Atlantic City Electric 10-Q 2021 Q2 Quarterly report

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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, 2021

or

☐ 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
001-16169	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
001-01839	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
001-01910	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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
EXELON CORPORATION:
Common stock, without par value	EXC	The Nasdaq Stock Market LLC
PECO ENERGY COMPANY:
Trust Receipts of PECO Energy Capital Trust III, each representing a 7.38% Cumulative Preferred Security, Series D, $25 stated value, issued by PECO Energy Capital, L.P. and unconditionally guaranteed by PECO Energy Company	EXC/28	New York Stock Exchange

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 every Interactive Data File required to be submitted 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.

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

The number of shares outstanding of each registrant’s common stock as of June 30, 2021 was:

Exelon Corporation Common Stock, without par value	977,832,660
Exelon Generation Company, LLC	not applicable
Commonwealth Edison Company Common Stock, $12.50 par value	127,021,380
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		8
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION		8
WHERE TO FIND MORE INFORMATION		8
PART I.	FINANCIAL INFORMATION	9
ITEM 1.	FINANCIAL STATEMENTS	9
	Exelon Corporation
	Consolidated Statements of Operations and Comprehensive Income	10
	Consolidated Statements of Cash Flows	11
	Consolidated Balance Sheets	12
	Consolidated Statements of Changes in Shareholders’ Equity	14
	Exelon Generation Company, LLC
	Consolidated Statements of Operations and Comprehensive Income	16
	Consolidated Statements of Cash Flows	17
	Consolidated Balance Sheets	18
	Consolidated Statements 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 Statements 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 Statements of Changes in Shareholder's Equity	30
	Baltimore Gas and Electric Company
	Statements of Operations and Comprehensive Income	31
	Statements of Cash Flows	32
	Balance Sheets	33
	Statements of Changes in Shareholder's Equity	35
	Pepco Holdings LLC
	Consolidated Statements of Operations and Comprehensive Income	36
	Consolidated Statements of Cash Flows	37
	Consolidated Balance Sheets	38
	Consolidated Statements of Changes in Member's Equity	40

1

	Page No.
Potomac Electric Power Company
Statements of Operations and Comprehensive Income	41
Statements of Cash Flows	42
Balance Sheets	43
Statements 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
Statements 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 Statements of Changes in Shareholder’s Equity	55
Combined Notes to Consolidated Financial Statements
1. Significant Accounting Policies	56
2. Mergers, Acquisitions and Dispositions	57
3. Regulatory Matters	58
4. Revenue from Contracts with Customers	66
5. Segment Information	69
6. Accounts Receivable	84
7. Early Plant Retirements	89
8. Nuclear Decommissioning	93
9. Asset Impairments	94
10. Income Taxes	95
11. Retirement Benefits	98
12. Derivative Financial Instruments	100
13. Debt and Credit Agreements	107
14. Fair Value of Financial Assets and Liabilities	110
15. Commitments and Contingencies	121
16. Changes in Accumulated Other Comprehensive Income	130
17. Variable Interest Entities	131
18. Supplemental Financial Information	136
19. Related Party Transactions	142
20. Planned Separation	145

2

		Page No.
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	146
	Exelon Corporation	146
	Executive Overview	146
	Financial Results of Operations	146
	Significant 2021 Transactions and Developments	151
	Other Key Business Drivers and Management Strategies	154
	Critical Accounting Policies and Estimates	156
	Results of Operations By Registrant	156
	Exelon Generation Company, LLC	157
	Commonwealth Edison Company	164
	PECO Energy Company	167
	Baltimore Gas and Electric Company	171
	Pepco Holdings LLC	174
	Potomac Electric Power Company	175
	Delmarva Power & Light Company	178
	Atlantic City Electric Company	182
	Liquidity and Capital Resources	185
	Contractual Obligations and Off-Balance Sheet Arrangements	193
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	194
ITEM 4.	CONTROLS AND PROCEDURES	198
PART II.	OTHER INFORMATION	199
ITEM 1.	LEGAL PROCEEDINGS	199
ITEM 1A.	RISK FACTORS	199
ITEM 4.	MINE SAFETY DISCLOSURES	199
ITEM 5.	OTHER INFORMATION	199
ITEM 6.	EXHIBITS	200
SIGNATURES		203
	Exelon Corporation	203
	Exelon Generation Company, LLC	204
	Commonwealth Edison Company	205
	PECO Energy Company	206
	Baltimore Gas and Electric Company	207
	Pepco Holdings LLC	208
	Potomac Electric Power Company	209
	Delmarva Power & Light Company	210
	Atlantic City Electric Company	211

3

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
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
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
Constellation	Constellation Energy Group, Inc.
EGR IV	ExGen Renewables IV, LLC
EGRP	ExGen Renewables Partners, LLC
Exelon Corporate	Exelon in its corporate capacity as a holding company
FitzPatrick	James A. FitzPatrick nuclear generating station
NER	NewEnergy Receivables LLC
PCI	Potomac Capital Investment Corporation and its subsidiaries
PECO Trust III	PECO Energy Capital Trust III
PECO Trust IV	PECO Energy Capital Trust IV
Pepco Energy Services	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
TMI	Three Mile Island nuclear facility

4

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
Note - of the 2020 Form 10-K	Reference to specific Combined Note to Consolidated Financial Statements within Exelon's 2020 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
AMI	Advanced Metering Infrastructure
AOCI	Accumulated Other Comprehensive Income (Loss)
ARC	Asset Retirement Cost
ARO	Asset Retirement Obligation
BGS	Basic Generation Service
CBA	Collective Bargaining Agreement
CERCLA	Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended
CES	Clean Energy Standard
Clean Water Act	Federal Water Pollution Control Amendments of 1972, as amended
CODM	Chief operating decision maker(s)
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	Public Service Commission of the District of Columbia
DOE	United States Department of Energy
DOEE	District of Columbia Department of Energy & Environment
DOJ	United States Department of Justice
DPP	Deferred Purchase Price
DPSC	Delaware Public Service Commission
EDF	Electricite de France SA and its subsidiaries
EIMA	Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
EPA	United States Environmental Protection Agency
ERCOT	Electric Reliability Council of Texas
FEJA	Illinois Public Act 99-0906 or Future Energy Jobs Act
FERC	Federal Energy Regulatory Commission
FRCC	Florida Reliability Coordinating Council
FRR	Fixed Resource Requirement
GAAP	Generally Accepted Accounting Principles in the United States
GCR	Gas Cost Rate
GHG	Greenhouse Gas
GSA	Generation Supply Adjustment
IBEW	International Brotherhood of Electrical Workers
ICC	Illinois Commerce Commission
ICE	Intercontinental Exchange
IPA	Illinois Power Agency
IRC	Internal Revenue Code
IRS	Internal Revenue Service
ISO	Independent System Operator
ISO-NE	Independent System Operator New England Inc.

5

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
LIBOR	London Interbank Offered Rate
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
MOPR	Minimum Offer Price Rule
MPSC	Missouri Public Service Commission
MW	Megawatt
MWh	Megawatt hour
NAV	Net Asset Value
N/A	Not applicable
NDT	Nuclear Decommissioning Trust
NERC	North American Electric Reliability Corporation
NGX	Natural Gas Exchange
NJBPU	New Jersey Board of Public Utilities
Non-Regulatory Agreement 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
NPNS	Normal Purchase Normal Sale scope exception
NPS	National Park Service
NRC	Nuclear Regulatory Commission
NYISO	New York Independent System Operator Inc.
NYMEX	New York Mercantile Exchange
NYPSC	New York Public Service Commission
OCI	Other Comprehensive Income
OIESO	Ontario Independent Electricity System Operator
OPEB	Other Postretirement Employee Benefits
PAPUC	Pennsylvania Public Utility Commission
PGC	Purchased Gas Cost Clause
PG&E	Pacific Gas and Electric Company
PJM	PJM Interconnection, LLC
POLR	Provider of Last Resort
PPA	Power Purchase Agreement
Price-Anderson Act	Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP	Potentially Responsible Parties
PSDAR	Post-Shutdown Decommissioning Activities Report
PSEG	Public Service Enterprise Group Incorporated
PUCT	Public Utility Commission of Texas
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
RFP	Request for Proposal
Rider	Reconcilable Surcharge Recovery Mechanism
RMC	Risk Management Committee

6

GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
RNF	Revenues Net of Purchased Power and Fuel Expense
ROE	Return on equity
ROU	Right-of-use
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)
SNF	Spent Nuclear Fuel
SOS	Standard Offer Service
STRIDE	Maryland Strategic Infrastructure Development and Enhancement Program
Transition Bonds	Transition Bonds issued by ACE Funding
UGSOA	United Government Security Officers of America
VIE	Variable Interest Entity
WECC	Western Electric Coordinating Council
ZEC	Zero Emission Credit, or Zero Emission Certificate
ZES	Zero Emission Standard

7

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 including, among others, those related to the timing, manner, tax-free nature, and expected benefits associated with the potential separation of Exelon’s competitive power generation and customer-facing energy business from its six regulated electric and gas utilities. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic, and financial performance, are intended to identify such forward-looking statements.

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 2020 Annual Report on Form 10-K in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies; (2) this Quarterly Report on Form 10-Q in (a) Part II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part I, ITEM 1. Financial Statements: Note 15, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants.

Investors 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 SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that the Registrants file electronically with the SEC. These documents are also available to the public from commercial document retrieval services and the Registrants' website at www.exeloncorp.com. Information contained on the Registrants' website shall not be deemed incorporated into, or to be a part of, this Report.

8

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

9

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)	2021		2020		2021		2020
Operating revenues
Competitive businesses revenues	$	3,900	$	3,612	$	9,165	$	8,016
Rate-regulated utility revenues	3,968		3,832		8,464		8,108
Revenues from alternative revenue programs	47		(122)		176		(55)
Total operating revenues	7,915		7,322		17,805		16,069
Operating expenses
Competitive businesses purchased power and fuel	1,952		1,945		6,562		4,655
Rate-regulated utility purchased power and fuel	1,064		979		2,422		2,136
Operating and maintenance	2,447		2,433		4,426		4,637
Depreciation and amortization	1,666		1,001		3,363		2,023
Taxes other than income taxes	432		411		870		847
Total operating expenses	7,561		6,769		17,643		14,298
Gain on sales of assets and businesses	12		12		83		13
Operating income	366		565		245		1,784
Other income and (deductions)
Interest expense, net	(390)		(421)		(770)		(824)
Interest expense to affiliates	(6)		(6)		(13)		(13)
Other, net	581		656		806		(68)
Total other income and (deductions)	185		229		23		(905)
Income before income taxes	551		794		268		879
Income taxes	74		219		55		(75)
Equity in losses of unconsolidated affiliates	(1)		(1)		(2)		(4)
Net income	476		574		211		950
Net income (loss) attributable to noncontrolling interests	75		53		99		(153)
Net income attributable to common shareholders	$	401	$	521	$	112	$	1,103
Comprehensive income, net of income taxes
Net income	$	476	$	574	$	211	$	950
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost	(1)		(10)		(2)		(20)
Actuarial loss reclassified to periodic benefit cost	56		47		112		94
Pension and non-pension postretirement benefit plan valuation adjustment	0		2		(2)		(5)
Unrealized loss on cash flow hedges	0		0		0		(1)
Unrealized gain (loss) on foreign currency translation	2		2		3		(6)
Other comprehensive income	57		41		111		62
Comprehensive income	533		615		322		1,012
Comprehensive income (loss) attributable to noncontrolling interests	75		53		99		(153)
Comprehensive income attributable to common shareholders	$	458	$	562	$	223	$	1,165
Average shares of common stock outstanding:
Basic	978		976		978		975
Assumed exercise and/or distributions of stock-based awards	1		0		1		1
Diluted(a)	979		976		979		976
Earnings per average common share
Basic	$	0.41	$	0.53	$	0.11	$	1.13
Diluted	$	0.41	$	0.53	$	0.11	$	1.13

__________

(a)The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was zero for the three and six months ended June 30, 2021 and 1 million and less than 1 million for the three and six months ended June 30, 2020, respectively.

See the Combined Notes to Consolidated Financial Statements

10

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	211	$	950
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization	4,180		2,741
Asset impairments	500		33
Gain on sales of assets and businesses	(83)		(13)
Deferred income taxes and amortization of investment tax credits	(163)		33
Net fair value changes related to derivatives	(490)		(194)
Net realized and unrealized (gains) losses on NDT funds	(376)		196
Net unrealized gains on equity investments	(96)		0
Other non-cash operating activities	(331)		671
Changes in assets and liabilities:
Accounts receivable	(16)		1,318
Inventories	1		(14)
Accounts payable and accrued expenses	(87)		(798)
Option premiums received (paid), net	2		(102)
Collateral received, net	957		340
Income taxes	190		(114)
Pension and non-pension postretirement benefit contributions	(559)		(558)
Other assets and liabilities	(2,702)		(1,809)
Net cash flows provided by operating activities	1,138		2,680
Cash flows from investing activities
Capital expenditures	(4,040)		(3,773)
Proceeds from NDT fund sales	4,438		2,488
Investment in NDT funds	(4,538)		(2,540)
Collection of DPP	2,209		1,102
Proceeds from sales of assets and businesses	724		0
Other investing activities	17		4
Net cash flows used in investing activities	(1,190)		(2,719)
Cash flows from financing activities
Changes in short-term borrowings	(666)		(751)
Proceeds from short-term borrowings with maturities greater than 90 days	500		500
Issuance of long-term debt	2,455		6,526
Retirement of long-term debt	(630)		(3,894)
Dividends paid on common stock	(747)		(746)
Proceeds from employee stock plans	47		46
Other financing activities	(64)		(84)
Net cash flows provided by financing activities	895		1,597
Increase in cash, restricted cash, and cash equivalents	843		1,558
Cash, restricted cash, and cash equivalents at beginning of period	1,166		1,122
Cash, restricted cash, and cash equivalents at end of period	$	2,009	$	2,680
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(313)	$	(105)
Increase in DPP	1,958		1,754

See the Combined Notes to Consolidated Financial Statements

11

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	1,578	$	663
Restricted cash and cash equivalents	379		438
Accounts receivable
Customer accounts receivable	3,533		3,597
Customer allowance for credit losses	(395)		(366)
Customer accounts receivable, net	3,138		3,231
Other accounts receivable	1,426		1,469
Other allowance for credit losses	(72)		(71)
Other accounts receivable, net	1,354		1,398
Mark-to-market derivative assets	749		644
Unamortized energy contract assets	37		38
Inventories, net
Fossil fuel and emission allowances	259		297
Materials and supplies	1,443		1,425
Regulatory assets	1,252		1,228
Renewable energy credits	368		633
Assets held for sale	11		958
Other	1,780		1,609
Total current assets	12,348		12,562
Property, plant, and equipment (net of accumulated depreciation and amortization of $28,783 and $26,727 as of June 30, 2021 and December 31, 2020, respectively)	82,120		82,584
Deferred debits and other assets
Regulatory assets	8,745		8,759
Nuclear decommissioning trust funds	15,400		14,464
Investments	421		440
Goodwill	6,677		6,677
Mark-to-market derivative assets	443		555
Unamortized energy contract assets	278		294
Other	2,964		2,982
Total deferred debits and other assets	34,928		34,171
Total assets(a)	$	129,396	$	129,317

See the Combined Notes to Consolidated Financial Statements

12

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	1,865	$	2,031
Long-term debt due within one year	3,633		1,819
Accounts payable	3,547		3,562
Accrued expenses	1,719		2,078
Payables to affiliates	5		5
Regulatory liabilities	686		581
Mark-to-market derivative liabilities	719		295
Unamortized energy contract liabilities	95		100
Renewable energy credit obligation	509		661
Liabilities held for sale	2		375
Other	1,139		1,264
Total current liabilities	13,919		12,771
Long-term debt	35,077		35,093
Long-term debt to financing trusts	390		390
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	13,194		13,035
Asset retirement obligations	12,502		12,300
Pension obligations	3,880		4,503
Non-pension postretirement benefit obligations	1,983		2,011
Spent nuclear fuel obligation	1,209		1,208
Regulatory liabilities	9,148		9,485
Mark-to-market derivative liabilities	554		473
Unamortized energy contract liabilities	192		238
Other	2,848		2,942
Total deferred credits and other liabilities	45,510		46,195
Total liabilities(a)	94,896		94,449
Commitments and contingencies	0		0
Shareholders’ equity
Common stock (NaN par value, 2,000 shares authorized, 978 shares and 976 shares outstanding at June 30, 2021 and December 31, 2020, respectively)	19,454		19,373
Treasury stock, at cost (2 shares at June 30, 2021 and December 31, 2020)	(123)		(123)
Retained earnings	16,098		16,735
Accumulated other comprehensive loss, net	(3,289)		(3,400)
Total shareholders’ equity	32,140		32,585
Noncontrolling interests	2,360		2,283
Total equity	34,500		34,868
Total liabilities and shareholders’ equity	$	129,396	$	129,317

__________

(a)Exelon’s consolidated assets include $10,093 million and $10,200 million at June 30, 2021 and December 31, 2020, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $3,578 million and $3,598 million at June 30, 2021 and December 31, 2020, respectively, of certain VIEs for which the VIE creditors do not have recourse to Exelon. See Note 17 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements

13

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(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, 2020	977,466	$	19,373	$	(123)	$	16,735	$	(3,400)	$	2,283	$	34,868
Net (loss) income	—	—		—		(289)		—		25		(264)
Long-term incentive plan activity	640	5		—		—		—		—		5
Employee stock purchase plan issuances	902	34		—		—		—		—		34
Changes in equity of noncontrolling interests	—	—		—		—		—		(10)		(10)
Common stock dividends ($0.38/common share)	—	—		—		(374)		—		—		(374)
Other comprehensive income, net of income taxes	—	—		—		—		54		—		54
Balance, March 31, 2021	979,008	$	19,412	$	(123)	$	16,072	$	(3,346)	$	2,298	$	34,313
Net income	—	—		—		401		—		75		476
Long-term incentive plan activity	237	24		—		—		—		—		24
Employee stock purchase plan issuances	420	18		—		—		—		—		18
Changes in equity of noncontrolling interests	—	—		—		—		—		(13)		(13)
Common stock dividends ($0.38/common share)	—	—		—		(375)		—		—		(375)
Other comprehensive income, net of income taxes	—	—		—		—		57		—		57
Balance, June 30, 2021	979,665	$	19,454	$	(123)	$	16,098	$	(3,289)	$	2,360	$	34,500

See the Combined Notes to Consolidated Financial Statements

14

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	Six Months Ended June 30, 2020
(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, 2019	974,416	$	19,274	$	(123)	$	16,267	$	(3,194)	$	2,349	$	34,573
Net income (loss)	—	—		—		582		—		(206)		376
Long-term incentive plan activity	1,354	(4)		—		—		—		—		(4)
Employee stock purchase plan issuances	470	31		—		—		—		—		31
Changes in equity of noncontrolling interests	—	—		—		—		—		(9)		(9)
Sale of noncontrolling interests	—	2		—		—		—		—		2
Common stock dividends ($0.38/common share)	—	—		—		(374)		—		—		(374)
Other comprehensive income, net of income taxes	—	—		—		—		21		—		21
Balance, March 31, 2020	976,240	$	19,303	$	(123)	$	16,475	$	(3,173)	$	2,134	$	34,616
Net income	—	—		—		521		—		53		574
Long-term incentive plan activity	148	17		—		—		—		—		17
Employee stock purchase plan issuances	(51)	15		—		—		—		—		15
Changes in equity of noncontrolling interests	—	—		—		—		—		(19)		(19)
Sale of noncontrolling interests	—	1		—		—		—		—		1
Common stock dividends ($0.38/common share)	—	—		—		(374)		—		—		(374)
Other comprehensive income, net of income taxes	—	—		—		—		41		—		41
Balance, June 30, 2020	976,337	$	19,336	$	(123)	$	16,622	$	(3,132)	$	2,168	$	34,871

See the Combined Notes to Consolidated Financial Statements

15

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)	2021		2020		2021		2020
Operating revenues
Operating revenues	$	3,899	$	3,609	$	9,163	$	8,012
Operating revenues from affiliates	254		271		549		601
Total operating revenues	4,153		3,880		9,712		8,613
Operating expenses
Purchased power and fuel	1,952		1,945		6,562		4,655
Purchased power and fuel from affiliates	(5)		(3)		(5)		(9)
Operating and maintenance	1,337		1,053		2,194		2,174
Operating and maintenance from affiliates	137		136		282		277
Depreciation and amortization	930		300		1,869		604
Taxes other than income taxes	118		116		239		246
Total operating expenses	4,469		3,547		11,141		7,947
Gain on sales of assets and businesses	8		12		79		12
Operating (loss) income	(308)		345		(1,350)		678
Other income and (deductions)
Interest expense, net	(72)		(78)		(140)		(179)
Interest expense to affiliates	(4)		(9)		(8)		(18)
Other, net	508		602		675		(168)
Total other income and (deductions)	432		515		527		(365)
Income (loss) before income taxes	124		860		(823)		313
Income taxes	110		329		(70)		(59)
Equity in losses of unconsolidated affiliates	(1)		(2)		(3)		(4)
Net income (loss)	13		529		(756)		368
Net income (loss) attributable to noncontrolling interests	74		53		98		(153)
Net (loss) income attributable to membership interest	$	(61)	$	476	$	(854)	$	521
Comprehensive income, net of income taxes
Net income (loss)	$	13	$	529	$	(756)	$	368
Other comprehensive income (loss), net of income taxes
Unrealized loss on cash flow hedges	0		0		0		(1)
Unrealized gain (loss) on foreign currency translation	2		2		3		(6)
Other comprehensive income (loss), net of income taxes	2		2		3		(7)
Comprehensive income (loss)	15		531		(753)		361
Comprehensive income (loss) attributable to noncontrolling interests	74		53		98		(153)
Comprehensive (loss) income attributable to membership interest	$	(59)	$	478	$	(851)	$	514

See the Combined Notes to Consolidated Financial Statements

16

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net (loss) income	$	(756)	$	368
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization	2,686		1,320
Asset impairments	493		18
Gain on sales of assets and businesses	(79)		(12)
Deferred income taxes and amortization of investment tax credits	(142)		(54)
Net fair value changes related to derivatives	(490)		(193)
Net realized and unrealized (gains) losses on NDT funds	(376)		196
Net unrealized gains on equity investments	(96)		0
Other non-cash operating activities	(421)		136
Changes in assets and liabilities:
Accounts receivable	(90)		1,443
Receivables from and payables to affiliates, net	43		68
Inventories	4		(34)
Accounts payable and accrued expenses	154		(666)
Option premiums received (paid), net	2		(102)
Collateral received, net	955		342
Income taxes	(1)		26
Pension and non-pension postretirement benefit contributions	(212)		(243)
Other assets and liabilities	(2,031)		(1,332)
Net cash flows (used in) provided by operating activities	(357)		1,281
Cash flows from investing activities
Capital expenditures	(719)		(930)
Proceeds from NDT fund sales	4,438		2,488
Investment in NDT funds	(4,538)		(2,540)
Collection of DPP	2,209		1,102
Proceeds from sales of assets and businesses	724		0
Other investing activities	(8)		6
Net cash flows provided by investing activities	2,106		126
Cash flows from financing activities
Changes in short-term borrowings	(340)		(220)
Proceeds from short-term borrowings with maturities greater than 90 days	0		500
Issuance of long-term debt	151		2,403
Retirement of long-term debt	(56)		(2,936)
Changes in Exelon intercompany money pool	(285)		0
Distributions to member	(916)		(937)
Other financing activities	(29)		(30)
Net cash flows used in financing activities	(1,475)		(1,220)
Increase in cash, restricted cash, and cash equivalents	274		187
Cash, restricted cash, and cash equivalents at beginning of period	327		449
Cash, restricted cash, and cash equivalents at end of period	$	601	$	636
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(66)	$	(108)
Increase in DPP	1,958		1,754

See the Combined Notes to Consolidated Financial Statements

17

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	542	$	226
Restricted cash and cash equivalents	59		89
Accounts receivable
Customer accounts receivable	1,410		1,330
Customer allowance for credit losses	(75)		(32)
Customer accounts receivable, net	1,335		1,298
Other accounts receivable	476		352
Other allowance for credit losses	(1)		0
Other accounts receivable, net	475		352
Mark-to-market derivative assets	749		644
Receivables from affiliates	117		153
Unamortized energy contract assets	37		38
Inventories, net
Fossil fuel and emission allowances	204		233
Materials and supplies	986		978
Renewable energy credits	341		621
Assets held for sale	11		958
Other	1,353		1,357
Total current assets	6,209		6,947
Property, plant, and equipment (net of accumulated depreciation and amortization of $15,024 and $13,370 as of June 30, 2021 and December 31, 2020, respectively)	19,837		22,214
Deferred debits and other assets
Nuclear decommissioning trust funds	15,400		14,464
Investments	157		184
Goodwill	47		47
Mark-to-market derivative assets	441		555
Prepaid pension asset	1,713		1,558
Unamortized energy contract assets	278		293
Deferred income taxes	14		6
Other	1,725		1,826
Total deferred debits and other assets	19,775		18,933
Total assets(a)	$	45,821	$	48,094

See the Combined Notes to Consolidated Financial Statements

18

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	500	$	840
Long-term debt due within one year	1,229		197
Accounts payable	1,489		1,253
Accrued expenses	654		788
Payables to affiliates	119		107
Borrowings from Exelon intercompany money pool	0		285
Mark-to-market derivative liabilities	695		262
Unamortized energy contract liabilities	4		7
Renewable energy credit obligation	508		661
Liabilities held for sale	2		375
Other	313		444
Total current liabilities	5,513		5,219
Long-term debt	4,627		5,566
Long-term debt to affiliates	322		324
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	3,460		3,656
Asset retirement obligations	12,257		12,054
Non-pension postretirement benefit obligations	857		858
Spent nuclear fuel obligation	1,209		1,208
Payables to affiliates	3,011		3,017
Mark-to-market derivative liabilities	311		205
Unamortized energy contract liabilities	3		3
Other	1,266		1,308
Total deferred credits and other liabilities	22,374		22,309
Total liabilities(a)	32,836		33,418
Commitments and contingencies	0		0
Equity
Member’s equity
Membership interest	9,624		9,624
Undistributed earnings	1,035		2,805
Accumulated other comprehensive loss, net	(27)		(30)
Total member’s equity	10,632		12,399
Noncontrolling interests	2,353		2,277
Total equity	12,985		14,676
Total liabilities and equity	$	45,821	$	48,094

__________

(a)Generation’s consolidated assets include $10,077 million and $10,182 million at June 30, 2021 and December 31, 2020, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $3,563 million and $3,572 million at June 30, 2021 and December 31, 2020, respectively, of certain VIEs for which the VIE creditors do not have recourse to Generation. See Note 17 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements

19

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
	Member’s Equity
(In millions)	Membership Interest		Undistributed Earnings		Accumulated Other Comprehensive Loss, net		Noncontrolling Interests		Total Equity
Balance, December 31, 2020	$	9,624	$	2,805	$	(30)	$	2,277	$	14,676
Net (loss) income	—		(793)		—		24		(769)
Changes in equity of noncontrolling interests	—		—		—		(10)		(10)
Distributions to member	—		(458)		—		—		(458)
Other comprehensive income, net of income taxes	—		0		1		0		1
Balance, March 31, 2021	$	9,624	$	1,554	$	(29)	$	2,291	$	13,440
Net (loss) income	—		(61)		—		74		13
Changes in equity of noncontrolling interests	—		—		—		(12)		(12)
Distributions to member	—		(458)		—		—		(458)
Other comprehensive income, net of income taxes	—		0		2		0		2
Balance, June 30, 2021	$	9,624	$	1,035	$	(27)	$	2,353	$	12,985

	Six Months Ended June 30, 2020
	Member’s Equity
(In millions)	Membership Interest		Undistributed Earnings		Accumulated Other Comprehensive Loss, net		Noncontrolling Interests		Total Equity
Balance, December 31, 2019	$	9,566	$	3,950	$	(32)	$	2,346	$	15,830
Net income (loss)	—		45		—		(206)		(161)
Changes in equity of noncontrolling interests	—		—		—		(11)		(11)
Sale of noncontrolling interests	2		—		—		—		2
Distributions to member	—		(468)		—		—		(468)
Other comprehensive loss, net of income taxes	—		0		(9)		0		(9)
Balance, March 31, 2020	$	9,568	$	3,527	$	(41)	$	2,129	$	15,183
Net income	—		476		—		53		529
Changes in equity of noncontrolling interests	—		—		—		(19)		(19)
Sale of noncontrolling interests	1		—		—		—		1
Distributions to member	—		(469)		—		—		(469)
Other comprehensive income, net of income taxes	—		0		2		0		2
Balance, June 30, 2020	$	9,569	$	3,534	$	(39)	$	2,163	$	15,227

See the Combined Notes to Consolidated Financial Statements

20

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)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	1,503	$	1,431	$	2,977	$	2,853
Revenues from alternative revenue programs	9		(25)		64		(13)
Operating revenues from affiliates	5		11		11		16
Total operating revenues	1,517		1,417		3,052		2,856
Operating expenses
Purchased power	421		380		862		770
Purchased power from affiliate	79		84		163		181
Operating and maintenance	250		469		495		713
Operating and maintenance from affiliates	73		67		144		140
Depreciation and amortization	296		274		589		547
Taxes other than income taxes	77		71		153		146
Total operating expenses	1,196		1,345		2,406		2,497
Operating income	321		72		646		359
Other income and (deductions)
Interest expense, net	(95)		(95)		(187)		(186)
Interest expense to affiliates	(3)		(3)		(6)		(6)
Other, net	15		11		22		22
Total other income and (deductions)	(83)		(87)		(171)		(170)
Income (loss) before income taxes	238		(15)		475		189
Income taxes	46		46		85		82
Net income (loss)	$	192	$	(61)	$	390	$	107
Comprehensive income (loss)	$	192	$	(61)	$	390	$	107

21

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	390	$	107
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	589		547
Asset impairments	0		15
Deferred income taxes and amortization of investment tax credits	143		129
Other non-cash operating activities	23		283
Changes in assets and liabilities:
Accounts receivable	(48)		(92)
Receivables from and payables to affiliates, net	5		(6)
Inventories	(2)		(7)
Accounts payable and accrued expenses	(45)		4
Collateral received (posted), net	2		(3)
Income taxes	(34)		(90)
Pension and non-pension postretirement benefit contributions	(173)		(144)
Other assets and liabilities	(292)		(245)
Net cash flows provided by operating activities	558		498
Cash flows from investing activities
Capital expenditures	(1,162)		(1,029)
Other investing activities	12		(4)
Net cash flows used in investing activities	(1,150)		(1,033)
Cash flows from financing activities
Changes in short-term borrowings	(290)		(130)
Issuance of long-term debt	700		1,000
Dividends paid on common stock	(253)		(249)
Contributions from parent	395		249
Other financing activities	(11)		(14)
Net cash flows provided by financing activities	541		856
(Decrease) increase in cash, restricted cash, and cash equivalents	(51)		321
Cash, restricted cash, and cash equivalents at beginning of period	405		403
Cash, restricted cash, and cash equivalents at end of period	$	354	$	724
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid	$	(93)	$	18

See the Combined Notes to Consolidated Financial Statements

22

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	71	$	83
Restricted cash and cash equivalents	240		279
Accounts receivable
Customer accounts receivable	687		656
Customer allowance for credit losses	(89)		(97)
Customer accounts receivable, net	598		559
Other accounts receivable	257		239
Other allowance for credit losses	(18)		(21)
Other accounts receivable, net	239		218
Receivables from affiliates	22		22
Inventories, net	170		170
Regulatory assets	298		279
Other	77		49
Total current assets	1,715		1,659
Property, plant, and equipment (net of accumulated depreciation and amortization of $5,885 and $5,672 as of June 30, 2021 and December 31, 2020, respectively)	25,170		24,557
Deferred debits and other assets
Regulatory assets	1,846		1,749
Investments	6		6
Goodwill	2,625		2,625
Receivables from affiliates	2,439		2,541
Prepaid pension asset	1,138		1,022
Other	385		307
Total deferred debits and other assets	8,439		8,250
Total assets	$	35,324	$	34,466

See the Combined Notes to Consolidated Financial Statements

23

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	33	$	323
Long-term debt due within one year	350		350
Accounts payable	575		683
Accrued expenses	346		390
Payables to affiliates	102		96
Customer deposits	90		86
Regulatory liabilities	419		289
Mark-to-market derivative liabilities	23		33
Other	147		143
Total current liabilities	2,085		2,393
Long-term debt	9,325		8,633
Long-term debt to financing trust	205		205
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	4,531		4,341
Asset retirement obligations	128		126
Non-pension postretirement benefits obligations	180		173
Regulatory liabilities	6,181		6,403
Mark-to-market derivative liabilities	242		268
Other	587		595
Total deferred credits and other liabilities	11,849		11,906
Total liabilities	23,464		23,137
Commitments and contingencies	0		0
Shareholders’ equity
Common stock	1,588		1,588
Other paid-in capital	8,680		8,285
Retained deficit unappropriated	(1,639)		(1,639)
Retained earnings appropriated	3,231		3,095
Total shareholders’ equity	11,860		11,329
Total liabilities and shareholders’ equity	$	35,324	$	34,466

See the Combined Notes to Consolidated Financial Statements

24

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Other Paid-In Capital		Retained Deficit Unappropriated		Retained Earnings Appropriated		Total Shareholders’ Equity
Balance, December 31, 2020	$	1,588	$	8,285	$	(1,639)	$	3,095	$	11,329
Net income	—		—		197		—		197
Appropriation of retained earnings for future dividends	—		—		(197)		197		0
Common stock dividends	—		—		—		(127)		(127)
Contributions from parent	—		198		—		—		198
Balance, March 31, 2021	$	1,588	$	8,483	$	(1,639)	$	3,165	$	11,597
Net income	—		—		192		—		192
Appropriation of retained earnings for future dividends	—		—		(192)		192		0
Common stock dividends	—		—		—		(126)		(126)
Contributions from parent	—		197		—		—		197
Balance, June 30, 2021	$	1,588	$	8,680	$	(1,639)	$	3,231	$	11,860
	Six Months Ended June 30, 2020
(In millions)	Common Stock		Other Paid-In Capital		Retained Deficit Unappropriated		Retained Earnings Appropriated		Total Shareholders’ Equity
Balance, December 31, 2019	$	1,588	$	7,572	$	(1,639)	$	3,156	$	10,677
Net income	—		—		168		—		168
Appropriation of retained earnings for future dividends	—		—		(168)		168		0
Common stock dividends	—		—		—		(125)		(125)
Contributions from parent	—		125		—		—		125
Balance, March 31, 2020	$	1,588	$	7,697	$	(1,639)	$	3,199	$	10,845
Net loss	—		—		(61)		—		(61)
Common stock dividends	—		—		—		(124)		(124)
Contributions from parent	—		124		—		—		124
Balance, June 30, 2020	$	1,588	$	7,821	$	(1,700)	$	3,075	$	10,784

See the Combined Notes to Consolidated Financial Statements

25

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)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	602	$	580	$	1,251	$	1,180
Natural gas operating revenues	82		95		310		304
Revenues from alternative revenue programs	7		4		17		5
Operating revenues from affiliates	2		2		4		4
Total operating revenues	693		681		1,582		1,493
Operating expenses
Purchased power	145		142		334		306
Purchased fuel	22		34		108		117
Purchased power from affiliate	40		40		81		76
Operating and maintenance	166		235		360		414
Operating and maintenance from affiliates	43		40		83		78
Depreciation and amortization	87		88		173		173
Taxes other than income taxes	49		39		92		78
Total operating expenses	552		618		1,231		1,242
Operating income	141		63		351		251
Other income and (deductions)
Interest expense, net	(39)		(33)		(74)		(65)
Interest expense to affiliates	(3)		(3)		(6)		(6)
Other, net	7		5		12		7
Total other income and (deductions)	(35)		(31)		(68)		(64)
Income before income taxes	106		32		283		187
Income taxes	2		(7)		12		9
Net income	$	104	$	39	$	271	$	178
Comprehensive income	$	104	$	39	$	271	$	178

See the Combined Notes to Consolidated Financial Statements

26

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	271	$	178
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	173		173
Deferred income taxes and amortization of investment tax credits	21		6
Other non-cash operating activities	(5)		25
Changes in assets and liabilities:
Accounts receivable	86		22
Receivables from and payables to affiliates, net	2		3
Inventories	3		10
Accounts payable and accrued expenses	(46)		27
Income taxes	24		15
Pension and non-pension postretirement benefit contributions	(15)		(18)
Other assets and liabilities	(140)		(48)
Net cash flows provided by operating activities	374		393
Cash flows from investing activities
Capital expenditures	(577)		(512)
Changes in Exelon intercompany money pool	0		68
Other investing activities	4		3
Net cash flows used in investing activities	(573)		(441)
Cash flows from financing activities
Issuance of long-term debt	375		350
Changes in Exelon intercompany money pool	(40)		0
Dividends paid on common stock	(169)		(170)
Contributions from parent	395		231
Other financing activities	(4)		(3)
Net cash flows provided by financing activities	557		408
Increase in cash, restricted cash, and cash equivalents	358		360
Cash, restricted cash, and cash equivalents at beginning of period	26		27
Cash, restricted cash, and cash equivalents at end of period	$	384	$	387
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid	$	(16)	$	42

See the Combined Notes to Consolidated Financial Statements

27

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	376	$	19
Restricted cash and cash equivalents	8		7
Accounts receivable
Customer accounts receivable	419		511
Customer allowance for credit losses	(111)		(116)
Customer accounts receivable, net	308		395
Other accounts receivable	106		130
Other allowance for credit losses	(7)		(8)
Other accounts receivable, net	99		122
Receivables from affiliates	0		2
Inventories, net
Fossil fuel	25		33
Materials and supplies	42		38
Prepaid utility taxes	76		0
Regulatory assets	30		25
Other	37		21
Total current assets	1,001		662
Property, plant, and equipment (net of accumulated depreciation and amortization of $3,906 and $3,843 as of June 30, 2021 and December 31, 2020, respectively)	10,581		10,181
Deferred debits and other assets
Regulatory assets	866		776
Investments	32		30
Receivables from affiliates	571		475
Prepaid pension asset	387		375
Other	53		32
Total deferred debits and other assets	1,909		1,688
Total assets	$	13,491	$	12,531

See the Combined Notes to Consolidated Financial Statements

28

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Long-term debt due within one year	$	300	$	300
Accounts payable	436		479
Accrued expenses	125		129
Payables to affiliates	50		50
Borrowings from Exelon intercompany money pool	0		40
Customer deposits	50		59
Regulatory liabilities	109		121
Other	29		30
Total current liabilities	1,099		1,208
Long-term debt	3,825		3,453
Long-term debt to financing trusts	184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	2,345		2,242
Asset retirement obligations	29		29
Non-pension postretirement benefits obligations	287		286
Regulatory liabilities	600		503
Other	92		93
Total deferred credits and other liabilities	3,353		3,153
Total liabilities	8,461		7,998
Commitments and contingencies	0		0
Shareholder’s equity
Common stock	3,409		3,014
Retained earnings	1,621		1,519
Total shareholder’s equity	5,030		4,533
Total liabilities and shareholder's equity	$	13,491	$	12,531

See the Combined Notes to Consolidated Financial Statements

29

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2020	$	3,014	$	1,519	$	4,533
Net income	—		167		167
Common stock dividends	—		(85)		(85)
Balance, March 31, 2021	$	3,014	$	1,601	$	4,615
Net income	—		104		104
Common stock dividends	—		(84)		(84)
Contributions from parent	395		—		395
Balance, June 30, 2021	$	3,409	$	1,621	$	5,030
	Six Months Ended June 30, 2020
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2019	$	2,766	$	1,412	$	4,178
Net income	—		140		140
Common stock dividends	—		(85)		(85)
Contributions from parent	231		—		231
Balance, March 31, 2020	$	2,997	$	1,467	$	4,464
Net income	—		39		39
Common stock dividends	—		(85)		(85)
Balance, June 30, 2020	$	2,997	$	1,421	$	4,418

See the Combined Notes to Consolidated Financial Statements

30

BALTIMORE GAS AND ELECTRIC COMPANY

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	560	$	530	$	1,180	$	1,125
Natural gas operating revenues	125		119		455		419
Revenues from alternative revenue programs	(10)		(37)		8		0
Operating revenues from affiliates	7		4		13		10
Total operating revenues	682		616		1,656		1,554
Operating expenses
Purchased power	133		107		295		221
Purchased fuel	27		18		126		95
Purchased power and fuel from affiliate	59		69		129		167
Operating and maintenance	147		146		299		293
Operating and maintenance from affiliates	46		41		91		83
Depreciation and amortization	141		129		293		272
Taxes other than income taxes	67		63		139		132
Total operating expenses	620		573		1,372		1,263
Operating income	62		43		284		291
Other income and (deductions)
Interest expense, net	(34)		(32)		(67)		(64)
Other, net	9		6		16		10
Total other income and (deductions)	(25)		(26)		(51)		(54)
Income before income taxes	37		17		233		237
Income taxes	(8)		(22)		(21)		18
Net income	$	45	$	39	$	254	$	219
Comprehensive income	$	45	$	39	$	254	$	219

See the Combined Notes to Consolidated Financial Statements

31

BALTIMORE GAS AND ELECTRIC COMPANY

STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	254	$	219
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	293		272
Deferred income taxes and amortization of investment tax credits	11		22
Other non-cash operating activities	28		50
Changes in assets and liabilities:
Accounts receivable	73		19
Receivables from and payables to affiliates, net	(19)		(26)
Inventories	(9)		10
Accounts payable and accrued expenses	(51)		(15)
Collateral posted, net	2		0
Income taxes	(27)		26
Pension and non-pension postretirement benefit contributions	(71)		(68)
Other assets and liabilities	(96)		(5)
Net cash flows provided by operating activities	388		504
Cash flows from investing activities
Capital expenditures	(620)		(548)
Other investing activities	10		(4)
Net cash flows used in investing activities	(610)		(552)
Cash flows from financing activities
Changes in short-term borrowings	0		(76)
Issuance of long-term debt	600		400
Dividends paid on common stock	(146)		(123)
Contributions from parent	0		26
Other financing activities	(6)		(8)
Net cash flows provided by financing activities	448		219
Increase in cash, restricted cash, and cash equivalents	226		171
Cash, restricted cash, and cash equivalents at beginning of period	145		25
Cash, restricted cash, and cash equivalents at end of period	$	371	$	196
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(71)	$	(14)

See the Combined Notes to Consolidated Financial Statements

32

BALTIMORE GAS AND ELECTRIC COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	368	$	144
Restricted cash and cash equivalents	3		1
Accounts receivable
Customer accounts receivable	398		487
Customer allowance for credit losses	(27)		(35)
Customer accounts receivable, net	371		452
Other accounts receivable	146		117
Other allowance for credit losses	(8)		(9)
Other accounts receivable, net	138		108
Receivables from affiliates	0		3
Inventories, net
Fossil fuel	27		25
Materials and supplies	48		41
Regulatory assets	177		168
Other	9		6
Total current assets	1,141		948
Property, plant, and equipment (net of accumulated depreciation and amortization of $4,151 and $4,034 as of June 30, 2021 and December 31, 2020, respectively)	10,200		9,872
Deferred debits and other assets
Regulatory assets	473		481
Investments	13		10
Prepaid pension asset	302		270
Other	57		69
Total deferred debits and other assets	845		830
Total assets	$	12,186	$	11,650

See the Combined Notes to Consolidated Financial Statements

33

BALTIMORE GAS AND ELECTRIC COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Long-term debt due within one year	$	300	$	300
Accounts payable	287		346
Accrued expenses	138		205
Payables to affiliates	41		61
Customer deposits	101		110
Regulatory liabilities	32		30
Other	87		91
Total current liabilities	986		1,143
Long-term debt	3,959		3,364
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	1,643		1,521
Asset retirement obligations	24		23
Non-pension postretirement benefits obligations	179		189
Regulatory liabilities	998		1,109
Other	92		104
Total deferred credits and other liabilities	2,936		2,946
Total liabilities	7,881		7,453
Commitments and contingencies	0		0
Shareholder's equity
Common stock	2,318		2,318
Retained earnings	1,987		1,879
Total shareholder's equity	4,305		4,197
Total liabilities and shareholder's equity	$	12,186	$	11,650

See the Combined Notes to Consolidated Financial Statements

34

BALTIMORE GAS AND ELECTRIC COMPANY

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2020	$	2,318	$	1,879	$	4,197
Net income	—		209		209
Common stock dividends	—		(74)		(74)
Balance, March 31, 2021	$	2,318	$	2,014	$	4,332
Net income	—		45		45
Common stock dividends	—		(72)		(72)
Balance, June 30, 2021	$	2,318	$	1,987	$	4,305
	Six Months Ended June 30, 2020
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2019	$	1,907	$	1,776	$	3,683
Net income	—		181		181
Common stock dividends	—		(62)		(62)
Balance, March 31, 2020	$	1,907	$	1,895	$	3,802
Net income	—		39		39
Common stock dividends	—		(62)		(62)
Contributions from parent	26		—		26
Balance, June 30, 2020	$	1,933	$	1,872	$	3,805

See the Combined Notes to Consolidated Financial Statements

35

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	1,071	$	1,047	$	2,195	$	2,133
Natural gas operating revenues	24		30		94		94
Revenues from alternative revenue programs	41		(64)		88		(47)
Operating revenues from affiliates	4		3		7		7
Total operating revenues	1,140		1,016		2,384		2,187
Operating expenses
Purchased power	308		286		656		586
Purchased fuel	9		11		41		42
Purchased power from affiliates	79		78		177		182
Operating and maintenance	217		245		434		464
Operating and maintenance from affiliates	39		36		79		74
Depreciation and amortization	194		191		404		385
Taxes other than income taxes	109		109		222		222
Total operating expenses	955		956		2,013		1,955
Gain on sales of assets	0		0		0		2
Operating income	185		60		371		234
Other income and (deductions)
Interest expense, net	(67)		(67)		(134)		(134)
Other, net	20		14		36		26
Total other income and (deductions)	(47)		(53)		(98)		(108)
Income before income taxes	138		7		273		126
Income taxes	(3)		(87)		5		(76)
Equity in earnings of unconsolidated affiliate	0		0		1		0
Net income	$	141	$	94	$	269	$	202
Comprehensive income	$	141	$	94	$	269	$	202

See the Combined Notes to Consolidated Financial Statements

36

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	269	$	202
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	404		385
Deferred income taxes and amortization of investment tax credits	10		(74)
Other non-cash operating activities	(50)		107
Changes in assets and liabilities:
Accounts receivable	(30)		(64)
Receivables from and payables to affiliates, net	(22)		(22)
Inventories	3		6
Accounts payable and accrued expenses	(35)		14
Income taxes	(1)		(30)
Pension and non-pension postretirement benefit contributions	(40)		(31)
Other assets and liabilities	(131)		(146)
Net cash flows provided by operating activities	377		347
Cash flows from investing activities
Capital expenditures	(889)		(686)
Other investing activities	(2)		2
Net cash flows used in investing activities	(891)		(684)
Cash flows from financing activities
Changes in short-term borrowings	(36)		(189)
Issuance of long-term debt	625		373
Retirement of long-term debt	(249)		(35)
Changes in Exelon intercompany money pool	(12)		10
Distributions to member	(414)		(268)
Contributions from member	560		359
Other financing activities	(8)		(8)
Net cash flows provided by financing activities	466		242
Decrease in cash, restricted cash, and cash equivalents	(48)		(95)
Cash, restricted cash, and cash equivalents at beginning of period	160		181
Cash, restricted cash, and cash equivalents at end of period	$	112	$	86
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(41)	$	(24)

See the Combined Notes to Consolidated Financial Statements

37

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	61	$	111
Restricted cash and cash equivalents	42		39
Accounts receivable
Customer accounts receivable	617		611
Customer allowance for credit losses	(93)		(86)
Customer accounts receivable, net	524		525
Other accounts receivable	286		260
Other allowance for credit losses	(38)		(33)
Other accounts receivable, net	248		227
Receivables from affiliates	1		8
Inventories, net
Fossil fuel	5		6
Materials and supplies	196		198
Regulatory assets	431		440
Other	77		45
Total current assets	1,585		1,599
Property, plant, and equipment (net of accumulated depreciation and amortization of $1,827 and $1,811 as of June 30, 2021 and December 31, 2020, respectively)	15,927		15,377
Deferred debits and other assets
Regulatory assets	1,898		1,933
Investments	145		140
Goodwill	4,005		4,005
Prepaid pension asset	370		365
Deferred income taxes	10		10
Other	295		307
Total deferred debits and other assets	6,723		6,760
Total assets(a)	$	24,235	$	23,736

See the Combined Notes to Consolidated Financial Statements

38

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND MEMBER'S EQUITY
Current liabilities
Short-term borrowings	$	332	$	368
Long-term debt due within one year	300		347
Accounts payable	517		539
Accrued expenses	246		299
Payables to affiliates	75		104
Borrowings from Exelon intercompany money pool	9		21
Customer deposits	89		106
Regulatory liabilities	123		137
Unamortized energy contract liabilities	92		92
Other	131		141
Total current liabilities	1,914		2,154
Long-term debt	7,069		6,659
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	2,541		2,439
Asset retirement obligations	59		59
Non-pension postretirement benefit obligations	75		86
Regulatory liabilities	1,338		1,438
Unamortized energy contract liabilities	190		235
Other	590		622
Total deferred credits and other liabilities	4,793		4,879
Total liabilities(a)	13,776		13,692
Commitments and contingencies	0		0
Member's equity
Membership interest	10,672		10,112
Undistributed losses	(213)		(68)
Total member's equity	10,459		10,044
Total liabilities and member's equity	$	24,235	$	23,736

__________

(a)PHI’s consolidated total assets include $16 million and $18 million at June 30, 2021 and December 31, 2020, respectively, of PHI's consolidated VIE that can only be used to settle the liabilities of the VIE. PHI’s consolidated total liabilities include $15 million and $26 million at June 30, 2021 and December 31, 2020, respectively, of PHI's consolidated VIE for which the VIE creditors do not have recourse to PHI. See Note 17 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements

39

PEPCO HOLDINGS LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Membership Interest		Undistributed (Losses)/Earnings		Total Member's Equity
Balance, December 31, 2020	$	10,112	$	(68)	$	10,044
Net income	—		128		128
Distributions to member	—		(81)		(81)
Contributions from member	560		—		560
Balance, March 31, 2021	$	10,672	$	(21)	$	10,651
Net income	—		141		141
Distributions to member	—		(333)		(333)
Balance, June 30, 2021	$	10,672	$	(213)	$	10,459

	Six Months Ended June 30, 2020
(In millions)	Membership Interest		Undistributed (Losses)/Earnings		Total Member's Equity
Balance, December 31, 2019	$	9,618	$	(10)	$	9,608
Net income	—		108		108
Distributions to member	—		(134)		(134)
Contributions from member	144		—		144
Balance, March 31, 2020	$	9,762	$	(36)	$	9,726
Net income	—		94		94
Distributions to member	—		(134)		(134)
Contributions from member	215		—		215
Balance, June 30, 2020	$	9,977	$	(76)	$	9,901

See the Combined Notes to Consolidated Financial Statements

40

POTOMAC ELECTRIC POWER COMPANY

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	503	$	506	$	1,027	$	1,034
Revenues from alternative revenue programs	19		(13)		46		2
Operating revenues from affiliates	1		1		3		3
Total operating revenues	523		494		1,076		1,039
Operating expenses
Purchased power	76		78		168		164
Purchased power from affiliate	57		60		130		139
Operating and maintenance	62		67		118		128
Operating and maintenance from affiliates	51		52		103		103
Depreciation and amortization	96		92		199		186
Taxes other than income taxes	87		87		177		179
Total operating expenses	429		436		895		899
Operating income	94		58		181		140
Other income and (deductions)
Interest expense, net	(35)		(34)		(69)		(68)
Other, net	13		9		25		18
Total other income and (deductions)	(22)		(25)		(44)		(50)
Income before income taxes	72		33		137		90
Income taxes	(3)		(24)		3		(19)
Net income	$	75	$	57	$	134	$	109
Comprehensive income	$	75	$	57	$	134	$	109

See the Combined Notes to Consolidated Financial Statements

41

POTOMAC ELECTRIC POWER COMPANY

STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	134	$	109
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	199		186
Deferred income taxes and amortization of investment tax credits	10		(22)
Other non-cash operating activities	(43)		11
Changes in assets and liabilities:
Accounts receivable	(23)		(45)
Receivables from and payables to affiliates, net	(11)		(22)
Inventories	1		3
Accounts payable and accrued expenses	(26)		11
Income taxes	(20)		(18)
Pension and non-pension postretirement benefit contributions	(7)		(6)
Other assets and liabilities	(79)		(52)
Net cash flows provided by operating activities	135		155
Cash flows from investing activities
Capital expenditures	(439)		(324)
Other investing activities	(2)		(3)
Net cash flows used in investing activities	(441)		(327)
Cash flows from financing activities
Changes in short-term borrowings	119		(68)
Issuance of long-term debt	150		150
Retirement of long-term debt	0		(1)
Changes in PHI intercompany money pool	9		50
Dividends paid on common stock	(123)		(101)
Contributions from parent	138		137
Other financing activities	(2)		(6)
Net cash flows provided by financing activities	291		161
Decrease in cash, restricted cash, and cash equivalents	(15)		(11)
Cash, restricted cash, and cash equivalents at beginning of period	65		63
Cash, restricted cash, and cash equivalents at end of period	$	50	$	52
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(15)	$	(28)

See the Combined Notes to Consolidated Financial Statements

42

POTOMAC ELECTRIC POWER COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	17	$	30
Restricted cash and cash equivalents	33		35
Accounts receivable
Customer accounts receivable	290		279
Customer allowance for credit losses	(38)		(32)
Customer accounts receivable, net	252		247
Other accounts receivable	155		131
Other allowance for credit losses	(16)		(13)
Other accounts receivable, net	139		118
Receivables from affiliates	0		2
Inventories, net	110		111
Regulatory assets	215		214
Other	13		13
Total current assets	779		770
Property, plant, and equipment (net of accumulated depreciation and amortization of $3,782 and $3,697 as of June 30, 2021 and December 31, 2020, respectively)	7,771		7,456
Deferred debits and other assets
Regulatory assets	571		570
Investments	118		115
Prepaid pension asset	282		284
Other	67		69
Total deferred debits and other assets	1,038		1,038
Total assets	$	9,588	$	9,264

See the Combined Notes to Consolidated Financial Statements

43

POTOMAC ELECTRIC POWER COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Short-term borrowings	$	154	$	35
Long-term debt due within one year	204		3
Accounts payable	215		226
Accrued expenses	123		164
Payables to affiliates	42		55
Borrowings from PHI intercompany money pool	9		0
Customer deposits	41		51
Regulatory liabilities	38		46
Merger related obligation	29		33
Current portion of DC PLUG obligation	30		30
Other	29		31
Total current liabilities	914		674
Long-term debt	3,114		3,162
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	1,244		1,189
Asset retirement obligations	39		39
Non-pension postretirement benefit obligations	7		13
Regulatory liabilities	599		644
Other	319		340
Total deferred credits and other liabilities	2,208		2,225
Total liabilities	6,236		6,061
Commitments and contingencies	0		0
Shareholder's equity
Common stock	2,196		2,058
Retained earnings	1,156		1,145
Total shareholder's equity	3,352		3,203
Total liabilities and shareholder's equity	$	9,588	$	9,264

See the Combined Notes to Consolidated Financial Statements

44

POTOMAC ELECTRIC POWER COMPANY

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2020	$	2,058	$	1,145	$	3,203
Net income	—		59		59
Common stock dividends	—		(28)		(28)
Contributions from parent	138		—		138
Balance, March 31, 2021	$	2,196	$	1,176	$	3,372
Net income	—		75		75
Common stock dividends	—		(95)		(95)
Balance, June 30, 2021	$	2,196	$	1,156	$	3,352

	Six Months Ended June 30, 2020
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2019	$	1,796	$	1,111	$	2,907
Net income	—		52		52
Common stock dividends	—		(28)		(28)
Contributions from parent	137		—		137
Balance, March 31, 2020	$	1,933	$	1,135	$	3,068
Net income	—		57		57
Common stock dividends	—		(73)		(73)
Balance, June 30, 2020	$	1,933	$	1,119	$	3,052

See the Combined Notes to Consolidated Financial Statements

45

DELMARVA POWER & LIGHT COMPANY

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	262	$	260	$	562	$	543
Natural gas operating revenues	24		30		95		94
Revenues from alternative revenue programs	10		(25)		19		(24)
Operating revenues from affiliates	2		2		4		4
Total operating revenues	298		267		680		617
Operating expenses
Purchased power	82		80		185		169
Purchased fuel	9		11		41		42
Purchased power from affiliates	17		16		37		38
Operating and maintenance	41		54		85		97
Operating and maintenance from affiliates	39		38		79		75
Depreciation and amortization	51		47		104		94
Taxes other than income taxes	16		17		33		32
Total operating expenses	255		263		564		547
Operating income	43		4		116		70
Other income and (deductions)
Interest expense, net	(16)		(15)		(30)		(31)
Other, net	4		2		6		5
Total other income and (deductions)	(12)		(13)		(24)		(26)
Income (loss) before income taxes	31		(9)		92		44
Income taxes	1		(28)		6		(20)
Net income	$	30	$	19	$	86	$	64
Comprehensive income	$	30	$	19	$	86	$	64

See the Combined Notes to Consolidated Financial Statements

46

DELMARVA POWER & LIGHT COMPANY

STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	86	$	64
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	104		94
Deferred income taxes and amortization of investment tax credits	4		(19)
Other non-cash operating activities	(12)		40
Changes in assets and liabilities:
Accounts receivable	24		6
Receivables from and payables to affiliates, net	(12)		(2)
Accounts payable and accrued expenses	7		3
Income taxes	14		(12)
Other assets and liabilities	(22)		(21)
Net cash flows provided by operating activities	193		153
Cash flows from investing activities
Capital expenditures	(211)		(184)
Changes in PHI intercompany money pool	(9)		(55)
Other investing activities	1		(3)
Net cash flows used in investing activities	(219)		(242)
Cash flows from financing activities
Changes in short-term borrowings	(146)		(56)
Issuance of long-term debt	125		100
Retirement of long-term debt	0		(1)
Dividends paid on common stock	(63)		(66)
Contributions from parent	120		106
Other financing activities	(3)		(1)
Net cash flows provided by financing activities	33		82
Increase (decrease) in cash, restricted cash, and cash equivalents	7		(7)
Cash, restricted cash, and cash equivalents at beginning of period	15		13
Cash, restricted cash, and cash equivalents at end of period	$	22	$	6
Supplemental cash flow information
Decrease in capital expenditures not paid	$	(14)	$	(4)

See the Combined Notes to Consolidated Financial Statements

47

DELMARVA POWER & LIGHT COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	17	$	15
Restricted cash and cash equivalents	5		0
Accounts receivable
Customer accounts receivable	139		176
Customer allowance for credit losses	(19)		(22)
Customer accounts receivable, net	120		154
Other accounts receivable	62		68
Other allowance for credit losses	(9)		(9)
Other accounts receivable, net	53		59
Receivables from affiliates	0		1
Receivable from PHI intercompany pool	9		0
Inventories, net
Fossil fuel	5		6
Materials and supplies	52		51
Prepaid utility taxes	0		11
Regulatory assets	70		58
Renewable energy credits	18		10
Other	3		3
Total current assets	352		368
Property, plant, and equipment (net of accumulated depreciation and amortization of $1,571 and $1,533 as of June 30, 2021 and December 31, 2020, respectively)	4,425		4,314
Deferred debits and other assets
Regulatory assets	223		222
Goodwill	8		8
Prepaid pension asset	159		162
Other	62		66
Total deferred debits and other assets	452		458
Total assets	$	5,229	$	5,140

See the Combined Notes to Consolidated Financial Statements

48

DELMARVA POWER & LIGHT COMPANY

BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Short-term borrowings	$	0	$	146
Long-term debt due within one year	82		82
Accounts payable	125		126
Accrued expenses	40		46
Payables to affiliates	23		36
Customer deposits	28		32
Regulatory liabilities	46		47
Other	14		20
Total current liabilities	358		535
Long-term debt	1,722		1,595
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	745		715
Asset retirement obligations	14		14
Non-pension postretirement benefits obligations	13		15
Regulatory liabilities	462		493
Other	96		97
Total deferred credits and other liabilities	1,330		1,334
Total liabilities	3,410		3,464
Commitments and contingencies	0		0
Shareholder's equity
Common stock	1,209		1,089
Retained earnings	610		587
Total shareholder's equity	1,819		1,676
Total liabilities and shareholder's equity	$	5,229	$	5,140

See the Combined Notes to Consolidated Financial Statements

49

DELMARVA POWER & LIGHT COMPANY

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2020	$	1,089	$	587	$	1,676
Net income	—		56		56
Common stock dividends	—		(40)		(40)
Contributions from parent	120		—		120
Balance, March 31, 2021	$	1,209	$	603	$	1,812
Net income	—		30		30
Common stock dividends	—		(23)		(23)
Balance, June 30, 2021	$	1,209	$	610	$	1,819

	Six Months Ended June 30, 2020
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2019	$	977	$	603	$	1,580
Net income	—		45		45
Common stock dividends	—		(52)		(52)
Contributions from parent	6		—		6
Balance, March 31, 2020	$	983	$	596	$	1,579
Net income	—		19		19
Common stock dividends	—		(14)		(14)
Contributions from parent	100		—		100
Balance, June 30, 2020	$	1,083	$	601	$	1,684

See the Combined Notes to Consolidated Financial Statements

50

ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating revenues
Electric operating revenues	$	306	$	281	$	605	$	556
Revenues from alternative revenue programs	12		(26)		23		(25)
Operating revenues from affiliates	1		1		1		1
Total operating revenues	319		256		629		532
Operating expenses
Purchased power	149		128		302		254
Purchased power from affiliate	5		2		9		5
Operating and maintenance	39		48		82		94
Operating and maintenance from affiliates	34		34		68		66
Depreciation and amortization	40		44		87		86
Taxes other than income taxes	2		2		4		4
Total operating expenses	269		258		552		509
Gain on sale of assets	0		0		0		2
Operating income (loss)	50		(2)		77		25
Other income and (deductions)
Interest expense, net	(14)		(15)		(29)		(29)
Other, net	0		2		2		3
Total other income and (deductions)	(14)		(13)		(27)		(26)
Income (loss) before income taxes	36		(15)		50		(1)
Income taxes	(1)		(33)		(1)		(32)
Net income	$	37	$	18	$	51	$	31
Comprehensive income	$	37	$	18	$	51	$	31

See the Combined Notes to Consolidated Financial Statements

51

ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2021		2020
Cash flows from operating activities
Net income	$	51	$	31
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	87		86
Deferred income taxes and amortization of investment tax credits	(2)		(30)
Other non-cash operating activities	(14)		34
Changes in assets and liabilities:
Accounts receivable	(30)		(23)
Receivables from and payables to affiliates, net	4		9
Inventories	2		2
Accounts payable and accrued expenses	(2)		17
Income taxes	2		2
Pension and non-pension postretirement benefit contributions	(3)		(2)
Other assets and liabilities	(25)		(68)
Net cash flows provided by operating activities	70		58
Cash flows from investing activities
Capital expenditures	(239)		(178)
Other investing activities	0		5
Net cash flows used in investing activities	(239)		(173)
Cash flows from financing activities
Changes in short-term borrowings	(9)		(65)
Issuance of long-term debt	350		123
Retirement of long-term debt	(249)		(34)
Changes in PHI intercompany money pool	0		5
Dividends paid on common stock	(229)		(35)
Contributions from parent	303		116
Other financing activities	(4)		(1)
Net cash flows provided by financing activities	162		109
Decrease in cash, restricted cash, and cash equivalents	(7)		(6)
Cash, restricted cash, and cash equivalents at beginning of period	30		28
Cash, restricted cash, and cash equivalents at end of period	$	23	$	22
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid	$	(13)	$	7

See the Combined Notes to Consolidated Financial Statements

52

ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	11	$	17
Restricted cash and cash equivalents	3		3
Accounts receivable
Customer accounts receivable	188		156
Customer allowance for credit losses	(36)		(32)
Customer accounts receivable, net	152		124
Other accounts receivable	69		72
Other allowance for credit losses	(13)		(11)
Other accounts receivable, net	56		61
Receivables from affiliates	1		6
Inventories, net	35		37
Prepaid utility taxes	37		0
Regulatory assets	53		75
Other	5		3
Total current assets	353		326
Property, plant, and equipment (net of accumulated depreciation and amortization of $1,358 and $1,303 as of June 30, 2021 and December 31, 2020, respectively)	3,614		3,475
Deferred debits and other assets
Regulatory assets	422		395
Prepaid pension asset	35		40
Other	49		50
Total deferred debits and other assets	506		485
Total assets(a)	$	4,473	$	4,286

See the Combined Notes to Consolidated Financial Statements

53

ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)	June 30, 2021		December 31, 2020
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Short-term borrowings	$	178	$	187
Long-term debt due within one year	13		261
Accounts payable	170		177
Accrued expenses	38		46
Payables to affiliates	30		31
Customer deposits	20		23
Regulatory liabilities	39		44
Other	11		11
Total current liabilities	499		780
Long-term debt	1,502		1,152
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits	643		624
Non-pension postretirement benefit obligations	14		17
Regulatory liabilities	252		274
Other	47		48
Total deferred credits and other liabilities	956		963
Total liabilities(a)	2,957		2,895
Commitments and contingencies	0		0
Shareholder's equity
Common stock	1,574		1,271
Retained (deficit) earnings	(58)		120
Total shareholder's equity	1,516		1,391
Total liabilities and shareholder's equity	$	4,473	$	4,286

__________

(a)ACE’s consolidated total assets include $12 million and $13 million at June 30, 2021 and December 31, 2020, respectively, of ACE's consolidated VIE that can only be used to settle the liabilities of the VIE. ACE’s consolidated total liabilities include $11 million and $21 million at June 30, 2021 and December 31, 2020, respectively, of ACE's consolidated VIE for which the VIE creditors do not have recourse to ACE. See Note 17 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements

54

ATLANTIC CITY ELECTRIC COMPANY AND SUBSIDIARY COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

(Unaudited)

	Six Months Ended June 30, 2021
(In millions)	Common Stock		Retained Earnings (Deficit)		Total Shareholder's Equity
Balance, December 31, 2020	$	1,271	$	120	$	1,391
Net income	—		14		14
Common stock dividends	—		(14)		(14)
Contributions from parent	303		—		303
Balance, March 31, 2021	$	1,574	$	120	$	1,694
Net income	—		37		37
Common stock dividends	—		(215)		(215)
Balance, June 30, 2021	$	1,574	$	(58)	$	1,516

	Six Months Ended June 30, 2020
(In millions)	Common Stock		Retained Earnings		Total Shareholder's Equity
Balance, December 31, 2019	$	1,154	$	122	$	1,276
Net income	—		13		13
Common stock dividends	—		(23)		(23)
Contributions from parent	1		—		1
Balance, March 31, 2020	$	1,155	$	112	$	1,267
Net income	—		18		18
Common stock dividends	—		(12)		(12)
Contributions from parent	115		—		115
Balance, June 30, 2020	$	1,270	$	118	$	1,388

See the Combined Notes to Consolidated Financial Statements

55

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise noted)

Note 1 — Significant Accounting Policies

1. Significant Accounting Policies (All Registrants)

Description of Business (All Registrants)

Exelon is a utility services holding company engaged in the generation, delivery and marketing of energy through Generation and the energy distribution and transmission businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.

Name of Registrant	Business	Service Territories
Exelon Generation Company, LLC	Generation, physical delivery and marketing of power across multiple geographical regions through its customer-facing business, Constellation, which sells electricity to both wholesale and retail customers. Generation also sells natural gas, renewable energy, and other energy-related products and services.	Five reportable segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions
Commonwealth Edison Company	Purchase and regulated retail sale of electricity	Northern Illinois, including the City of Chicago
	Transmission and distribution of electricity to retail customers
PECO Energy Company	Purchase and regulated retail sale of electricity and natural gas	Southeastern Pennsylvania, including the City of Philadelphia (electricity)
	Transmission and distribution of electricity and distribution of natural gas to retail customers	Pennsylvania counties surrounding the City of Philadelphia (natural gas)
Baltimore Gas and Electric Company	Purchase and regulated retail sale of electricity and natural gas	Central Maryland, including the City of Baltimore (electricity and natural gas)
	Transmission and distribution of electricity and distribution of natural gas to retail customers
Pepco Holdings LLC	Utility services holding company engaged, through its reportable segments Pepco, DPL, and ACE	Service Territories of Pepco, DPL, and ACE
Potomac Electric  Power Company	Purchase and regulated retail sale of electricity	District of Columbia, and major portions of Montgomery and Prince George’s Counties, Maryland
	Transmission and distribution of electricity to retail customers
Delmarva Power & Light Company	Purchase and regulated retail sale of electricity and natural gas	Portions of Delaware and Maryland (electricity)
	Transmission and distribution of electricity and distribution of natural gas to retail customers	Portions of New Castle County, Delaware (natural gas)
Atlantic City Electric Company	Purchase and regulated retail sale of electricity	Portions of Southern New Jersey
	Transmission and distribution of electricity to retail customers

Basis of Presentation (All Registrants)

This is a combined quarterly report of all Registrants. The Notes to the Consolidated Financial Statements apply to the Registrants as indicated parenthetically next to each corresponding disclosure. When appropriate, the Registrants are named specifically for their related activities and disclosures. Each of the Registrant’s Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated.

Through its business services subsidiary, BSC, Exelon provides its subsidiaries with a variety of support services at cost, including legal, human resources, financial, information technology, and supply management services. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services at cost, including legal, accounting, engineering, customer operations, distribution and transmission planning, asset management, system operations, and power procurement, to PHI operating companies. The costs of BSC and PHISCO are directly charged or allocated to the applicable subsidiaries. The results of Exelon’s corporate operations are presented as “Other” within the consolidated financial statements and include intercompany eliminations unless otherwise disclosed.

The accompanying consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 are unaudited but, in the opinion of the management of each Registrant include all adjustments that are considered necessary for a fair statement of the Registrants’ respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise

56

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise noted)

Note 1 — Significant Accounting Policies

disclosed. The December 31, 2020 Consolidated Balance Sheets were derived from audited financial statements. Financial results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2021. These Combined Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

2. Mergers, Acquisitions, and Dispositions (Exelon and Generation)

CENG Put Option (Exelon and Generation)

Generation owns a 50.01% membership interest in CENG, a joint venture with EDF, which wholly owns the Calvert Cliffs and Ginna nuclear stations and Nine Mile Point Unit 1, in addition to an 82% undivided ownership interest in Nine Mile Point Unit 2. CENG is 100% consolidated in Exelon's and Generation's financial statements. See Note 17 — Variable Interest Entities for additional information.

On April 1, 2014, Generation and EDF entered into various agreements including a NOSA, an amended LLC Operating Agreement, an Employee Matters Agreement, and a Put Option Agreement, among others. Under the amended LLC Operating Agreement, CENG made a $400 million special distribution to EDF and committed to make preferred distributions to Generation until Generation has received aggregate distributions of $400 million plus a return of 8.50% per annum.

Under the terms of the Put Option Agreement, EDF has the option to sell its 49.99% equity interest in CENG to Generation exercisable beginning on January 1, 2016 and thereafter until June 30, 2022. The Put Option Agreement’s terms also provide that in the event the put closing has not been completed prior to the 18-month anniversary of the exercise date, EDF may withdraw its exercise notice. In the event of a withdrawal, EDF retains the right to exercise the put option until the later of June 30, 2022 and 18 months following the date of withdrawal, but in no event later than January 1, 2024. EDF is not entitled to this withdrawal right in the event it breaches any provision of the Put Option Agreement that results in the failure of the put to close on or before the 18-month anniversary of the exercise date.

The Put Option Agreement provides that the purchase price is to be determined by agreement of the parties, or absent such agreement, by a third-party arbitration process. The third parties determining fair market value of EDF’s 49.99% interest are to take into consideration all rights and obligations under the LLC Operating Agreement and Employee Matters Agreement including but not limited to Generation’s rights with respect to any unpaid aggregate preferred distributions and the related return. As of June 30, 2021, the total unpaid aggregate preferred distributions and related return owed to Generation is $645 million. 

On November 20, 2019, Generation received notice of EDF’s intention to exercise the put option to sell its interest in CENG to Generation, and the put automatically exercised on January 19, 2020 at the end of the sixty-day advance notice period. At this time, Generation cannot reasonably predict the ultimate purchase price that will be paid to EDF for its interest in CENG. The transaction required approval by the FERC and the NYPSC, which approvals were received on July 30, 2020 and April 15, 2021, respectively. The sale process is currently expected to close in the second half of 2021. EDF has not exercised its right to withdraw the exercise of the put, which right became effective on July 19, 2021.

Agreement for Sale of Generation’s Solar Business (Exelon and Generation)

On December 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable, for the sale of a significant portion of Generation’s solar business, including 360 MW of generation in operation or under construction across more than 600 sites across the United States. Generation will retain certain solar assets not included in this agreement, primarily Antelope Valley.

Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions which were satisfied in the first quarter of 2021. The sale was completed on March 31, 2021 for a purchase price of $810 million. Generation received cash proceeds of $675 million, net of $125 million long-term debt assumed by the buyer and certain working capital and other post-closing adjustments. Exelon and

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 2 — Mergers, Acquisitions, and Dispositions

Generation recognized a pre-tax gain of $68 million which is included in Gain on sales of assets and businesses in Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income.

See Note 17 — Debt and Credit Agreements of the Exelon 2020 Form 10-K for additional information on the SolGen nonrecourse debt included as part of the transaction.

Agreement for the Sale of a Generation Biomass Facility (Exelon and Generation)

On April 28, 2021, Generation and ReGenerate Energy Holdings, LLC (“ReGenerate”) entered into a purchase agreement, under which ReGenerate agreed to purchase Generation’s interest in the Albany Green Energy biomass facility. As a result, in the second quarter of 2021, Exelon and Generation recorded a pre-tax impairment charge of $140 million within Operating and maintenance expense in Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income. Completion of the transaction was subject to the satisfaction of various customary closing conditions which were satisfied in the second quarter of 2021. The sale was completed on June 30, 2021 for a net purchase price of $36 million.

3. Regulatory Matters (All Registrants)

As discussed in Note 3 — Regulatory Matters of the Exelon 2020 Form 10-K, the Registrants are involved in rate and regulatory proceedings at the FERC and their state commissions. The following discusses developments in 2021 and updates to the 2020 Form 10-K.

Utility Regulatory Matters (Exelon, PHI, and the Utility Registrants)

Distribution Base Rate Case Proceedings

The following tables show the completed and pending distribution base rate case proceedings in 2021.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

Completed Distribution Base Rate Case Proceedings

Registrant/Jurisdiction	Filing Date	Service	Requested Revenue Requirement (Decrease) Increase		Approved Revenue Requirement (Decrease) Increase		Approved ROE		Approval Date	Rate Effective Date
ComEd - Illinois(a)	April 16, 2020	Electric	$	(11)	$	(14)	8.38	%	December 9, 2020	January 1, 2021
PECO - Pennsylvania	September 30, 2020	Natural Gas	69		29		10.24	%	June 22, 2021	July 1, 2021
BGE - Maryland(b)	May 15, 2020 (amended September 11, 2020)	Electric	203		140		9.50	%	December 16, 2020	January 1, 2021
		Natural Gas	108		74		9.65	%
Pepco - District of Columbia(c)	May 30, 2019 (amended June 1, 2020)	Electric	136		109		9.275	%	June 8, 2021	July 1, 2021
Pepco - Maryland(d)	October 26, 2020 (amended March 31, 2021)	Electric	104		52		9.55	%	June 28, 2021	June 28, 2021
ACE - New Jersey(e)	December 9, 2020 (amended February 26, 2021)	Electric	67		41		9.60	%	July 14, 2021	January 1, 2022

__________

(a)ComEd's 2021 approved revenue requirement reflects an increase of $50 million for the initial year revenue requirement for 2021 and a decrease of $64 million related to the annual reconciliation for 2019. The revenue requirement for 2021 and the revenue requirement for 2019 provide for a weighted average debt and equity return on distribution rate base of 6.28%, inclusive of an allowed ROE of 8.38%, reflecting the monthly average yields for 30-year treasury bonds plus 580 basis points.

(b)Reflects a three-year cumulative multi-year plan for 2021 through 2023. The MDPSC awarded BGE electric revenue requirement increases of $59 million, $39 million, and $42 million, before offsets, in 2021, 2022, and 2023, respectively, and natural gas revenue requirement increases of $53 million, $11 million, and $10 million, before offsets, in 2021, 2022, and 2023, respectively. BGE proposed to use certain tax benefits to fully offset the increases in 2021 and 2022 and partially offset the increase in 2023. However, the MDPSC only utilized the tax benefits to fully offset the increases in 2021 such that customer rates will remain unchanged from 2020 to 2021. The MDPSC has deferred a decision on whether to use certain tax benefits to offset the customer rate increases in 2022 and 2023 and BGE cannot predict the outcome.

(c)Reflects a cumulative multi-year plan with 18-months remaining in 2021 through 2022. The DCPSC awarded Pepco electric incremental revenue requirement increases of $42 million and $67 million, before offsets, for the remainder of 2021 and 2022, respectively. However, the DCPSC utilized the acceleration of refunds for certain tax benefits along with other rate relief to partially offset the customer rate increases by $22 million and $40 million for the remainder of 2021 and 2022, respectively.

(d)Reflects a three-year cumulative multi-year plan for April 1, 2021 through March 31, 2024. The MDPSC awarded Pepco electric incremental revenue requirement increases of $21 million, $16 million, and $15 million, before offsets, for the 12-month periods ending March 31, 2022, 2023, and 2024, respectively. Pepco proposed to utilize certain tax benefits to fully offset the increase through 2023 and partially offset customer rate increases in 2024. However, the MDPSC only utilized the acceleration of refunds for certain tax benefits to fully offset the increases such that customer rates remain unchanged through March 31, 2022. The MDPSC has deferred decision on whether to use additional tax benefits to offset customer rate increases for periods after March 31, 2022 and Pepco cannot predict the outcome.

(e)Requested and approved increases are before New Jersey sales and use tax. The order allows ACE to retain approximately $11 million of certain tax benefits which will result in a decrease to income tax expense within Exelon's, PHI's, and ACE's Consolidated Statements of Operations and Comprehensive Income in the third quarter of 2021.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

Pending Distribution Base Rate Case Proceedings

Registrant/Jurisdiction	Filing Date	Service	Requested Revenue Requirement Increase		Requested ROE		Expected Approval Timing
ComEd - Illinois(a)	April 16, 2021	Electric	$	51	7.36	%	Fourth quarter of 2021
PECO - Pennsylvania	March 30, 2021	Electric	246		10.95	%	Fourth quarter of 2021
DPL - Delaware(b)	March 6, 2020 (amended February 2, 2021)	Electric	23		10.3	%	Third quarter of 2021

__________

(a)ComEd's 2022 requested revenue requirement reflects an increase of $40 million for the initial year revenue requirement for 2022 and an increase of $11 million related to the annual reconciliation for 2020. The revenue requirement for 2022 provides for a weighted average debt and equity return on distribution rate base of 5.72%, inclusive of an allowed ROE of 7.36%, reflecting the average monthly yields for 30-year treasury bonds plus 580 basis points. The reconciliation revenue requirement for 2020 provides for a weighted average debt and equity return on distribution rate base of 5.69%, inclusive of an allowed ROE of 7.29%, reflecting the average monthly yields for 30-year treasury bonds plus 580 basis points less a performance metrics penalty of 7 basis points.

(b)The rates went into effect on October 6, 2020, subject to refund.

Transmission Formula Rates

The Utility Registrants' transmission rates are each established based on a FERC-approved formula. ComEd, BGE, Pepco, DPL, and ACE are required to file an annual update to the FERC-approved formula on or before May 15, and PECO is required to file on or before May 31, with the resulting rates effective on June 1 of the same year. The annual update for ComEd is based on prior year actual costs and current year projected capital additions (initial year revenue requirement). The annual update for PECO is based on prior year actual costs and current year projected capital additions, accumulated depreciation, and accumulated deferred income taxes. The annual update for BGE, Pepco, DPL, and ACE is based on prior year actual costs and current year projected capital additions, accumulated depreciation, depreciation and amortization expense, and accumulated deferred income taxes. The update for ComEd also reconciles any differences between the revenue requirement in effect beginning June 1 of the prior year and actual costs incurred for that year (annual reconciliation). The update for PECO, BGE, Pepco, DPL, and ACE also reconciles any differences between the actual costs and actual revenues for the calendar year (annual reconciliation).

For 2021, the following total increases/(decreases) were included in the Utility Registrants’ electric transmission formula rate updates:

Registrant(a)	Initial Revenue Requirement Increase (Decrease)		Annual Reconciliation Increase		Total Revenue Requirement Increase(b)		Allowed Return on Rate Base(c)		Allowed ROE(d)
ComEd	$	33	$	12	$	45	8.20	%	11.50	%
PECO	(2)		26		24		7.37	%	10.35	%
BGE	38		27		65		7.35	%	10.50	%
Pepco	(9)		21		12		7.68	%	10.50	%
DPL	19		33		52		7.20	%	10.50	%
ACE	27		24		51		7.45	%	10.50	%

__________

(a)All rates are effective June 1, 2021 - May 31, 2022, subject to review by interested parties pursuant to review protocols of each Utility Registrants' tariff.

(b)In 2020, ComEd, BGE, Pepco, DPL, and ACE's transmission revenue requirement included a one-time decrease in accordance with the April 24, 2020 settlement agreement related to excess deferred income taxes which now completed has resulted in an increase to the 2021 transmission revenue requirement. In 2020, PECO's transmission revenue requirement included a one-time decrease in accordance with the December 5, 2019 settlement agreement related to refunds which now completed has resulted in an increase to the 2021 transmission revenue requirement.

(c)Represents the weighted average debt and equity return on transmission rate bases.

(d)As part of the FERC-approved settlements of ComEd’s 2007 and PECO's 2017 rate cases, the rate of return on common equity is 11.50% and 10.35%, respectively, inclusive of a 50-basis-point incentive adder for being a member of a RTO, and

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

the common equity component of the ratio used to calculate the weighted average debt and equity return for the transmission formula rate is currently capped at 55% and 55.75%, respectively. As part of the FERC-approved settlement of the ROE complaint against BGE, Pepco, DPL, and ACE, the rate of return on common equity is 10.50%, inclusive of a 50-basis-point incentive adder for being a member of a RTO.

Other State Regulatory Matters

Illinois Regulatory Matters

Energy Efficiency Formula Rate (Exelon and ComEd). ComEd filed its annual energy efficiency formula rate update with the ICC on June 1, 2021. The filing establishes the revenue requirement used to set the rates that will take effect in January 2022 after the ICC’s review and approval. The requested revenue requirement update is based on a reconciliation of the 2020 actual costs plus projected 2022 expenditures.

Initial Revenue Requirement Increase		Annual Reconciliation Decrease		Total Revenue Requirement Increase		Requested Return on Rate Base(a)		Requested ROE
$	55	$	(1)	$	54	5.72	%	7.36	%

__________

(a)The requested revenue requirement increase provides for a weighted average debt and equity return on the energy efficiency regulatory asset and rate base of 5.72% inclusive of an allowed ROE of 7.36%, reflecting the monthly average yields for 30-year treasury bonds plus 580 basis points. For the 2020 reconciliation year, the requested revenue requirement provides for a weighted average debt and equity return on the energy efficiency regulatory asset and rate base of 6.26% inclusive of an allowed ROE of 8.46%, which includes an upward performance adjustment that increased the ROE. The performance adjustment can either increase or decrease the ROE based upon the achievement of energy efficiency savings goals.

Maryland Regulatory Matters

Maryland Order Directing the Distribution of Energy Assistance Funds (Exelon, BGE, PHI, Pepco, and DPL). On June 15, 2021, the MDPSC issued an order authorizing the disbursal of funds to utilities in accordance with Maryland COVID-19 relief legislation. Upon receipt, the funds are to be used to reduce or eliminate certain qualifying past-due residential customer receivables. Under this order, BGE, Pepco, and DPL received funds of $50 million, $12 million, and $8 million, respectively, in July 2021.

New Jersey Regulatory Matters

Advanced Metering Infrastructure Filing (Exelon, PHI, and ACE). On August 26, 2020, ACE filed an application with the NJBPU as was required seeking approval to deploy a smart energy network in alignment with New Jersey’s Energy Master Plan and Clean Energy Act. The proposal consisted of estimated costs totaling $220 million with deployment taking place over a 3-year implementation period from approximately 2021 to 2024 that involves the installation of an integrated system of smart meters for all customers accompanied by the requisite communications facilities and data management systems.

On July 14, 2021, the NJBPU approved the settlement filed by ACE and the third parties to the proceeding. The approved settlement addresses all material aspects of ACE's smart energy network deployment plan, including cost recovery of the investment costs, incremental O&M expenses, and the unrecovered balance of existing infrastructure through future distribution rates.

Regulatory Assets and Liabilities

The Utility Registrants' regulatory assets and liabilities have not changed materially since December 31, 2020, unless noted below. See Note 3 — Regulatory Matters of the Exelon 2020 Form 10-K for additional information on the specific regulatory assets and liabilities.

ComEd. Regulatory assets increased $116 million primarily due to an increase of $67 million in the Electric Distribution Formula Rate Annual Reconciliations regulatory asset and $85 million in the Energy Efficiency Costs regulatory asset, partially offset by a decrease of $36 million in the renewable energy regulatory asset.

PECO. Regulatory assets increased $95 million primarily due to an increase of $81 million in the Deferred Income Taxes regulatory asset and $12 million in the Vacation Accrual regulatory asset. Regulatory liabilities

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

increased by $85 million primarily due to an increase of $96 million in the Nuclear Decommissioning regulatory liability partially offset by a $13 million decrease in the Electric Energy and Natural Gas Costs regulatory liability.

BGE. Regulatory liabilities decreased $109 million primarily due to a decrease of $111 million in the Deferred Income Taxes regulatory liability.

Pepco. Regulatory liabilities decreased $53 million primarily due to a decrease of $46 million in the Deferred Income Taxes regulatory liability and $14 million in the Transmission Formula Rate regulatory liability partially offset by an increase of $10 million in various regulatory liabilities as a result of the Pepco DC multi-year plan.

DPL. Regulatory liabilities decreased $32 million primarily due to a decrease of $26 million in the Deferred Income Taxes regulatory liability and $9 million in the Transmission Formula Rate regulatory liability.

ACE. Regulatory liabilities decreased $27 million primarily due to a decrease of $20 million in the Deferred Income Taxes regulatory liability and $6 million in the Transmission Formula Rate regulatory liability.

Capitalized Ratemaking Amounts Not Recognized

The following table presents authorized amounts capitalized for ratemaking purposes related to earnings on shareholders’ investment that are not recognized for financial reporting purposes in Exelon's and the Utility Registrant's Consolidated Balance Sheets. These amounts will be recognized as revenues in the related Consolidated Statements of Operations and Comprehensive Income in the periods they are billable to the Utility Registrants' customers.

	Exelon		ComEd(a)		PECO		BGE(b)		PHI		Pepco(c)		DPL(c)		ACE
June 30, 2021	$	48	$	1	$	0	$	41	$	6	$	3	$	3	$	0
December 31, 2020	51		(1)		0		45		7		4		3		0

__________

(a)Reflects ComEd's unrecognized equity returns/(losses) earned/(incurred) for ratemaking purposes on its electric distribution formula rate regulatory assets.

(b)BGE's authorized amounts capitalized for ratemaking purposes primarily relate to earnings on shareholders' investment on its AMI programs.

(c)Pepco's and DPL's authorized amounts capitalized for ratemaking purposes relate to earnings on shareholders' investment on their respective AMI Programs and Energy Efficiency and Demand Response Programs. The earnings on energy efficiency are on Pepco DC and DPL DE programs only.

Generation Regulatory Matters (Exelon and Generation)

Impacts of the February 2021 Extreme Cold Weather Event and Texas-based Generating Assets Outages

Beginning on February 15, 2021, Generation’s Texas-based generating assets within the ERCOT market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced outages as a result of extreme cold weather conditions. In addition, those weather conditions drove increased demand for service, dramatically increased wholesale power prices, and also increased gas prices in certain regions. In response to the high demand and significantly reduced total generation on the system, the PUCT directed ERCOT to use an administrative price cap of $9,000 per MWh during firm load shedding events.

The estimated impact to Exelon’s and Generation’s Net income for the six months ended June 30, 2021 arising from these market and weather conditions was a reduction of approximately $880 million. The estimated impact to Exelon's and Generation's Net income for the three months ended June 30, 2021 was not material. The ultimate impact to Exelon’s and Generation’s consolidated financial statements for the full year 2021 may be affected by a number of factors, including final settlement data, the impacts of customer and counterparty credit losses, any state or federal solutions to address the financial challenges caused by the event, and related litigation and contract disputes.

During February and March 2021, various parties with differing interests, including generators and retail providers, filed requests with the PUCT to void the PUCT’s orders setting prices at $9,000 per MWh during firm load shedding events. Other requests were made for the PUCT to enforce its order and reduce prices for 33 hours between February 18 and February 19 after firm load shedding ceased, and to cap ancillary services at $9,000 per MWh. On March 2, 2021, a third party filed a notice of appeal in the Court of Appeals for the Third

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

District of Texas challenging the validity of the PUCT’s actions. Generation intervened in that appeal and filed its initial brief on June 2, 2021. On April 19, 2021, Generation filed a declaratory action and request for judicial review of the PUCT’s orders setting prices at $9,000 per MWh in District Court of Travis County, Texas. Generation subsequently requested that the District Court of Travis County, Texas stay its proceeding pending action by the Court of Appeals in the third party proceeding. On May 17, 2021, Generation amended its petition for declaratory action and request for judicial review pending in the District Court of Travis County, Texas. Exelon and Generation cannot predict the outcome of these proceedings or the financial statement impact.

Due to these events, a number of ERCOT market participants experienced bankruptcies or defaulted on payments to ERCOT, resulting in approximately a $3.0 billion payment shortfall in collections, which is allocated to the remaining ERCOT market participants. As of June 30, 2021, Generation has recorded its portion of this obligation of approximately $17 million on a discounted basis, which is to be paid over a term of 83 years. ERCOT rules historically have limited recovery of default from market participants to $2.5 million per month market-wide. In February 2021, the PUCT gave ERCOT discretion to disregard those rules, but ERCOT has declined to exercise that discretion thus far. On March 8, 2021, a third party filed a notice of appeal in the Court of Appeals for the Third District of Texas challenging the validity of the PUCT's order to ERCOT in February 2021. Generation intervened in that appeal and filed its initial brief on July 7, 2021. On May 7, 2021, Generation filed a declaratory action and request for judicial review of the PUCT's order in the District Court of Travis County, Texas. Generation subsequently requested that the District Court of Travis County, Texas stay its proceeding pending action by the Court of Appeals in the third party proceeding. Exelon and Generation cannot predict the outcome of these proceedings or the financial statement impact. Additionally, several legislative proposals were introduced in the Texas legislature during February and March 2021 concerning the amount, timing and allocation of recovery of the $3.0 billion shortfall, as well as recovery of other costs associated with the PUCT's directive to set prices at $9,000 per MWh. Two of these proposals were enacted into law in June 2021 and establish financing mechanisms that ERCOT and certain market participants can utilize to fund amounts owed to ERCOT. Exelon and Generation are monitoring the implementation of the legislation, which could result in further adjustment to Generation's portion of the obligation.

In addition, other legislative proposals were introduced in the Texas legislature during February and March 2021 addressing cold-weather preparation for power plants and natural gas production and transportation infrastructure and the market structure for reliability services. The Texas legislature addressed these proposals by enacting a bill with a broad set of market reforms that, among other things, directed the PUCT to establish weatherization standards for electric generators within six months of enactment and gave the PUCT authority to impose administrative penalties if the new proposed standards, once adopted, are not met. On June 9, 2021, PUCT staff issued a request for comments regarding the conditions under which the PUCT should require the operation of electric generation facilities and Generation and other third parties responded on June 23, 2021. Exelon and Generation are monitoring and cannot predict the outcome of this proceeding, which could have a material adverse impact in Exelon’s and Generation’s consolidated financial statements. The legislation also directs the PUCT to evaluate whether additional ancillary services are needed for reliability in the ERCOT power region to provide adequate incentives for dispatchable generation. This evaluation is expected to be taken up by the PUCT later in 2021.

In February 2021, more than 70 local distribution companies (LDCs) and natural gas pipelines in multiple states throughout the mid-continent region, where Generation serves natural gas customers, issued operational flow orders (OFOs), curtailments or other limitations on natural gas transportation or use to manage the operational integrity of the applicable LDC or pipeline system. When in effect, gas transportation or use above these limitations is subject to significant penalties according to the applicable LDCs’ and natural gas pipelines’ tariffs. Gas transportation and supply in many states became restricted due to wells freezing and pipeline compression disruption, while demand was increasing due to the extreme cold temperatures, resulting in extremely high natural gas prices. Due to the extraordinary circumstances, many LDCs and natural gas pipelines have either voluntarily waived or have sought applicable regulatory approvals to waive the tariff penalties associated with the extreme weather event. During March 2021, three natural gas pipelines filed individual petitions with the FERC requesting approval to waive OFO penalties. Generation also filed motions in March 2021 to intervene and filed comments in support of these FERC waiver requests. On March 25, 2021, the FERC issued an order on one of the petitions approving a pipeline’s request for a limited waiver of penalties for February 15, 2021. On April 23, 2021, Generation and several other entities filed a request for rehearing and a complaint requesting that FERC expand the order to include additional days of the weather event in February, from February 16 through February 19, 2021. During April 2021, the FERC issued orders on the remaining petitions approving the requests to waive the penalties. During May 2021, an LDC filed a motion with the Kansas Corporation Commission (KCC)

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

requesting the KCC to grant a waiver from the tariff and allow the LDC to reduce the amounts assessed by permitting the removal of a multiplier from the penalty calculation. Exelon and Generation cannot predict the outcome of the pending FERC complaint proceeding, the KCC proceeding, or the determinations made by the LDCs and natural gas pipelines.

New Jersey Regulatory Matters

New Jersey Clean Energy Legislation. On May 23, 2018, New Jersey enacted legislation that established a ZEC program that provides compensation for nuclear plants that demonstrate to the NJBPU that they meet certain requirements, including that they make a significant contribution to air quality in the state and that their revenues are insufficient to cover their costs and risks. Under the legislation, the NJBPU will issue ZECs to qualifying nuclear power plants and the electric distribution utilities in New Jersey, including ACE, will be required to purchase those ZECs. On April 18, 2019, the NJBPU approved the award of ZECs to Salem 1 and Salem 2. Upon approval, Generation began recognizing revenue for the sale of New Jersey ZECs in the month they are generated. On March 19, 2021, a three-judge panel of the Superior Court of New Jersey Appellate Division unanimously affirmed the NJBPU’s April 2019 order awarding ZECs for the first eligibility period. On April 8, 2021, New Jersey Rate Counsel filed a notice asking the New Jersey Supreme Court to hear the appeal of the Superior Court’s order. On July 9, 2021, the New Jersey Supreme Court declined to hear the appeal. On October 1, 2020, PSEG and Generation filed applications seeking ZECs for the second eligibility period (June 2022 through May 2025). On April 27, 2021, the NJBPU approved the award of ZECs to Salem 1 and Salem 2 for the second eligibility period. On May 11, 2021, the New Jersey Rate Counsel appealed the April 27, 2021 decision to the Superior Court of New Jersey Appellate Division. Exelon and Generation cannot predict the outcome of this proceeding. See Note 7 — Early Plant Retirements for additional information related to Salem.

New England Regulatory Matters

Mystic Units 8 & 9 and Everett Marine Terminal Cost of Service Agreement. On March 29, 2018, Generation notified grid operator ISO-NE of its plans to early retire Mystic Units 8 and 9 absent regulatory reforms on June 1, 2022. On May 16, 2018, Generation made a filing with FERC to establish cost-of-service compensation and terms and conditions of service for Mystic Units 8 & 9 for the period between June 1, 2022 - May 31, 2024. On December 20, 2018, FERC issued an order accepting the cost of service compensation, reflecting a number of adjustments to the annual fixed revenue requirement and allowing for recovery of a substantial portion of the costs associated with the adjacent Everett Marine Terminal acquired by Generation in October 2018. Those adjustments were reflected in a compliance filing made on March 1, 2019. In the December 20, 2018 order, FERC also directed a paper hearing on ROE using a new methodology. On January 22, 2019, Exelon and several other parties filed requests for rehearing of certain findings in the order. On July 15, 2021, FERC issued an order establishing the ROE to be used in the cost of service agreement for Mystic 8 and 9 at 9.33%.

On July 17, 2020, FERC issued three orders, which together affirmed the recovery of key elements of Mystic's cost of service compensation, including recovery of costs associated with the operation of the Everett Marine Terminal. FERC directed a downward adjustment to the rate base for Mystic Units 8 and 9, the effect of which will be partially offset by elimination of a crediting mechanism for third party gas sales during the term of the cost of service agreement. In addition, several parties filed protests to a compliance filing by Generation on September 15, 2020, taking issue with how gross plant in-service was calculated, and Generation filed an answer to the protests on October 21, 2020. On December 21, 2020, FERC issued an order on rehearing of the three July 17, 2020 orders, clarifying several cost of service provisions. Several parties appealed the December 21, 2020 order to the U.S. Court of Appeals for the D.C. Circuit and that appeal was consolidated with appeals of orders issued December 20, 2018 and July 17, 2020 in the Mystic proceeding. The briefing schedule for the consolidated appeal has not yet been set.

On February 25, 2021, Mystic made its filing to comply with the December 21, 2020 order. On April 26, 2021, FERC rejected Mystic’s language and directed another compliance filing relating to the claw back provision language, which only applies if Mystic 8 and 9 were to continue operation after the conclusion of the cost-of-service period. FERC’s April 26, 2021 order also accepted in part and rejected in part Mystic’s September 15, 2020 compliance filing. It directed a further compliance filing in 60 days consistent with the information provided in Mystic’s October 21, 2020 answer to protests, which Mystic filed on June 2, 2021.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

On August 25, 2020, a group of New England generators filed a complaint against Generation seeking to extend the scope of the claw back provision in the cost-of-service agreement, whereby Generation would refund certain amounts recovered during the term of the cost of service if it returns to market afterwards. On April 15, 2021 FERC dismissed the complaint.

On February 16, 2021, Generation filed an unopposed motion to voluntarily dismiss an appeal filed with the U.S. Court of Appeals for the D.C. Circuit stemming from a June 2020 complaint filed with the FERC against ISO-NE over failures to follow its tariff in evaluating Mystic for transmission security for the 2024 to 2025 Capacity Commitment Period, which was granted on February 18, 2021.

See Note 7 — Early Plant Retirements for additional information on the impacts of Generation’s August 2020 decision to retire Mystic Units 8 & 9 upon expiration of the cost of service agreement.

Federal Regulatory Matters

PJM and NYISO MOPR Proceedings. PJM and NYISO capacity markets include a MOPR. If a resource is subjected to a MOPR, its offer is adjusted to effectively remove the revenues it receives through a state government-provided financial support program - resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the MOPR in PJM applied only to certain new gas-fired resources. Currently, the MOPR in NYISO applies only to certain resources in downstate New York.

For Generation’s facilities in PJM and NYISO that are currently receiving ZEC compensation, an expanded MOPR would require exclusion of ZEC compensation when bidding into future capacity auctions, resulting in an increased risk of these facilities not receiving capacity revenues in future auctions.

On December 19, 2019, FERC required PJM to broadly apply the MOPR to all new and existing resources including nuclear, renewables, demand response, energy efficiency, storage, and all resources owned by vertically-integrated utilities. This greatly expands the breadth and scope of PJM’s MOPR, which is effective as of PJM’s next capacity auction. While FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources.

FERC provided no new mechanism for accommodating state-supported resources other than the existing FRR mechanism (under which an entire utility zone would be removed from PJM’s capacity auction along with sufficient resources to support the load in such zone). In response to FERC’s order, PJM submitted a compliance filing on March 18, 2020 wherein PJM proposed tariff language interpreting and implementing FERC's directives, and proposed a schedule for resuming capacity auctions that is contingent on the timing of FERC's action on the compliance filing.

On April 16, 2020, FERC issued an order largely denying most requests for rehearing of FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing which PJM submitted on June 1, 2020.

On October 15, 2020, FERC issued an order denying requests for rehearing of its April 16, 2020 order and accepting PJM’s two compliance filings, subject to a further compliance filing to revise minor aspects of the proposed MOPR methodology. As part of that order, FERC also accepted PJM’s proposal to condense the schedule of activities leading up to the next capacity auction. A number of parties, including Exelon, have filed petitions for review of FERC's orders in this proceeding, which remain pending before the Court of Appeals for the District of Columbia Circuit.

In November 2020, PJM announced that it will conduct its next capacity auction beginning on May 19, 2021 and ending on May 25, 2021 and will post the results on June 2, 2021. PJM conducted the auction as scheduled and, because neither Illinois nor New Jersey implemented an FRR program in their PJM zones, the MOPR applied in the capacity auction to Generation's owned or jointly owned nuclear plants in those states receiving a benefit under the Illinois ZES, or the New Jersey ZEC program. The MOPR prevented Quad Cities from clearing in the capacity auction.

At the direction of the PJM Board of Managers, PJM and its stakeholders are considering MOPR reforms to ensure that the capacity market rules respect and accommodate state resource preferences such as the ZEC

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 3 — Regulatory Matters

programs which PJM filed at FERC on July 30, 2021. Exelon cannot predict whether or when such changes can be implemented.

On February 20, 2020, FERC issued an order rejecting requests to expand NYISO’s version of the MOPR (referred to as buyer-side mitigation rules) beyond its current limited applicability to certain resources in downstate. However, on October 14, 2020, two natural gas-fired generators in New York filed a complaint at FERC seeking to expand the MOPR in NYISO to apply to all resources, new and existing, across the entire NYISO market. Exelon is strenuously opposing expansion of FERC’s MOPR policies in the NYISO market. While it is too early in the proceeding to predict its outcome and there are significant differences between the NYISO and PJM markets that would justify a different result, if FERC follows its MOPR precedent in PJM and applies the MOPR in NYISO broadly as requested in the complaint, Generation’s facilities in NYISO that are receiving ZEC compensation may be at increased risk of not clearing the capacity auction.

If Generation’s state-supported nuclear plants in PJM or NYISO are subjected to the MOPR or equivalent without compensation under an FRR or similar program, it could have a material adverse impact on Exelon's and Generation's financial statements, which Exelon and Generation cannot reasonably estimate at this time.

Operating License Renewals

Conowingo Hydroelectric Project. On August 29, 2012, Generation submitted a hydroelectric license application to FERC for a new license for the Conowingo Hydroelectric Project (Conowingo). In connection with Generation’s efforts to obtain a water quality certification pursuant to Section 401 of the Clean Water Act (401 Certification) from MDE for Conowingo, Generation had been working with MDE and other stakeholders to resolve water quality licensing issues, including: (1) water quality, (2) fish habitat, and (3) sediment.

On April 27, 2018, MDE issued its 401 Certification for Conowingo. On October 29, 2019, Generation and MDE filed with FERC a Joint Offer of Settlement (Offer of Settlement) that would resolve all outstanding issues relating to the 401 Certification. Pursuant to the Offer of Settlement, the parties submitted Proposed License Articles to FERC to be incorporated by FERC into the new license in accordance with FERC’s discretionary authority under the Federal Power Act.

On March 19, 2021, FERC issued a new 50-year license for Conowingo, effective March 1, 2021. FERC adopted the Proposed License Articles into the new license only making modifications it deemed necessary to allow FERC to enforce the Proposed License Articles. Consistent with the Offer of Settlement, FERC found that MDE waived its 401 Certification. On April 19, 2021, a few environmental groups filed with FERC a petition for rehearing requesting that FERC reconsider the issuance of the new Conowingo license, which was denied by operation of law on May 20, 2021. On June 17, 2021, the petitioners appealed FERC’s ruling to the United States Court of Appeals. On July 15, 2021, FERC issued an order addressing the arguments raised on rehearing, affirming the determinations of its March 19, 2021 order. Generation cannot predict the outcome of this proceeding.

4. Revenue from Contracts with Customers (All Registrants)

The Registrants recognize revenue from contracts with customers to depict the transfer of goods or services to customers at an amount that the entities expect to be entitled to in exchange for those goods or services. Generation’s primary sources of revenue include competitive sales of power, natural gas, and other energy-related products and services. The Utility Registrants’ primary sources of revenue include regulated electric and gas tariff sales, distribution, and transmission services.

See Note 4 — Revenue from Contracts with Customers of the Exelon 2020 Form 10-K for additional information regarding the primary sources of revenue for the Registrants.

Contract Balances (All Registrants)

Contract Assets

Generation records contract assets for the revenue recognized on the construction and installation of energy efficiency assets and new power generating facilities before Generation has an unconditional right to bill for and

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Revenue from Contracts with Customers

receive the consideration from the customer. These contract assets are subsequently reclassified to receivables when the right to payment becomes unconditional. Generation records contract assets and contract receivables within Other current assets and Customer accounts receivable, net, respectively, within Exelon’s and Generation’s Consolidated Balance Sheets.

The following table provides a rollforward of the contract assets reflected in Exelon's and Generation's Consolidated Balance Sheets for the three and six months ended June 30, 2021 and 2020. The Utility Registrants do not have any contract assets.

	Exelon		Generation
Balance as of December 31, 2020	$	144	$	144
Amounts reclassified to receivables	(16)		(16)
Revenues recognized	13		13
Amounts previously held-for-sale	12		12
Balance as of March 31, 2021	153		153
Amounts reclassified to receivables	(12)		(12)
Revenues recognized	9		9
Balance as of June 30, 2021	$	150	$	150
	Exelon		Generation
Balance as of December 31, 2019	$	174	$	174
Amounts reclassified to receivables	(19)		(19)
Revenues recognized	17		17
Balance as of March 31, 2020	172		172
Amounts reclassified to receivables	(26)		(26)
Revenues recognized	13		13
Balance as of June 30, 2020	$	159	$	159

Contract Liabilities

The Registrants record contract liabilities when consideration is received or due prior to the satisfaction of the performance obligations. The Registrants record contract liabilities within Other current liabilities and Other noncurrent liabilities within the Registrants' Consolidated Balance Sheets.

For Generation, these contract liabilities primarily relate to upfront consideration received or due for equipment service plans, and the Illinois ZEC program that introduces a cap on the total consideration to be received by Generation.

For PHI, Pepco, DPL, and ACE these contract liabilities primarily relate to upfront consideration received in the third quarter of 2020 for a collaborative arrangement with an unrelated owner and manager of communication infrastructure. The revenue attributable to this arrangement will be recognized as operating revenue over the 35 years under the collaborative arrangement.

The following table provides a rollforward of the contract liabilities reflected in Exelon's, Generation's, PHI's, Pepco's, DPL's, and ACE's Consolidated Balance Sheets for the three and six months ended June 30, 2021 and 2020. As of June 30, 2021 and December 31, 2020, ComEd's, PECO's, and BGE's contract liabilities were immaterial.

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Revenue from Contracts with Customers

	Exelon		Generation		PHI		Pepco		DPL		ACE
Balance as of December 31, 2020	$	151	$	84	$	118	$	94	$	12	$	12
Consideration received or due	20		31		0		0		0		0
Revenues recognized	(27)		(64)		(2)		(2)		0		0
Amounts previously held-for-sale	3		3		0		0		0		0
Balance as of March 31, 2021	147		54		116		92		12		12
Consideration received or due	17		39		0		0		0		0
Revenues recognized	(32)		(68)		(3)		(1)		(1)		(1)
Balance as of June 30, 2021	$	132	$	25	$	113	$	91	$	11	$	11
	Exelon		Generation		PHI		Pepco		DPL		ACE
Balance as of December 31, 2019	$	33	$	71	$	0	$	0	$	0	$	0
Consideration received or due	20		55		0		0		0		0
Revenues recognized	(24)		(70)		0		0		0		0
Balance as of March 31, 2020	29		56		0		0		0		0
Consideration received or due	13		34		0		0		0		0
Revenues recognized	(22)		(63)		0		0		0		0
Balance as of June 30, 2020	$	20	$	27	$	0	$	0	$	0	$	0

The following table reflects revenues recognized in the three and six months ended June 30, 2021 and 2020, which were included in contract liabilities at December 31, 2020 and 2019, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Exelon	$	17	$	14	$	34	$	23
Generation	41		42		79		61
PHI	3		0		5		0
Pepco	1		0		3		0
DPL	1		0		1		0
ACE	1		0		1		0

Transaction Price Allocated to Remaining Performance Obligations (All Registrants)

The following table shows the amounts of future revenues expected to be recorded in each year for performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2021. This disclosure only includes contracts for which the total consideration is fixed and determinable at contract inception. The average contract term varies by customer type and commodity but ranges from one month to several years.

This disclosure excludes Generation's power and gas sales contracts as they contain variable volumes and/or variable pricing. This disclosure also excludes the Utility Registrants' gas and electric tariff sales contracts and transmission revenue contracts as they generally have an original expected duration of one year or less and, therefore, do not contain any future, unsatisfied performance obligations to be included in this disclosure.

	2021		2022		2023		2024		2025 and thereafter		Total
Exelon	$	149	$	100	$	46	$	31	$	180	$	506
Generation	223		146		54		29		94		546
PHI	5		8		8		6		86		113
Pepco	3		6		6		5		71		91
DPL	1		1		1		0		8		11
ACE	1		1		1		1		7		11

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 4 — Revenue from Contracts with Customers

Revenue Disaggregation (All Registrants)

The Registrants disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. See Note 5 — Segment Information for the presentation of the Registrant's revenue disaggregation.

5. Segment Information (All Registrants)

Operating segments for each of the Registrants are determined based on information used by the CODM in deciding how to evaluate performance and allocate resources at each of the Registrants.

Exelon has 11 reportable segments, which include Generation's 5 reportable segments consisting of the Mid-Atlantic, Midwest, New York, ERCOT, and all other power regions referred to collectively as “Other Power Regions” and ComEd, PECO, BGE, and PHI's 3 reportable segments consisting of Pepco, DPL, and ACE. ComEd, PECO, BGE, Pepco, DPL, and ACE each represent a single reportable segment, and as such, no separate segment information is provided for these Registrants. Exelon, ComEd, PECO, BGE, Pepco, DPL, and ACE's CODMs evaluate the performance of and allocate resources to ComEd, PECO, BGE, Pepco, DPL, and ACE based on net income.

The basis for Generation's reportable segments is the integrated management of its electricity business that is located in different geographic regions, and largely representative of the footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Generation's hedging strategies and risk metrics are also aligned to these same geographic regions. Descriptions of each of Generation’s 5 reportable segments are as follows:

•Mid-Atlantic represents operations in the eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia, and parts of Pennsylvania and North Carolina.

•Midwest represents operations in the western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region.

•New York represents operations within NYISO.

•ERCOT represents operations within Electric Reliability Council of Texas.

•Other Power Regions:

•New England represents the operations within ISO-NE.

•South represents operations in the FRCC, MISO’s Southern Region, and the remaining portions of the SERC not included within MISO or PJM.

•West represents operations in the WECC, which includes California ISO.

•Canada represents operations across the entire country of Canada and includes AESO, OIESO, and the Canadian portion of MISO.

The CODMs for Exelon and Generation evaluate the performance of Generation’s electric business activities and allocate resources based on RNF. Generation believes that RNF is a useful measurement of operational performance. RNF is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report. Generation’s operating revenues include all sales to third parties and affiliated sales to the Utility Registrants. Purchased power costs include all costs associated with the procurement and supply of electricity including capacity, energy, and ancillary services. Fuel expense includes the fuel costs for Generation’s owned generation and fuel costs associated with tolling agreements. The results of Generation's other business activities are not regularly reviewed by the CODM and are therefore not classified as operating segments or included in the regional reportable segment amounts. These activities include natural gas, as well as other miscellaneous business activities that are not significant to Generation's overall operating revenues or results of operations. Further,

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Note 5 — Segment Information

Generation’s unrealized mark-to-market gains and losses on economic hedging activities and