Edgar Filing: EXELON CORP

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number	Name of Registrant; State of Incorporation; Address of Principal Executive Offices; and Telephone Number	IRS Employer Identification Number

1-16169	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

1-1839	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

1-1910	BALTIMORE GAS AND ELECTRIC COMPANY		52-0280210
	(a Maryland corporation) 2 Center Plaza 110 West Fayette Street Baltimore, Maryland 21201-3708 (410) 234-5000

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company
Exelon Corporation	x
Exelon Generation Company, LLC			x
Commonwealth Edison Company			x
PECO Energy Company			x
Baltimore Gas and Electric Company			x

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, 2015 was:


Exelon Corporation Common Stock, without par value		861,617,731
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,016,973
PECO Energy Company Common Stock, without par value		170,478,507
Baltimore Gas and Electric Company Common Stock, without par value		1,000

TABLE OF CONTENTS


		Page No.

FILING FORMAT			7

FORWARD-LOOKING STATEMENTS			7

WHERE TO FIND MORE INFORMATION			7

PART I.	FINANCIAL INFORMATION		8

ITEM 1.	FINANCIAL STATEMENTS		8

	Exelon Corporation

	Consolidated Statements of Operations and Comprehensive Income		9

	Consolidated Statements of Cash Flows		10

	Consolidated Balance Sheets		11

	Consolidated Statement of Changes in Shareholders’ Equity		13

	Exelon Generation Company, LLC

	Consolidated Statements of Operations and Comprehensive Income		14

	Consolidated Statements of Cash Flows		15

	Consolidated Balance Sheets		16

	Consolidated Statement of Changes in Equity		18

	Commonwealth Edison Company

	Consolidated Statements of Operations and Comprehensive Income		19

	Consolidated Statements of Cash Flows		20

	Consolidated Balance Sheets		21

	Consolidated Statement of Changes in Shareholders’ Equity		23

	PECO Energy Company

	Consolidated Statements of Operations and Comprehensive Income		24

	Consolidated Statements of Cash Flows		25

	Consolidated Balance Sheets		26

	Consolidated Statement of Changes in Shareholders’ Equity		28

	Baltimore Gas and Electric Company

	Consolidated Statements of Operations and Comprehensive Income		29

	Consolidated Statements of Cash Flows		30

	Consolidated Balance Sheets		31

	Consolidated Statement of Changes in Shareholders’ Equity		33

	Combined Notes to Consolidated Financial Statements		34

	1. Basis of Presentation		34

	2. New Accounting Pronouncements		35

	3. Variable Interest Entities		37

	4. Mergers, Acquisitions and Dispositions		42

	5. Regulatory Matters		45

	6. Investment in Constellation Energy Nuclear Group, LLC		57

	7. Impairment of Long-Lived Assets		58


		Page No.

	8. Implications of Potential Early Plant Retirements		60

	9. Fair Value of Financial Assets and Liabilities		61

	10. Derivative Financial Instruments		79

	11. Debt and Credit Agreements		95

	12. Income Taxes		100

	13. Nuclear Decommissioning		104

	14. Retirement Benefits		106

	15. Severance		108

	16. Changes in Accumulated Other Comprehensive Income		109

	17. Common Stock		114

	18. Earnings Per Share and Equity		115

	19. Commitments and Contingencies		115

	20. Supplemental Financial Information		129

	21. Segment Information		134

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		141

	Exelon Corporation		141

	General		141

	Executive Overview		142

	Critical Accounting Policies and Estimates		167

	Results of Operations		167

	Liquidity and Capital Resources		195

	Contractual Obligations and Off-Balance Sheet Arrangements		205

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		207

ITEM 4.	CONTROLS AND PROCEDURES		215

PART II.	OTHER INFORMATION		217

ITEM 1.	LEGAL PROCEEDINGS		217

ITEM 1A.	RISK FACTORS		217

ITEM 4.	MINE SAFETY DISCLOSURES		217

ITEM 6.	EXHIBITS		217

SIGNATURES			219

	Exelon Corporation		219

	Exelon Generation Company, LLC		219

	Commonwealth Edison Company		220

	PECO Energy Company		220

	Baltimore Gas and Electric Company		220

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
BSC		Exelon Business Services Company, LLC
Exelon Corporate		Exelon’s holding company
CENG		Constellation Energy Nuclear Group, LLC
Constellation		Constellation Energy Group, Inc.
Antelope Valley, AVSR		Antelope Valley Solar Ranch One
Exelon Transmission Company		Exelon Transmission Company, LLC
Exelon Wind		Exelon Wind, LLC and Exelon Generation Acquisition Company, LLC
Ventures		Exelon Ventures Company, LLC
AmerGen		AmerGen Energy Company, LLC
BondCo		RSB BondCo LLC
ComEd Financing III		ComEd Financing III
PEC L.P.		PECO Energy Capital, L.P.
PECO Trust III		PECO Energy Capital Trust III
PECO Trust IV		PECO Energy Capital Trust IV
BGE Trust II		BGE Capital Trust II
PETT		PECO Energy Transition Trust
Registrants		Exelon, Generation, ComEd, PECO and BGE, collectively


Other Terms and Abbreviations
Note “—” of the Exelon 2014 Form 10-K		Reference to a specific Combined Note to Consolidated Financial Statements within Exelon’s 2014 Annual Report on Form 10-K
1998 restructuring settlement		PECO’s 1998 settlement of its restructuring case mandated by the Competition Act
Act 11		Pennsylvania Act 11 of 2012
Act 129		Pennsylvania Act 129 of 2008
AEC		Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source
AEPS		Pennsylvania Alternative Energy Portfolio Standards
AEPS Act		Pennsylvania Alternative Energy Portfolio Standards Act of 2004, as amended
AESO		Alberta Electric Systems Operator
AFUDC		Allowance for Funds Used During Construction
ALJ		Administrative Law Judge
AMI		Advanced Metering Infrastructure
AMP		Advanced Metering Program
ARC		Asset Retirement Cost
ARO		Asset Retirement Obligation
ARP		Title IV Acid Rain Program
ARRA of 2009		American Recovery and Reinvestment Act of 2009
Block contracts		Forward Purchase Energy Block Contracts
CAIR		Clean Air Interstate Rule
CAISO		California ISO
CAMR		Federal Clean Air Mercury Rule

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CFL		Compact Fluorescent Light
Clean Air Act		Clean Air Act of 1963, as amended
Clean Water Act		Federal Water Pollution Control Amendments of 1972, as amended
Competition Act		Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996
CPI		Consumer Price Index
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
CTC		Competitive Transition Charge
DC Circuit Court		United States Court of Appeals for the District of Columbia Circuit
DOE		United States Department of Energy
DOJ		United States Department of Justice
DSP		Default Service Provider
DSP Program		Default Service Provider Program
EDF		Electricite de France SA
EE&C		Energy Efficiency and Conservation/Demand Response
EGR		ExGen Renewables I, LLC
EGS		Electric Generation Supplier
EGTP		ExGen Texas Power, LLC
EIMA		Illinois Energy Infrastructure Modernization Act
EPA		United States Environmental Protection Agency
ERCOT		Electric Reliability Council of Texas
ERISA		Employee Retirement Income Security Act of 1974, as amended
EROA		Expected Rate of Return on Assets
ESPP		Employee Stock Purchase Plan
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FRCC		Florida Reliability Coordinating Council
FTC		Federal Trade Commission
GAAP		Generally Accepted Accounting Principles in the United States
GDP		Gross Domestic Product
GHG		Greenhouse Gas
GRT		Gross Receipts Tax
GSA		Generation Supply Adjustment
GWh		Gigawatt hour
HAP		Hazardous air pollutants
Health Care Reform Acts		Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010
IBEW		International Brotherhood of Electrical Workers
ICC		Illinois Commerce Commission
ICE		Intercontinental Exchange
Illinois Act		Illinois Electric Service Customer Choice and Rate Relief Law of 1997
Illinois EPA		Illinois Environmental Protection Agency
Illinois Settlement Legislation		Legislation enacted in 2007 affecting electric utilities in Illinois
Integrys		Integrys Energy Services, Inc.
IPA		Illinois Power Agency
IRC		Internal Revenue Code

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
IRS		Internal Revenue Service
ISO		Independent System Operator
ISO-NE		ISO New England Inc.
ISO-NY		New York Independent System Operator
kV		Kilovolt
kW		Kilowatt
kWh		Kilowatt-hour
LIBOR		London Interbank Offered Rate
LILO		Lease-In, Lease-Out
LLRW		Low-Level Radioactive Waste
LTIP		Long-Term Incentive Plan
MATS		U.S. EPA Mercury and Air Toxics Standard Rule
MBR		Market Based Rates Incentive
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
Moody’s		Moody’s Investor Service
MOPR		Minimum Offer Price Rule
MRV		Market-Related Value
MW		Megawatt
MWh		Megawatt hour
NAAQS		National Ambient Air Quality Standards
n.m.		not meaningful
NAV		Net Asset Value
NDT		Nuclear Decommissioning Trust
NEIL		Nuclear Electric Insurance Limited
NERC		North American Electric Reliability Corporation
NGS		Natural Gas Supplier
NJDEP		New Jersey Department of Environmental Protection
Non-Regulatory Agreements Units		Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting including the CENG units (Calvert Cliffs, Nine Mile Point, and R.E. Ginna), Clinton, Oyster Creek, Three Mile Island, Zion (a former ComEd unit), and portions of Peach Bottom (a former PECO unit)
NOSA		Nuclear Operating Services Agreement
NOV		Notice of Violation
NPDES		National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission
NSPS		New Source Performance Standards
NWPA		Nuclear Waste Policy Act of 1982
NYMEX		New York Mercantile Exchange
OCI		Other Comprehensive Income
OIESO		Ontario Independent Electricity System Operator
OPEB		Other Postretirement Employee Benefits
PA DEP		Pennsylvania Department of Environmental Protection
PAPUC		Pennsylvania Public Utility Commission
PGC		Purchased Gas Cost Clause

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
PHI		Pepco Holdings, Inc.
PJM		PJM Interconnection, LLC
POLR		Provider of Last Resort
POR		Purchase of Receivables
PPA		Power Purchase Agreement
PPL		PPL Holtwood, LLC
Price-Anderson Act		Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP		Potentially Responsible Parties
PSEG		Public Service Enterprise Group Incorporated
PURTA		Pennsylvania Public Realty Tax Act
PV		Photovoltaic
RCRA		Resource Conservation and Recovery Act of 1976, as amended
REC		Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source
Regulatory Agreement Units		Nuclear generating units whose decommissioning-related activities are subject to contractual elimination under regulatory accounting including the former ComEd units (Braidwood, Bryon, Dresden, LaSalle, Quad Cities) and the former PECO units (Limerick, Peach Bottom, Salem)
RES		Retail Electric Suppliers
RFP		Request for Proposal
Rider		Reconcilable Surcharge Recovery Mechanism
RGGI		Regional Greenhouse Gas Initiative
RMC		Risk Management Committee
RPM		PJM Reliability Pricing Model
RPS		Renewable Energy Portfolio Standards
RTEP		Regional Transmission Expansion Plan
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Services
SEC		United States Securities and Exchange Commission
Senate Bill 1		Maryland Senate Bill 1
SERC		SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
SERP		Supplemental Employee Retirement Plan
SGIG		Smart Grid Investment Grant
SGIP		Smart Grid Initiative Program
SILO		Sale-In, Lease-Out
SMP		Smart Meter Program
SMPIP		Smart Meter Procurement and Installation Plan
SNF		Spent Nuclear Fuel
SOA		Society of Actuaries
SOS		Standard Offer Service
SPP		Southwest Power Pool
Tax Relief Act of 2010		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Upstream		Natural gas and oil exploration and production activities
VIE		Variable Interest Entity
WECC		Western Electric Coordinating Council

FILING FORMAT

This combined Form 10-Q is being filed separately by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company and Baltimore Gas and 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.

FORWARD-LOOKING STATEMENTS

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. 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) Exelon’s 2014 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 22; (2) this Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors, (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 19; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The public may read and copy any reports or other information that the Registrants file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These documents are also available to the public from commercial document retrieval services, the website maintained by the SEC at www.sec.gov and the Registrants’ websites at www.exeloncorp.com. Information contained on the Registrants’ websites shall not be deemed incorporated into, or to be a part of, this Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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)	2015			2014			2015			2014
Operating revenues	$	6,514		$	6,024		$	15,345		$	13,261
Operating expenses
Purchased power and fuel		2,449			2,346			6,919			6,352
Purchased power and fuel from affiliates		—			66			—			400
Operating and maintenance		2,042			2,166			4,123			4,024
Depreciation and amortization		602			590			1,212			1,154
Taxes other than income		294			288			598			580

Total operating expenses		5,387			5,456			12,852			12,510

Equity in losses of unconsolidated affiliates		—			—			—			(20	)
Gain on sales of assets		7			13			8			18
Gain on consolidation and acquisition of businesses		—			261			—			261

Operating income		1,134			842			2,501			1,010

Other income and (deductions)
Interest expense, net		(145	)		(228	)		(480	)		(445	)
Interest expense to affiliates		(10	)		(10	)		(21	)		(20	)
Other, net		(17	)		230			64			330

Total other income and (deductions)		(172	)		(8	)		(437	)		(135	)

Income before income taxes		962			834			2,064			875
Income taxes		327			277			690			224
Equity in losses of unconsolidated affiliates		(2	)		—			(2	)		—

Net income		633			557			1,372			651

Net income (loss) attributable to noncontrolling interest and preference stock dividends		(5	)		35			41			39

Net income attributable to common shareholders	$	638		$	522		$	1,331		$	612

Comprehensive income, net of income taxes
Net income	$	633		$	557		$	1,372		$	651
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		(11	)		(6	)		(23	)		(6	)
Actuarial loss reclassified to periodic cost		55			38			110			72
Pension and non-pension postretirement benefit plans valuation adjustment		—			258			(29	)		246
Unrealized gain (loss) on cash flow hedges		3			(48	)		9			(73	)
Unrealized gain on equity investments		—			—			—			11
Unrealized gain (loss) on foreign currency translation		3			4			(9	)		(1	)
Unrealized loss on marketable securities		—			1			—			1
Reversal of CENG equity method AOCI		—			(116	)		—			(116	)

Other comprehensive income		50			131			58			134

Comprehensive income	$	683		$	688		$	1,430		$	785

Average shares of common stock outstanding:
Basic		863			860			862			860
Diluted		866			864			866			863

Earnings per average common share:
Basic	$	0.74		$	0.61		$	1.54		$	0.71
Diluted	$	0.74		$	0.60		$	1.54		$	0.71

Dividends per common share	$	0.31		$	0.31		$	0.62		$	0.62

Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	1,372		$	651
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		1,957			1,925
Impairment of long-lived assets		24			112
Gain on consolidation and acquisition of businesses		—			(268	)
Gain on sales of assets		(8	)		(18	)
Deferred income taxes and amortization of investment tax credits		211			133
Net fair value changes related to derivatives		(507	)		751
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(2	)		(168	)
Other non-cash operating activities		579			473
Changes in assets and liabilities:
Accounts receivable		253			48
Inventories		159			(150	)
Accounts payable, accrued expenses and other current liabilities		(668	)		(358	)
Option premiums received, net		22			21
Counterparty collateral received (posted), net		417			(606	)
Income taxes		247			(16	)
Pension and non-pension postretirement benefit contributions		(301	)		(499	)
Other assets and liabilities		214			(280	)

Net cash flows provided by operating activities		3,969			1,751

Cash flows from investing activities
Capital expenditures		(3,460	)		(2,501	)
Proceeds from nuclear decommissioning trust fund sales		3,314			4,219
Investment in nuclear decommissioning trust funds		(3,437	)		(4,238	)
Acquisition of businesses		(28	)		(66	)
Proceeds from sale of long-lived assets		145			32
Proceeds from termination of direct financing lease investment		—			335
Cash and restricted cash acquired from consolidations and acquisitions		—			129
Change in restricted cash		(3	)		(40	)
Other investing activities		(77	)		(57	)

Net cash flows used in investing activities		(3,546	)		(2,187	)

Cash flows from financing activities
Changes in short-term borrowings		94			293
Issuance of long-term debt		5,907			2,100
Retirement of long-term debt		(1,708	)		(1,191	)
Distributions to noncontrolling interest of consolidated VIE		—			(415	)
Dividends paid on common stock		(537	)		(533	)
Proceeds from employee stock plans		16			18
Other financing activities		(59	)		(83	)

Net cash flows provided by financing activities		3,713			189

Increase (decrease) in cash and cash equivalents		4,136			(247	)
Cash and cash equivalents at beginning of period		1,878			1,609

Cash and cash equivalents at end of period	$	6,014		$	1,362

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	6,014	$	1,878
Restricted cash and cash equivalents		274		271
Accounts receivable, net
Customer		3,227		3,482
Other		1,304		1,227
Mark-to-market derivative assets		1,405		1,279
Unamortized energy contract assets		156		254
Inventories, net
Fossil fuel and emission allowances		364		579
Materials and supplies		1,068		1,024
Deferred income taxes		173		244
Regulatory assets		785		847
Assets held for sale		1		147
Other		654		865

Total current assets		15,425		12,097

Property, plant and equipment, net		53,935		52,087
Deferred debits and other assets
Regulatory assets		5,976		6,076
Nuclear decommissioning trust funds		10,607		10,537
Investments		607		544
Goodwill		2,672		2,672
Mark-to-market derivative assets		811		773
Deferred income taxes		2		—
Unamortized energy contracts assets		526		549
Pledged assets for Zion Station decommissioning		264		319
Other		1,388		1,160

Total deferred debits and other assets		22,853		22,630

Total assets^(a)	$	92,213	$	86,814

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015			December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	543		$	460
Long-term debt due within one year		226			1,802
Accounts payable		2,727			3,048
Accrued expenses		1,366			1,539
Payables to affiliates		8			8
Regulatory liabilities		409			310
Mark-to-market derivative liabilities		165			234
Unamortized energy contract liabilities		141			238
Other		941			1,123

Total current liabilities		6,526			8,762

Long-term debt		25,220			19,362
Long-term debt to financing trusts		648			648
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		13,309			13,019
Asset retirement obligations		7,550			7,295
Pension obligations		3,134			3,366
Non-pension postretirement benefit obligations		1,850			1,742
Spent nuclear fuel obligation		1,021			1,021
Regulatory liabilities		4,462			4,550
Mark-to-market derivative liabilities		595			403
Unamortized energy contract liabilities		166			211
Payable for Zion Station decommissioning		135			155
Other		2,528			2,147

Total deferred credits and other liabilities		34,750			33,909

Total liabilities^(a)		67,144			62,681

Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 862 shares and 860 shares outstanding at June 30, 2015 and December 31, 2014, respectively)		16,755			16,709
Treasury stock, at cost (35 shares at both June 30, 2015 and December 31, 2014)		(2,327	)		(2,327	)
Retained earnings		11,704			10,910
Accumulated other comprehensive loss, net		(2,626	)		(2,684	)

Total shareholders’ equity		23,506			22,608
BGE preference stock not subject to mandatory redemption		193			193
Noncontrolling interest		1,370			1,332

Total equity		25,069			24,133

Total liabilities and shareholders’ equity	$	92,213		$	86,814

(a)

Exelon’s consolidated assets include $7,989 million and $8,160 million at June 30, 2015 and December 31, 2014, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $2,555 million and $2,723 million at June 30, 2015 and December 31, 2014, respectively, of certain VIEs for which the VIE creditors do not have recourse to Exelon. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions, shares in thousands)	Issued Shares		Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss, net			Noncontrolling Interest		Preference Stock			Total Equity
Balance, December 31, 2014		894,568	$	16,709	$	(2,327	)	$	10,910		$	(2,684	)	$	1,332	$	193		$	24,133
Net income		—		—		—			1,331			—			35		6			1,372
Long-term incentive plan activity		1,252		29		—			—			—			—		—			29
Employee stock purchase plan issuances		790		16		—			—			—			—		—			16
Tax benefit on stock compensation		—		1		—			—			—			—		—			1
Changes in equity of noncontrolling interest		—		—		—			—			—			3		—			3
Common stock dividends		—		—		—			(537	)		—			—		—			(537	)
Preference stock dividends		—		—		—			—			—			—		(6	)		(6	)
Other comprehensive income, net of income taxes		—		—		—			—			58			—		—			58

Balance, June 30, 2015		896,610	$	16,755	$	(2,327	)	$	11,704		$	(2,626	)	$	1,370	$	193		$	25,069

See the Combined Notes to Consolidated Financial Statements

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)	2015			2014			2015			2014
Operating revenues
Operating revenues	$	4,079		$	3,588		$	9,709		$	7,644
Operating revenues from affiliates		153			201			365			535

Total operating revenues		4,232			3,789			10,074			8,179

Operating expenses
Purchased power and fuel		1,848			1,766			5,274			4,774
Purchased power and fuel from affiliates		1			69			8			417
Operating and maintenance		1,149			1,255			2,311			2,194
Operating and maintenance from affiliates		159			158			308			305
Depreciation and amortization		255			254			509			466
Taxes other than income		124			118			246			223

Total operating expenses		3,536			3,620			8,656			8,379

Equity in losses of unconsolidated affiliates		—			(1	)		—			(20	)
Gain on sales of assets		7			12			6			18
Gain on consolidation and acquisition of businesses		—			261			—			261

Operating income		703			441			1,424			59

Other income and (deductions)
Interest expense		(90	)		(74	)		(180	)		(147	)
Interest expense to affiliates, net		(9	)		(12	)		(21	)		(25	)
Other, net		(31	)		216			62			300

Total other income and (deductions)		(130	)		130			(139	)		128

Income before income taxes		573			571			1,285			187
Income taxes (benefit)		181			199			407			(1	)
Equity in losses of unconsolidated affiliates		(2	)		—			(3	)		—

Net income		390			372			875			188
Net (loss) income attributable to noncontrolling interests		(8	)		32			34			33

Net income attributable to membership interest	$	398		$	340		$	841		$	155

Comprehensive income, net of income taxes
Net income	$	390		$	372		$	875		$	188
Other comprehensive income (loss), net of income taxes
Unrealized gain (loss) on cash flow hedges		2			(45	)		(3	)		(70	)
Unrealized gain on equity investments		—			—			—			11
Unrealized gain (loss) on foreign currency translation		3			4			(9	)		(1	)
Unrealized gain (loss) on marketable securities		1			2			1			(1	)
Reversal of CENG equity method AOCI		—			(116	)		—			(116	)

Other comprehensive income (loss)		6			(155	)		(11	)		(177	)

Comprehensive income	$	396		$	217		$	864		$	11

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	875		$	188
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		1,255			1,242
Impairment of long-lived assets		(1	)		88
Gain on consolidation and acquisitions of businesses		—			(268	)
Gain on sales of assets		(6	)		(18	)
Deferred income taxes and amortization of investment tax credits		65			(15	)
Net fair value changes related to derivatives		(396	)		760
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(2	)		(168	)
Other non-cash operating activities		134			139
Changes in assets and liabilities:
Accounts receivable		291			63
Receivables from and payables to affiliates, net		(11	)		(20	)
Inventories		134			(170	)
Accounts payable, accrued expenses and other current liabilities		(485	)		(273	)
Option premiums received, net		22			21
Counterparty collateral (posted) received, net		440			(633	)
Income taxes		27			72
Pension and non-pension postretirement benefit contributions		(122	)		(210	)
Other assets and liabilities		203			(56	)

Net cash flows provided by operating activities		2,423			742

Cash flows from investing activities
Capital expenditures		(1,764	)		(1,103	)
Proceeds from nuclear decommissioning trust fund sales		3,314			4,219
Investment in nuclear decommissioning trust funds		(3,437	)		(4,238	)
Acquisition of businesses		(28	)		(66	)
Proceeds from sale of long-lived assets		144			32
Change in restricted cash		(16	)		(17	)
Changes in Exelon intercompany money pool		—			44
Cash and restricted cash acquired from consolidations and acquisitions		—			129
Other investing activities		(63	)		(14	)

Net cash flows used in investing activities		(1,850	)		(1,014	)

Cash flows from financing activities
Change in short-term borrowings		15			46
Issuance of long-term debt		1,307			300
Retirement of long-term debt		(39	)		(538	)
Retirement of long-term debt to affiliate		(550	)		—
Changes in Exelon intercompany money pool		638			190
Distribution to member		(2,262	)		(235	)
Distributions to noncontrolling interest of consolidated VIE		—			(415	)
Other financing activities		(6	)		(29	)

Net cash flows used in financing activities		(897	)		(681	)

Decrease in cash and cash equivalents		(324	)		(953	)
Cash and cash equivalents at beginning of period		780			1,258

Cash and cash equivalents at end of period	$	456		$	305

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	456	$	780
Restricted cash and cash equivalents		174		158
Accounts receivable, net
Customer		2,045		2,295
Other		299		318
Mark-to-market derivative assets		1,405		1,276
Receivables from affiliates		103		113
Unamortized energy contract assets		156		254
Inventories, net
Fossil fuel and emission allowances		305		465
Materials and supplies		860		847
Deferred income taxes		188		327
Assets held for sale		1		147
Other		451		658

Total current assets		6,443		7,638

Property, plant and equipment, net		23,766		22,945
Deferred debits and other assets
Nuclear decommissioning trust funds		10,607		10,537
Investments		183		104
Goodwill		47		47
Mark-to-market derivative assets		790		771
Prepaid pension asset		1,699		1,704
Pledged assets for Zion Station decommissioning		264		319
Unamortized energy contract assets		526		549
Deferred income taxes		2		3
Other		798		731

Total deferred debits and other assets		14,916		14,765

Total assets^(a)	$	45,125	$	45,348

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015			December 31, 2014
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	40		$	36
Long-term debt due within one year		89			58
Long-term debt to affiliates due within one year		—			556
Accounts payable		1,528			1,759
Accrued expenses		732			886
Payables to affiliates		98			107
Borrowings from Exelon intercompany money pool		638			—
Mark-to-market derivative liabilities		145			214
Unamortized energy contract liabilities		141			238
Other		453			605

Total current liabilities		3,864			4,459

Long-term debt		7,974			6,709
Long-term debt to affiliate		938			943
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		6,009			6,034
Asset retirement obligations		7,399			7,146
Non-pension postretirement benefit obligations		922			915
Spent nuclear fuel obligation		1,021			1,021
Payables to affiliates		2,832			2,880
Mark-to-market derivative liabilities		392			105
Unamortized energy contract liabilities		166			211
Payable for Zion Station decommissioning		135			155
Other		817			719

Total deferred credits and other liabilities		19,693			19,186

Total liabilities^(a)		32,469			31,297

Commitments and contingencies
Equity
Member’s equity
Membership interest		8,951			8,951
Undistributed earnings		2,382			3,803
Accumulated other comprehensive loss, net		(47	)		(36	)

Total member’s equity		11,286			12,718
Noncontrolling interest		1,370			1,333

Total equity		12,656			14,051

Total liabilities and equity	$	45,125		$	45,348

(a)

Generation’s consolidated assets include $7,949 million and $8,119 million at June 30, 2015 and December 31, 2014, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $2,435 million and $2,507 million at June 30, 2015 and December 31, 2014, respectively, of certain VIEs for which the VIE creditors do not have recourse to Generation. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


	Member’s Equity
(In millions)	Membership Interest		Undistributed Earnings			Accumulated Other Comprehensive Loss, net			Noncontrolling Interest		Total Equity
Balance, December 31, 2014	$	8,951	$	3,803		$	(36	)	$	1,333	$	14,051
Net income		—		841			—			34		875
Changes in equity of noncontrolling interest		—		—			—			3		3
Distribution to member		—		(2,262	)		—			—		(2,262	)
Other comprehensive loss, net of income taxes		—		—			(11	)		—		(11	)

Balance, June 30, 2015	$	8,951	$	2,382		$	(47	)	$	1,370	$	12,656

See the Combined Notes to Consolidated Financial Statements

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)	2015			2014			2015			2014
Operating revenues
Operating revenues	$	1,147		$	1,128		$	2,331		$	2,261
Operating revenues from affiliates		1			—			2			1

Total operating revenues		1,148			1,128			2,333			2,262

Operating expenses
Purchased power		269			204			586			416
Purchased power from affiliate		6			65			15			173
Operating and maintenance		337			316			670			603
Operating and maintenance from affiliate		47			39			92			78
Depreciation and amortization		177			174			352			347
Taxes other than income		69			72			146			149

Total operating expenses		905			870			1,861			1,766

Operating income		243			258			472			496

Other income and (deductions)
Interest expense, net		(78	)		(76	)		(158	)		(153	)
Interest expense to affiliates		(3	)		(4	)		(7	)		(7	)
Other, net		5			5			9			10

Total other income and (deductions)		(76	)		(75	)		(156	)		(150	)

Income before income taxes		167			183			316			346
Income taxes		68			72			127			137

Net income		99			111			189			209

Comprehensive income	$	99		$	111		$	189		$	209

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	189		$	209
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		352			347
Deferred income taxes and amortization of investment tax credits		36			63
Other non-cash operating activities		222			99
Changes in assets and liabilities:
Accounts receivable		(57	)		(83	)
Receivables from and payables to affiliates, net		(10	)		(46	)
Inventories		(19	)		(4	)
Accounts payable, accrued expenses and other current liabilities		(52	)		27
Income taxes		239			5
Pension and non-pension postretirement benefit contributions		(125	)		(236	)
Other assets and liabilities		25			48

Net cash flows provided by operating activities		800			429

Cash flows from investing activities
Capital expenditures		(1,061	)		(747	)
Proceeds from sales of investments		—			7
Purchases of investments		—			(3	)
Change in restricted cash		—			(2	)
Other investing activities		17			14

Net cash flows used in investing activities		(1,044	)		(731	)

Cash flows from financing activities
Changes in short-term borrowings		199			314
Issuance of long-term debt		400			650
Retirement of long-term debt		(260	)		(617	)
Contributions from parent		45			112
Dividends paid on common stock		(150	)		(153	)
Other financing activities		(5	)		(2	)

Net cash flows provided by financing activities		229			304

Increase (decrease) in cash and cash equivalents		(15	)		2
Cash and cash equivalents at beginning of period		66			36

Cash and cash equivalents at end of period	$	51		$	38

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	51	$	66
Restricted cash		4		4
Accounts receivable, net
Customer		522		477
Other		569		648
Receivables from affiliates		14		14
Inventories, net		144		125
Regulatory assets		276		349
Other		36		40

Total current assets		1,616		1,723

Property, plant and equipment, net		16,493		15,793
Deferred debits and other assets
Regulatory assets		834		852
Goodwill		2,625		2,625
Receivables from affiliates		2,538		2,571
Prepaid pension asset		1,572		1,551
Other		283		277

Total deferred debits and other assets		7,852		7,876

Total assets	$	25,961	$	25,392

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	503	$	304
Long-term debt due within one year		—		260
Accounts payable		580		598
Accrued expenses		291		331
Payables to affiliates		73		84
Customer deposits		128		128
Regulatory liabilities		154		125
Deferred income taxes		20		63
Mark-to-market derivative liability		20		20
Other		75		73

Total current liabilities		1,844		1,986

Long-term debt		6,099		5,698
Long-term debt to financing trust		206		206
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		4,579		4,498
Asset retirement obligations		103		103
Non-pension postretirement benefits obligations		262		263
Regulatory liabilities		3,622		3,655
Mark-to-market derivative liability		203		187
Other		1,049		889

Total deferred credits and other liabilities		9,818		9,595

Total liabilities		17,967		17,485

Commitments and contingencies
Shareholders’ equity
Common stock		1,588		1,588
Other paid-in capital		5,516		5,468
Retained earnings		890		851

Total shareholders’ equity		7,994		7,907

Total liabilities and shareholders’ equity	$	25,961	$	25,392

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Other Paid- In Capital		Retained Deficit Unappropriated			Retained Earnings Appropriated			Total Shareholders’ Equity
Balance, December 31, 2014	$	1,588	$	5,468	$	(1,639	)	$	2,490		$	7,907
Net income		—		—		189			—			189
Appropriation of retained earnings for future dividends		—		—		(189	)		189			—
Common stock dividends		—		—		—			(150	)		(150	)
Contribution from parent		—		45		—			—			45
Parent tax matter indemnification		—		3		—			—			3

Balance, June 30, 2015	$	1,588	$	5,516	$	(1,639	)	$	2,529		$	7,994

See the Combined Notes to Consolidated Financial Statements

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)	2015			2014			2015			2014
Operating revenues
Operating revenues	$	661		$	656		$	1,645		$	1,648
Operating revenues from affiliates		—			—			1			1

Total operating revenues		661			656			1,646			1,649

Operating expenses
Purchased power and fuel		189			193			565			570
Purchased power from affiliate		48			48			110			135
Operating and maintenance		166			160			363			416
Operating and maintenance from affiliates		26			24			51			48
Depreciation and amortization		69			59			131			117
Taxes other than income		39			38			80			80

Total operating expenses		537			522			1,300			1,366

Gain on sale of assets		—			—			1			—

Operating income		124			134			347			283

Other income and (deductions)
Interest expense, net		(25	)		(25	)		(50	)		(50	)
Interest expense to affiliates		(3	)		(3	)		(6	)		(6	)
Other, net		1			1			3			3

Total other income and (deductions)		(27	)		(27	)		(53	)		(53	)

Income before income taxes		97			107			294			230
Income taxes		27			23			85			57

Net income attributable to common shareholder		70			84			209			173

Comprehensive income	$	70		$	84		$	209		$	173

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	209		$	173
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		131			117
Deferred income taxes and amortization of investment tax credits		4			6
Other non-cash operating activities		45			50
Changes in assets and liabilities:
Accounts receivable		(18	)		34
Receivables from and payables to affiliates, net		(2	)		(21	)
Inventories		21			22
Accounts payable, accrued expenses and other current liabilities		3			30
Income taxes		57			54
Pension and non-pension postretirement benefit contributions		(15	)		(11	)
Other assets and liabilities		(60	)		(114	)

Net cash flows provided by operating activities		375			340

Cash flows from investing activities
Capital expenditures		(289	)		(308	)
Change in restricted cash		(1	)		—
Other investing activities		9			6

Net cash flows used in investing activities		(281	)		(302	)

Cash flows from financing activities
Change in Exelon intercompany money pool		41			—
Dividends paid on common stock		(139	)		(160	)
Other financing activities		—			(2	)

Net cash flows used in financing activities		(98	)		(162	)

Decrease in cash and cash equivalents		(4	)		(124	)
Cash and cash equivalents at beginning of period		30			217

Cash and cash equivalents at end of period	$	26		$	93

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	26	$	30
Restricted cash and cash equivalents		3		2
Accounts receivable, net
Customer		301		320
Other		122		141
Receivables from affiliates		3		3
Inventories, net
Fossil fuel		30		57
Materials and supplies		28		22
Deferred income taxes		69		69
Prepaid utility taxes		80		10
Regulatory assets		42		29
Other		36		31

Total current assets		740		714

Property, plant and equipment, net		6,957		6,801
Deferred debits and other assets
Regulatory assets		1,552		1,529
Investments		28		31
Receivable from affiliates		477		490
Prepaid pension asset		341		344
Other		31		34

Total deferred debits and other assets		2,429		2,428

Total assets	$	10,126	$	9,943

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	319	$	337
Accrued expenses		116		91
Payables to affiliates		50		52
Borrowings from Exelon intercompany money pool		41		—
Customer deposits		54		52
Regulatory liabilities		117		90
Other		41		31

Total current liabilities		738		653

Long-term debt		2,246		2,246
Long-term debt to financing trusts		184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,724		2,671
Asset retirement obligations		30		29
Non-pension postretirement benefits obligations		287		287
Regulatory liabilities		633		657
Other		93		95

Total deferred credits and other liabilities		3,767		3,739

Total liabilities		6,935		6,822

Commitments and contingencies
Shareholder’s equity
Common stock		2,439		2,439
Retained earnings		751		681
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,191		3,121

Total liabilities and shareholder’s equity	$	10,126	$	9,943

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Accumulated Other Comprehensive Income, net		Total Shareholder’s Equity
Balance, December 31, 2014	$	2,439	$	681		$	1	$	3,121
Net income		—		209			—		209
Common stock dividends		—		(139	)		—		(139	)

Balance, June 30, 2015	$	2,439	$	751		$	1	$	3,191

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2015			2014			2015			2014
Operating revenue
Operating revenue	$	627		$	651		$	1,656		$	1,689
Operating revenue from affiliates		1			2			8			18

Total operating revenues		628			653			1,664			1,707

Operating expenses
Purchased power and fuel		143			183			493			592
Purchased power from affiliate		96			85			233			205
Operating and maintenance		120			163			276			326
Operating and maintenance from affiliates		29			25			55			50
Depreciation and amortization		87			89			192			197
Taxes other than income		54			53			111			113

Total operating expenses		529			598			1,360			1,483

Operating income		99			55			304			224

Other income and (deductions)
Interest expense, net		(20	)		(23	)		(42	)		(47	)
Interest expense to affiliates		(4	)		(4	)		(8	)		(8	)
Other, net		4			5			8			9

Total other income and (deductions)		(20	)		(22	)		(42	)		(46	)

Income before income taxes		79			33			262			178
Income taxes		32			14			105			72

Net income		47			19			157			106
Preference stock dividends		3			3			6			6

Net income attributable to common shareholder		44			16			151			100

Comprehensive income	$	47		$	19		$	157		$	106

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	157		$	106
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		192			197
Deferred income taxes and amortization of investment tax credits		54			47
Other non-cash operating activities		76			89
Changes in assets and liabilities:
Accounts receivable		25			44
Receivables from and payables to affiliates, net		(2	)		(12	)
Inventories		23			—
Accounts payable, accrued expenses and other current liabilities		(49	)		(74	)
Counterparty collateral (posted) received, net		(23	)		27
Income taxes		(6	)		(14	)
Pension and non-pension postretirement benefit contributions		(9	)		(8	)
Other assets and liabilities		51			8

Net cash flows provided by operating activities		489			410

Cash flows from investing activities
Capital expenditures		(304	)		(313	)
Change in restricted cash		21			(30	)
Other investing activities		8			11

Net cash flows used in investing activities		(275	)		(332	)

Cash flows from financing activities
Changes in short-term borrowings		(120	)		(65	)
Retirement of long-term debt		(37	)		(35	)
Dividends paid on preference stock		(6	)		(6	)
Dividends paid on common stock		(77	)		—
Other financing activities		(14	)		12

Net cash flows used in financing activities		(254	)		(94	)

Decrease in cash and cash equivalents		(40	)		(16	)
Cash and cash equivalents at beginning of period		64			31

Cash and cash equivalents at end of period	$	24		$	15

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	24	$	64
Restricted cash and cash equivalents		29		50
Accounts receivable, net
Customer		360		390
Other		76		82
Inventories, net
Gas held in storage		29		57
Materials and supplies		35		30
Deferred income taxes		12		6
Prepaid utility taxes		—		59
Regulatory assets		207		214
Other		4		5

Total current assets		776		957

Property, plant and equipment, net		6,373		6,204
Deferred debits and other assets
Regulatory assets		486		510
Investments		13		12
Prepaid pension asset		344		370
Other		25		25

Total deferred debits and other assets		868		917

Total assets^(a)	$	8,017	$	8,078

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	—	$	120
Long-term debt due within one year		77		75
Accounts payable		194		215
Accrued expenses		108		131
Deferred income taxes		48		52
Payables to affiliates		52		66
Customer deposits		97		92
Regulatory liabilities		91		44
Other		33		51

Total current liabilities		700		846

Long-term debt		1,828		1,867
Long-term debt to financing trust		258		258
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		1,930		1,865
Asset retirement obligations		18		17
Non-pension postretirement benefits obligations		209		212
Regulatory liabilities		185		200
Other		62		60

Total deferred credits and other liabilities		2,404		2,354

Total liabilities^(a)		5,190		5,325

Commitments and contingencies
Shareholders’ equity
Common stock		1,360		1,360
Retained earnings		1,277		1,203

Total shareholders’ equity		2,637		2,563

Preference stock not subject to mandatory redemption		190		190

Total equity		2,827		2,753

Total liabilities and shareholders’ equity	$	8,017	$	8,078

(a)

BGE’s consolidated assets include $27 million and $24 million at June 30, 2015 and December 31, 2014, respectively, of BGE’s consolidated VIE that can only be used to settle the liabilities of the VIE. BGE’s consolidated liabilities include $160 million and $197 million at June 30, 2015 and December 31, 2014, respectively, of BGE’s consolidated VIE for which the VIE creditors do not have recourse to BGE. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Total Shareholders’ Equity			Preference Stock Not Subject To Mandatory Redemption		Total Equity
Balance, December 31, 2014	$	1,360	$	1,203		$	2,563		$	190	$	2,753
Net income		—		157			157			—		157
Preference stock dividends		—		(6	)		(6	)		—		(6	)
Common stock dividends		—		(77	)		(77	)		—		(77	)

Balance, June 30, 2015	$	1,360	$	1,277		$	2,637		$	190	$	2,827

See the Combined Notes to Consolidated Financial Statements

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise noted)

Index to Combined Notes to Consolidated Financial Statements

The notes to the consolidated financial statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply:

Applicable Notes


Registrant	1		2		3		4		5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21
Exelon Corporation		.		.		.		.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents