Edgar Filing: EXELON CORP

Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the Quarterly Period Ended March 31, 2018



o	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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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



	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company	Emerging Growth Company
Exelon Corporation	x
Exelon Generation Company, LLC			x
Commonwealth Edison Company			x
PECO Energy Company			x
Baltimore Gas and Electric Company			x
Pepco Holdings LLC			x
Potomac Electric Power Company			x
Delmarva Power & Light Company			x
Atlantic City Electric Company			x

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. o

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

The number of shares outstanding of each registrant’s common stock as of March 31, 2018 was:



Exelon Corporation Common Stock, without par value	965,381,919
Exelon Generation Company, LLC	not applicable
Commonwealth Edison Company Common Stock, $12.50 par value	127,021,264
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, $0.01 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		10
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION		10
WHERE TO FIND MORE INFORMATION		10
PART I.	FINANCIAL INFORMATION	11
ITEM 1.	FINANCIAL STATEMENTS	11
	Exelon Corporation
	Consolidated Statements of Operations and Comprehensive Income	12
	Consolidated Statements of Cash Flows	13
	Consolidated Balance Sheets	14
	Consolidated Statement of Changes in Shareholders’ Equity	16
	Exelon Generation Company, LLC
	Consolidated Statements of Operations and Comprehensive Income	17
	Consolidated Statements of Cash Flows	18
	Consolidated Balance Sheets	19
	Consolidated Statement of Changes in Equity	21
	Commonwealth Edison Company
	Consolidated Statements of Operations and Comprehensive Income	22
	Consolidated Statements of Cash Flows	23
	Consolidated Balance Sheets	24
	Consolidated Statement of Changes in Shareholders' Equity	26
	PECO Energy Company
	Consolidated Statements of Operations and Comprehensive Income	27
	Consolidated Statements of Cash Flows	28
	Consolidated Balance Sheets	29
	Consolidated Statement of Changes in Shareholder's Equity	31
	Baltimore Gas and Electric Company
	Consolidated Statements of Operations and Comprehensive Income	32
	Consolidated Statements of Cash Flows	33
	Consolidated Balance Sheets	34
	Consolidated Statement of Changes in Shareholders’ Equity	36
	Pepco Holdings LLC
	Consolidated Statements of Operations and Comprehensive Income	37
	Consolidated Statements of Cash Flows	38
	Consolidated Balance Sheets	39
	Consolidated Statement of Changes in Equity	41



		Page No.
	Potomac Electric Power Company
	Statements of Operations and Comprehensive Income	42
	Statements of Cash Flows	43
	Balance Sheets	44
	Statement of Changes in Shareholder's Equity	46
	Delmarva Power & Light Company
	Statements of Operations and Comprehensive Income	47
	Statements of Cash Flows	48
	Balance Sheets	49
	Statement of Changes in Shareholder’s Equity	51
	Atlantic City Electric Company
	Consolidated Statements of Operations and Comprehensive Income	52
	Consolidated Statements of Cash Flows	53
	Consolidated Balance Sheets	54
	Consolidated Statement of Changes in Shareholder’s Equity	56
	Combined Notes to Consolidated Financial Statements	57
	1. Significant Accounting Policies	58
	2. New Accounting Standards	63
	3. Variable Interest Entities	65
	4. Mergers, Acquisitions and Dispositions	71
	5. Revenue from Contracts with Customers	73
	6. Regulatory Matters	76
	7. Impairment of Long-Lived Assets	90
	8. Early Plant Retirements	90
	9. Fair Value of Financial Assets and Liabilities	94
	10. Derivative Financial Instruments	114
	11. Debt and Credit Agreements	130
	12. Income Taxes	131
	13. Nuclear Decommissioning	136
	14. Retirement Benefits	138
	15. Changes in Accumulated Other Comprehensive Income	142
	16. Earnings Per Share and Equity	145
	17. Commitments and Contingencies	146
	18. Supplemental Financial Information	157
	19. Segment Information	163



		Page No.
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	172
	Exelon Corporation	172
	Executive Overview	172
	Financial Results of Operations	174
	Significant 2018 Transactions and Developments	179
	Exelon's Strategy and Outlook for 2018 and Beyond	183
	Liquidity Considerations	185
	Other Key Business Drivers and Management Strategies	185
	Critical Accounting Policies and Estimates	190
	Results of Operations By Registrant	192
	Exelon Generation Company, LLC	193
	Commonwealth Edison Company	201
	PECO Energy Company	207
	Baltimore Gas and Electric Company	212
	Pepco Holdings LLC	218
	Potomac Electric Power Company	221
	Delmarva Power & Light Company	226
	Atlantic City Electric Company	232
	Liquidity and Capital Resources	237
	Contractual Obligations and Off-Balance Sheet Arrangements	251
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	252
ITEM 4.	CONTROLS AND PROCEDURES	259
PART II.	OTHER INFORMATION	261
ITEM 1.	LEGAL PROCEEDINGS	261
ITEM 1A.	RISK FACTORS	261
ITEM 4.	MINE SAFETY DISCLOSURES	261
ITEM 6.	EXHIBITS	261
SIGNATURES		265
	Exelon Corporation	265
	Exelon Generation Company, LLC	266
	Commonwealth Edison Company	267
	PECO Energy Company	268
	Baltimore Gas and Electric Company	269
	Pepco Holdings LLC	270
	Potomac Electric Power Company	271
	Delmarva Power & Light Company	272
	Atlantic City Electric Company	273

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Exelon Corporation and Related Entities
Exelon		Exelon Corporation
Generation		Exelon Generation Company, LLC
ComEd		Commonwealth Edison Company
PECO		PECO Energy Company
BGE		Baltimore Gas and Electric Company
Pepco Holdings or PHI		Pepco Holdings LLC (formerly Pepco Holdings, Inc.)
Pepco		Potomac Electric Power Company
DPL		Delmarva Power & Light Company
ACE		Atlantic City Electric Company
Registrants		Exelon, Generation, ComEd, PECO, BGE, PHI, Pepco, DPL and ACE, collectively
Utility Registrants		ComEd, PECO, BGE, Pepco, DPL and ACE, collectively
Legacy PHI		PHI, Pepco, DPL and ACE, collectively
ACE Funding or ATF		Atlantic City Electric Transition Funding LLC
Antelope Valley		Antelope Valley Solar Ranch One
BondCo		RSB BondCo LLC
BSC		Exelon Business Services Company, 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.
EEDC		Exelon Energy Delievery Company, LLC
EGR IV		ExGen Renewables IV, LLC
EGTP		ExGen Texas Power, LLC
Entergy		Entergy Nuclear FitzPatrick, LLC
Exelon Corporate		Exelon in its corporate capacity as a holding company
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
PCI		Potomac Capital Investment Corporation and its subsidiaries
PEC L.P.		PECO Energy Capital, L.P.
PECO Trust III		PECO Capital Trust III
PECO Trust IV		PECO Energy Capital Trust IV
Pepco Energy Services or PES		Pepco Energy Services, Inc. and its subsidiaries
PHI Corporate		PHI in its corporate capacity as a holding company
PHISCO		PHI Service Company
RPG		Renewable Power Generation
SolGen		SolGen, LLC

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
TMI		Three Mile Island nuclear facility
UII		Unicom Investments, Inc.
Note “—” of the Exelon 2017 Form 10-K		Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2017 Annual Report on Form 10-K
AEC		Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source
AESO		Alberta Electric Systems Operator
AFUDC		Allowance for Funds Used During Construction
AGE		Albany Green Energy Project
AMI		Advanced Metering Infrastructure
AMP		Advanced Metering Program
AOCI		Accumulated Other Comprehensive Income
ARC		Asset Retirement Cost
ARO		Asset Retirement Obligation
ARP		Alternative Revenue Program
CAISO		California ISO
CAP		Customer Assistance Program
CCGTs		Combined-Cycle Gas Turbines
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CES		Clean Energy Standard
Clean Air Act		Clean Air Act of 1963, as amended
Clean Water Act		Federal Water Pollution Control Amendments of 1972, as amended
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
CSAPR		Cross-State Air Pollution Rule
D.C. Circuit Court		United States Court of Appeals for the District of Columbia Circuit
DC PLUG		District of Columbia Power Line Undergrounding Initiative
DCPSC		District of Columbia Public Service Commission
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

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
DSP		Default Service Provider
EDF		Electricite de France SA and its subsidiaries
EE&C		Energy Efficiency and Conservation/Demand Response
EIMA		Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
EmPower		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
ESPP		Employee Stock Purchase Plan
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
IBEW		International Brotherhood of Electrical Workers
ICC		Illinois Commerce Commission
ICE		Intercontinental Exchange
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

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
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
MWh		Megawatt hour
n.m.		not meaningful
NAAQS		National Ambient Air Quality Standards
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

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
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
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
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
SNF		Spent Nuclear Fuel
SOS		Standard Offer Service
SPFPA		Security, Police and Fire Professionals of America

Table of Contents



GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
SPP		Southwest Power Pool
TCJA		Tax Cuts and Jobs Act
Transition Bond Charge		Revenue ACE receives, and pays to ACE Funding, to fund the principal and interest payments on Transition Bonds and related taxes, expenses and fees
Transition Bonds		Transition Bonds issued by ACE Funding
Upstream		Natural gas exploration and production activities
VIE		Variable Interest Entity
WECC		Western Electric Coordinating Council
ZEC		Zero Emission Credit
ZES		Zero Emission Standard

Table of Contents

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 2017 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 23, 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.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended March 31,
(In millions, except per share data)	2018			2017
Operating revenues
Competitive businesses revenues	$	5,113		$	4,550
Rate-regulated utility revenues	4,570			4,118
Revenues from alternative revenue programs	10			79
Total operating revenues	9,693			8,747
Operating expenses
Competitive businesses purchased power and fuel	3,289			2,795
Rate-regulated utility purchased power and fuel	1,438			1,104
Operating and maintenance	2,384			2,438
Depreciation and amortization	1,091			896
Taxes other than income	446			436
Total operating expenses	8,648			7,669
Gain on sales of assets and businesses	56			4
Bargain purchase gain	—			226
Operating income	1,101			1,308
Other income and (deductions)
Interest expense, net	(365		)	(363		)
Interest expense to affiliates	(6		)	(10		)
Other, net	(28		)	257
Total other income and (deductions)	(399		)	(116		)
Income before income taxes	702			1,192
Income taxes	59			211
Equity in losses of unconsolidated affiliates	(7		)	(10		)
Net income	636			971
Net income (loss) attributable to noncontrolling interests	51			(19		)
Net income attributable to common shareholders	$	585		$	990
Comprehensive income, net of income taxes
Net income	$	636		$	971
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost	(17		)	(13		)
Actuarial loss reclassified to periodic benefit cost	61			49
Pension and non-pension postretirement benefit plan valuation adjustment	18			(59		)
Unrealized gain on cash flow hedges	8			6
Unrealized gain on investments in unconsolidated affiliates	1			3
Unrealized gain on foreign currency translation	1			1
Unrealized gain on marketable securities	—			1
Other comprehensive income (loss)	72			(12		)
Comprehensive income	708			959
Comprehensive income (loss) attributable to noncontrolling interests	52			(21		)
Comprehensive income attributable to common shareholders	$	656		$	980

Average shares of common stock outstanding:
Basic	966			928
Diluted	968			930
Earnings per average common share:
Basic	$	0.61		$	1.07
Diluted	$	0.60		$	1.06
Dividends declared per common share	$	0.35		$	0.33

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Cash flows from operating activities
Net income	$	636		$	971
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization	1,501			1,274
Impairment of long-lived assets and losses on regulatory assets	—			10
Gain on sales of assets and businesses	(56		)	(4		)
Bargain purchase gain	—			(226		)
Deferred income taxes and amortization of investment tax credits	(14		)	185
Net fair value changes related to derivatives	259			47
Net realized and unrealized gains (losses) on nuclear decommissioning trust fund investments	68			(175		)
Other non-cash operating activities	240			118
Changes in assets and liabilities:
Accounts receivable	133			291
Inventories	167			109
Accounts payable and accrued expenses	(451		)	(728		)
Option premiums paid, net	(27		)	(6		)
Collateral posted, net	(214		)	(110		)
Income taxes	86			50
Pension and non-pension postretirement benefit contributions	(331		)	(307		)
Other assets and liabilities	(495		)	(425		)
Net cash flows provided by operating activities	1,502			1,074
Cash flows from investing activities
Capital expenditures	(1,880		)	(2,009		)
Proceeds from nuclear decommissioning trust fund sales	1,189			1,767
Investment in nuclear decommissioning trust funds	(1,248		)	(1,833		)
Acquisition of businesses, net	—			(212		)
Proceeds from sales of assets and businesses	79			22
Other investing activities	3			(18		)
Net cash flows used in investing activities	(1,857		)	(2,283		)
Cash flows from financing activities
Changes in short-term borrowings	726			721
Proceeds from short-term borrowings with maturities greater than 90 days	1			560
Repayments on short-term borrowings with maturities greater than 90 days	(1		)	(500		)
Issuance of long-term debt	1,130			763
Retirement of long-term debt	(1,241		)	(65		)
Dividends paid on common stock	(333		)	(303		)
Proceeds from employee stock plans	12			12
Other financing activities	(30		)	(4		)
Net cash flows provided by financing activities	264			1,184
Decrease in cash, cash equivalents and restricted cash	(91		)	(25		)
Cash, cash equivalents and restricted cash at beginning of period	1,190			914
Cash, cash equivalents and restricted cash at end of period	$	1,099		$	889

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018		December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	787	$	898
Restricted cash and cash equivalents	209		207
Accounts receivable, net
Customer	4,190		4,445
Other	1,103		1,132
Mark-to-market derivative assets	978		976
Unamortized energy contract assets	55		60
Inventories, net
Fossil fuel and emission allowances	180		340
Materials and supplies	1,291		1,311
Regulatory assets	1,245		1,267
Other	1,495		1,260
Total current assets	11,533		11,896
Property, plant and equipment, net	74,711		74,202
Deferred debits and other assets
Regulatory assets	8,063		8,021
Nuclear decommissioning trust funds	13,149		13,272
Investments	640		640
Goodwill	6,677		6,677
Mark-to-market derivative assets	527		337
Unamortized energy contract assets	385		395
Other	1,333		1,330
Total deferred debits and other assets	30,774		30,672
Total assets^(a)	$	117,018	$	116,770

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018			December 31, 2017
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	1,654		$	929
Long-term debt due within one year	1,203			2,088
Accounts payable	3,207			3,532
Accrued expenses	1,569			1,837
Payables to affiliates	5			5
Regulatory liabilities	522			523
Mark-to-market derivative liabilities	415			232
Unamortized energy contract liabilities	202			231
Renewable energy credit obligation	333			352
PHI merger related obligation	87			87
Other	956			982
Total current liabilities	10,153			10,798
Long-term debt	32,905			32,176
Long-term debt to financing trusts	389			389
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	11,344			11,235
Asset retirement obligations	10,126			10,029
Pension obligations	3,433			3,736
Non-pension postretirement benefit obligations	2,114			2,093
Spent nuclear fuel obligation	1,151			1,147
Regulatory liabilities	9,724			9,865
Mark-to-market derivative liabilities	468			409
Unamortized energy contract liabilities	579			609
Other	2,067			2,097
Total deferred credits and other liabilities	41,006			41,220
Total liabilities^(a)	84,453			84,583
Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 965 shares and 963 shares outstanding at March 31, 2018 and December 31, 2017, respectively)	18,973			18,964
Treasury stock, at cost (2 shares at March 31, 2018 and December 31, 2017)	(123		)	(123		)
Retained earnings	14,346			14,081
Accumulated other comprehensive loss, net	(2,965		)	(3,026		)
Total shareholders’ equity	30,231			29,896
Noncontrolling interests	2,334			2,291
Total equity	32,565			32,187
Total liabilities and shareholders’ equity	$	117,018		$	116,770

__________

(a)

Exelon’s consolidated assets include $9,727 million and $9,597 million at March 31, 2018 and December 31, 2017, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $3,556 million and $3,618 million at March 31, 2018 and December 31, 2017, 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

Table of Contents

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, 2017	965,168	$	18,964		$	(123	)	$	14,081		$	(3,026	)	$	2,291		$	32,187
Net income	—	—			—			585			—			51			636
Long-term incentive plan activity	1,685	(3		)	—			—			—			—			(3		)
Employee stock purchase plan issuances	361	12			—			—			—			—			12
Changes in equity of noncontrolling interests	—	—			—			—			—			(9		)	(9		)
Common stock dividends	—	—			—			(334		)	—			—			(334		)
Other comprehensive income, net of income taxes	—	—			—			—			71			1			72
Impact of adoption of Recognition and Measurement of Financial Assets and Liabilities standard	—	—			—			14			(10		)	—			4
Balance, March 31, 2018	967,214	$	18,973		$	(123	)	$	14,346		$	(2,965	)	$	2,334		$	32,565

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Operating revenues
Operating revenues	$	5,114		$	4,548
Operating revenues from affiliates	398			330
Total operating revenues	5,512			4,878
Operating expenses
Purchased power and fuel	3,289			2,796
Purchased power and fuel from affiliates	4			2
Operating and maintenance	1,178			1,313
Operating and maintenance from affiliates	161			179
Depreciation and amortization	448			302
Taxes other than income	138			143
Total operating expenses	5,218			4,735
Gain on sales of assets and businesses	53			4
Bargain purchase gain	—			226
Operating income	347			373
Other income and (deductions)
Interest expense, net	(91		)	(90		)
Interest expense to affiliates	(10		)	(10		)
Other, net	(44		)	259
Total other income and (deductions)	(145		)	159
Income before income taxes	202			532
Income taxes	9			123
Equity in losses of unconsolidated affiliates	(7		)	(10		)
Net income	186			399
Net income (loss) attributable to noncontrolling interests	50			(19		)
Net income attributable to membership interest	$	136		$	418
Comprehensive income, net of income taxes
Net income	$	186		$	399
Other comprehensive income (loss), net of income taxes
Unrealized gain on cash flow hedges	7			6
Unrealized gain on investments in unconsolidated affiliates	1			4
Unrealized (loss) gain on foreign currency translation	(1		)	1
Other comprehensive income	7			11
Comprehensive income	193			410
Comprehensive income (loss) attributable to noncontrolling interests	51			(21		)
Comprehensive income attributable to membership interest	$	142		$	431

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Cash flows from operating activities
Net income	$	186		$	399
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization	858			678
Impairment of long-lived assets	—			10
Gain on sales of assets and businesses	(53		)	(4		)
Bargain purchase gain	—			(226		)
Deferred income taxes and amortization of investment tax credits	(68		)	108
Net fair value changes related to derivatives	264			51
Net realized and unrealized gains on nuclear decommissioning trust fund investments	68			(175		)
Other non-cash operating activities	45			(10		)
Changes in assets and liabilities:
Accounts receivable	194			173
Receivables from and payables to affiliates, net	(15		)	23
Inventories	122			81
Accounts payable and accrued expenses	(317		)	(236		)
Option premiums paid, net	(27		)	(6		)
Collateral posted, net	(214		)	(102		)
Income taxes	79			(81		)
Pension and non-pension postretirement benefit contributions	(125		)	(110		)
Other assets and liabilities	(142		)	(153		)
Net cash flows provided by operating activities	855			420
Cash flows from investing activities
Capital expenditures	(628		)	(625		)
Proceeds from nuclear decommissioning trust fund sales	1,189			1,767
Investment in nuclear decommissioning trust funds	(1,248		)	(1,833		)
Acquisition of businesses, net	—			(212		)
Proceeds from sales of assets and businesses	79			22
Other investing activities	(7		)	(29		)
Net cash flows used in investing activities	(615		)	(910		)
Cash flows from financing activities
Changes in short-term borrowings	165			(42		)
Proceeds from short-term borrowings with maturities greater than 90 days	1			60
Repayments of short-term borrowings with maturities greater than 90 days	(1		)	—
Issuance of long-term debt	4			762
Retirement of long-term debt	(29		)	(30		)
Changes in Exelon intercompany money pool	—			(1		)
Distributions to member	(188		)	(164		)
Other financing activities	(9		)	(3		)
Net cash flows (used in) provided by financing activities	(57		)	582
Increase in cash, cash equivalents and restricted cash	183			92
Cash, cash equivalents and restricted cash at beginning of period	554			448
Cash, cash equivalents and restricted cash at end of period	$	737		$	540

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018		December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	610	$	416
Restricted cash and cash equivalents	127		138
Accounts receivable, net
Customer	2,478		2,697
Other	294		321
Mark-to-market derivative assets	978		976
Receivables from affiliates	153		140
Unamortized energy contract assets	55		60
Inventories, net
Fossil fuel and emission allowances	151		264
Materials and supplies	916		937
Other	1,122		933
Total current assets	6,884		6,882
Property, plant and equipment, net	24,714		24,906
Deferred debits and other assets
Nuclear decommissioning trust funds	13,149		13,272
Investments	431		433
Goodwill	47		47
Mark-to-market derivative assets	527		334
Prepaid pension asset	1,571		1,502
Unamortized energy contract assets	385		395
Deferred income taxes	10		16
Other	657		670
Total deferred debits and other assets	16,777		16,669
Total assets^(a)	$	48,375	$	48,457

See the Combined Notes to Consolidated Financial Statements

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018			December 31, 2017
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	166		$	2
Long-term debt due within one year	373			346
Accounts payable	1,447			1,773
Accrued expenses	951			1,022
Payables to affiliates	114			123
Borrowings from Exelon intercompany money pool	54			54
Mark-to-market derivative liabilities	391			211
Unamortized energy contract liabilities	39			43
Renewable energy credit obligation	333			352
Other	288			265
Total current liabilities	4,156			4,191
Long-term debt	7,685			7,734
Long-term debt to affiliate	907			910
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	3,749			3,811
Asset retirement obligations	9,941			9,844
Non-pension postretirement benefit obligations	911			916
Spent nuclear fuel obligation	1,151			1,147
Payables to affiliates	2,970			3,065
Mark-to-market derivative liabilities	221			174
Unamortized energy contract liabilities	40			48
Other	686			658
Total deferred credits and other liabilities	19,669			19,663
Total liabilities^(a)	32,417			32,498
Commitments and contingencies
Equity
Member’s equity
Membership interest	9,357			9,357
Undistributed earnings	4,303			4,349
Accumulated other comprehensive loss, net	(34		)	(37		)
Total member’s equity	13,626			13,669
Noncontrolling interests	2,332			2,290
Total equity	15,958			15,959
Total liabilities and equity	$	48,375		$	48,457

__________

(a)

Generation’s consolidated assets include $9,688 million and $9,556 million at March 31, 2018 and December 31, 2017, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $3,461 million and $3,516 million at March 31, 2018 and December 31, 2017, 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

Table of Contents

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, 2017	$	9,357	$	4,349		$	(37	)	$	2,290		$	15,959
Net income	—		136			—			50			186
Changes in equity of noncontrolling interests	—		—			—			(9		)	(9		)
Distributions to member	—		(188		)	—			—			(188		)
Other comprehensive income, net of income taxes	—		—			6			1			7
Impact of adoption of Recognition and Measurement of Financial Assets and Liabilities standard	—		6			(3		)	—			3
Balance, March 31, 2018	$	9,357	$	4,303		$	(34	)	$	2,332		$	15,958

See the Combined Notes to Consolidated Financial Statements

Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Operating revenues
Electric operating revenues	$	1,493		$	1,279
Revenues from alternative revenue programs	5			14
Operating revenues from affiliates	14			5
Total operating revenues	1,512			1,298
Operating expenses
Purchased power	411			329
Purchased power from affiliate	194			5
Operating and maintenance	253			307
Operating and maintenance from affiliate	60			63
Depreciation and amortization	228			208
Taxes other than income	77			72
Total operating expenses	1,223			984
Gain on sales of assets	3			—
Operating income	292			314
Other income and (deductions)
Interest expense, net	(86		)	(82		)
Interest expense to affiliates	(3		)	(3		)
Other, net	8			4
Total other income and (deductions)	(81		)	(81		)
Income before income taxes	211			233
Income taxes	46			92
Net income	$	165		$	141
Comprehensive income	$	165		$	141

See the Combined Notes to Consolidated Financial Statements

Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Cash flows from operating activities
Net income	$	165		$	141
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	228			208
Deferred income taxes and amortization of investment tax credits	50			137
Other non-cash operating activities	46			31
Changes in assets and liabilities:
Accounts receivable	39			92
Receivables from and payables to affiliates, net	(19		)	(16		)
Inventories	5			4
Accounts payable and accrued expenses	(158		)	(236		)
Collateral posted, net	(3		)	(7		)
Income taxes	(5		)	(34		)
Pension and non-pension postretirement benefit contributions	(38		)	(35		)
Other assets and liabilities	(176		)	(49		)
Net cash flows provided by operating activities	134			236
Cash flows from investing activities
Capital expenditures	(531		)	(626		)
Other investing activities	8			7
Net cash flows used in investing activities	(523		)	(619		)
Cash flows from financing activities
Changes in short-term borrowings	317			365
Issuance of long-term debt	800			—
Retirement of long-term debt	(700		)	—
Contributions from parent	113			100
Dividends paid on common stock	(114		)	(105		)
Other financing activities	(9		)	(1		)
Net cash flows provided by financing activities	407			359
Increase (Decrease) in cash, cash equivalents and restricted cash	18			(24		)
Cash, cash equivalents and restricted cash at beginning of period	144			58
Cash, cash equivalents and restricted cash at end of period	$	162		$	34

See the Combined Notes to Consolidated Financial Statements

Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018		December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	70	$	76
Restricted cash	9		5
Accounts receivable, net
Customer	485		559
Other	290		266
Receivables from affiliates	28		13
Inventories, net	146		152
Regulatory assets	226		225
Other	82		68
Total current assets	1,336		1,364
Property, plant and equipment, net	21,010		20,723
Deferred debits and other assets
Regulatory assets	1,125		1,054
Investments	6		6
Goodwill	2,625		2,625
Receivables from affiliates	2,464		2,528
Prepaid pension asset	1,177		1,188
Other	259		238
Total deferred debits and other assets	7,656		7,639
Total assets	$	30,002	$	29,726

See the Combined Notes to Consolidated Financial Statements

Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions)	March 31, 2018			December 31, 2017
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	317		$	—
Long-term debt due within one year	440			840
Accounts payable	491			568
Accrued expenses	198			327
Payables to affiliates	70			74
Customer deposits	111			112
Regulatory liabilities	212			249
Mark-to-market derivative liability	24			21
Other	82			103
Total current liabilities	1,945			2,294
Long-term debt	7,254			6,761
Long-term debt to financing trust	205			205
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	3,539			3,469
Asset retirement obligations	111			111
Non-pension postretirement benefits obligations	215			219
Regulatory liabilities	6,212			6,328
Mark-to-market derivative liability	243			235
Other	572			562
Total deferred credits and other liabilities	10,892			10,924
Total liabilities	20,296			20,184
Commitments and contingencies
Shareholders’ equity
Common stock	1,588			1,588
Other paid-in capital	6,935			6,822
Retained deficit unappropriated	(1,639		)	(1,639		)
Retained earnings appropriated	2,822			2,771
Total shareholders’ equity	9,706			9,542
Total liabilities and shareholders’ equity	$	30,002		$	29,726

See the Combined Notes to Consolidated Financial Statements

Table of Contents

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, 2017	$	1,588	$	6,822	$	(1,639	)	$	2,771		$	9,542
Net income	—		—		165			—			165
Appropriation of retained earnings for future dividends	—		—		(165		)	165			—
Common stock dividends	—		—		—			(114		)	(114		)
Contributions from parent	—		113		—			—			113
Balance, March 31, 2018	$	1,588	$	6,935	$	(1,639	)	$	2,822		$	9,706

See the Combined Notes to Consolidated Financial Statements

Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended March 31,
(In millions)	2018			2017
Operating revenues
Electric operating revenues	$	633		$	589
Natural gas operating revenues	232			206
Revenues from alternative revenue programs	(1		)	—
Operating revenues from affiliates	2			1
Total operating revenues	866			796
Operating expenses
Purchased power	199			156
Purchased fuel	98			86
Purchased power from affiliate	36			45
Operating and maintenance	233			174
Operating and maintenance from affiliates	42			34
Depreciation and amortization	75			71
Taxes other than income	41			38
Total operating expenses	724			604
Operating income	142			192
Other income and (deductions)
Interest expense, net	(30		)	(28		)
Interest expense to affiliates