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 March 31, 2016

¨	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

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

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 (a Delaware and Virginia corporation) 500 North Wakefield Drive Newark, Delaware 19702 (202) 872-2000		51-0084283

001-03559	ATLANTIC CITY ELECTRIC COMPANY		21-0398280
	(a New Jersey corporation) 500 North Wakefield Drive Newark, Delaware 19702 (202) 872-2000

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
Pepco Holdings LLC	x
Potomac Electric Power Company			x
Delmarva Power & Light Company			x
Atlantic City 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 March 31, 2016 was:


Exelon Corporation Common Stock, without par value		887,313,966
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,017,042
PECO Energy Company Common Stock, without par value		170,478,507
Baltimore Gas and Electric Company Common Stock, without par value		1,000
Pepco Holdings LLC		not applicable
Potomac Electric Power Company Common Stock, $.01 par value		100
Delmarva Power & Light Company Common Stock, $2.25 par value		1,000
Atlantic City Electric Company Common Stock, $3.00 par value		8,546,017

TABLE OF CONTENTS


		Page No.

FILING FORMAT			9

FORWARD-LOOKING STATEMENTS			9

WHERE TO FIND MORE INFORMATION			9

PART I.	FINANCIAL INFORMATION		10

ITEM 1.	FINANCIAL STATEMENTS		10

	Exelon Corporation

	Consolidated Statements of Operations and Comprehensive Income		11

	Consolidated Statements of Cash Flows		12

	Consolidated Balance Sheets		13

	Consolidated Statement of Changes in Shareholders’ Equity		15

	Exelon Generation Company, LLC

	Consolidated Statements of Operations and Comprehensive Income		16

	Consolidated Statements of Cash Flows		17

	Consolidated Balance Sheets		18

	Consolidated Statement of Changes in Equity		20

	Commonwealth Edison Company

	Consolidated Statements of Operations and Comprehensive Income		21

	Consolidated Statements of Cash Flows		22

	Consolidated Balance Sheets		23

	Consolidated Statement of Changes in Shareholders’ Equity		25

	PECO Energy Company

	Consolidated Statements of Operations and Comprehensive Income		26

	Consolidated Statements of Cash Flows		27

	Consolidated Balance Sheets		28

	Consolidated Statement of Changes in Shareholder’s Equity		30

	Baltimore Gas and Electric Company

	Consolidated Statements of Operations and Comprehensive Income		31

	Consolidated Statements of Cash Flows		32

	Consolidated Balance Sheets		33

	Consolidated Statement of Changes in Shareholders’ Equity		35

	Pepco Holdings LLC

	Consolidated Statements of Operations and Comprehensive Income		36

	Consolidated Statements of Cash Flows		37

	Consolidated Balance Sheets		38

	Consolidated Statement of Changes in Equity		40


	Page No.

Potomac Electric Power Company

Statements of Operations and Comprehensive Income		41

Statements of Cash Flows		42

Balance Sheets		43

Statement of Changes in Shareholder’s Equity		45

Delmarva Power & Light Company

Statements of Operations and Comprehensive Income		46

Statements of Cash Flows		47

Balance Sheets		48

Statement of Changes in Shareholder’s Equity		50

Atlantic City Electric Company

Consolidated Statements of Operations and Comprehensive Income		51

Consolidated Statements of Cash Flows		52

Consolidated Balance Sheets		53

Consolidated Statement of Changes in Shareholder’s Equity		55

Combined Notes to Consolidated Financial Statements		56

1. Significant Accounting Policies (All Registrants)		56

2. New Accounting Pronouncements (All Registrants)		59

3. Variable Interest Entities (All Registrants)		62

4. Mergers, Acquisitions and Dispositions		69

5. Regulatory Matters (All Registrants)		75

6. Impairment of Long-Lived Assets (Exelon and Generation)		89

7. Implications of Potential Early Plant Retirements (Exelon and Generation)		90

8. Fair Value of Financial Assets and Liabilities (All Registrants)		91

9. Derivative Financial Instruments (All Registrants)		113

10. Debt and Credit Agreements (All Registrants)		130

11. Income Taxes (All Registrants)		134

12. Nuclear Decommissioning (Exelon and Generation)		138

13. Retirement Benefits (All Registrants)		141

14. Severance (All Registrants)		143

15. Changes in Accumulated Other Comprehensive Income (Exelon, Generation, PECO and PHI)		146

16. Mezzanine Equity (Exelon, Generation and PHI)		149

17. Earnings Per Share (Exelon)		150

18. Commitments and Contingencies (All Registrants)		151

19. Supplemental Financial Information (All Registrants)		165

20. Segment Information (All Registrants)		172


		Page No.

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		178

	Exelon Corporation		178

	General		178

	Executive Overview		179

	Critical Accounting Policies and Estimates		195

	Results of Operations		195

	Liquidity and Capital Resources		237

	Contractual Obligations and Off-Balance Sheet Arrangements		250

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		251

ITEM 4.	CONTROLS AND PROCEDURES		261

PART II.	OTHER INFORMATION		262

ITEM 1.	LEGAL PROCEEDINGS		262

ITEM 1A.	RISK FACTORS		262

ITEM 4.	MINE SAFETY DISCLOSURES		263

ITEM 6.	EXHIBITS		263

SIGNATURES			266

	Exelon Corporation		266

	Exelon Generation Company, LLC		266

	Commonwealth Edison Company		266

	PECO Energy Company		267

	Baltimore Gas and Electric Company		267

	Pepco Holdings LLC		267

	Potomac Electric Power Company		268

	Delmarva Power & Light Company		268

	Atlantic City Electric Company		268

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
Pepco Energy Services or PES		Pepco Energy Services, Inc. and its subsidiaries
PCI		Potomac Capital Investment Corporation and its subsidiaries
DPL		Delmarva Power & Light Company
ACE		Atlantic City Electric Company
ACE Funding or ATF		Atlantic City Electric Transition Funding LLC
BSC		Exelon Business Services Company, LLC
PHISCO		PHI Service Company
Exelon Corporate		Exelon in its corporate capacity as a holding company
PHI Corporate		PHI in its corporate capacity as a holding company
CENG		Constellation Energy Nuclear Group, LLC
Constellation		Constellation Energy Group, Inc.
Antelope Valley		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
PEC L.P.		PECO Energy Capital, L.P.
PECO Trust III		PECO Capital Trust III
PECO Trust IV		PECO Energy Capital Trust IV
PETT		PECO Energy Transition Trust
Registrants		Exelon, Generation, ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, collectively
Utility Registrants		ComEd, PECO, BGE, Pepco, DPL and ACE, collectively
Legacy PHI		PHI, Pepco, DPL and ACE, collectively


Other Terms and Abbreviations
Note “—” of the Exelon 2015 Form 10-K		Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2015 Annual Report on Form 10-K
Note “—” of the PHI 2015 Form 10-K		Reference to specific Note to Consolidated Financial Statements within Legacy PHI’s 2015 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

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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
ASC		Accounting Standards Codification
BGS		Basic Generation Service (the supply of electricity by ACE to retail customers in New Jersey who have not elected to purchase electricity from a competitive supplier)
Block contracts		Forward Purchase Energy Block Contracts
CAIR		Clean Air Interstate Rule
CAISO		California ISO
CAMR		Federal Clean Air Mercury Rule
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
Conectiv		Conectiv, LLC, a wholly owned subsidiary of PHI and the parent of DPL and ACE
Conectiv Energy		Conectiv Energy Holdings, Inc. and substantially all of its subsidiaries, which were sold to Calpine in July 2010
Contract EDCs		Pepco, DPL and BGE, the Maryland utilities required by the MDPSC to enter into a contract for new generation
CPI		Consumer Price Index
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
CTA		Consolidated tax adjustment
CTC		Competitive Transition Charge
D.C. Circuit Court		United States Court of Appeals for the District of Columbia Circuit
DCPSC		District of Columbia Public Service Commission
DC PLUG		District of Columbia Power Line Undergrounding
Default Electricity Supply		The supply of electricity by PHI’s electric utility subsidiaries at regulated rates to retail customers who do not elect to purchase electricity from a competitive supplier, and which, depending on the jurisdiction, is also known as Standard Offer Service or BGS
Default Electricity Supply Revenue		Revenue primarily from Default Electricity Supply
DOE		United States Department of Energy
DOJ		United States Department of Justice
DPSC		Delaware Public Service Commission
DRP		Direct Stock Purchase and Dividend Reinvestment Plan
DSP		Default Service Provider
DSP Program		Default Service Provider Program
EDCs		Electric distribution companies

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
EDF		Electricite de France SA and its subsidiaries
EE&C		Energy Efficiency and Conservation/Demand Response
EGS		Electric Generation Supplier
EGTP		ExGen Texas Power, LLC
EIMA		Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
EmPower Maryland		A Maryland demand-side management program for Pepco and DPL
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
GCR		Gas Cost Rate
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
HSR Act		The Hart-Scott-Rodino Antitrust Improvements Act of 1976
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
IRS		Internal Revenue Service
ISO		Independent System Operator
ISO-NE		ISO New England Inc.
ISO-NY		ISO New York
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
MAPP		Mid-Atlantic Power Pathway
MATS		U.S. EPA Mercury and Air Toxics Rule
MBR		Market Based Rates Incentive

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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
NJBPU		New Jersey Board of Public Utilities
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
NOSA		Nuclear Operating Services Agreement
NOV		Notice of Violation
NPDES		National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission
NSPS		New Source Performance Standards
NUGs		Non-utility generators
NWPA		Nuclear Waste Policy Act of 1982
NYMEX		New York Mercantile Exchange
OCI		Other Comprehensive Income
OIESO		Ontario Independent Electricity System Operator
OPC		Office of People’s Counsel
OPEB		Other Postretirement Employee Benefits
PA DEP		Pennsylvania Department of Environmental Protection
PAPUC		Pennsylvania Public Utility Commission
PGC		Purchased Gas Cost Clause
PHI Retirement Plan		PHI’s noncontributory retirement plan
PJM		PJM Interconnection, LLC
POLR		Provider of Last Resort
POR		Purchase of Receivables
PPA		Power Purchase Agreement
Price-Anderson Act		Price-Anderson Nuclear Industries Indemnity Act of 1957
Preferred Stock		Originally issued shares of non-voting, non-convertible and non-transferable Series A preferred stock, par value $0.01 per share
PRP		Potentially Responsible Parties
PSEG		Public Service Enterprise Group Incorporated
PURTA		Pennsylvania Public Realty Tax Act
PV		Photovoltaic

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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 or portions thereof whose decommissioning-related activities are subject to contractual elimination under regulatory accounting
RES		Retail Electric Suppliers
RFP		Request for Proposal
Rider		Reconcilable Surcharge Recovery Mechanism
RGGI		Regional Greenhouse Gas Initiative
RMC		Risk Management Committee
ROE		Return on equity
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
SMPIP		Smart Meter Procurement and Installation Plan
SNF		Spent Nuclear Fuel
SOCAs		Standard Offer Capacity Agreements required to be entered into by ACE pursuant to a New Jersey law enacted to promote the construction of qualified electric generation facilities in New Jersey
SOS		Standard Offer Service
SPP		Southwest Power Pool
Tax Relief Act of 2010		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Transition Bond Charge		Revenue ACE receives, and pays to ACE Funding, to fund the principal and interest payments on Transition Bonds and related taxes, expenses and fees
Transition Bonds		Transition Bonds issued by ACE Funding
Upstream		Natural gas 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, 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.

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 2015 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 23; (2) PHI’s 2015 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 16; (3) 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 18; and (4) 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 March 31,
(In millions, except per share data)	2016			2015
Operating revenues
Competitive businesses revenues	$	4,473		$	5,632
Rate-regulated utility revenues		3,100			3,198

Total operating revenues		7,573			8,830
Operating expenses
Competitive businesses purchased power and fuel		2,440			3,426
Rate-regulated utility purchased power and fuel		814			1,044
Operating and maintenance		2,835			2,081
Depreciation and amortization		685			610
Taxes other than income		325			304

Total operating expenses		7,099			7,465

Gain on sales of assets		9			1

Operating income		483			1,366

Other income and (deductions)
Interest expense, net		(277	)		(335	)
Interest expense to affiliates, net		(10	)		(10	)
Other, net		114			80

Total other income and (deductions)		(173	)		(265	)

Income before income taxes		310			1,101
Income taxes		184			363
Equity in losses of unconsolidated affiliates		(3	)		—

Net income		123			738

Net (loss) income attributable to noncontrolling interest and preference stock dividends		(50	)		45

Net income attributable to common shareholders	$	173		$	693

Comprehensive income, net of income taxes
Net income	$	123		$	738
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		(12	)		(11	)
Actuarial loss reclassified to periodic benefit cost		46			54
Pension and non-pension postretirement benefit plan valuation adjustment		(1	)		(26	)
Unrealized (loss) gain on cash flow hedges		(7	)		6
Unrealized loss on equity investments		(3	)		—
Unrealized gain (loss) on foreign currency translation		6			(12	)
Unrealized loss on marketable securities		(1	)		—

Other comprehensive income		28			11

Comprehensive income	$	151		$	749

Average shares of common stock outstanding:
Basic		923			862
Diluted		925			867
Earnings per average common share:
Basic	$	0.19		$	0.80
Diluted	$	0.19		$	0.80

Dividends per common share	$	0.31		$	0.31

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	123		$	738
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		1,063			948
Impairment of long-lived assets		119			—
Gain on sales of assets		(9	)		(1	)
Deferred income taxes and amortization of investment tax credits		127			129
Net fair value changes related to derivatives		(107	)		(91	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(55	)		(47	)
Other non-cash operating activities		804			344
Changes in assets and liabilities:
Accounts receivable		117			(270	)
Inventories		142			291
Accounts payable and accrued expenses		(571	)		(468	)
Option premiums received, net		17			5
Collateral received, net		206			257
Income taxes		47			174
Pension and non-pension postretirement benefit contributions		(239	)		(269	)
Other assets and liabilities		(311	)		(250	)

Net cash flows provided by operating activities		1,473			1,490

Cash flows from investing activities
Capital expenditures		(2,202	)		(1,784	)
Proceeds from nuclear decommissioning trust fund sales		2,240			1,681
Investment in nuclear decommissioning trust funds		(2,297	)		(1,747	)
Acquisition of businesses, net of cash acquired		(6,645	)		(15	)
Proceeds from sale of long-lived assets		—			142
Proceeds from termination of direct financing lease investment		360			—
Change in restricted cash		(2	)		(26	)
Other investing activities		(2	)		(2	)

Net cash flows used in investing activities		(8,548	)		(1,751	)

Cash flows from financing activities
Changes in short-term borrowings		1,647			(141	)
Proceeds from short-term borrowings with maturities greater than 90 days		123			—
Issuance of long-term debt		151			1,206
Retirement of long-term debt		(116	)		(580	)
Dividends paid on common stock		(287	)		(269	)
Proceeds from employee stock plans		9			8
Other financing activities		6			(16	)

Net cash flows provided by financing activities		1,533			208

Decrease in cash and cash equivalents		(5,542	)		(53	)
Cash and cash equivalents at beginning of period		6,502			1,878

Cash and cash equivalents at end of period	$	960		$	1,825

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	960	$	6,502
Restricted cash and cash equivalents		218		205
Accounts receivable, net
Customer		3,594		3,187
Other		1,138		912
Mark-to-market derivative assets		1,185		1,365
Unamortized energy contract assets		85		86
Inventories, net
Fossil fuel and emission allowances		285		462
Materials and supplies		1,229		1,104
Regulatory assets		1,584		759
Other		1,086		752

Total current assets		11,364		15,334

Property, plant and equipment, net		69,406		57,439
Deferred debits and other assets
Regulatory assets		10,407		6,065
Nuclear decommissioning trust funds		10,526		10,342
Investments		455		639
Goodwill		6,688		2,672
Mark-to-market derivative assets		841		758
Unamortized energy contracts assets		474		484
Pledged assets for Zion Station decommissioning		183		206
Other		1,398		1,445

Total deferred debits and other assets		30,972		22,611

Total assets^(a)	$	111,742	$	95,384

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016			December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	3,640		$	533
Long-term debt due within one year		2,058			1,500
Accounts payable		2,874			2,883
Accrued expenses		2,260			2,376
Payables to affiliates		8			8
Regulatory liabilities		512			369
Mark-to-market derivative liabilities		203			205
Unamortized energy contract liabilities		582			100
Renewable energy credit obligation		308			302
PHI merger related obligation		317			—
Other		1,008			842

Total current liabilities		13,770			9,118

Long-term debt		29,314			23,645
Long-term debt to financing trusts		641			641
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		17,474			13,776
Asset retirement obligations		8,755			8,585
Pension obligations		3,771			3,385
Non-pension postretirement benefit obligations		1,902			1,618
Spent nuclear fuel obligation		1,022			1,021
Regulatory liabilities		4,378			4,201
Mark-to-market derivative liabilities		408			374
Unamortized energy contract liabilities		1,144			117
Payable for Zion Station decommissioning		72			90
Other		1,886			1,491

Total deferred credits and other liabilities		40,812			34,658

Total liabilities^(a)		84,537			68,062

Commitments and contingencies
Contingently redeemable noncontrolling interest		19			28
Shareholders’ equity
Common stock (No par value, 2000 shares authorized, 922 shares and 920 shares outstanding at March 31, 2016 and December 31, 2015, respectively)		18,686			18,676
Treasury stock, at cost (35 shares at March 31, 2016 and December 31, 2015, respectively)		(2,327	)		(2,327	)
Retained earnings		11,954			12,068
Accumulated other comprehensive loss, net		(2,596	)		(2,624	)

Total shareholders’ equity		25,717			25,793
BGE preference stock not subject to mandatory redemption		193			193
Noncontrolling interest		1,276			1,308

Total equity		27,186			27,294

Total liabilities and shareholders’ equity	$	111,742		$	95,384

(a)

Exelon’s consolidated assets include $8,310 million and $8,268 million at March 31, 2016 and December 31, 2015, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $3,421 million and $3,264 million at March 31, 2016 and December 31, 2015, 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 Shareholders’ Equity
Balance, December 31, 2015		954,668	$	18,676		$	(2,327	)	$	12,068		$	(2,624	)	$	1,308		$	193		$	27,294
Net income		—		—			—			173			—			(53	)		3			123
Long-term incentive plan activity		1,783		17			—			—			—			—			—			17
Employee stock purchase plan issuances		351		9			—			—			—			—			—			9
Tax benefit on stock compensation		—		(16	)		—			—			—			—			—			(16	)
Changes in equity of noncontrolling interest		—		—			—			—			—			2			—			2
Adjustment of contingently redeemable noncontrolling interest due to release of contingency		—		—			—			—			—			19			—			19
Common stock dividends		—		—			—			(287	)		—			—			—			(287	)
Preference stock dividends		—		—			—			—			—			—			(3	)		(3	)
Other comprehensive income, net of income taxes		—		—			—			—			28			—			—			28

Balance, March 31, 2016		956,802	$	18,686		$	(2,327	)	$	11,954		$	(2,596	)	$	1,276		$	193		$	27,186

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 March 31,
(In millions)	2016			2015
Operating revenues
Operating revenues	$	4,471		$	5,629
Operating revenues from affiliates		268			211

Total operating revenues		4,739			5,840

Operating expenses
Purchased power and fuel		2,440			3,426
Purchased power and fuel from affiliates		2			7
Operating and maintenance		1,296			1,162
Operating and maintenance from affiliates		171			149
Depreciation and amortization		289			254
Taxes other than income		126			122

Total operating expenses		4,324			5,120

Loss on sales of assets		—			(1	)

Operating income		415			719

Other income and (deductions)
Interest expense, net		(87	)		(90	)
Interest expense to affiliates		(10	)		(12	)
Other, net		93			94

Total other income and (deductions)		(4	)		(8	)

Income before income taxes		411			711
Income taxes		151			226
Equity in losses of unconsolidated affiliates		(3	)		—

Net income		257			485
Net (loss) income attributable to noncontrolling interests		(53	)		42

Net income attributable to membership interest	$	310		$	443

Comprehensive income, net of income taxes
Net income	$	257		$	485
Other comprehensive income (loss), net of income taxes
Unrealized loss on cash flow hedges		(5	)		(5	)
Unrealized loss on equity investments		(2	)		—
Unrealized gain (loss) on foreign currency translation		6			(12	)

Other comprehensive income (loss)		(1	)		(17	)

Comprehensive income	$	256		$	468

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	257		$	485
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		667			591
Impairment of long-lived assets		119			—
Loss on sales of assets		—			1
Deferred income taxes and amortization of investment tax credits		68			89
Net fair value changes related to derivatives		(106	)		(165	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(55	)		(47	)
Other non-cash operating activities		51			45
Changes in assets and liabilities:
Accounts receivable		173			24
Receivables from and payables to affiliates, net		(17	)		(10	)
Inventories		93			228
Accounts payable and accrued expenses		(363	)		(254	)
Option premiums received, net		17			5
Collateral received, net		198			288
Income taxes		(60	)		(104	)
Pension and non-pension postretirement benefit contributions		(112	)		(107	)
Other assets and liabilities		(148	)		(232	)

Net cash flows provided by operating activities		782			837

Cash flows from investing activities
Capital expenditures		(1,125	)		(937	)
Proceeds from nuclear decommissioning trust fund sales		2,240			1,681
Investment in nuclear decommissioning trust funds		(2,297	)		(1,747	)
Acquisition of businesses		(1	)		(15	)
Proceeds from sale of long-lived assets		—			142
Change in restricted cash		4			(21	)
Other investing activities		(25	)		(2	)

Net cash flows used in investing activities		(1,204	)		(899	)

Cash flows from financing activities
Change in short-term borrowings		1,377			(1	)
Proceeds from short-term borrowings with maturities greater than 90 days		123			—
Issuance of long-term debt		151			806
Retirement of long-term debt		(94	)		(18	)
Retirement of long-term debt to affiliate		—			(550	)
Changes in Exelon intercompany money pool		(1,183	)		936
Distribution to member		(55	)		(1,356	)
Contribution from member		44			—
Other financing activities		5			(3	)

Net cash flows provided by (used in) financing activities		368			(186	)

Decrease in cash and cash equivalents		(54	)		(248	)
Cash and cash equivalents at beginning of period		431			780

Cash and cash equivalents at end of period	$	377		$	532

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	377	$	431
Restricted cash and cash equivalents		119		123
Accounts receivable, net
Customer		1,963		2,095
Other		434		360
Mark-to-market derivative assets		1,185		1,365
Receivables from affiliates		154		83
Unamortized energy contract assets		85		86
Inventories, net
Fossil fuel and emission allowances		251		384
Materials and supplies		884		880
Other		719		535

Total current assets		6,171		6,342

Property, plant and equipment, net		26,166		25,843
Deferred debits and other assets
Nuclear decommissioning trust funds		10,526		10,342
Investments		250		210
Goodwill		47		47
Mark-to-market derivative assets		799		733
Prepaid pension asset		1,725		1,689
Pledged assets for Zion Station decommissioning		183		206
Unamortized energy contract assets		473		484
Deferred income taxes		12		6
Other		650		627

Total deferred debits and other assets		14,665		14,344

Total assets^(a)	$	47,002	$	46,529

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016			December 31, 2015
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	1,529		$	29
Long-term debt due within one year		177			90
Accounts payable		1,290			1,583
Accrued expenses		673			935
Payables to affiliates		140			104
Borrowings from Exelon intercompany money pool		63			1,252
Mark-to-market derivative liabilities		177			182
Unamortized energy contract liabilities		85			100
Renewable energy credit obligation		308			302
Other		333			356

Total current liabilities		4,775			4,933

Long-term debt		7,945			7,936
Long-term debt to affiliate		930			933
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,872			5,845
Asset retirement obligations		8,588			8,431
Non-pension postretirement benefit obligations		937			924
Spent nuclear fuel obligation		1,022			1,021
Payables to affiliates		2,600			2,577
Mark-to-market derivative liabilities		166			150
Unamortized energy contract liabilities		106			117
Payable for Zion Station decommissioning		71			90
Other		637			602

Total deferred credits and other liabilities		19,999			19,757

Total liabilities^(a)		33,649			33,559

Commitments and contingencies
Contingently redeemable noncontrolling interests		19			28
Equity
Member’s equity
Membership interest		9,167			8,997
Undistributed earnings		2,956			2,701
Accumulated other comprehensive loss, net		(64	)		(63	)

Total member’s equity		12,059			11,635
Noncontrolling interest		1,275			1,307

Total equity		13,334			12,942

Total liabilities and equity	$	47,002		$	46,529

(a)

Generation’s consolidated assets include $8,190 million and $8,235 million at March 31, 2016 and December 31, 2015, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $3,094 million and $3,135 million at March 31, 2016 and December 31, 2015, 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, 2015	$	8,997	$	2,701		$	(63	)	$	1,307		$	12,942
Net income (loss)		—		310			—			(53	)		257
Acquisition of non-controlling interest		—		—			—			2			2
Adjustment of contingently redeemable noncontrolling interest due to release of contingency		—		—			—			19			19
Contribution from member		170		—			—			—			170
Distribution to member		—		(55	)		—			—			(55	)
Other comprehensive loss, net of income taxes		—		—			(1	)		—			(1	)

Balance, March 31, 2016	$	9,167	$	2,956		$	(64	)	$	1,275		$	13,334

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 March 31,
(In millions)	2016			2015
Operating revenues
Electric operating revenues	$	1,244		$	1,184
Operating revenues from affiliates		5			1

Total operating revenues		1,249			1,185

Operating expenses
Purchased power		343			318
Purchased power from affiliate		5			9
Operating and maintenance		305			333
Operating and maintenance from affiliate		63			45
Depreciation and amortization		189			175
Taxes other than income		75			75

Total operating expenses		980			955

Gain on sale of assets		5			—

Operating income		274			230

Other income and (deductions)
Interest expense, net		(83	)		(81	)
Interest expense to affiliates		(3	)		(3	)
Other, net		4			3

Total other income and (deductions)		(82	)		(81	)

Income before income taxes		192			149
Income taxes		77			59

Net income	$	115		$	90

Comprehensive income	$	115		$	90

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	115		$	90
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		189			175
Deferred income taxes and amortization of investment tax credits		70			35
Other non-cash operating activities		32			126
Changes in assets and liabilities:
Accounts receivable		69			(38	)
Receivables from and payables to affiliates, net		—			(2	)
Inventories		7			(10	)
Accounts payable and accrued expenses		(207	)		(121	)
Collateral received (posted), net		7			(5	)
Income taxes		20			131
Pension and non-pension postretirement benefit contributions		(32	)		(121	)
Other assets and liabilities		14			(9	)

Net cash flows provided by operating activities		284			251

Cash flows from investing activities
Capital expenditures		(639	)		(530	)
Other investing activities		13			7

Net cash flows used in investing activities		(626	)		(523	)

Cash flows from financing activities
Changes in short-term borrowings		349			(21	)
Issuance of long-term debt		—			400
Contributions from parent		39			14
Dividends paid on common stock		(91	)		(75	)
Other financing activities		(1	)		(4	)

Net cash flows provided by financing activities		296			314

(Decrease) Increase in cash and cash equivalents		(46	)		42
Cash and cash equivalents at beginning of period		67			66

Cash and cash equivalents at end of period	$	21		$	108

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	21	$	67
Restricted cash		2		2
Accounts receivable, net
Customer		479		533
Other		221		272
Receivables from affiliates		202		199
Inventories, net		157		164
Regulatory assets		239		218
Other		51		63

Total current assets		1,372		1,518

Property, plant and equipment, net		17,971		17,502
Deferred debits and other assets
Regulatory assets		925		895
Investments		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,182		2,172
Prepaid pension asset		1,476		1,490
Other		330		324

Total deferred debits and other assets		7,544		7,512

Total assets	$	26,887	$	26,532

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	643	$	294
Long-term debt due within one year		665		665
Accounts payable		645		660
Accrued expenses		539		706
Payables to affiliates		64		62
Customer deposits		130		131
Regulatory liabilities		150		155
Mark-to-market derivative liability		26		23
Other		76		70

Total current liabilities		2,938		2,766

Long-term debt		5,845		5,844
Long-term debt to financing trust		205		205
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		4,985		4,914
Asset retirement obligations		113		111
Non-pension postretirement benefits obligations		254		259
Regulatory liabilities		3,489		3,459
Mark-to-market derivative liability		239		224
Other		512		507

Total deferred credits and other liabilities		9,592		9,474

Total liabilities		18,580		18,289

Commitments and contingencies
Shareholders’ equity
Common stock		1,588		1,588
Other paid-in capital		5,717		5,677
Retained earnings		1,002		978

Total shareholders’ equity		8,307		8,243

Total liabilities and shareholders’ equity	$	26,887	$	26,532

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, 2015	$	1,588	$	5,677	$	(1,639	)	$	2,617		$	8,243
Net income		—		—		115			—			115
Appropriation of retained earnings for future dividends		—		—		(115	)		115			—
Common stock dividends		—		—		—			(91	)		(91	)
Contribution from parent		—		39		—			—			39
Parent tax matter indemnification		—		1		—			—			1

Balance, March 31, 2016	$	1,588	$	5,717	$	(1,639	)	$	2,641		$	8,307

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 March 31,
(In millions)	2016			2015
Operating revenues
Electric operating revenues	$	643		$	677
Natural gas operating revenues		197			308
Operating revenues from affiliates		1			—

Total operating revenues		841			985

Operating expenses
Purchased power		166			216
Purchased fuel		77			160
Purchased power from affiliate		78			62
Operating and maintenance		177			197
Operating and maintenance from affiliates		38			25
Depreciation and amortization		67			62
Taxes other than income		42			41

Total operating expenses		645			763

Gain on sales of assets		—			1

Operating income		196			223

Other income and (deductions)
Interest expense, net		(28	)		(25	)
Interest expense to affiliates		(3	)		(3	)
Other, net		2			2

Total other income and (deductions)		(29	)		(26	)

Income before income taxes		167			197
Income taxes		43			58

Net income attributable to common shareholder	$	124		$	139

Comprehensive income	$	124		$	139

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	124		$	139
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		67			62
Deferred income taxes and amortization of investment tax credits		23			5
Other non-cash operating activities		24			44
Changes in assets and liabilities:
Accounts receivable		(51	)		(115	)
Receivables from and payables to affiliates, net		4			5
Inventories		24			34
Accounts payable and accrued expenses		18			(1	)
Income taxes		29			67
Pension and non-pension postretirement benefit contributions		(29	)		(12	)
Other assets and liabilities		(95	)		(70	)

Net cash flows provided by operating activities		138			158

Cash flows from investing activities
Capital expenditures		(195	)		(148	)
Changes in Exelon intercompany money pool		(160	)		—
Other investing activities		4			4

Net cash flows used in investing activities		(351	)		(144	)

Cash flows from financing activities
Changes in Exelon intercompany money pool		—			65
Dividends paid on common stock		(69	)		(70	)
Other financing activities		—			(1	)

Net cash flows used in financing activities		(69	)		(6	)

Increase (decrease) in cash and cash equivalents		(282	)		8
Cash and cash equivalents at beginning of period		295			30

Cash and cash equivalents at end of period	$	13		$	38

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	13	$	295
Restricted cash and cash equivalents		3		3
Accounts receivable, net
Customer		288		258
Other		124		146
Receivables from affiliates		5		2
Receivable from Exelon intercompany pool		160		—
Inventories, net
Fossil fuel		18		43
Materials and supplies		27		26
Prepaid utility taxes		110		11
Regulatory assets		42		34
Other		26		24

Total current assets		816		842

Property, plant and equipment, net		7,209		7,141
Deferred debits and other assets
Regulatory assets		1,605		1,583
Investments		27		28
Receivable from affiliates		417		405
Prepaid pension asset		368		347
Other		20		21

Total deferred debits and other assets		2,437		2,384

Total assets	$	10,462	$	10,367

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Long-term debt due within one year	$	300	$	300
Accounts payable		261		281
Accrued expenses		84		109
Payables to affiliates		62		55
Customer deposits		59		58
Regulatory liabilities		134		112
Other		33		29

Total current liabilities		933		944

Long-term debt		2,281		2,280
Long-term debt to financing trusts		184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,849		2,792
Asset retirement obligations		27		27
Non-pension postretirement benefits obligations		288		287
Regulatory liabilities		521		527
Other		88		90

Total deferred credits and other liabilities		3,773		3,723

Total liabilities		7,171		7,131

Commitments and contingencies
Shareholder’s equity
Common stock		2,455		2,455
Retained earnings		835		780
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,291		3,236

Total liabilities and shareholder’s equity	$	10,462	$	10,367

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, 2015	$	2,455	$	780		$	1	$	3,236
Net income		—		124			—		124
Common stock dividends		—		(69	)		—		(69	)

Balance, March 31, 2016	$	2,455	$	835		$	1	$	3,291

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 March 31,
(In millions)	2016			2015
Operating revenues
Electric operating revenues	$	678		$	714
Natural gas operating revenues		246			315
Operating revenues from affiliates		5			7

Total operating revenues		929			1,036

Operating expenses
Purchased power		127			208
Purchased fuel		75			142
Purchased power from affiliate		171			137
Operating and maintenance		168			156
Operating and maintenance from affiliates		34			26
Depreciation and amortization		109			106
Taxes other than income		58			57

Total operating expenses		742			832

Operating income		187			204

Other income and (deductions)
Interest expense, net		(20	)		(21	)
Interest expense to affiliates		(4	)		(4	)
Other, net		4			4

Total other income and (deductions)		(20	)		(21	)

Income before income taxes		167			183
Income taxes		66			74

Net income		101			109
Preference stock dividends		3			3

Net income attributable to common shareholder	$	98		$	106

Comprehensive income	$	101		$	109

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	101		$	109
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		109			106
Deferred income taxes and amortization of investment tax credits		26			33
Other non-cash operating activities		44			64
Changes in assets and liabilities:
Accounts receivable		(44	)		(141	)
Receivables from and payables to affiliates, net		7			(8	)
Inventories		17			38
Accounts payable and accrued expenses		3			(14	)
Collateral received (posted), net		—			(27	)
Income taxes		78			26
Pension and non-pension postretirement benefit contributions		(38	)		(4	)
Other assets and liabilities		(30	)		99

Net cash flows provided by operating activities		273			281

Cash flows from investing activities
Capital expenditures		(176	)		(136	)
Change in restricted cash		(20	)		2
Other investing activities		5			2

Net cash flows used in investing activities		(191	)		(132	)

Cash flows from financing activities
Changes in short-term borrowings		(60	)		(120	)
Dividends paid on preference stock		(3	)		(3	)
Dividends paid on common stock		(45	)		(36	)
Contributions from parent		21			—
Other financing activities		1			(13	)

Net cash flows used in financing activities		(86	)		(172	)

Decrease in cash and cash equivalents		(4	)		(23	)
Cash and cash equivalents at beginning of period		9			64

Cash and cash equivalents at end of period	$	5		$	41

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5	$	9
Restricted cash and cash equivalents		44		24
Accounts receivable, net
Customer		328		300
Other		77		112
Inventories, net
Gas held in storage		13		36
Materials and supplies		39		33
Prepaid utility taxes		31		61
Regulatory assets		266		267
Other		16		3

Total current assets		819		845

Property, plant and equipment, net		6,684		6,597
Deferred debits and other assets
Regulatory assets		499		514
Investments		12		12
Prepaid pension asset		337		319
Other		10		8

Total deferred debits and other assets		858		853

Total assets^(a)	$	8,361	$	8,295

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2016		December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	150	$	210
Long-term debt due within one year		378		378
Accounts payable		206		209
Accrued expenses		151		110
Payables to affiliates		59		52
Customer deposits		105		102
Regulatory liabilities		61		38
Other		28		35

Total current liabilities		1,138		1,134

Long-term debt		1,481		1,480
Long-term debt to financing trust		252		252
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,104		2,081
Asset retirement obligations		15		17
Non-pension postretirement benefits obligations		205		209
Regulatory liabilities		151		184
Other		71		61

Total deferred credits and other liabilities		2,546		2,552

Total liabilities^(a)		5,417		5,418

Commitments and contingencies
Shareholders’ equity
Common stock		1,381		1,367
Retained earnings		1,373		1,320

Total shareholders’ equity		2,754		2,687

Preference stock not subject to mandatory redemption		190		190

Total equity		2,944		2,877

Total liabilities and shareholders’ equity	$	8,361	$	8,295

(a)

BGE’s consolidated assets include $47 million and $26 million at March 31, 2016 and December 31, 2015, respectively, of BGE’s consolidated VIE that can only be used to settle the liabilities of the VIE. BGE’s consolidated liabilities include $41 million and $41 million at March 31, 2016 and December 31, 2015, 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, 2015	$	1,367		$	1,320		$	2,687		$	190	$	2,877
Net income		—			101			101			—		101
Preference stock dividends		—			(3	)		(3	)		—		(3	)
Common stock dividends		—			(45	)		(45	)		—		(45	)
Distribution to parent		(7	)		—			(7	)		—		(7	)
Contribution from parent		21			—			21			—		21

Balance, March 31, 2016	$	1,381		$	1,373		$	2,754		$	190	$	2,944

See the Combined Notes to Consolidated Financial Statements

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Successor			Predecessor
	March 24 to March 31,			January 1 to March 23,			Three Months Ended March 31,
(In millions)	2016			2016			2015
Operating revenues
Electric operating revenues	$	90		$	1,096		$	1,268
Natural gas operating revenues		3			57			86
Operating revenues from affiliates		12			—			—

Total operating revenues		105			1,153			1,354

Operating expenses
Purchased power		26			471			588
Purchased fuel		1			26			51
Purchased power and fuel from affiliates		11			—			—
Operating and maintenance		447			294			300
Operating and maintenance from affiliates		2			—			—
Depreciation and amortization		14			152			155
Taxes other than income		15			105			118

Total operating expenses		516			1,048			1,212

Operating (loss) income		(411	)		105			142

Other income and (deductions)
Interest expense, net		(6	)		(65	)		(68	)
Other, net		2			(4	)		9

Total other income and (deductions)		(4	)		(69	)		(59	)

(Loss) Income before income taxes		(415	)		36			83
Income taxes		(106	)		17			30

Net (loss) income attributable to membership interest/common shareholders	$	(309	)	$	19		$	53

Comprehensive (loss) income, net of income taxes
Net (loss) income	$	(309	)	$	19		$	53
Other comprehensive income, net of income taxes
Pension and non-pension postretirement benefit plans:
Actuarial loss reclassified to periodic cost		—			1			1

Other comprehensive income		—			1			1

Comprehensive (loss) income	$	(309	)	$	20		$	54

See the Combined Notes to Consolidated Financial Statements

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Successor			Predecessor
	March 24 to March 31,			January 1 to March 23,			Three Months Ended March 31,
(In millions)	2016			2016			2015
Cash flows from operating activities
Net (loss) income	$	(309	)	$	19		$	53
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation, amortization and accretion		14			152			155
Deferred income taxes and amortization of investment tax credits		(112	)		19			49
Net fair value changes related to derivatives		—			18			—
Other non-cash operating activities		410			46			57
Changes in assets and liabilities:
Accounts receivable		16			(28	)		(214	)
Receivables from and payables to affiliates, net		46			—			—
Inventories		—			(4	)		(3	)
Accounts payable and accrued expenses		(4	)		42			43
Collateral received, net		—			1			—
Income taxes		7			12			(3	)
Pension and non-pension postretirement benefit contributions		—			(4	)		(5	)
Other assets and liabilities		(25	)		(9	)		25

Net cash flows provided by operating activities		43			264			157

Cash flows from investing activities
Capital expenditures		(29	)		(273	)		(246	)
Changes in restricted cash		(1	)		3			9
Purchases of investments		(2	)		(68	)		—
Other investing activities		2			(5	)		2

Net cash flows used in investing activities		(30	)		(343	)		(235	)

Cash flows from financing activities
Changes in short-term borrowings		(20	)		(121	)		74
Proceeds from short-term borrowings with maturities greater than 90 days					500			—
Issuance of long-term debt		—			—			208
Retirement of long-term debt		—			(11	)		(22	)
Issuance of preferred stock		—			—			18
Dividends paid on common stock		—			—			(68	)
Common stock issued for the Direct Stock Purchase and Dividend Reinvestment Plan and employee-related compensation		—			2			8
Distribution to member		(108	)		—			—
Change in Exelon intercompany money pool		(53	)		—			—

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