Edgar Filing: EXELON CORP

FORM 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2017

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

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

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 ☒ 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 ☒ No ☐

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

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller
Reporting
Company

Emerging
Growth
Company

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

☒

Atlantic City Electric Company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of each registrant’s common stock as of March 31, 2017 was:


Exelon Corporation Common Stock, without par value		926,096,660
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,017,158
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.

GLOSSARY OF TERMS AND ABBREVIATIONS			4

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		56

2. New Accounting Standards		58

3. Variable Interest Entities		61

4. Mergers, Acquisitions and Dispositions		67

5. Regulatory Matters		75

6. Impairment of Long-Lived Assets		93

7. Early Nuclear Plant Retirements		94

8. Fair Value of Financial Assets and Liabilities		96

9. Derivative Financial Instruments		117

10. Debt and Credit Agreements		134

11. Income Taxes		137

12. Nuclear Decommissioning		141

13. Retirement Benefits		144

14. Severance		147

15. Changes in Accumulated Other Comprehensive Income		149

16. Earnings Per Share and Equity		152

17. Commitments and Contingencies		153

18. Supplemental Financial Information		166

19. Segment Information		171

20. Subsequent Events		176


		Page No.

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		177

	Exelon Corporation		177

	Executive Overview		177

	Financial Results of Operations		178

	Significant 2017 Transactions and Developments		183

	Exelon’s Strategy and Outlook for 2017 and Beyond		186

	Liquidity Considerations		187

	Other Key Business Drivers and Management Strategies		188

	Critical Accounting Policies and Estimates		194

	Results of Operations		195

	Exelon Generation Company, LLC		195

	Commonwealth Edison Company		202

	PECO Energy Company		207

	Baltimore Gas and Electric Company		213

	Pepco Holdings LLC		218

	Potomac Electric Power Company		219

	Delmarva Power & Light Company		225

	Atlantic City Electric Company		231

	Liquidity and Capital Resources		236

	Contractual Obligations and Off-Balance Sheet Arrangements		249

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		250

ITEM 4.	CONTROLS AND PROCEDURES		259

PART II.	OTHER INFORMATION		260

ITEM 1.	LEGAL PROCEEDINGS		260

ITEM 1A.	RISK FACTORS		260

ITEM 4.	MINE SAFETY DISCLOSURES		260

ITEM 5.	OTHER INFORMATION		260

ITEM 6.	EXHIBITS		260

SIGNATURES			262

	Exelon Corporation		262

	Exelon Generation Company, LLC		262

	Commonwealth Edison Company		262

	PECO Energy Company		263

	Baltimore Gas and Electric Company		263

	Pepco Holdings LLC		263

	Potomac Electric Power Company		264

	Delmarva Power & Light Company		264

	Atlantic City Electric Company		264

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
Registrants		Exelon, Generation, ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, collectively
Utility Registrants		ComEd, PECO, BGE, Pepco, DPL and ACE, collectively
AmerGen		AmerGen Energy Company, LLC
Antelope Valley		Antelope Valley Solar Ranch One
BondCo		RSB BondCo LLC
CENG		Constellation Energy Nuclear Group, LLC
ConEdison Solutions		The competitive retail electricity and natural gas business of Consolidated Edison Solutions, Inc., a subsidiary of Consolidated Edison, Inc.
Constellation		Constellation Energy Group, Inc.
EGTP		ExGen Texas Power, LLC
EGR		ExGen Renewables I, LLC
Entergy		Entergy Nuclear FitzPatrick LLC
Exelon Transmission Company		Exelon Transmission Company, LLC
Exelon Wind		Exelon Wind, LLC and Exelon Generation Acquisition Company, LLC
FitzPatrick		James A. FitzPatrick nuclear generating station
Legacy PHI		PHI, Pepco, DPL and ACE, collectively
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
RPG		Renewable Power Generation
SolGen		SolGen, LLC
UII		Unicom Investments, Inc.
Ventures		Exelon Ventures Company, LLC


Other Terms and Abbreviations
Note “—” of the Exelon 2016 Form 10-K		Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2016 Annual Report on Form 10-K
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

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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
AMI		Advanced Metering Infrastructure
AOCI		Accumulated Other Comprehensive Income
ARC		Asset Retirement Cost
ARO		Asset Retirement Obligation
ASC		Accounting Standards Codification
BGS		Basic Generation Service
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
CES		Clean Energy Standard
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
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
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
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
EDF		Electricite de France SA and its subsidiaries
EE&C		Energy Efficiency and Conservation/Demand Response
EGS		Electric Generation Supplier
EIMA		Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
EmPower Maryland		A Maryland demand-side management program for Pepco and DPL
EPA		United States Environmental Protection Agency
EPSA		Electric Power Supply Association
ERCOT		Electric Reliability Council of Texas
ERISA		Employee Retirement Income Security Act of 1974, as amended
EROA		Expected Rate of Return on Assets
FASB		Financial Accounting Standards Board
FEJA		Illinois Public Act 99-0906 or Future Energy Jobs Act
FERC		Federal Energy Regulatory Commission
FRCC		Florida Reliability Coordinating Council
GAAP		Generally Accepted Accounting Principles in the United States
GCR		Gas Cost Rate
GHG		Greenhouse Gas
GSA		Generation Supply Adjustment
GWh		Gigawatt hour
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
LLRW		Low-Level Radioactive Waste
LT Plan		Long-term renewable resources procurement plan
LTIP		Long-Term Incentive Plan
MAPP		Mid-Atlantic Power Pathway
MATS		U.S. EPA Mercury and Air Toxics 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

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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
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
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
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

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
RMC		Risk Management Committee
ROE		Return on equity
RPM		PJM Reliability Pricing Model
RPS		Renewable Energy Portfolio Standards
RSSA		Reliability Support Services Agreement
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)
SGIG		Smart Grid Investment Grant from DOE
SILO		Sale-In, Lease-Out
SMPIP		Smart Meter Procurement and Installation Plan
SNF		Spent Nuclear Fuel
SOS		Standard Offer Service
SPFPA		Security, Police and Fire Professionals of America
SPP		Southwest Power Pool
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
UGSOA		United Government Security Officers of America
Upstream		Natural gas exploration and production activities
VIE		Variable Interest Entity
WECC		Western Electric Coordinating Council
ZEC		Zero Emission Credit
ZES		Zero Emission Standard

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 Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC (PHI), Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) the Registrants’ combined 2016 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 24, Commitments and Contingencies; and (2) 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)	2017			2016
Operating revenues
Competitive businesses revenues	$	4,560		$	4,473
Rate-regulated utility revenues		4,197			3,100

Total operating revenues		8,757			7,573
Operating expenses
Competitive businesses purchased power and fuel		2,795			2,440
Rate-regulated utility purchased power and fuel		1,104			814
Operating and maintenance		2,460			2,835
Depreciation and amortization		896			685
Taxes other than income		436			325

Total operating expenses		7,691			7,099

Gain on sales of assets		4			9
Bargain purchase gain		226			—

Operating income		1,296			483

Other income and (deductions)
Interest expense, net		(363	)		(277	)
Interest expense to affiliates		(10	)		(10	)
Other, net		283			114

Total other income and (deductions)		(90	)		(173	)

Income before income taxes		1,206			310
Income taxes		215			184
Equity in losses of unconsolidated affiliates		(10	)		(3	)

Net income		981			123

Net loss attributable to noncontrolling interests and preference stock dividends		(14	)		(50	)

Net income attributable to common shareholders	$	995		$	173

Comprehensive income, net of income taxes
Net income	$	981		$	123
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		(13	)		(12	)
Actuarial loss reclassified to periodic benefit cost		49			46
Pension and non-pension postretirement benefit plan valuation adjustment		(59	)		(1	)
Unrealized gain (loss) on cash flow hedges		6			(7	)
Unrealized gain (loss) on equity investments		3			(3	)
Unrealized gain on foreign currency translation		1			6
Unrealized gain (loss) on marketable securities		1			(1	)

Other comprehensive (loss) income		(12	)		28

Comprehensive income		969			151

Comprehensive loss attributable to noncontrolling interests and preference stock dividends		(16	)		(50	)

Comprehensive income attributable to common shareholders	$	985		$	201

Average shares of common stock outstanding:
Basic		928			923
Diluted		930			925
Earnings per average common share:
Basic	$	1.07		$	0.19
Diluted	$	1.07		$	0.19

Dividends declared per common share	$	0.33		$	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)	2017			2016
Cash flows from operating activities
Net income	$	981		$	123
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization		1,274			1,063
Impairment of long-lived assets		10			119
Gain on sales of assets		(4	)		(9	)
Bargain purchase gain		(226	)		—
Deferred income taxes and amortization of investment tax credits		189			127
Net fair value changes related to derivatives		47			(107	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(175	)		(55	)
Other non-cash operating activities		118			804
Changes in assets and liabilities:
Accounts receivable		313			117
Inventories		109			142
Accounts payable and accrued expenses		(623	)		(571	)
Option premiums (paid) received, net		(6	)		17
Collateral (posted) received, net		(110	)		206
Income taxes		50			47
Pension and non-pension postretirement benefit contributions		(307	)		(239	)
Other assets and liabilities		(439	)		(311	)

Net cash flows provided by operating activities		1,201			1,473

Cash flows from investing activities
Capital expenditures		(2,114	)		(2,202	)
Proceeds from nuclear decommissioning trust fund sales		1,767			2,240
Investment in nuclear decommissioning trust funds		(1,833	)		(2,297	)
Acquisition of businesses, net		(212	)		(6,645	)
Proceeds from termination of direct financing lease investment		—			360
Change in restricted cash		(1	)		(2	)
Other investing activities		(18	)		(2	)

Net cash flows used in investing activities		(2,411	)		(8,548	)

Cash flows from financing activities
Changes in short-term borrowings		721			1,647
Proceeds from short-term borrowings with maturities greater than 90 days		560			123
Repayments on short-term borrowings with maturities greater than 90 days		(500	)		—
Issuance of long-term debt		763			151
Retirement of long-term debt		(65	)		(116	)
Dividends paid on common stock		(303	)		(287	)
Proceeds from employee stock plans		12			9
Other financing activities		(4	)		6

Net cash flows provided by financing activities		1,184			1,533

Decrease in cash and cash equivalents		(26	)		(5,542	)
Cash and cash equivalents at beginning of period		635			6,502

Cash and cash equivalents at end of period	$	609		$	960

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	609	$	635
Restricted cash and cash equivalents		254		253
Deposit with IRS		1,250		1,250
Accounts receivable, net
Customer		3,886		4,158
Other		1,133		1,201
Mark-to-market derivative assets		847		917
Unamortized energy contract assets		103		88
Inventories, net
Fossil fuel and emission allowances		249		364
Materials and supplies		1,312		1,274
Regulatory assets		1,330		1,342
Other		1,221		930

Total current assets		12,194		12,412

Property, plant and equipment, net		72,630		71,555
Deferred debits and other assets
Regulatory assets		10,051		10,046
Nuclear decommissioning trust funds		12,362		11,061
Investments		648		629
Goodwill		6,677		6,677
Mark-to-market derivative assets		539		492
Unamortized energy contract assets		432		447
Pledged assets for Zion Station decommissioning		95		113
Other		1,440		1,472

Total deferred debits and other assets		32,244		30,937

Total assets^(a)	$	117,068	$	114,904

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017			December 31, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	2,048		$	1,267
Long-term debt due within one year		3,645			2,430
Accounts payable		3,011			3,441
Accrued expenses		3,007			3,460
Payables to affiliates		8			8
Regulatory liabilities		637			602
Mark-to-market derivative liabilities		228			282
Unamortized energy contract liabilities		388			407
Renewable energy credit obligation		400			428
PHI merger related obligation		123			151
Other		942			981

Total current liabilities		14,437			13,457

Long-term debt		31,044			31,575
Long-term debt to financing trusts		641			641
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		18,518			18,138
Asset retirement obligations		9,634			9,111
Pension obligations		4,082			4,248
Non-pension postretirement benefit obligations		1,928			1,848
Spent nuclear fuel obligation		1,136			1,024
Regulatory liabilities		4,302			4,187
Mark-to-market derivative liabilities		420			392
Unamortized energy contract liabilities		779			830
Payable for Zion Station decommissioning		3			14
Other		1,853			1,827

Total deferred credits and other liabilities		42,655			41,619

Total liabilities^(a)		88,777			87,292

Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2000 shares authorized, 926 shares and 924 shares outstanding at March 31, 2017 and December 31, 2016, respectively)		18,807			18,794
Treasury stock, at cost (35 shares at March 31, 2017 and December 31, 2016, respectively)		(2,327	)		(2,327	)
Retained earnings		12,720			12,030
Accumulated other comprehensive loss, net		(2,670	)		(2,660	)

Total shareholders’ equity		26,530			25,837
Noncontrolling interests		1,761			1,775

Total equity		28,291			27,612

Total liabilities and shareholders’ equity	$	117,068		$	114,904

(a)

Exelon’s consolidated assets include $9,148 million and $8,893 million at March 31, 2017 and December 31, 2016, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $3,345 million and $3,356 million at March 31, 2017 and December 31, 2016, 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 Interests			Total Shareholders’ Equity
Balance, December 31, 2016		958,778	$	18,794	$	(2,327	)	$	12,030		$	(2,660	)	$	1,775		$	27,612
Net income (loss)		—		—		—			995			—			(14	)		981
Long-term incentive plan activity		1,739		1		—			—			—			—			1
Employee stock purchase plan issuances		323		12		—			—			—			—			12
Changes in equity of noncontrolling interests		—		—		—			—			—			2			2
Common stock dividends		—		—		—			(305	)		—			—			(305	)
Other comprehensive loss, net of income taxes		—		—		—			—			(10	)		(2	)		(12	)

Balance at March 31, 2017		960,840	$	18,807	$	(2,327	)	$	12,720		$	(2,670	)	$	1,761		$	28,291

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)	2017			2016
Operating revenues
Operating revenues	$	4,558		$	4,471
Operating revenues from affiliates		330			268

Total operating revenues		4,888			4,739

Operating expenses
Purchased power and fuel		2,796			2,440
Purchased power and fuel from affiliates		2			2
Operating and maintenance		1,309			1,296
Operating and maintenance from affiliates		179			171
Depreciation and amortization		302			289
Taxes other than income		143			126

Total operating expenses		4,731			4,324

Gain on sales of assets		4			—
Bargain purchase gain		226			—

Operating income		387			415

Other income and (deductions)
Interest expense, net		(90	)		(87	)
Interest expense to affiliates		(10	)		(10	)
Other, net		259			93

Total other income and (deductions)		159			(4	)

Income before income taxes		546			411
Income taxes		127			151
Equity in losses of unconsolidated affiliates		(10	)		(3	)

Net income		409			257
Net loss attributable to noncontrolling interests		(14	)		(53	)

Net income attributable to membership interest	$	423		$	310

Comprehensive income, net of income taxes
Net income	$	409		$	257
Other comprehensive income (loss), net of income taxes
Unrealized gain (loss) on cash flow hedges		6			(5	)
Unrealized gain (loss) on equity investments		4			(2	)
Unrealized gain on foreign currency translation		1			6

Other comprehensive income (loss)		11			(1	)

Comprehensive income		420			256

Comprehensive loss attributable to noncontrolling interests		(16	)		(53	)

Comprehensive income attributable to membership interest	$	436		$	309

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)	2017			2016
Cash flows from operating activities
Net income	$	409		$	257
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization		678			667
Impairment of long-lived assets		10			119
Gain on sales of assets		(4	)		—
Bargain purchase gain		(226	)		—
Deferred income taxes and amortization of investment tax credits		112			68
Net fair value changes related to derivatives		51			(106	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(175	)		(55	)
Other non-cash operating activities		(10	)		51
Changes in assets and liabilities:
Accounts receivable		195			173
Receivables from and payables to affiliates, net		23			(17	)
Inventories		81			93
Accounts payable and accrued expenses		62			(363	)
Option premiums (paid) received, net		(6	)		17
Collateral (posted) received, net		(102	)		198
Income taxes		(81	)		(60	)
Pension and non-pension postretirement benefit contributions		(110	)		(112	)
Other assets and liabilities		(167	)		(148	)

Net cash flows provided by operating activities		740			782

Cash flows from investing activities
Capital expenditures		(923	)		(1,125	)
Proceeds from nuclear decommissioning trust fund sales		1,767			2,240
Investment in nuclear decommissioning trust funds		(1,833	)		(2,297	)
Acquisition of businesses, net		(212	)		(1	)
Change in restricted cash		18			4
Other investing activities		(29	)		(25	)

Net cash flows used in investing activities		(1,212	)		(1,204	)

Cash flows from financing activities
Changes in short-term borrowings		(42	)		1,377
Proceeds from short-term borrowings with maturities greater than 90 days		60			123
Issuance of long-term debt		762			151
Retirement of long-term debt		(30	)		(94	)
Changes in Exelon intercompany money pool		(1	)		(1,183	)
Distribution to member		(164	)		(55	)
Contribution from member		—			44
Other financing activities		(3	)		5

Net cash flows provided by financing activities		582			368

Increase (Decrease) in cash and cash equivalents		110			(54	)
Cash and cash equivalents at beginning of period		290			431

Cash and cash equivalents at end of period	$	400		$	377

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	400	$	290
Restricted cash and cash equivalents		140		158
Accounts receivable, net
Customer		2,278		2,433
Other		545		558
Mark-to-market derivative assets		847		917
Receivables from affiliates		141		156
Unamortized energy contract assets		103		88
Inventories, net
Fossil fuel and emission allowances		222		292
Materials and supplies		957		935
Other		881		701

Total current assets		6,514		6,528

Property, plant and equipment, net		25,893		25,585
Deferred debits and other assets
Nuclear decommissioning trust funds		12,362		11,061
Investments		435		418
Goodwill		47		47
Mark-to-market derivative assets		527		476
Prepaid pension asset		1,646		1,595
Pledged assets for Zion Station decommissioning		95		113
Unamortized energy contract assets		432		447
Deferred income taxes		10		16
Other		648		688

Total deferred debits and other assets		16,202		14,861

Total assets^(a)	$	48,609	$	46,974

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017			December 31, 2016
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	717		$	699
Long-term debt due within one year		1,156			1,117
Accounts payable		1,482			1,610
Accrued expenses		720			989
Payables to affiliates		145			137
Borrowings from Exelon intercompany money pool		54			55
Mark-to-market derivative liabilities		209			263
Unamortized energy contract liabilities		68			72
Renewable energy credit obligation		400			428
Other		286			313

Total current liabilities		5,237			5,683

Long-term debt		7,904			7,202
Long-term debt to affiliate		919			922
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,850			5,585
Asset retirement obligations		9,444			8,922
Non-pension postretirement benefit obligations		926			930
Spent nuclear fuel obligation		1,136			1,024
Payables to affiliates		2,776			2,608
Mark-to-market derivative liabilities		157			153
Unamortized energy contract liabilities		78			80
Payable for Zion Station decommissioning		3			14
Other		615			595

Total deferred credits and other liabilities		20,985			19,911

Total liabilities^(a)		35,045			33,718

Commitments and contingencies
Equity
Member’s equity
Membership interest		9,310			9,261
Undistributed earnings		2,534			2,275
Accumulated other comprehensive loss, net		(41	)		(54	)

Total member’s equity		11,803			11,482
Noncontrolling interests		1,761			1,774

Total equity		13,564			13,256

Total liabilities and equity	$	48,609		$	46,974

(a)

Generation’s consolidated assets include $9,059 million and $8,817 million at March 31, 2017 and December 31, 2016, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $3,174 million and $3,170 million at March 31, 2017 and December 31, 2016, 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 Interests			Total Equity
Balance, December 31, 2016	$	9,261	$	2,275		$	(54	)	$	1,774		$	13,256
Net income (loss)		—		423			—			(14	)		409
Changes in equity of noncontrolling interests		—		—			—			3			3
Distribution of net retirement benefit obligation to member		49		—			—			—			49
Distribution to member		—		(164	)		—			—			(164	)
Other comprehensive income (loss), net of income taxes		—		—			13			(2	)		11

Balance, March 31, 2017	$	9,310	$	2,534		$	(41	)	$	1,761		$	13,564

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)	2017			2016
Operating revenues
Electric operating revenues	$	1,293		$	1,244
Operating revenues from affiliates		5			5

Total operating revenues		1,298			1,249

Operating expenses
Purchased power		329			343
Purchased power from affiliate		5			5
Operating and maintenance		307			305
Operating and maintenance from affiliate		63			63
Depreciation and amortization		208			189
Taxes other than income		72			75

Total operating expenses		984			980

Gain on sale of assets		—			5

Operating income		314			274

Other income and (deductions)
Interest expense, net		(82	)		(83	)
Interest expense to affiliates		(3	)		(3	)
Other, net		4			4

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

Income before income taxes		233			192
Income taxes		92			77

Net income	$	141		$	115

Comprehensive income	$	141		$	115

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)	2017			2016
Cash flows from operating activities
Net income	$	141		$	115
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		208			189
Deferred income taxes and amortization of investment tax credits		137			70
Other non-cash operating activities		31			32
Changes in assets and liabilities:
Accounts receivable		92			69
Receivables from and payables to affiliates, net		(16	)		—
Inventories		4			7
Accounts payable and accrued expenses		(327	)		(207	)
Collateral (posted) received, net		(7	)		7
Income taxes		(34	)		20
Pension and non-pension postretirement benefit contributions		(35	)		(32	)
Other assets and liabilities		(49	)		14

Net cash flows provided by operating activities		145			284

Cash flows from investing activities
Capital expenditures		(535	)		(639	)
Change in restricted cash		(1	)		—
Other investing activities		7			13

Net cash flows used in investing activities		(529	)		(626	)

Cash flows from financing activities
Changes in short-term borrowings		365			349
Contributions from parent		100			39
Dividends paid on common stock		(105	)		(91	)
Other financing activities		(1	)		(1	)

Net cash flows provided by financing activities		359			296

Decrease in cash and cash equivalents		(25	)		(46	)
Cash and cash equivalents at beginning of period		56			67

Cash and cash equivalents at end of period	$	31		$	21

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	31	$	56
Restricted cash		3		2
Accounts receivable, net
Customer		461		528
Other		199		218
Receivables from affiliates		360		356
Inventories, net		154		159
Regulatory assets		183		190
Other		55		45

Total current assets		1,446		1,554

Property, plant and equipment, net		19,692		19,335
Deferred debits and other assets
Regulatory assets		1,032		977
Investments		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,294		2,170
Prepaid pension asset		1,330		1,343
Other		331		325

Total deferred debits and other assets		7,618		7,446

Total assets	$	28,756	$	28,335

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017			December 31, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	365		$	—
Long-term debt due within one year		1,125			425
Accounts payable		518			645
Accrued expenses		1,061			1,250
Payables to affiliates		52			65
Customer deposits		117			121
Regulatory liabilities		311			329
Mark-to-market derivative liability		19			19
Other		77			84

Total current liabilities		3,645			2,938

Long-term debt		5,910			6,608
Long-term debt to financing trust		205			205
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,502			5,364
Asset retirement obligations		121			119
Non-pension postretirement benefits obligations		234			239
Regulatory liabilities		3,492			3,369
Mark-to-market derivative liability		263			239
Other		523			529

Total deferred credits and other liabilities		10,135			9,859

Total liabilities		19,895			19,610

Commitments and contingencies
Shareholders’ equity
Common stock		1,588			1,588
Other paid-in capital		6,250			6,150
Retained deficit unappropriated		(1,639	)		(1,639	)
Retained earnings appropriated		2,662			2,626

Total shareholders’ equity		8,861			8,725

Total liabilities and shareholders’ equity	$	28,756		$	28,335

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, 2016	$	1,588	$	6,150	$	(1,639	)	$	2,626		$	8,725
Net income		—		—		141			—			141
Appropriation of retained earnings for future dividends		—		—		(141	)		141			—
Common stock dividends		—		—		—			(105	)		(105	)
Contribution from parent		—		100		—			—			100

Balance, March 31, 2017	$	1,588	$	6,250	$	(1,639	)	$	2,662		$	8,861

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)	2017			2016
Operating revenues
Electric operating revenues	$	589		$	643
Natural gas operating revenues		206			197
Operating revenues from affiliates		1			1

Total operating revenues		796			841

Operating expenses
Purchased power		156			166
Purchased fuel		86			77
Purchased power from affiliate		45			78
Operating and maintenance		174			177
Operating and maintenance from affiliates		34			38
Depreciation and amortization		71			67
Taxes other than income		38			42

Total operating expenses		604			645

Operating income		192			196

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

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

Income before income taxes		163			167
Income taxes		36			43

Net income	$	127		$	124

Comprehensive income	$	127		$	124

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)	2017			2016
Cash flows from operating activities
Net income	$	127		$	124
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		71			67
Deferred income taxes and amortization of investment tax credits		24			23
Other non-cash operating activities		23			24
Changes in assets and liabilities:
Accounts receivable		(25	)		(51	)
Receivables from and payables to affiliates, net		(10	)		4
Inventories		19			24
Accounts payable and accrued expenses		(82	)		18
Income taxes		25			29
Pension and non-pension postretirement benefit contributions		(23	)		(29	)
Other assets and liabilities		(85	)		(95	)

Net cash flows provided by operating activities		64			138

Cash flows from investing activities
Capital expenditures		(159	)		(195	)
Changes in Exelon intercompany money pool		131			(160	)
Other investing activities		1			4

Net cash flows used in investing activities		(27	)		(351	)

Cash flows from financing activities
Dividends paid on common stock		(72	)		(69	)

Net cash flows used in financing activities		(72	)		(69	)

Decrease in cash and cash equivalents		(35	)		(282	)
Cash and cash equivalents at beginning of period		63			295

Cash and cash equivalents at end of period	$	28		$	13

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	28	$	63
Restricted cash and cash equivalents		4		4
Accounts receivable, net
Customer		314		306
Other		122		131
Receivables from affiliates		6		4
Receivable from Exelon intercompany pool		—		131
Inventories, net
Fossil fuel		14		35
Materials and supplies		29		27
Prepaid utility taxes		100		9
Regulatory assets		40		29
Other		21		18

Total current assets		678		757

Property, plant and equipment, net		7,659		7,565
Deferred debits and other assets
Regulatory assets		1,708		1,681
Investments		25		25
Receivable from affiliates		482		438
Prepaid pension asset		361		345
Other		19		20

Total deferred debits and other assets		2,595		2,509

Total assets	$	10,932	$	10,831

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Long-term debt due within one year	$	500	$	—
Accounts payable		288		342
Accrued expenses		92		104
Payables to affiliates		55		63
Customer deposits		62		61
Regulatory liabilities		161		127
Other		29		30

Total current liabilities		1,187		727

Long-term debt		2,080		2,580
Long-term debt to financing trusts		184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		3,076		3,006
Asset retirement obligations		28		28
Non-pension postretirement benefits obligations		289		289
Regulatory liabilities		530		517
Other		88		85

Total deferred credits and other liabilities		4,011		3,925

Total liabilities		7,462		7,416

Commitments and contingencies
Shareholder’s equity
Common stock		2,473		2,473
Retained earnings		996		941
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,470		3,415

Total liabilities and shareholder’s equity	$	10,932	$	10,831

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, 2016	$	2,473	$	941		$	1	$	3,415
Net income		—		127			—		127
Common stock dividends		—		(72	)		—		(72	)

Balance, March 31, 2017	$	2,473	$	996		$	1	$	3,470

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)	2017			2016
Operating revenues
Electric operating revenues	$	665		$	678
Natural gas operating revenues		281			246
Operating revenues from affiliates		5			5

Total operating revenues		951			929

Operating expenses
Purchased power		133			127
Purchased fuel		83			75
Purchased power from affiliate		134			171
Operating and maintenance		148			168
Operating and maintenance from affiliates		35			34
Depreciation and amortization		128			109
Taxes other than income		62			58

Total operating expenses		723			742

Operating income		228			187

Other income and (deductions)
Interest expense, net		(23	)		(20	)
Interest expense to affiliates		(4	)		(4	)
Other, net		4			4

Total other income and (deductions)		(23	)		(20	)

Income before income taxes		205			167
Income taxes		80			66

Net income		125			101
Preference stock dividends		—			3

Net income attributable to common shareholder	$	125		$	98


Comprehensive income	$	125		$	101
Comprehensive income attributable to preference stock dividends		—			3

Comprehensive income attributable to common shareholder	$	125		$	98

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)	2017			2016
Cash flows from operating activities
Net income	$	125		$	101
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		128			109
Deferred income taxes and amortization of investment tax credits		72			26
Other non-cash operating activities		24			44
Changes in assets and liabilities:
Accounts receivable		(7	)		(44	)
Receivables from and payables to affiliates, net		(7	)		7
Inventories		17			17
Accounts payable and accrued expenses		(121	)		3
Income taxes		33			78
Pension and non-pension postretirement benefit contributions		(44	)		(38	)
Other assets and liabilities		(52	)		(30	)

Net cash flows provided by operating activities		168			273

Cash flows from investing activities
Capital expenditures		(166	)		(176	)
Change in restricted cash		(19	)		(20	)
Other investing activities		4			5

Net cash flows used in investing activities		(181	)		(191	)

Cash flows from financing activities
Changes in short-term borrowings		50			(60	)
Dividends paid on preference stock		—			(3	)
Dividends paid on common stock		(49	)		(45	)
Contributions from parent		—			21
Other financing activities		—			1

Net cash flows provided by (used in) financing activities		1			(86	)

Decrease in cash and cash equivalents		(12	)		(4	)
Cash and cash equivalents at beginning of period		23			9

Cash and cash equivalents at end of period	$	11		$	5

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	11	$	23
Restricted cash and cash equivalents		43		24
Accounts receivable, net
Customer		393		395
Other		79		102
Receivables from affiliates		1		—
Inventories, net
Gas held in storage		10		30
Materials and supplies		41		38
Prepaid utility taxes		32		15
Regulatory assets		191		208
Other		11		7

Total current assets		812		842

Property, plant and equipment, net		7,166		7,040
Deferred debits and other assets
Regulatory assets		499		504
Investments		12		12
Prepaid pension asset		322		297
Other		10		9

Total deferred debits and other assets		843		822

Total assets^(a)	$	8,821	$	8,704

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2017		December 31, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	95	$	45
Long-term debt due within one year		41		41
Accounts payable		186		205
Accrued expenses		120		175
Payables to affiliates		49		55
Customer deposits		112		110
Regulatory liabilities		67		50
Other		23		26

Total current liabilities		693		707

Long-term debt		2,282		2,281
Long-term debt to financing trust		252		252
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,295		2,219
Asset retirement obligations		20		21
Non-pension postretirement benefits obligations		202		205
Regulatory liabilities		94		110
Other		59		61

Total deferred credits and other liabilities		2,670		2,616

Total liabilities^(a)		5,897		5,856

Commitments and contingencies
Shareholders’ equity
Common stock		1,421		1,421
Retained earnings		1,503		1,427

Total shareholders’ equity		2,924		2,848

Total liabilities and shareholders’ equity	$	8,821	$	8,704

(a)

BGE’s consolidated assets include $45 million and $26 million at March 31, 2017 and December 31, 2016, respectively, of BGE’s consolidated VIE that can only be used to settle the liabilities of the VIE. BGE’s consolidated liabilities include $42 million and $42 million at March 31, 2017 and December 31, 2016, 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
Balance, December 31, 2016	$	1,421	$	1,427		$	2,848
Net income		—		125			125
Common stock dividends		—		(49	)		(49	)

Balance, March 31, 2017	$	1,421	$	1,503		$	2,924

See the Combined Notes to Consolidated Financial Statements

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Successor						Predecessor
	Three Months Ended March 31,			March 24 to March 31,			January 1 to March 23,
(In millions)	2017			2016			2016
Operating revenues
Electric operating revenues	$	1,097		$	90		$	1,096
Natural gas operating revenues		66			3			57
Operating revenues from affiliates		12			12			—

Total operating revenues		1,175			105			1,153

Operating expenses
Purchased power		288			26			471
Purchased fuel		29			1			26
Purchased power and fuel from affiliates		144			11			—
Operating and maintenance		223			447			294
Operating and maintenance from affiliates		33			2			—
Depreciation and amortization		167			14			152
Taxes other than income		111			15			105

Total operating expenses		995			516			1,048

Operating income (loss)		180			(411	)		105

Other income and (deductions)
Interest expense, net		(62	)		(6	)		(65	)
Other, net		13			2			(4	)

Total other income and (deductions)		(49	)		(4	)		(69	)

Income (loss) before income taxes		131			(415	)		36
Income taxes		(9	)		(106	)		17

Net income (loss)	$	140		$	(309	)	$	19

Comprehensive income (loss), net of income taxes
Net income (loss)	$	140		$	(309	)	$	19
Other comprehensive income, net of income taxes
Pension and non-pension postretirement benefit plans:
Actuarial loss reclassified to periodic cost		—			—			1

Other comprehensive income		—			—			1

Comprehensive income (loss)	$	140		$	(309	)	$	20

See the Combined Notes to Consolidated Financial Statements

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Successor						Predecessor
	Three Months Ended March 31,			March 24 to March 31,			January 1 to March 23,
(In millions)	2017			2016			2016
Cash flows from operating activities
Net income (loss)	$	140		$	(309	)	$	19
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization		167			14			152
Deferred income taxes and amortization of investment tax credits		13			(112	)		19
Net fair value changes related to derivatives		—			—			18
Other non-cash operating activities		(8	)		410			46
Changes in assets and liabilities:
Accounts receivable		68			16			(28	)
Receivables from and payables to affiliates, net		(8	)		—			—
Inventories		(11	)		—			(4	)
Accounts payable and accrued expenses		(81	)		(4	)		42
Income taxes		55			7			12
Pension and non-pension postretirement benefit contributions		(66	)		—			(4	)
Other assets and liabilities		(75	)		(25	)		(8	)

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