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 September 30, 2018
or
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 September 30, 2018 was:
Exelon Corporation Common Stock, without par value
967,009,746
Exelon Generation Company, LLC
not applicable
Commonwealth Edison Company Common Stock, $12.50 par value
127,021,324
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1

 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2

 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3

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
BSC
 
Exelon Business Services Company, LLC
CENG
 
Constellation Energy Nuclear Group, LLC
Conectiv
  
Conectiv, LLC, a wholly owned subsidiary of PHI and the parent of DPL and ACE
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 Delivery 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

4

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
BGS
 
Basic Generation Service
CAISO
 
California Independent System Operator
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 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 Basic Generation Service
DOE
 
United States Department of Energy
DOEE
 
Department of Energy & Environment
DOJ
 
United States Department of Justice
DPSC
 
Delaware Public Service Commission
DRP
 
Direct Stock Purchase and Dividend Reinvestment Plan
DSP
 
Default Service Provider
EDF
 
Electricite de France SA and its subsidiaries

5

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
 
 
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
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

6

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
 
 
MDE
 
Maryland Department of the Environment
MDPSC
 
Maryland Public Service Commission
MGP
 
Manufactured Gas Plant
MISO
 
Midcontinent Independent System Operator, Inc.
mmcf
 
Million Cubic Feet
Moody’s
 
Moody’s Investor Service
MOPR
 
Minimum Offer Price Rule
MRV
 
Market-Related Value
MW
 
Megawatt
MWh
 
Megawatt hour
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
NLRB
 
National Labor Relations Board
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
PCB
 
Polychlorinated Biphenyl
PGC
 
Purchased Gas Cost Clause
PJM
 
PJM Interconnection, LLC
POLR
 
Provider of Last Resort
POR
 
Purchase of Receivables
PPA
 
Power Purchase Agreement

7

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
 
 
Price-Anderson Act
 
Price-Anderson Nuclear Industries Indemnity Act of 1957
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
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
SERC
 
SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
SILO
 
Sale-In, Lease-Out
SNF
 
Spent Nuclear Fuel
SOS
 
Standard Offer Service
SPFPA
 
Security, Police and Fire Professionals of America
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, or Zero Emission Certificate
ZES
 
Zero Emission Standard

8

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.

9

Table of Contents




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

10

Table of Contents


EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In millions, except per share data)
2018
 
2017
 
2018
 
2017
Operating revenues
 
 
 
 
 
 
 
Competitive businesses revenues
$
4,971

 
$
4,455

 
$
14,387

 
$
12,955

Rate-regulated utility revenues
4,457

 
4,259

 
12,824

 
12,034

Revenues from alternative revenue programs
(25
)
 
54

 
(41
)
 
191

Total operating revenues
9,403

 
8,768

 
27,170

 
25,180

Operating expenses
 
 
 
 
 
 
 
Competitive businesses purchased power and fuel
2,977

 
2,316

 
8,542

 
7,268

Rate-regulated utility purchased power and fuel
1,355

 
1,226

 
3,832

 
3,259

Operating and maintenance
2,346

 
2,275

 
7,036

 
7,658

Depreciation and amortization
1,105

 
1,002

 
3,284

 
2,814

Taxes other than income
469

 
456

 
1,342

 
1,313

Total operating expenses
8,252


7,275


24,036


22,312

(Loss) gain on sales of assets and businesses
(5
)
 
(1
)
 
55

 
4

Bargain purchase gain
—

 
7

 
—

 
233

Operating income
1,146


1,499


3,189


3,105

Other income and (deductions)
 
 
 
 
 
 
 
Interest expense, net
(387
)
 
(377
)
 
(1,119
)
 
(1,165
)
Interest expense to affiliates
(6
)
 
(9
)
 
(19
)
 
(29
)
Other, net
194

 
210

 
212

 
643

Total other income and (deductions)
(199
)

(176
)

(926
)

(551
)
Income before income taxes
947

 
1,323

 
2,263

 
2,554

Income taxes
137

 
451

 
262

 
601

Equity in losses of unconsolidated affiliates
(10
)
 
(7
)
 
(22
)
 
(25
)
Net income
800


865


1,979


1,928

Net income attributable to noncontrolling interests
67

 
42

 
121

 
21

Net income attributable to common shareholders
$
733


$
823


$
1,858


$
1,907

Comprehensive income, net of income taxes
 
 
 
 
 
 
 
Net income
$
800

 
$
865

 
$
1,979

 
$
1,928

Other comprehensive income (loss), net of income taxes
 
 
 
 
 
 
 
Pension and non-pension postretirement benefit plans:
 
 
 
 
 
 
 
Prior service benefit reclassified to periodic benefit cost
(17
)
 
(14
)
 
(50
)
 
(42
)
Actuarial loss reclassified to periodic benefit cost
62

 
49

 
186

 
147

Pension and non-pension postretirement benefit plan valuation adjustment
5

 
3

 
22

 
(55
)
Unrealized gain on cash flow hedges
—

 
—

 
12

 
5

Unrealized gain on investments in unconsolidated affiliates
—

 
1

 
3

 
5

Unrealized gain (loss) on foreign currency translation
2

 
4

 
(4
)
 
7

Unrealized gain on marketable securities
—

 
1

 
—

 
2

Other comprehensive income
52


44


169


69

Comprehensive income
852


909


2,148


1,997

Comprehensive income attributable to noncontrolling interests
67

 
42

 
123

 
19

Comprehensive income attributable to common shareholders
$
785

 
$
867

 
$
2,025

 
$
1,978

 
 
 
 
 
 
 
 
Average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic
968

 
962

 
967

 
941

Diluted
970

 
965

 
969

 
943

Earnings per average common share:
 
 
 
 
 
 
 
Basic
$
0.76

 
$
0.86

 
$
1.92

 
$
2.03

Diluted
$
0.76

 
$
0.85

 
$
1.92

 
$
2.02

Dividends declared per common share
$
0.35

 
$
0.33

 
$
1.04

 
$
0.98


See the Combined Notes to Consolidated Financial Statements
11

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
1,979

 
$
1,928

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization
4,511

 
3,999

Impairment of long-lived assets and losses on regulatory assets
49

 
488

Gain on sales of assets and businesses
(55
)
 
(5
)
Bargain purchase gain
—

 
(233
)
Deferred income taxes and amortization of investment tax credits
97

 
444

Net fair value changes related to derivatives
67

 
149

Net realized and unrealized gains on nuclear decommissioning trust fund investments
(21
)
 
(429
)
Other non-cash operating activities
804

 
603

Changes in assets and liabilities:
 
 
 
Accounts receivable
(167
)
 
184

Inventories
(24
)
 
(87
)
Accounts payable and accrued expenses
84

 
(591
)
Option premiums (paid) received, net
(36
)
 
35

Collateral received (posted), net
222

 
(100
)
Income taxes
166

 
167

Pension and non-pension postretirement benefit contributions
(362
)
 
(344
)
Other assets and liabilities
(639
)
 
(535
)
Net cash flows provided by operating activities
6,675


5,673

Cash flows from investing activities
 
 
 
Capital expenditures
(5,497
)
 
(5,556
)
Proceeds from nuclear decommissioning trust fund sales
6,379

 
6,848

Investment in nuclear decommissioning trust funds
(6,553
)
 
(7,044
)
Acquisition of assets and businesses, net
(57
)
 
(208
)
Proceeds from sales of assets and businesses
90

 
219

Other investing activities
29

 
(2
)
Net cash flows used in investing activities
(5,609
)

(5,743
)
Cash flows from financing activities
 
 
 
Changes in short-term borrowings
(218
)
 
(570
)
Proceeds from short-term borrowings with maturities greater than 90 days
126

 
621

Repayments on short-term borrowings with maturities greater than 90 days
(1
)
 
(610
)
Issuance of long-term debt
2,664

 
2,616

Retirement of long-term debt
(1,480
)
 
(1,728
)
Retirement of long-term debt to financing trust
—

 
(250
)
Sale of noncontrolling interest
—

 
396

Dividends paid on common stock
(999
)
 
(921
)
Common stock issued from treasury stock
—

 
1,150

Proceeds from employee stock plans
67

 
61

Other financing activities
(94
)
 
(64
)
Net cash flows provided by financing activities
65


701

Increase in cash, cash equivalents and restricted cash
1,131

 
631

Cash, cash equivalents and restricted cash at beginning of period
1,190

 
914

Cash, cash equivalents and restricted cash at end of period
$
2,321


$
1,545


See the Combined Notes to Consolidated Financial Statements
12

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
September 30, 2018
 
December 31, 2017
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
1,918

 
$
898

Restricted cash and cash equivalents
240

 
207

Accounts receivable, net
 
 
 
Customer
4,239

 
4,445

Other
1,246

 
1,132

Mark-to-market derivative assets
696

 
976

Unamortized energy contract assets
42

 
60

Inventories, net
 
 
 
Fossil fuel and emission allowances
349

 
340

Materials and supplies
1,316

 
1,311

Regulatory assets
1,340

 
1,267

Assets held for sale
910

 
—

Other
1,177

 
1,260

Total current assets
13,473


11,896

Property, plant and equipment, net
75,840

 
74,202

Deferred debits and other assets
 
 
 
Regulatory assets
8,002

 
8,021

Nuclear decommissioning trust funds
12,464

 
13,272

Investments
649

 
640

Goodwill
6,677

 
6,677

Mark-to-market derivative assets
449

 
337

Unamortized energy contract assets
371

 
395

Other
1,560

 
1,330

Total deferred debits and other assets
30,172


30,672

Total assets(a)
$
119,485


$
116,770


See the Combined Notes to Consolidated Financial Statements
13

Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
September 30, 2018
 
December 31, 2017
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Short-term borrowings
$
834

 
$
929

Long-term debt due within one year
771

 
2,088

Accounts payable
3,348

 
3,532

Accrued expenses
1,964

 
1,837

Payables to affiliates
5

 
5

Regulatory liabilities
689

 
523

Mark-to-market derivative liabilities
329

 
232

Unamortized energy contract liabilities
158

 
231

Renewable energy credit obligation
256

 
352

PHI merger related obligation
63

 
87

Liabilities held for sale
788

 
—

Other
935

 
982

Total current liabilities
10,140

 
10,798

Long-term debt
34,519

 
32,176

Long-term debt to financing trusts
390

 
389

Deferred credits and other liabilities
 
 
 
Deferred income taxes and unamortized investment tax credits
11,702

 
11,235

Asset retirement obligations
9,747

 
10,029

Pension obligations
3,385

 
3,736

Non-pension postretirement benefit obligations
2,155

 
2,093

Spent nuclear fuel obligation
1,164

 
1,147

Regulatory liabilities
9,756

 
9,865

Mark-to-market derivative liabilities
482

 
409

Unamortized energy contract liabilities
497

 
609

Other
2,160

 
2,097

Total deferred credits and other liabilities
41,048

 
41,220

Total liabilities(a)
86,097


84,583

Commitments and contingencies

 

Shareholders’ equity
 
 
 
Common stock (No par value, 2,000 shares authorized, 967 shares and 963 shares outstanding at September 30, 2018 and December 31, 2017, respectively)
19,063

 
18,964

Treasury stock, at cost (2 shares at September 30, 2018 and December 31, 2017)
(123
)
 
(123
)
Retained earnings
14,949

 
14,081

Accumulated other comprehensive loss, net
(2,869
)
 
(3,026
)
Total shareholders’ equity
31,020


29,896

Noncontrolling interests
2,368

 
2,291

Total equity
33,388


32,187

Total liabilities and shareholders’ equity
$
119,485


$
116,770

__________
(a)
Exelon’s consolidated assets include $9,804 million and $9,597 million at September 30, 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 $3,606 million and $3,618 million at September 30, 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 for additional information.

See the Combined Notes to Consolidated Financial Statements
14

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
—

 
—

 
—

 
1,858

 
—

 
121

 
1,979

Long-term incentive plan activity
2,677

 
32

 
—

 
—

 
—

 
—

 
32

Employee stock purchase plan issuances
997

 
67

 
—

 
—

 
—

 
—

 
67

Changes in equity of noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(46
)
 
(46
)
Common stock dividends
—

 
—

 
—

 
(1,004
)
 
—

 
—

 
(1,004
)
Other comprehensive income, net of income taxes
—

 
—

 
—

 
—

 
167

 
2

 
169

Impact of adoption of Recognition and Measurement of Financial Assets and Liabilities standard
—

 
—

 
—

 
14

 
(10
)
 
—

 
4

Balance, September 30, 2018
968,842

 
$
19,063

 
$
(123
)
 
$
14,949

 
$
(2,869
)
 
$
2,368

 
$
33,388


See the Combined Notes to Consolidated Financial Statements
15

Table of Contents


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
 
2018
 
2017
Operating revenues
 
 
 
 
 
 
 
Operating revenues
$
4,970

 
$
4,454

 
$
14,389

 
$
12,949

Operating revenues from affiliates
308

 
296

 
979

 
894

Total operating revenues
5,278


4,750


15,368


13,843

Operating expenses
 
 
 
 
 
 
 
Purchased power and fuel
2,977

 
2,315

 
8,542

 
7,267

Purchased power and fuel from affiliates
3

 
16

 
10

 
19

Operating and maintenance
1,218

 
1,205

 
3,643

 
4,343

Operating and maintenance from affiliates
152

 
171

 
483

 
536

Depreciation and amortization
468

 
410

 
1,383

 
1,046

Taxes other than income
143

 
141

 
414

 
425

Total operating expenses
4,961


4,258


14,475


13,636

(Loss) gain on sales of assets and businesses
(6
)
 
(2
)
 
48

 
3

Bargain purchase gain
—

 
7

 
—

 
233

Operating income
311


497


941


443

Other income and (deductions)
 
 
 
 
 
 
 
Interest expense, net
(93
)
 
(103
)
 
(278
)
 
(313
)
Interest expense to affiliates
(8
)
 
(10
)
 
(27
)
 
(29
)
Other, net
179

 
209

 
164

 
648

Total other income and (deductions)
78


96


(141
)

306

Income before income taxes
389

 
593

 
800

 
749

Income taxes
78

 
239

 
110

 
215

Equity in losses of unconsolidated affiliates
(11
)
 
(8
)
 
(23
)
 
(26
)
Net income
300


346


667


508

Net income attributable to noncontrolling interests
66

 
42

 
120

 
21

Net income attributable to membership interest
$
234


$
304


$
547


$
487

Comprehensive income, net of income taxes
 
 
 
 
 
 
 
Net income
$
300

 
$
346

 
$
667

 
$
508

Other comprehensive income (loss), net of income taxes
 
 
 
 
 
 
 
Unrealized gain on cash flow hedges
—

 
—

 
12

 
5

Unrealized gain on investments in unconsolidated affiliates
—

 
—

 
3

 
4

Unrealized gain (loss) on foreign currency translation
2

 
4

 
(4
)
 
7

Other comprehensive income
2


4


11


16

Comprehensive income
302


350


678


524

Comprehensive income attributable to noncontrolling interests
66

 
42

 
122

 
19

Comprehensive income attributable to membership interest
$
236

 
$
308

 
$
556

 
$
505


See the Combined Notes to Consolidated Financial Statements
16

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
667

 
$
508

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation, amortization and accretion, including nuclear fuel and energy contract amortization
2,608

 
2,231

Impairment of long-lived assets
49

 
485

Gain on sales of assets and businesses
(48
)
 
(3
)
Bargain purchase gain
—

 
(233
)
Deferred income taxes and amortization of investment tax credits
(278
)
 
(179
)
Net fair value changes related to derivatives
73

 
160

Net realized and unrealized gains on nuclear decommissioning trust fund investments
(21
)
 
(429
)
Other non-cash operating activities
187

 
132

Changes in assets and liabilities:

 

Accounts receivable
126

 
66

Receivables from and payables to affiliates, net
(7
)
 
27

Inventories
(10
)
 
(43
)
Accounts payable and accrued expenses
(59
)
 
(255
)
Option premiums (paid) received, net
(36
)
 
35

Collateral received (posted), net
228

 
(77
)
Income taxes
220

 
154

Pension and non-pension postretirement benefit contributions
(134
)
 
(122
)
Other assets and liabilities
(154
)
 
(187
)
Net cash flows provided by operating activities
3,411


2,270

Cash flows from investing activities
 
 
 
Capital expenditures
(1,660
)
 
(1,654
)
Proceeds from nuclear decommissioning trust fund sales
6,379

 
6,848

Investment in nuclear decommissioning trust funds
(6,553
)
 
(7,044
)
Acquisition of assets and businesses, net
(57
)
 
(208
)
Proceeds from sales of assets and businesses
90

 
218

Other investing activities
(5
)
 
(35
)
Net cash flows used in investing activities
(1,806
)

(1,875
)
Cash flows from financing activities
 
 
 
Changes in short-term borrowings
—

 
(620
)
Proceeds from short-term borrowings with maturities greater than 90 days
1

 
121

Repayments of short-term borrowings with maturities greater than 90 days
(1
)
 
(110
)
Issuance of long-term debt
14

 
789

Retirement of long-term debt
(100
)
 
(541
)
Changes in Exelon intercompany money pool
(54
)
 
91

Distributions to member
(688
)
 
(494
)
Contributions from member
54


102

Sale of noncontrolling interest
—

 
396

Other financing activities
(46
)
 
(31
)
Net cash flows used in financing activities
(820
)

(297
)
Increase in cash, cash equivalents and restricted cash
785

 
98

Cash, cash equivalents and restricted cash at beginning of period
554

 
448

Cash, cash equivalents and restricted cash at end of period
$
1,339


$
546


See the Combined Notes to Consolidated Financial Statements
17

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
September 30, 2018
 
December 31, 2017
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
1,187

 
$
416

Restricted cash and cash equivalents
152

 
138

Accounts receivable, net
 
 
 
Customer
2,545

 
2,697

Other
278

 
321

Mark-to-market derivative assets
696

 
976

Receivables from affiliates
182

 
140

Unamortized energy contract assets
42

 
60

Inventories, net
 
 
 
Fossil fuel and emission allowances
255

 
264

Materials and supplies
948

 
937

Assets held for sale
910

 
—

Other
854

 
933

Total current assets
8,049


6,882

Property, plant and equipment, net
24,168

 
24,906

Deferred debits and other assets
 
 
 
Nuclear decommissioning trust funds
12,464

 
13,272

Investments
433

 
433

Goodwill
47

 
47

Mark-to-market derivative assets
449

 
334

Prepaid pension asset
1,472

 
1,502

Unamortized energy contract assets
370

 
395

Deferred income taxes
25

 
16

Other
730

 
670

Total deferred debits and other assets
15,990


16,669

Total assets(a)
$
48,207


$
48,457


See the Combined Notes to Consolidated Financial Statements
18

Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
September 30, 2018
 
December 31, 2017
LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term borrowings
$
—

 
$
2

Long-term debt due within one year
336

 
346

Accounts payable
1,450

 
1,773

Accrued expenses
1,200

 
1,022

Payables to affiliates
144

 
123

Borrowings from Exelon intercompany money pool
—

 
54

Mark-to-market derivative liabilities
305

 
211

Unamortized energy contract liabilities
33

 
43

Renewable energy credit obligation
256

 
352

Liabilities held for sale
788

 
—

Other
255

 
265

Total current liabilities
4,767

 
4,191

Long-term debt
7,605

 
7,734

Long-term debt to affiliate
901

 
910

Deferred credits and other liabilities
 
 
 
Deferred income taxes and unamortized investment tax credits
3,532

 
3,811

Asset retirement obligations
9,521

 
9,844

Non-pension postretirement benefit obligations
903

 
916

Spent nuclear fuel obligation
1,164

 
1,147

Payables to affiliates
2,959

 
3,065

Mark-to-market derivative liabilities
237

 
174

Unamortized energy contract liabilities
23

 
48

Other
635

 
658

Total deferred credits and other liabilities
18,974

 
19,663

Total liabilities(a)
32,247

 
32,498

Commitments and contingencies

 

Equity
 
 
 
Member’s equity
 
 
 
Membership interest
9,411

 
9,357

Undistributed earnings
4,214

 
4,349

Accumulated other comprehensive loss, net
(31
)
 
(37
)
Total member’s equity
13,594

 
13,669

Noncontrolling interests
2,366

 
2,290

Total equity
15,960

 
15,959

Total liabilities and equity
$
48,207

 
$
48,457

__________
(a)
Generation’s consolidated assets include $9,768 million and $9,556 million at September 30, 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 $3,528 million and $3,516 million at September 30, 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 for additional information.

See the Combined Notes to Consolidated Financial Statements
19

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
—

 
547

 
—

 
120

 
667

Changes in equity of noncontrolling interests
—

 
—

 
—

 
(46
)
 
(46
)
Contribution from member
54

 
—

 
—

 
—

 
54

Distributions to member
—

 
(688
)
 
—

 
—

 
(688
)
Other comprehensive income, net of income taxes
—

 
—

 
9

 
2

 
11

Impact of adoption of Recognition and Measurement of Financial Assets and Liabilities standard
—

 
6

 
(3
)
 
—

 
3

Balance, September 30, 2018
$
9,411


$
4,214


$
(31
)

$
2,366


$
15,960


See the Combined Notes to Consolidated Financial Statements
20

Table of Contents


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
 
2018
 
2017
Operating revenues
 
 
 
 
 
 
 
Electric operating revenues
$
1,609

 
$
1,552

 
$
4,512

 
$
4,167

Revenues from alternative revenue programs
(15
)
 
16

 
(27
)
 
48

Operating revenues from affiliates
4

 
3

 
23

 
12

Total operating revenues
1,598


1,571


4,508


4,227

Operating expenses
 
 
 
 
 
 
 
Purchased power
496

 
489

 
1,281

 
1,178

Purchased power from affiliate
123

 
40

 
421

 
63

Operating and maintenance
276

 
277

 
785

 
897

Operating and maintenance from affiliate
61

 
69

 
189

 
199

Depreciation and amortization
237

 
212

 
696

 
631

Taxes other than income
82

 
80

 
238

 
223

Total operating expenses
1,275


1,167


3,610


3,191

Gain on sales of assets
—

 
—

 
5

 
—

Operating income
323


404


903


1,036

Other income and (deductions)
 
 
 
 
 
 
 
Interest expense, net
(82
)
 
(86
)
 
(251
)
 
(265
)
Interest expense to affiliates
(3
)
 
(3
)
 
(10
)
 
(10
)
Other, net
7

 
5

 
21

 
14

Total other income and (deductions)
(78
)

(84
)

(240
)

(261
)
Income before income taxes
245

 
320

 
663

 
775

Income taxes
52

 
131

 
140

 
328

Net income
$
193


$
189


$
523


$
447

Comprehensive income
$
193

 
$
189

 
$
523

 
$
447


See the Combined Notes to Consolidated Financial Statements
21

Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended
September 30,
(In millions)
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
523

 
$
447

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
696

 
631

Deferred income taxes and amortization of investment tax credits
214

 
455

Other non-cash operating activities
187

 
112

Changes in assets and liabilities:
 
 
 
Accounts receivable
(190
)
 
31

Receivables from and payables to affiliates, net
8

 
346