
 3
 
Other(c)

 1
 7
 1
 
 1
 
Total rate-regulated natural gas revenues(d)
$
 $89
 $101
 $24
 $
 $24
 $
Total rate-regulated revenues from contracts with customers$1,360
 $652
 $639
 $1,091
 $530
 $286
 $276
              
Other revenues             
Revenues from alternative revenue programs$(14) $(3) $6
 $(3) $(1) $
 $(2)
Other rate-regulated electric revenues(e)
5
 6
 3
 3
 2
 1
 
Other rate-regulated natural gas revenues(e)

 
 1
 
 
 
 
Total other revenues$(9) $3
 $10
 $
 $1
 $1
 $(2)
Total rate-regulated revenues for reportable segments$1,351
 $655
 $649
 $1,091
 $531
 $287
 $274
__________
(a)Includes revenues from transmission revenue from PJM, wholesale electric revenue and mutual assistance revenue.
(b)Includes operating revenues from affiliates of $11 million, $1 million, $3 million, $3 million, $1 million, $2 million and $1 million at ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, respectively, in 2020 and $5 million, $1 million, $1 million, $3 million, $1 million, $2 million and $1 million at ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, respectively, in 2019.
(c)Includes revenues from off-system natural gas sales.
(d)Includes operating revenues from affiliates of less than $1 million and $1 million at PECO and BGE, respectively, in 2020 and less than $1 million and $4 million at PECO and BGE, respectively, in 2019.
(e)Includes late payment charge revenues.

73

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

Six Months Ended June 30, 2020 and 2019
 Generation ComEd PECO BGE PHI 
Other(a)
 Intersegment
Eliminations
 Exelon
Operating revenues(b):
2020               
Competitive businesses electric revenues$7,165
 $
 $
 $
 $
 $
 $(594) $6,571
Competitive businesses natural gas revenues1,025
 
 
 
 
 
 (3) 1,022
Competitive businesses other revenues423
 
 
 
 
 
 (2) 421
Rate-regulated electric revenues
 2,856
 1,189
 1,118
 2,086
 
 (27) 7,222
Rate-regulated natural gas revenues
 
 304
 436
 94
 
 (2) 832
Shared service and other revenues
 
 
 
 7
 953
 (959) 1
Total operating revenues$8,613
 $2,856
 $1,493
 $1,554
 $2,187
 $953
 $(1,587) $16,069
2019               
Competitive businesses electric revenues$8,052
 $
 $
 $
 $
 $
 $(565) $7,487
Competitive businesses natural gas revenues1,214
 
 
 
 
 
 (1) 1,213
Competitive businesses other revenues240
 
 
 
 
 
 (2) 238
Rate-regulated electric revenues
 2,759
 1,185
 1,198
 2,218
 
 (17) 7,343
Rate-regulated natural gas revenues
 
 369
 427
 95
 
 (8) 883
Shared service and other revenues
 
 
 
 6
 940
 (944) 2
Total operating revenues$9,506
 $2,759
 $1,554
 $1,625
 $2,319
 $940
 $(1,537) $17,166
Intersegment revenues(c):
               
2020$601
 $16
 $4
 $10
 $7
 $949
 $(1,585) $2
2019568
 9
 3
 12
 7
 935
 (1,534) 
Depreciation and amortization:               
2020$604
 $547
 $173
 $272
 $385
 $42
 $
 $2,023
2019814
 508
 164
 252
 369
 47
 
 2,154
Operating expenses:               
2020$7,947
 $2,497
 $1,242
 $1,263
 $1,955
 $958
 $(1,564) $14,298
20199,059
 2,174
 1,187
 1,325
 1,981
 942
 (1,526) 15,142
Interest expense, net:               
2020$197
 $192
 $71
 $64
 $134
 $179
 $
 $837
2019227
 178
 67
 58
 131
 152
 
 813

74

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

 Generation ComEd PECO BGE PHI 
Other(a)
 Intersegment
Eliminations
 Exelon
Income (loss) before income taxes:               
2020$313
 $189
 $187
 $237
 $126
 $(175) $2
 $879
2019854
 429
 307
 253
 234
 (151) 
 1,926
Income Taxes:               
2020$(59) $82
 $9
 $18
 $(76) $(49) $
 $(75)
2019301
 85
 37
 47
 11
 (27) 
 454
Net income (loss):               
2020$368
 $107
 $178
 $219
 $202
 $(126) $2
 $950
2019540
 344
 270
 206
 223
 (123) 
 1,460
Capital Expenditures               
2020$930
 $1,029
 $512
 $548
 $686
 $68
 $
 $3,773
2019890
 961
 447
 542
 698
 34
 
 3,572
Total assets:               
June 30, 2020$47,003
 $33,896
 $12,120
 $11,027
 $23,004
 $9,288
 $(10,025) $126,313
December 31, 201948,995
 32,765
 11,469
 10,634
 22,719
 8,484
 (10,089) 124,977
__________
(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 17 — Supplemental Financial Information for additional information on total utility taxes.
(c)Intersegment revenues exclude sales to unconsolidated affiliates. The intersegment profit associated with Generation’s sale of certain products and services by and between Exelon’s segments is not eliminated in consolidation due to the recognition of intersegment profit in accordance with regulatory accounting guidance. For Exelon, these amounts are included in Operating revenues in the Consolidated Statements of Operations and Comprehensive Income. See Note 18 — Related Party Transactions for additional information on intersegment revenues.


75

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

PHI:
 Pepco DPL ACE 
Other(a)
 Intersegment
Eliminations
 PHI
Operating revenues(b):
           
2020           
Rate-regulated electric revenues$1,039
 $523
 $532
 $
 $(8) $2,086
Rate-regulated natural gas revenues
 94
 
 
 
 94
Shared service and other revenues
 
 
 189
 (182) 7
Total operating revenues$1,039
 $617
 $532
 $189
 $(190) $2,187
2019           
Rate-regulated electric revenues$1,106
 $572
 $547
 $
 $(7) $2,218
Rate-regulated natural gas revenues
 95
 
 
 
 95
Shared service and other revenues
 
 
 205
 (199) 6
Total operating revenues$1,106
 $667
 $547
 $205
 $(206) $2,319
Intersegment revenues(c):
           
2020$3
 $4
 $1
 $189
 $(190) $7
20193
 3
 1
 205
 (205) 7
Depreciation and amortization:           
2020$186
 $94
 $86
 $19
 $
 $385
2019186
 91
 71
 20
 1
 369
Operating expenses:           
2020$899
 $547
 $509
 $190
 $(190) $1,955
2019929
 550
 498
 208
 (204) 1,981
Interest expense, net:           
2020$68
 $31
 $29
 $6
 $
 $134
201968
 30
 28
 5
 
 131
Income (loss) before income taxes:           
2020$90
 $44
 $(1) $(7) $
 $126
2019(d)
123
 94
 25
 (8) 
 234
Income Taxes:           
2020$(19) $(20) $(32) $(5) $
 $(76)
20194
 11
 1
 (5) 
 11
Net income (loss):           
2020$109
 $64
 $31
 $(2) $
 $202
2019119
 83
 24
 (3) 
 223
Capital Expenditures           
2020$324
 $184
 $178
 $
 $
 $686
2019298
 160
 227
 13
 
 698
Total assets:           
June 30, 2020$8,869
 $4,966
 $4,089
 $5,234
 $(154) $23,004
December 31, 2019(d)
8,661
 4,830
 3,933
 5,335
 (40) 22,719

76

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

__________
(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 17 — Supplemental Financial Information for additional information on total utility taxes.
(c)Includes intersegment revenues with ComEd, BGE and PECO, which are eliminated at Exelon.
(d)
The Income (loss) before income taxes and Total assets amounts in Other and Intersegment Eliminations have been adjusted by an offsetting $227 million and $5.7 billion, respectively, for consistency with the Exelon consolidating disclosure above.
The following tables disaggregate the Registrants' 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. For Generation, the disaggregation of revenues reflects Generation’s two primary products of power sales and natural gas sales, with further disaggregation of power sales provided by geographic region. For the Utility Registrants, the disaggregation of revenues reflects the two primary utility services of rate-regulated electric sales and rate-regulated natural gas sales (where applicable), with further disaggregation of these tariff sales provided by major customer groups. Exelon’s disaggregated revenues are consistent with Generation and the Utility Registrants, but exclude any intercompany revenues.
Competitive Business Revenues (Generation):
 Six Months Ended June 30, 2020
 
Revenues from external customers(a)
 
Intersegment
Revenues
 
Total
Revenues
 Contracts with customers 
Other(b)
 Total  
Mid-Atlantic$2,365
 $(133) $2,232
 $15
 $2,247
Midwest1,798
 172
 1,970
 (6) 1,964
New York672
 (16) 656
 (1) 655
ERCOT330
 81
 411
 13
 424
Other Power Regions1,782
 114
 1,896
 (21) 1,875
Total Competitive Businesses Electric Revenues6,947
 218
 7,165
 
 7,165
Competitive Businesses Natural Gas Revenues712
 313
 1,025
 
 1,025
Competitive Businesses Other Revenues(c)
185
 238
 423
 
 423
Total Generation Consolidated Operating Revenues$7,844
 $769
 $8,613
 $
 $8,613
 Six Months Ended June 30, 2019
 
Revenues from external customers(a)
 Intersegment
revenues
 Total
Revenues
 Contracts with customers 
Other(b)
 Total  
Mid-Atlantic$2,448
 $(2) $2,446
 $(1) $2,445
Midwest2,030
 126
 2,156
 (14) 2,142
New York781
 1
 782
 
 782
ERCOT307
 126
 433
 8
 441
Other Power Regions1,976
 259
 2,235
 (21) 2,214
Total Competitive Businesses Electric Revenues7,542
 510
 8,052
 (28) 8,024
Competitive Businesses Natural Gas Revenues763
 451
 1,214
 28
 1,242
Competitive Businesses Other Revenues(c)
230
 10
 240
 
 240
Total Generation Consolidated Operating Revenues$8,535
 $971
 $9,506
 $
 $9,506

__________

77

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

(a)Includes all wholesale and retail electric sales to third parties and affiliated sales to the Utility Registrants.
(b)Includes revenues from derivatives and leases.
(c)Other represents activities not allocated to a region. See text above for a description of included activities. Includes unrealized mark-to-market gains of $200 million and losses of $14 million in 2020 and 2019, respectively, and elimination of intersegment revenues.

Revenues net of purchased power and fuel expense (Generation):
 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
 
RNF
from external
customers(a)
 
Intersegment
RNF
 Total RNF 
RNF
from external
customers(a)
 
Intersegment
RNF
 Total RNF
Mid-Atlantic$1,074
 $18
 $1,092
 $1,324
 $10
 $1,334
Midwest1,431
 (4) 1,427
 1,506
 (6) 1,500
New York433
 7
 440
 512
 7
 519
ERCOT168
 9
 177
 178
 (24) 154
Other Power Regions355
 (43) 312
 328
 (36) 292
Total Revenues net of purchased power and fuel expense for Reportable Segments3,461

(13)
3,448

3,848

(49)
3,799
Other(b)
506
 13
 519
 161
 49
 210
Total Generation Revenues net of purchased power and fuel expense$3,967

$

$3,967

$4,009

$

$4,009

__________
(a)Includes purchases and sales from/to third parties and affiliated sales to the Utility Registrants.
(b)Other represents activities not allocated to a region. See text above for a description of included activities. Includes unrealized mark-to-market gains of $218 million and losses of $102 million in 2020 and 2019, respectively and the elimination of intersegment RNF.



78

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

Electric and Gas Revenue by Customer Class (Utility Registrants):
 Six Months Ended June 30, 2020
Revenues from contracts with customersComEd PECO BGE PHI Pepco DPL ACE
Rate-regulated electric revenues             
Residential$1,468
 $759
 $644
 $1,062
 $472
 $308
 $282
Small commercial & industrial689
 187
 118
 221
 65
 82
 74
Large commercial & industrial253
 108
 198
 493
 363
 45
 85
Public authorities & electric railroads23
 14
 14
 31
 17
 6
 7
Other(a)
430
 113
 154
 332
 119
 105
 109
Total rate-regulated electric revenues(b)
$2,863
 $1,181
 $1,128
 $2,139
 $1,036
 $546
 $557
Rate-regulated natural gas revenues             
Residential$
 $220
 $287
 $57
 $
 $57
 $
Small commercial & industrial
 70
 46
 25
 
 25
 
Large commercial & industrial
 
 76
 2
 
 2
 
Transportation
 12
 
 7
 
 7
 
Other(c)

 2
 13
 3
 
 3
 
Total rate-regulated natural gas revenues(d)
$
 $304
 $422
 $94
 $
 $94
 $
Total rate-regulated revenues from contracts with customers$2,863
 $1,485
 $1,550
 $2,233
 $1,036
 $640
 $557
              
Other revenues             
Revenues from alternative revenue programs$(13) $5
 $
 $(47) $2
 $(24) $(25)
Other rate-regulated electric revenues(e)
6
 3
 3
 1
 1
 1
 
Other rate-regulated natural gas revenues(e)

 
 1
 
 
 
 
Total other revenues$(7) $8
 $4
 $(46) $3
 $(23) $(25)
Total rate-regulated revenues for reportable segments$2,856
 $1,493
 $1,554
 $2,187
 $1,039
 $617
 $532


79

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Segment Information

 Six Months Ended June 30, 2019
Revenues from contracts with customersComEd PECO BGE PHI Pepco DPL ACE
Rate-regulated electric revenues             
Residential$1,356
 $752
 $667
 $1,073
 $480
 $320
 $273
Small commercial & industrial709
 195
 129
 241
 73
 93
 75
Large commercial & industrial259
 100
 219
 545
 411
 49
 85
Public authorities & electric railroads23
 14
 13
 31
 17
 7
 7
Other(a)
442
 123
 160
 317
 108
 101
 108
Total rate-regulated electric revenues(b)
$2,789
 $1,184
 $1,188
 $2,207
 $1,089
 $570
 $548
Rate-regulated natural gas revenues             
Residential$
 $247
 $279
 $55
 $
 $55
 $
Small commercial & industrial
 105
 46
 26
 
 26
 
Large commercial & industrial
 1
 73
 3
 
 3
 
Transportation
 13
 
 7
 
 7
 
Other(c)

 3
 13
 4
 
 4
 
Total rate-regulated natural gas revenues(d)
$
 $369
 $411
 $95
 $
 $95
 $
Total rate-regulated revenues from contracts with customers$2,789
 $1,553
 $1,599
 $2,302
 $1,089
 $665
 $548
              
Other revenues             
Revenues from alternative revenue programs$(42) $(6) $17
 $12
 $13
 $1
 $(1)
Other rate-regulated electric revenues(e)
12
 7
 6
 5
 4
 1
 
Other rate-regulated natural gas revenues(e)

 
 3
 
 
 
 
Total other revenues$(30) $1
 $26
 $17
 $17
 $2
 $(1)
Total rate-regulated revenues for reportable segments$2,759
 $1,554
 $1,625
 $2,319
 $1,106
 $667
 $547

__________
(a)Includes revenues from transmission revenue from PJM, wholesale electric revenue and mutual assistance revenue.
(b)Includes operating revenues from affiliates of $16 million, $3 million, $6 million, $7 million, $3 million, $4 million and $1 million at ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, respectively, in 2020 and $9 million, $2 million, $1 million, $7 million, $3 million, $3 million and $1 million at ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, respectively, in 2019.
(c)Includes revenues from off-system natural gas sales.
(d)Includes operating revenues from affiliates of less than $1 million and $4 million at PECO and BGE, respectively, in 2020 and $1 million and $9 million at PECO and BGE, respectively, in 2019.
(e)Includes late payment charge revenues.


80

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 5 — Accounts Receivable

5. Accounts Receivable (All Registrants)
Allowance for Credit Losses on Accounts Receivable (All Registrants)
The following tables present the rollforward of Allowance for Credit Losses on Customer Accounts Receivable.
 Three Months Ended June 30, 2020
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
Balance as of March 31, 2020$278
 $81
 $71
 $66
 $18
 $42
 $15
 $13
 $14
Plus: Current Period Provision for Expected Credit Losses51
 9
 7
 10
 6
 19
 8
 5
 6
Less: Write-offs, net of recoveries(a)
12
 1
 6
 5
 1
 (1) (1) 
 
Less: Sale of customer accounts receivable (b)
56
 56
 
 
 
 
 
 
 
Balance as of June 30, 2020$261
 $33
 $72
 $71
 $23
 $62
 $24
 $18
 $20
 Six Months Ended June 30, 2020
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
Balance as of December 31, 2019$243
 $80
 $59
 $55
 $12
 $37
 $13
 $11
 $13
Plus: Current Period Provision for Expected Credit Losses106
 13
 25
 28
 14
 26
 11
 7
 8
Less: Write-offs, net of recoveries(a)
32
 4
 12
 12
 3
 1
 
 
 1
Less: Sale of customer accounts receivable (b)

56
 56
 
 
 
 
 
 
 
Balance as of June 30, 2020$261
 $33
 $72
 $71
 $23
 $62
 $24
 $18
 $20
_________
(a)Recoveries were not material to the Registrants.
(b)See below for additional information on the sale of customer accounts receivable at Generation in the second quarter of 2020.


81

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 5 — Accounts Receivable

The following tables present the rollforward of Allowance for Credit Losses on Other Accounts Receivable.
 Three Months Ended June 30, 2020
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
Balance as of March 31, 2020$52
 $
 $22
 $7
 $5
 $18
 $8
 $4
 $6
Plus: Current Period Provision for Expected Credit Losses12
 
 1
 1
 2
 8
 3
 3
 2
Less: Write-offs, net of recoveries(a)
3
 
 1
 1
 1
 
 
 
 
Balance as of June 30, 2020$61
 $
 $22
 $7
 $6
 $26
 $11
 $7
 $8

 Six Months Ended June 30, 2020
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
Balance as of December 31, 2019$48
 $
 $20
 $7
 $5
 $16
 $7
 $4
 $5
Plus: Current Period Provision for Expected Credit Losses20
 
 4
 2
 4
 10
 4
 3
 3
Less: Write-offs, net of recoveries(a)
7
 
 2
 2
 3
 
 
 
 
Balance as of June 30, 2020$61
 $
 $22
 $7
 $6
 $26
 $11
 $7
 $8
_________
(a)Recoveries were not material to the Registrants.

Unbilled Customer Revenue (All Registrants)
The following table provides additional information about unbilled customer revenues recorded in the Registrants' Consolidated Balance Sheets.
 
Unbilled customer revenues(a)
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
June 30, 2020$804
 $120
 $257
 $120
 $116
 $191
 $102
 $49
 $40
December 31, 20191,535
 807
 218
 146
 170
 194
 100
 61
 33
_________
(a)Unbilled customer revenues are classified in customer accounts receivables, net in the Registrants' Consolidated Balance Sheets.
Sales of Customer Accounts Receivable (Exelon and Generation)
On April 8, 2020, NER, a bankruptcy remote, special purpose entity, which is wholly-owned by Generation, entered into a revolving accounts receivable financing arrangement with a number of financial institutions and a commercial paper conduit (the Purchasers) to sell certain customer accounts receivable (the Facility). The Facility, whose maximum capacity is $750 million, is scheduled to expire on April 7, 2021, unless renewed by the mutual consent of the parties in accordance with its terms. Under the Facility, NER may sell eligible short-term customer accounts receivable to the Purchasers in exchange for cash and subordinated interest. The transfers are reported as sales of receivables in Exelon’s and Generation’s consolidated financial statements. The subordinated interest in collections upon the receivables sold to the Purchasers is referred to as the DPP, which is reflected in Other current assets on Exelon’s and Generation’s Consolidated Balance Sheet.

82

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 5 — Accounts Receivable

On April 8, 2020, Generation derecognized and transferred approximately $1.2 billion of receivables at fair value to the Purchasers in exchange for approximately $500 million in cash purchase price and $650 million of DPP.
The following table summarizes the impact of the sale of certain receivables:
 As of June 30, 2020
Derecognized receivables transferred at fair value(a)
$1,135
Cash proceeds received500
DPP635
_________
(a)Includes additional customer accounts receivable sold into the Facility of $2,032 million since the start of the financing agreement.

 Three and six months ended June 30, 2020
Loss on sale of receivables(a)

$15
_________
(a)Reflected in Operating and maintenance expense on Exelon and Generation's Consolidated Statements of Operations and Income Statement.

 Six months ended June 30, 2020
Proceeds from new transfers$927
Cash collections received on DPP1,102
Cash collections reinvested in the Facility2,029

Generation’s risk of loss following the transfer of accounts receivable is limited to the DPP outstanding.  Payment of DPP is not subject to significant risks other than delinquencies and credit losses on accounts receivable transferred, which have historically been and are expected to be immaterial. Generation continues to service the receivables sold in exchange for a servicing fee. Generation did not record a servicing asset or liability as the servicing fees were immaterial.
Generation reflected the cash proceeds received upon sale in Net cash provided by operating activities in the Consolidated Statements of Cash Flows. The collection and reinvestment of DPP is recognized in Net cash provided by investing activities of the Consolidated Statements of Cash Flows.
See Note 13 — Fair Value of Financial Assets and Liabilities and Note 16 — Variable Interest Entities for additional information.
Other Purchases and Sales of Customer and Other Accounts Receivables (All Registrants)
Generation is required, under supplier tariffs in ISO-NE, MISO, NYISO and PJM, to sell customer and other receivables to utility companies, which include the Utility Registrants. The Utility Registrants are required, under separate legislation and regulations in Illinois, Pennsylvania, Maryland, District of Columbia 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 and sold.

83

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 5 — Accounts Receivable

 Six Months Ended June 30, 2020
 Exelon Generation ComEd PECO BGE PHI Pepco DPL ACE
Total Receivables Purchased$1,584
 $
 $518
 $494
 $333
 $485
 $303
 $98
 $84
Total Receivables Sold533
 779
 
 
 
 
 
 
 
                  
Related Party Transactions:                 
Receivables purchased from Generation
 
 34
 67
 73
 72
 51
 13
 8
Receivables sold to the Utility Registrants
 246
 
 
 
 
 
 
 

6. Early Plant Retirements (Exelon and Generation)
Exelon and Generation continuously evaluate factors that affect the current and expected economic value of Generation’s plants, including, but not limited to: market power prices, results of capacity auctions, potential legislative and regulatory solutions to ensure plants are fairly compensated for benefits they provide through their carbon-free emissions, reliability, or fuel security, and the impact of potential rules from the EPA requiring reduction of carbon and other emissions and the efforts of states to implement those final rules. The precise timing of an early retirement date for any plant, and the resulting financial statement impacts, may be affected by many factors, including the status of potential regulatory or legislative solutions, results of any transmission system reliability study assessments, the nature of any co-owner requirements and stipulations, and NDT fund requirements for nuclear plants, among other factors. However, the earliest retirement date for any plant would usually be the first year in which the unit does not have capacity or other obligations, and where applicable, just prior to its next scheduled nuclear refueling outage.
Nuclear Generation
In 2015 and 2016, Generation identified the Clinton and Quad Cities nuclear plants in Illinois, Ginna and Nine Mile Point nuclear plants in New York and Three Mile Island nuclear plant in Pennsylvania as having the greatest risk of early retirement based on economic valuation and other factors. In 2017, PSEG made public similar financial challenges facing its New Jersey nuclear plants, including Salem, of which Generation owns a 42.59% ownership interest. PSEG is the operator of Salem and also has the decision-making authority to retire Salem.
Assuming the continued effectiveness of the Illinois ZES, New Jersey ZEC program and the New York CES, Generation and CENG, through its ownership of Ginna and Nine Mile Point, no longer consider Clinton, Quad Cities, Salem, Ginna or Nine Mile Point to be at heightened risk for early retirement. However, to the extent the Illinois ZES, New Jersey ZEC program or the New York CES do not operate as expected over their full terms, each of these plants could again be at heightened risk for early retirement, which could have a material impact on Exelon’s and Generation’s future financial statements. In addition, FERC’s December 19, 2019 order on the MOPR in PJM may undermine the continued effectiveness of the Illinois ZES and the New Jersey ZEC program unless Illinois and New Jersey implement an FRR mechanism under which the Generation plants in these states would be removed from PJM’s capacity auction. See Note 2 — Regulatory Matters for additional information on the New Jersey ZEC program, New York CES and FERC's December 19, 2019 order and Note 3 — Regulatory Matters of the 2019 Form 10-K for additional information on the Illinois ZES.
In Pennsylvania, the TMI nuclear plant did not clear in the May 2017 PJM capacity auction for the 2020-2021 planning year, the third consecutive year that TMI failed to clear the PJM base residual capacity auction and on May 30, 2017, based on these capacity auction results, prolonged periods of low wholesale power prices, and the absence of federal or state policies that place a value on nuclear energy for its ability to produce electricity without air pollution, Generation announced that it would permanently cease generation operations at TMI. On September 20, 2019, Generation permanently ceased generation operations at TMI.

84

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 6 — Early Plant Retirements

As a result of the early nuclear plant retirement decision at TMI, Exelon and Generation recognized incremental non-cash charges to earnings stemming from shortening the expected economic useful lives primarily related to accelerated depreciation of plant assets (including any ARC) and accelerated amortization of nuclear fuel, as well as operating and maintenance expenses. The total impact for the three and six months ended June 30, 2019 are summarized in the table below.
Income statement expense (pre-tax) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Depreciation and amortization    
Accelerated depreciation $71
 $145
Accelerated nuclear fuel amortization 4
 9
Operating and maintenance(a)
 
 (83)
Total $75
 $71
_________
(a)Primarily reflects the net impacts associated with the remeasurement of the TMI ARO. See Note 9 — Asset Retirement Obligations of the 2019 Form 10-K for additional information.
Generation’s Dresden, Byron and Braidwood nuclear plants in Illinois are also showing increased signs of economic distress, which could lead to an early retirement, in a market that does not currently compensate them for their unique contribution to grid resiliency and their ability to produce large amounts of energy without carbon and air pollution. The May 2018 PJM capacity auction for the 2021-2022 planning year resulted in the largest volume of nuclear capacity ever not selected in the auction, including all of Dresden, and portions of Byron and Braidwood. While all of LaSalle's capacity did clear in the 2021-2022 planning year auction, Generation has become increasingly concerned about the economic viability of this plant as well in a landscape where energy market prices remain depressed and energy market rules remain fatally flawed. Exelon continues to work with stakeholders on state policy solutions, while also advocating for broader market reforms at the regional and federal level. The absence of such solutions or reforms could result in future impairments of the Midwest asset group, or accelerated depreciation for specific plants over their shortened estimated useful lives, both of which could have a material unfavorable impact on Exelon's and Generation's future results of operations.
The following table provides the balance sheet amounts as of June 30, 2020 for Exelon's and Generation's significant assets and liabilities associated with these four nuclear plants. Depreciation provisions are based on the estimated useful lives of these nuclear generating stations, which reflect the first renewal of the operating licenses.
  Dresden Byron Braidwood LaSalle Total
Asset Balances          
Materials and supplies inventory, net $70
 $70
 $82
 $108
 $330
Nuclear fuel inventory, net 182
 145
 180
 244
 751
Completed plant, net 1,057
 1,334
 1,416
 1,588
 5,395
Construction work in progress 18
 21
 18
 19
 76
Liability Balances          
Asset retirement obligation (1,317) (604) (562) (915) (3,398)
           
NRC License First Renewal Term 2029 (Unit 2)
 2044 (Unit 1)
 2046 (Unit 1)
 2042 (Unit 1)
  
 2031 (Unit 3)
 2046 (Unit 2)
 2047 (Unit 2)
 2043 (Unit 2)
  

Other Generation
On March 29, 2018, Generation notified grid operator ISO-NE of its plans to early retire its Mystic Units 8 and 9 absent regulatory reforms on June 1, 2022, at the end of the then-current capacity commitment for Mystic Units 7 and 8. Mystic Unit 9 was then committed through May 2021.

85

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 6 — Early Plant Retirements

On May 16, 2018, Generation made a filing with FERC to establish cost-of-service compensation and terms and conditions of service for Mystic Units 8 and 9 for the period between June 1, 2022 - May 31, 2024. On December 20, 2018, FERC issued an order accepting the cost of service agreement, reflecting a number of adjustments to the annual fixed revenue requirement and allowing for recovery of a substantial portion of the costs associated with the Everett Marine Terminal. Those adjustments were reflected in a compliance filing filed March 1, 2019. In the December 20, 2018 order, FERC also directed a paper hearing on ROE using a new methodology. On January 22, 2019, Exelon and several other parties filed requests for rehearing of certain findings in the order. On July 17, 2020, FERC issued three orders, which together affirmed the recovery of key elements of Mystic's cost of service compensation, including recovery of costs associated with the operation of the Everett Marine Terminal. FERC directed a downward adjustment to the rate base for Mystic Units 8 and 9, the effect of which will be partially offset by elimination of a crediting mechanism for third party gas sales during the term of the cost of service agreement. A compliance filing will be due on September 15, 2020. On July 28, 2020, FERC ordered additional briefings in the ROE proceeding, with initial briefs due by September 28, 2020.
On March 25, 2019, ISO-NE filed the Inventoried Energy Program (IEP), which is intended to provide an interim fuel security program pending conclusion of the stakeholder process to develop a long-term, market-based solution to address fuel security. The IEP went into effect by operation of law on August 5, 2019 because FERC did not have a quorum at that time. On October 7, 2019, requests for rehearing were denied and several parties appealed to the D.C. Circuit Court. On April 14, 2020, FERC filed an unopposed motion asking the court for a voluntary remand of the IEP order, noting that FERC now has a quorum of commissioners who can participate in the consideration of ISO-NE’s IEP filing. On April 21, 2020, the D.C. Circuit Court granted the voluntary remand and on June 18, 2020, FERC issued an order finding the IEP just and reasonable and accepting ISO-NE's proposed tariff revisions. Several parties have filed requests for rehearing.
On April 15, 2020, ISO-NE filed its long-term, market-based fuel security proposal, proposing three new, day-ahead ancillary services products intended to compensate generators for operational capabilities that provide fuel security to the region. In the filing, ISO-NE also proposed to sunset the Fuel Security Retention Mechanism, through which Mystic has been retained for fuel security, and the IEP by June 1, 2024. In addition, the filing includes an alternate proposal sponsored by New England Power Pool (NEPOOL), which includes substantive amendments to the ISO-NE proposal. On May 15, 2020, Exelon filed a limited protest to ISO's long-term fuel-security proposal asking FERC to accept ISO-NE's proposal but to direct ISO-NE to revise its tariff so that the IEP remains in place as a safeguard until the long-term solution is in place. A number of other comments in support and protests have been filed. ISO-NE asked for a decision on its proposal by November 1, 2020.
On June 12, 2020, Generation filed a complaint with FERC against ISO-NE on the grounds that ISO-NE failed to follow its tariff with respect to its evaluation of Mystic for transmission security for the 2024 to 2025 Capacity Commitment Period (FCA 15) and that modifications ISO-NE made to its unfiled planning procedures to avoid retaining Mystic should have been filed with FERC for approval. Generation asked for a ruling from FERC by August 10, 2020, but ISO-NE asserts that a ruling is not needed until November 2, 2020. On July 27, 2020, ISO-NE issued a memo to NEPOOL announcing its determination pursuant to its unfiled planning procedures that Mystic Units 8 and 9 are not needed for FCA 15 for transmission security. It had previously determined Mystic Units 8 and 9 are not needed for fuel security. The timing and the outcome of this proceeding is uncertain.
The following table provides the balance sheet amounts as of June 30, 2020 for Exelon's and Generation’s significant assets and liabilities associated with the Mystic Units 8 and 9 and Everett Marine Terminal assets that would potentially be impacted by the failure to adopt long-term solutions for reliability and fuel security.
  June 30, 2020
Asset Balances  
Materials and supplies inventory $33
Fuel inventory 6
Property, plant and equipment, net 898
Liability Balances  
Asset retirement obligation (3)

See Note 8 — Asset Impairments for impairment assessment considerations on the New England Asset Group.

86

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 7 — Nuclear Decommissioning

7. Nuclear Decommissioning (Exelon and Generation)
Nuclear Decommissioning Asset Retirement Obligations
Generation has a legal obligation to decommission its nuclear power plants following the expiration of their operating licenses. To estimate its decommissioning obligation related to its nuclear generating stations for financial accounting and reporting purposes, Generation uses a probability-weighted, discounted cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on decommissioning cost studies, cost escalation rates, probabilistic cash flow models and discount rates. Generation updates its ARO annually, unless circumstances warrant more frequent updates, based on its review of updated cost studies and its annual evaluation of cost escalation factors and probabilities assigned to various scenarios.
The financial statement impact for changes in the ARO, on an individual unit basis, due to the changes in and timing of estimated cash flows generally result in a corresponding change in the unit’s ARC within Property, plant and equipment on Exelon’s and Generation’s Consolidated Balance Sheets. If the ARO decreases for a Non-Regulatory Agreement unit without any remaining ARC, the corresponding change is recorded as decrease in Operating and maintenance expense within Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income.
The following table provides a rollforward of the nuclear decommissioning ARO reflected in Exelon’s and Generation’s Consolidated Balance Sheets from December 31, 2019 to June 30, 2020:
Nuclear decommissioning ARO at December 31, 2019 (a)
$10,504
Accretion expense243
Costs incurred related to decommissioning plants$(37)
Nuclear decommissioning ARO at June 30, 2020 (a)
$10,710
_________
(a)Includes $104 million and $112 million as the current portion of the ARO at June 30, 2020 and December 31, 2019, respectively, which is included in Other current liabilities in Exelon’s and Generation’s Consolidated Balance Sheets.

NDT Funds
Exelon and Generation had NDT funds totaling $12,917 million and $13,353 million at June 30, 2020 and December 31, 2019, respectively. The NDT funds also include $187 million and $163 million for the current portion of the NDT funds at June 30, 2020 and December 31, 2019, respectively, which are included in Other current assets in Exelon's and Generation's Consolidated Balance Sheets. See Note 17 — Supplemental Financial Information for additional information on activities of the NDT funds.
NRC Minimum Funding Requirements
NRC regulations require that licensees of nuclear generating facilities demonstrate reasonable assurance that funds will be available in specified minimum amounts to decommission the facility at the end of its life.
Generation filed its biennial decommissioning funding status report with the NRC on April 1, 2019 for all units, including its shutdown units, except for Zion Station which is included in a separate report to the NRC submitted by ZionSolutions, LLC. The status report demonstrated adequate decommissioning funding assurance as of December 31, 2018 for all units except for Clinton and Peach Bottom Unit 1. As of February 28, 2019, Clinton demonstrated adequate minimum funding assurance due to market recovery and no further action is required. This demonstration was also included in the April 1, 2019 submittal. On March 31, 2020, Generation filed its annual decommissioning funding status report with the NRC for Generation’s shutdown units (excluding Zion Station for the reason noted above). The annual status report demonstrated adequate decommissioning funding assurance as of December 31, 2019, for all of its shutdown reactors except for Peach Bottom Unit 1. As a former PECO plant, financial assurance for decommissioning Peach Bottom Unit 1 is provided by the NDT fund, collections from PECO ratepayers, and the ability to adjust those collections in accordance with the approved PAPUC tariff. No additional actions are required aside from the PAPUC filing in accordance with the tariff.  See Note 9 — Asset Retirement

87

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except per share data, unless otherwise noted)

Note 7 — Nuclear Decommissioning

Obligations of the Exelon 2019 Form 10-K for information regarding the amount collected from PECO ratepayers for decommissioning cost.
8. Asset Impairments (Exelon and Generation)
The Registrants evaluate the carrying value of long-lived assets or asset groups for recoverability whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. Indicators of impairment may include a deteriorating business climate, including, but not limited to, declines in energy prices, condition of the asset, specific regulatory disallowance, or plans to dispose of a long-lived asset significantly before the end of its useful life. The Registrants determine if long-lived assets or asset groups are impaired by comparing the undiscounted expected future cash flows to the carrying value. When the undiscounted cash flow analysis indicates a long-lived asset or asset group is not recoverable, the amount of the impairment loss is determined by measuring the excess of the carrying amount of the long-lived asset or asset group over its fair value. The fair value analysis is primarily based on the income approach using significant unobservable inputs (Level 3) including revenue and generation forecasts, projected capital and maintenance expenditures and discount rates. A variation in the assumptions used could lead to a different conclusion regarding the recoverability of an asset or asset group and, thus, could potentially result in material future impairments of the Registrant's long-lived assets.
Antelope Valley Solar Facility
Generation’s Antelope Valley, a 242 MW solar facility in Lancaster, CA, sells all of its output to PG&E through a PPA. As of June 30, 2020, Generation had approximately $710 million of net long-lived assets related to Antelope Valley. As a result of the PG&E bankruptcy filing in the first quarter of 2019, Generation completed a comprehensive review of Antelope Valley's estimated undiscounted future cash flows and no impairment charge was recorded.
Antelope Valley is a wholly owned indirect subsidiary of EGR IV, which had approximately $1,840 million of additional net long-lived assets as of June 30, 2020. EGR IV is a wholly owned indirect subsidiary of Exelon and Generation and includes Generation's interest in EGRP and other projects with non-controlling interests. To date, there have been no indicators to suggest that the carrying amount of other net long-lived assets of EGR IV may not be recoverable.
The United States Bankruptcy Court entered an order on June 20, 2020 confirming PG&E’s plan of reorganization. On July 1, 2020 the plan became effective, and PG&E emerged from bankruptcy. Under the confirmed plan, PG&E will continue to honor the existing PPA agreement with Antelope Valley.
See Note 12 - Debt and Credit Agreements for additional information.
New England Asset Group
During the first quarter of 2018, Mystic Unit 9 did not clear in the ISO-NE capacity auction for the 2021 - 2022 planning year. On March 29, 2018, Generation notified ISO-NE of the early retirement of its Mystic Generating Station's Units 7, 8, 9 and the