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 June 30, 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 June 30, 2017 was:


Exelon Corporation Common Stock, without par value		960,087,898
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,017,160
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

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION			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. Basis of Presentation		56

2. New Accounting Standards		58

3. Variable Interest Entities		61

4. Mergers, Acquisitions and Dispositions		67

5. Regulatory Matters		76

6. Impairment of Long-Lived Assets		95

7. Early Nuclear Plant Retirements		96

8. Fair Value of Financial Assets and Liabilities		99

9. Derivative Financial Instruments		123

10. Debt and Credit Agreements		140

11. Income Taxes		144

12. Nuclear Decommissioning		150

13. Retirement Benefits		153

14. Severance		156

15. Changes in Accumulated Other Comprehensive Income		159

16. Earnings Per Share and Equity		163

17. Commitments and Contingencies		164

18. Supplemental Financial Information		177

19. Segment Information		184

20. Subsequent Events		192


		Page No.

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		193

	Exelon Corporation		193

	Executive Overview		193

	Financial Results of Operations		195

	Significant 2017 Transactions and Developments		204

	Exelon’s Strategy and Outlook for 2017 and Beyond		209

	Liquidity Considerations		210

	Other Key Business Drivers and Management Strategies		211

	Critical Accounting Policies and Estimates		218

	Results of Operations By Registrant		218

	Exelon Generation Company, LLC		219

	Commonwealth Edison Company		228

	PECO Energy Company		235

	Baltimore Gas and Electric Company		241

	Pepco Holdings LLC		247

	Potomac Electric Power Company		251

	Delmarva Power & Light Company		258

	Atlantic City Electric Company		266

	Liquidity and Capital Resources		271

	Contractual Obligations and Off-Balance Sheet Arrangements		285

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		286

ITEM 4.	CONTROLS AND PROCEDURES		296

PART II.	OTHER INFORMATION		297

ITEM 1.	LEGAL PROCEEDINGS		297

ITEM 1A.	RISK FACTORS		297

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		297

ITEM 4.	MINE SAFETY DISCLOSURES		298

ITEM 6.	EXHIBITS		298

SIGNATURES			300

	Exelon Corporation		300

	Exelon Generation Company, LLC		300

	Commonwealth Edison Company		300

	PECO Energy Company		301

	Baltimore Gas and Electric Company		301

	Pepco Holdings LLC		301

	Potomac Electric Power Company		302

	Delmarva Power & Light Company		302

	Atlantic City Electric Company		302

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
TMI		Three Mile Island nuclear facility
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)
EmPower Maryland		A Maryland demand-side management program for Pepco and DPL

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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		Independent System Operator New England Inc.
ISO-NY		Independent System Operator 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
MW		Megawatt

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
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
NYPSC		New York Public Service Commission
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.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, as well as the items discussed in (1) the Registrants’ combined 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; (2) this Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 17, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except per share data)	2017			2016			2017			2016
Operating revenues
Competitive businesses revenues	$	3,908		$	3,234		$	8,468		$	7,708
Rate-regulated utility revenues		3,715			3,676			7,913			6,777

Total operating revenues		7,623			6,910			16,381			14,485
Operating expenses
Competitive businesses purchased power and fuel		2,158			1,576			4,952			4,016
Rate-regulated utility purchased power and fuel		928			878			2,033			1,692
Operating and maintenance		2,971			2,505			5,431			5,341
Depreciation and amortization		915			941			1,811			1,626
Taxes other than income		420			394			857			720

Total operating expenses		7,392			6,294			15,084			13,395

Gain on sales of assets		1			31			5			40
Bargain purchase gain		—			—			226			—

Operating income		232			647			1,528			1,130

Other income and (deductions)
Interest expense, net		(426	)		(366	)		(789	)		(643	)
Interest expense to affiliates		(10	)		(10	)		(20	)		(20	)
Other, net		205			144			488			258

Total other income and (deductions)		(231	)		(232	)		(321	)		(405	)

Income before income taxes		1			415			1,207			725
Income taxes		(72	)		102			143			285
Equity in losses of unconsolidated affiliates		(9	)		(7	)		(18	)		(10	)

Net income		64			306			1,046			430

Net (loss) income attributable to noncontrolling interests and preference stock dividends		(16	)		39			(30	)		(10	)

Net income attributable to common shareholders	$	80		$	267		$	1,076		$	440

Comprehensive income, net of income taxes
Net income	$	64		$	306		$	1,046		$	430
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		(14	)		(12	)		(28	)		(23	)
Actuarial loss reclassified to periodic benefit cost		49			46			98			93
Pension and non-pension postretirement benefit plan valuation adjustment		(2	)		(1	)		(58	)		(3	)
Unrealized (loss) gain on cash flow hedges		(1	)		—			5			(7	)
Unrealized (loss) gain on equity investments		—			(4	)		3			(7	)
Unrealized gain on foreign currency translation		2			—			3			6
Unrealized gain on marketable securities		1			2			2			—

Other comprehensive income		35			31			25			59

Comprehensive income		99			337			1,071			489

Comprehensive (loss) income attributable to noncontrolling interests and preference stock dividends		(16	)		39			(32	)		(10	)

Comprehensive income attributable to common shareholders	$	115		$	298		$	1,103		$	499

Average shares of common stock outstanding:
Basic		934			924			931			923
Diluted		936			926			932			926
Earnings per average common share:
Basic	$	0.09		$	0.29		$	1.16		$	0.48
Diluted	$	0.09		$	0.29		$	1.15		$	0.48

Dividends declared per common share	$	0.33		$	0.32		$	0.66		$	0.63

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2017			2016
Cash flows from operating activities
Net income	$	1,046		$	430
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization		2,591			2,396
Impairment of long-lived assets and losses on regulatory assets		445			239
Gain on sales of assets		(5	)		(40	)
Bargain purchase gain		(226	)		—
Deferred income taxes and amortization of investment tax credits		107			261
Net fair value changes related to derivatives		230			194
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(284	)		(114	)
Other non-cash operating activities		415			1,056
Changes in assets and liabilities:
Accounts receivable		342			86
Inventories		(23	)		89
Accounts payable and accrued expenses		(811	)		(363	)
Option premiums paid, net		(8	)		(10	)
Collateral (posted) received, net		(173	)		710
Income taxes		58			470
Pension and non-pension postretirement benefit contributions		(325	)		(258	)
Other assets and liabilities		(481	)		(593	)

Net cash flows provided by operating activities		2,898			4,553

Cash flows from investing activities
Capital expenditures		(3,845	)		(4,489	)
Proceeds from nuclear decommissioning trust fund sales		5,213			4,977
Investment in nuclear decommissioning trust funds		(5,339	)		(5,094	)
Acquisition of businesses, net		(212	)		(6,642	)
Proceeds from sales of long-lived assets		211			45
Proceeds from termination of direct financing lease investment		—			360
Change in restricted cash		1			15
Other investing activities		(9	)		(49	)

Net cash flows used in investing activities		(3,980	)		(10,877	)

Cash flows from financing activities
Changes in short-term borrowings		422			(798	)
Proceeds from short-term borrowings with maturities greater than 90 days		576			194
Repayments on short-term borrowings with maturities greater than 90 days		(510	)		(315	)
Issuance of long-term debt		981			3,174
Retirement of long-term debt		(1,049	)		(217	)
Dividends paid on common stock		(607	)		(582	)
Common stock issued from treasury stock		1,150			—
Proceeds from employee stock plans		43			17
Other financing activities		(23	)		(4	)

Net cash flows provided by financing activities		983			1,469

Decrease in cash and cash equivalents		(99	)		(4,855	)
Cash and cash equivalents at beginning of period		635			6,502

Cash and cash equivalents at end of period	$	536		$	1,647

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	536	$	635
Restricted cash and cash equivalents		252		253
Deposit with IRS		1,250		1,250
Accounts receivable, net
Customer		3,825		4,158
Other		958		1,201
Mark-to-market derivative assets		833		917
Unamortized energy contract assets		84		88
Inventories, net
Fossil fuel and emission allowances		334		364
Materials and supplies		1,267		1,274
Regulatory assets		1,293		1,342
Other		1,600		930

Total current assets		12,232		12,412

Property, plant and equipment, net		72,748		71,555
Deferred debits and other assets
Regulatory assets		9,945		10,046
Nuclear decommissioning trust funds		12,641		11,061
Investments		638		629
Goodwill		6,677		6,677
Mark-to-market derivative assets		464		492
Unamortized energy contract assets		419		447
Pledged assets for Zion Station decommissioning		75		113
Other		1,265		1,472

Total deferred debits and other assets		32,124		30,937

Total assets^(a)	$	117,104	$	114,904

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017			December 31, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	1,757		$	1,267
Long-term debt due within one year		3,619			2,430
Accounts payable		3,134			3,441
Accrued expenses		2,878			3,460
Payables to affiliates		8			8
Regulatory liabilities		574			602
Mark-to-market derivative liabilities		244			282
Unamortized energy contract liabilities		340			407
Renewable energy credit obligation		308			428
PHI merger related obligation		126			151
Other		977			981

Total current liabilities		13,965			13,457

Long-term debt		30,315			31,575
Long-term debt to financing trusts		641			641
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		18,521			18,138
Asset retirement obligations		9,848			9,111
Pension obligations		4,082			4,248
Non-pension postretirement benefit obligations		1,955			1,848
Spent nuclear fuel obligation		1,139			1,024
Regulatory liabilities		4,398			4,187
Mark-to-market derivative liabilities		417			392
Unamortized energy contract liabilities		705			830
Payable for Zion Station decommissioning		—			14
Other		1,828			1,827

Total deferred credits and other liabilities		42,893			41,619

Total liabilities^(a)		87,814			87,292

Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2000 shares authorized, 960 shares and 924 shares outstanding at June 30, 2017 and December 31, 2016, respectively)		18,860			18,794
Treasury stock, at cost (2 shares and 35 shares at June 30, 2017 and December 31, 2016, respectively)		(123	)		(2,327	)
Retained earnings		11,442			12,030
Accumulated other comprehensive loss, net		(2,633	)		(2,660	)

Total shareholders’ equity		27,546			25,837
Noncontrolling interests		1,744			1,775

Total equity		29,290			27,612

Total liabilities and shareholders’ equity	$	117,104		$	114,904

(a)

Exelon’s consolidated assets include $8,385 million and $8,893 million at June 30, 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 $3,021 million and $3,356 million at June 30, 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)		—		—		—			1,076			—			(30	)		1,046
Long-term incentive plan activity		2,494		23		—			—			—			—			23
Employee stock purchase plan issuances		648		43		—			—			—			—			43
Common stock issued from treasury stock		—		—		2,204			(1,054	)		—			—			1,150
Changes in equity of noncontrolling interests		—		—		—			—			—			1			1
Common stock dividends		—		—		—			(610	)		—			—			(610	)
Other comprehensive income (loss), net of income taxes		—		—		—			—			27			(2	)		25

Balance, June 30, 2017		961,920	$	18,860	$	(123	)	$	11,442		$	(2,633	)	$	1,744		$	29,290

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Operating revenues
Operating revenues	$	3,906		$	3,231		$	8,463		$	7,702
Operating revenues from affiliates		268			358			598			627

Total operating revenues		4,174			3,589			9,061			8,329

Operating expenses
Purchased power and fuel		2,156			1,575			4,952			4,015
Purchased power and fuel from affiliates		1			2			3			5
Operating and maintenance		1,824			1,369			3,132			2,665
Operating and maintenance from affiliates		186			161			365			332
Depreciation and amortization		334			408			637			697
Taxes other than income		140			118			282			244

Total operating expenses		4,641			3,633			9,371			7,958

Gain on sales of assets		—			31			4			31
Bargain purchase gain		—			—			226			—

Operating (loss) income		(467	)		(13	)		(80	)		402

Other income and (deductions)
Interest expense, net		(120	)		(89	)		(209	)		(176	)
Interest expense to affiliates		(9	)		(10	)		(19	)		(20	)
Other, net		181			117			440			210

Total other income and (deductions)		52			18			212			14

(Loss) income before income taxes		(415	)		5			132			416
Income taxes		(158	)		(31	)		(31	)		120
Equity in losses of unconsolidated affiliates		(9	)		(8	)		(19	)		(11	)

Net (loss) income		(266	)		28			144			285
Net (loss) income attributable to noncontrolling interests		(16	)		36			(30	)		(17	)

Net (loss) income attributable to membership interest	$	(250	)	$	(8	)	$	174		$	302

Comprehensive (loss) income, net of income taxes
Net (loss) income	$	(266	)	$	28		$	144		$	285
Other comprehensive income (loss), net of income taxes
Unrealized (loss) gain on cash flow hedges		(1	)		1			5			(4	)
Unrealized (loss) gain on equity investments		—			(2	)		4			(4	)
Unrealized gain on foreign currency translation		2			—			3			6
Unrealized gain on marketable securities		—			1			—			—

Other comprehensive income (loss)		1			—			12			(2	)

Comprehensive (loss) income		(265	)		28			156			283

Comprehensive (loss) income attributable to noncontrolling interests		(16	)		36			(32	)		(17	)

Comprehensive (loss) income attributable to membership interest	$	(249	)	$	(8	)	$	188		$	300

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2017			2016
Cash flows from operating activities
Net income	$	144		$	285
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization		1,415			1,467
Impairment of long-lived assets		445			179
Gain on sales of assets		(4	)		(31	)
Bargain purchase gain		(226	)		—
Deferred income taxes and amortization of investment tax credits		(173	)		(59	)
Net fair value changes related to derivatives		235			199
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(284	)		(114	)
Other non-cash operating activities		121			169
Changes in assets and liabilities:
Accounts receivable		192			123
Receivables from and payables to affiliates, net		8			(77	)
Inventories		(5	)		57
Accounts payable and accrued expenses		(328	)		(228	)
Option premiums paid, net		(8	)		(10	)
Collateral (posted) received, net		(163	)		720
Income taxes		(99	)		41
Pension and non-pension postretirement benefit contributions		(116	)		(117	)
Other assets and liabilities		(180	)		(217	)

Net cash flows provided by operating activities		974			2,387

Cash flows from investing activities
Capital expenditures		(1,189	)		(2,051	)
Proceeds from nuclear decommissioning trust fund sales		5,213			4,977
Investment in nuclear decommissioning trust funds		(5,339	)		(5,094	)
Acquisition of businesses, net		(212	)		(1	)
Proceeds from sale of long-lived assets		210			30
Change in restricted cash		(8	)		25
Other investing activities		(32	)		(96	)

Net cash flows used in investing activities		(1,357	)		(2,210	)

Cash flows from financing activities
Changes in short-term borrowings		(51	)		—
Proceeds from short-term borrowings with maturities greater than 90 days		76			194
Repayments of short-term borrowings with maturities greater than 90 days		(10	)		(15	)
Issuance of long-term debt		779			173
Retirement of long-term debt		(295	)		(131	)
Changes in Exelon intercompany money pool		196			(429	)
Distribution to member		(330	)		(111	)
Contribution from member		—			45
Other financing activities		(7	)		39

Net cash flows provided by (used in) financing activities		358			(235	)

Decrease in cash and cash equivalents		(25	)		(58	)
Cash and cash equivalents at beginning of period		290			431

Cash and cash equivalents at end of period	$	265		$	373

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	265	$	290
Restricted cash and cash equivalents		166		158
Accounts receivable, net
Customer		2,242		2,433
Other		447		558
Mark-to-market derivative assets		833		917
Receivables from affiliates		143		156
Unamortized energy contract assets		84		88
Inventories, net
Fossil fuel and emission allowances		272		292
Materials and supplies		901		935
Other		1,241		701

Total current assets		6,594		6,528

Property, plant and equipment, net		25,261		25,585
Deferred debits and other assets
Nuclear decommissioning trust funds		12,641		11,061
Investments		426		418
Goodwill		47		47
Mark-to-market derivative assets		453		476
Prepaid pension asset		1,590		1,595
Pledged assets for Zion Station decommissioning		75		113
Unamortized energy contract assets		418		447
Deferred income taxes		5		16
Other		620		688

Total deferred debits and other assets		16,275		14,861

Total assets^(a)	$	48,130	$	46,974

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017			December 31, 2016
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	716		$	699
Long-term debt due within one year		1,828			1,117
Accounts payable		1,527			1,610
Accrued expenses		722			989
Payables to affiliates		132			137
Borrowings from Exelon intercompany money pool		251			55
Mark-to-market derivative liabilities		225			263
Unamortized energy contract liabilities		61			72
Renewable energy credit obligation		308			428
Other		294			313

Total current liabilities		6,064			5,683

Long-term debt		7,010			7,202
Long-term debt to affiliate		916			922
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,578			5,585
Asset retirement obligations		9,655			8,922
Non-pension postretirement benefit obligations		922			930
Spent nuclear fuel obligation		1,139			1,024
Payables to affiliates		2,871			2,608
Mark-to-market derivative liabilities		180			153
Unamortized energy contract liabilities		67			80
Payable for Zion Station decommissioning		—			14
Other		598			595

Total deferred credits and other liabilities		21,010			19,911

Total liabilities^(a)		35,000			33,718

Commitments and contingencies
Equity
Member’s equity
Membership interest		9,308			9,261
Undistributed earnings		2,119			2,275
Accumulated other comprehensive loss, net		(40	)		(54	)

Total member’s equity		11,387			11,482
Noncontrolling interests		1,743			1,774

Total equity		13,130			13,256

Total liabilities and equity	$	48,130		$	46,974

(a)

Generation’s consolidated assets include $8,342 million and $8,817 million at June 30, 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 $2,900 million and $3,170 million at June 30, 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)		—			174			—			(30	)		144
Changes in equity of noncontrolling interests		—			—			—			1			1
Distribution of net retirement benefit obligation to member		49			—			—			—			49
Allocation of tax benefit from member		(2	)		—			—			—			(2	)
Distribution to member		—			(330	)		—			—			(330	)
Other comprehensive income (loss), net of income taxes		—			—			14			(2	)		12

Balance, June 30, 2017	$	9,308		$	2,119		$	(40	)	$	1,743		$	13,130

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Operating revenues
Electric operating revenues	$	1,354		$	1,283		$	2,647		$	2,527
Operating revenues from affiliates		3			3			9			8

Total operating revenues		1,357			1,286			2,656			2,535

Operating expenses
Purchased power		360			326			689			668
Purchased power from affiliate		18			13			24			18
Operating and maintenance		312			318			620			623
Operating and maintenance from affiliate		65			50			127			113
Depreciation and amortization		211			190			419			379
Taxes other than income		72			65			144			141

Total operating expenses		1,038			962			2,023			1,942

Gain on sales of assets		—			—			—			5

Operating income		319			324			633			598

Other income and (deductions)
Interest expense, net		(98	)		(88	)		(179	)		(170	)
Interest expense to affiliates		(3	)		(3	)		(6	)		(7	)
Other, net		4			3			8			7

Total other income and (deductions)		(97	)		(88	)		(177	)		(170	)

Income before income taxes		222			236			456			428
Income taxes		104			91			197			168

Net income	$	118		$	145		$	259		$	260

Comprehensive income	$	118		$	145		$	259		$	260

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2017			2016
Cash flows from operating activities
Net income	$	259		$	260
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		419			379
Deferred income taxes and amortization of investment tax credits		235			222
Other non-cash operating activities		58			83
Changes in assets and liabilities:
Accounts receivable		12			(36	)
Receivables from and payables to affiliates, net		(4	)		1
Inventories		(2	)		7
Accounts payable and accrued expenses		(182	)		(42	)
Collateral (posted) received, net		(8	)		(10	)
Income taxes		4			261
Pension and non-pension postretirement benefit contributions		(37	)		(35	)
Other assets and liabilities		34			38

Net cash flows provided by operating activities		788			1,128

Cash flows from investing activities
Capital expenditures		(1,168	)		(1,334	)
Change in restricted cash		(10	)		—
Other investing activities		12			21

Net cash flows used in investing activities		(1,166	)		(1,313	)

Cash flows from financing activities
Changes in short-term borrowings		389			(259	)
Issuance of long-term debt		—			1,200
Contributions from parent		184			113
Dividends paid on common stock		(211	)		(183	)
Other financing activities		(1	)		(17	)

Net cash flows provided by financing activities		361			854

(Decrease) increase in cash and cash equivalents		(17	)		669
Cash and cash equivalents at beginning of period		56			67

Cash and cash equivalents at end of period	$	39		$	736

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	39	$	56
Restricted cash		12		2
Accounts receivable, net
Customer		529		528
Other		211		218
Receivables from affiliates		386		356
Inventories, net		160		159
Regulatory assets		182		190
Other		57		45

Total current assets		1,576		1,554

Property, plant and equipment, net		20,019		19,335
Deferred debits and other assets
Regulatory assets		1,050		977
Investments		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,364		2,170
Prepaid pension asset		1,283		1,343
Other		237		325

Total deferred debits and other assets		7,565		7,446

Total assets	$	29,160	$	28,335

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017			December 31, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	389		$	—
Long-term debt due within one year		1,125			425
Accounts payable		547			645
Accrued expenses		1,107			1,250
Payables to affiliates		67			65
Customer deposits		115			121
Regulatory liabilities		269			329
Mark-to-market derivative liability		19			19
Other		112			84

Total current liabilities		3,750			2,938

Long-term debt		5,911			6,608
Long-term debt to financing trust		205			205
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,600			5,364
Asset retirement obligations		122			119
Non-pension postretirement benefits obligations		229			239
Regulatory liabilities		3,585			3,369
Mark-to-market derivative liability		237			239
Other		541			529

Total deferred credits and other liabilities		10,314			9,859

Total liabilities		20,180			19,610

Commitments and contingencies
Shareholders’ equity
Common stock		1,588			1,588
Other paid-in capital		6,357			6,150
Retained deficit unappropriated		(1,639	)		(1,639	)
Retained earnings appropriated		2,674			2,626

Total shareholders’ equity		8,980			8,725

Total liabilities and shareholders’ equity	$	29,160		$	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		—		—		259			—			259
Appropriation of retained earnings for future dividends		—		—		(259	)		259			—
Common stock dividends		—		—		—			(211	)		(211	)
Contribution from parent		—		184		—			—			184
Parent tax matter indemnification		—		23		—			—			23

Balance, June 30, 2017	$	1,588	$	6,357	$	(1,639	)	$	2,674		$	8,980

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Operating revenues
Electric operating revenues	$	548		$	585		$	1,138		$	1,228
Natural gas operating revenues		80			77			285			273
Operating revenues from affiliates		2			2			3			4

Total operating revenues		630			664			1,426			1,505

Operating expenses
Purchased power		136			130			292			295
Purchased fuel		27			23			113			100
Purchased power from affiliate		34			64			79			142
Operating and maintenance		153			157			326			333
Operating and maintenance from affiliates		37			33			72			72
Depreciation and amortization		71			67			141			134
Taxes other than income		35			38			74			80

Total operating expenses		493			512			1,097			1,156

Operating income		137			152			329			349

Other income and (deductions)
Interest expense, net		(28	)		(28	)		(56	)		(56	)
Interest expense to affiliates		(3	)		(3	)		(6	)		(6	)
Other, net		2			2			3			4

Total other income and (deductions)		(29	)		(29	)		(59	)		(58	)

Income before income taxes		108			123			270			291
Income taxes		20			23			55			67

Net income	$	88		$	100		$	215		$	224

Comprehensive income	$	88		$	100		$	215		$	224

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2017			2016
Cash flows from operating activities
Net income	$	215		$	224
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		141			134
Deferred income taxes and amortization of investment tax credits		39			51
Other non-cash operating activities		22			27
Changes in assets and liabilities:
Accounts receivable		26			(1	)
Receivables from and payables to affiliates, net		(10	)		(2	)
Inventories		7			19
Accounts payable and accrued expenses		(30	)		(19	)
Income taxes		51			31
Pension and non-pension postretirement benefit contributions		(23	)		(29	)
Other assets and liabilities		(70	)		(96	)

Net cash flows provided by operating activities		368			339

Cash flows from investing activities
Capital expenditures		(367	)		(299	)
Changes in Exelon intercompany money pool		121			—
Other investing activities		4			8

Net cash flows used in investing activities		(242	)		(291	)

Cash flows from financing activities
Dividends paid on common stock		(144	)		(139	)
Other financing activities		—			(1	)

Net cash flows used in financing activities		(144	)		(140	)

Decrease in cash and cash equivalents		(18	)		(92	)
Cash and cash equivalents at beginning of period		63			295

Cash and cash equivalents at end of period	$	45		$	203

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017		December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	45	$	63
Restricted cash and cash equivalents		4		4
Accounts receivable, net
Customer		258		306
Other		135		131
Receivables from affiliates		1		4
Receivable from Exelon intercompany pool		10		131
Inventories, net
Fossil fuel		25		35
Materials and supplies		30		27
Prepaid utility taxes		77		9
Regulatory assets		46		29
Other		25		18

Total current assets		656		757

Property, plant and equipment, net		7,758		7,565
Deferred debits and other assets
Regulatory assets		1,732		1,681
Investments		24		25
Receivable from affiliates		506		438
Prepaid pension asset		354		345
Other		11		20

Total deferred debits and other assets		2,627		2,509

Total assets	$	11,041	$	10,831

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017		December 31, 2016
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Long-term debt due within one year	$	500	$	—
Accounts payable		278		342
Accrued expenses		136		104
Payables to affiliates		50		63
Customer deposits		63		61
Regulatory liabilities		155		127
Other		31		30

Total current liabilities		1,213		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		3,128		3,006
Asset retirement obligations		28		28
Non-pension postretirement benefits obligations		289		289
Regulatory liabilities		544		517
Other		89		85

Total deferred credits and other liabilities		4,078		3,925

Total liabilities		7,555		7,416

Commitments and contingencies
Shareholder’s equity
Common stock		2,473		2,473
Retained earnings		1,012		941
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,486		3,415

Total liabilities and shareholder’s equity	$	11,041	$	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		—		215			—		215
Common stock dividends		—		(144	)		—		(144	)

Balance, June 30, 2017	$	2,473	$	1,012		$	1	$	3,486

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2017			2016			2017			2016
Operating revenues
Electric operating revenues	$	569		$	582		$	1,234		$	1,260
Natural gas operating revenues		102			94			383			340
Operating revenues from affiliates		3			4			8			9

Total operating revenues		674			680			1,625			1,609

Operating expenses
Purchased power		115			108			248			235
Purchased fuel		22			20			105			95
Purchased power from affiliate		97			133			231			304
Operating and maintenance		135			177			284			345
Operating and maintenance from affiliates		39			31			73			65
Depreciation and amortization		112			97			239			206
Taxes other than income		56			55			119			114

Total operating expenses		576			621			1,299			1,364

Operating income		98			59			326			245

Other income and (deductions)
Interest expense, net		(22	)		(20	)		(46	)		(40	)
Interest expense to affiliates		(4	)		(4	)		(8	)		(8	)
Other, net		4			5			8			11

Total other income and (deductions)		(22	)		(19	)		(46	)		(37	)

Income before income taxes		76			40			280			208
Income taxes		31			6			111			73

Net income		45			34			169			135
Preference stock dividends		—			3			—			6

Net income attributable to common shareholder	$	45		$	31		$	169		$	129


Comprehensive income	$	45		$	34		$	169		$	135
Comprehensive income attributable to preference stock dividends		—			3			—			6

Comprehensive income attributable to common shareholder	$	45		$	31		$	169		$	129

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2017			2016
Cash flows from operating activities
Net income	$	169		$	135
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		239			206
Impairment of long-lived assets and losses on regulatory assets		—			52
Deferred income taxes and amortization of investment tax credits		99			17
Other non-cash operating activities		35			60
Changes in assets and liabilities:
Accounts receivable		77			11
Receivables from and payables to affiliates, net		(7	)		6
Inventories		(5	)		6
Accounts payable and accrued expenses		(83	)		(5	)
Income taxes		26			46
Pension and non-pension postretirement benefit contributions		(47	)		(42	)
Other assets and liabilities		(31	)		(3	)

Net cash flows provided by operating activities		472			489

Cash flows from investing activities
Capital expenditures		(405	)		(392	)
Change in restricted cash		18			5
Other investing activities		4			12

Net cash flows used in investing activities		(383	)		(375	)

Cash flows from financing activities
Changes in short-term borrowings		40			(2	)
Retirement of long-term debt		(41	)		(39	)
Dividends paid on preference stock		—			(6	)
Dividends paid on common stock		(99	)		(90	)
Contributions from parent		—			21
Other financing activities		—			(2	)

Net cash flows used in financing activities		(100	)		(118	)

Decrease in cash and cash equivalents		(11	)		(4	)
Cash and cash equivalents at beginning of period		23			9

Cash and cash equivalents at end of period	$	12		$	5

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	June 30, 2017	December 31, 2016
ASSETS
Current assets

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