10-Q 1 d623182d10q.htm FORM 10-Q Form 10-Q

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

For the Quarterly Period Ended September 30, 2013

or

 

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

 

Commission

File Number

  

Name of Registrant; State of Incorporation;

Address of Principal Executive Offices; and

Telephone Number

   IRS  Employer
Identification

Number
 

1-16169

  

EXELON CORPORATION

     23-2990190   
  

(a Pennsylvania corporation)

10 South Dearborn Street

P.O. Box 805379

Chicago, Illinois 60680-5379

(312) 394-7398

  

333-85496

  

EXELON GENERATION COMPANY, LLC

     23-3064219   
  

(a Pennsylvania limited liability company)

300 Exelon Way

Kennett Square, Pennsylvania 19348-2473

(610) 765-5959

  

1-1839

  

COMMONWEALTH EDISON COMPANY

     36-0938600   
  

(an Illinois corporation)

440 South LaSalle Street

Chicago, Illinois 60605-1028

(312) 394-4321

  

000-16844

  

PECO ENERGY COMPANY

     23-0970240   
  

(a Pennsylvania corporation)

P.O. Box 8699

2301 Market Street

Philadelphia, Pennsylvania 19101-8699

(215) 841-4000

  

1-1910

  

BALTIMORE GAS AND ELECTRIC COMPANY

     52-0280210   
  

(a Maryland corporation)

2 Center Plaza

110 West Fayette Street

Baltimore, Maryland 21201-3708

(410) 234-5000

  

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  ¨

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

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

 

     Large Accelerated Filer    Accelerated Filer    Non-accelerated Filer    Smaller
Reporting
Company

Exelon Corporation

   x         

Exelon Generation Company, LLC

         x   

Commonwealth Edison Company

         x   

PECO Energy Company

         x   

Baltimore Gas and Electric Company

         x   

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 September 30, 2013 was:

 

Exelon Corporation Common Stock, without par value

   856,903,972

Exelon Generation Company, LLC

   not applicable

Commonwealth Edison Company Common Stock, $12.50 par value

   127,016,855

PECO Energy Company Common Stock, without par value

   170,478,507

Baltimore Gas and Electric Company Common Stock, without par value

   1,000

 

 

 

 


TABLE OF CONTENTS

 

    Page No.  
FILING FORMAT     7   
FORWARD-LOOKING STATEMENTS     7   
WHERE TO FIND MORE INFORMATION     7   
PART I.  

FINANCIAL INFORMATION

    8   
ITEM 1.  

FINANCIAL STATEMENTS

    8   
 

Exelon Corporation

 
 

Consolidated Statements of Operations and Comprehensive Income

    9   
 

Consolidated Statements of Cash Flows

    10   
 

Consolidated Balance Sheets

    11   
 

Consolidated Statement of Changes in Shareholders’ Equity

    13   
 

Exelon Generation Company, LLC

 
 

Consolidated Statements of Operations and Comprehensive Income

    14   
 

Consolidated Statements of Cash Flows

    15   
 

Consolidated Balance Sheets

    16   
 

Consolidated Statement of Changes in Equity

    18   
 

Commonwealth Edison Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    19   
 

Consolidated Statements of Cash Flows

    20   
 

Consolidated Balance Sheets

    21   
 

Consolidated Statement of Changes in Shareholders’ Equity

    23   
 

PECO Energy Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    24   
 

Consolidated Statements of Cash Flows

    25   
 

Consolidated Balance Sheets

    26   
 

Consolidated Statement of Changes in Shareholders’ Equity

    28   
 

Baltimore Gas and Electric Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    29   
 

Consolidated Statements of Cash Flows

    30   
 

Consolidated Balance Sheets

    31   
 

Consolidated Statement of Changes in Shareholders’ Equity

    33   
 

Combined Notes to Consolidated Financial Statements

    34   
 

1. Basis of Presentation

    34   
 

2. New Accounting Pronouncements

    35   
 

3. Variable Interest Entities

    36   
 

4. Merger and Acquisitions

    39   
 

5. Regulatory Matters

    46   
 

6. Investment in Constellation Energy Nuclear Group, LLC

    61   
 

7. Impairment of Long-Lived Assets

    64   
 

8. Goodwill

    65   

 

1


    Page No.  
 

9. Fair Value of Financial Assets and Liabilities

    66   
 

10. Derivative Financial Instruments

    92   
 

11. Debt and Credit Agreements

    108   
 

12. Income Taxes

    114   
 

13. Nuclear Decommissioning

    118   
 

14. Retirement Benefits

    122   
 

15. Stock-Based Compensation Plans

    125   
 

16. Changes in Accumulated Other Comprehensive Income

    129   
 

17. Earnings Per Share and Equity

    132   
 

18. Commitments and Contingencies

    133   
 

19. Supplemental Financial Information

    150   
 

20. Segment Information

    156   
ITEM 2.  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    161   
 

Exelon Corporation

    161   
 

General

    161   
 

Executive Overview

    162   
 

Critical Accounting Policies and Estimates

    181   
 

Results of Operations

    182   
 

Liquidity and Capital Resources

    211   
 

Contractual Obligations and Off-Balance Sheet Arrangements

    222   
ITEM 3.  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    223   
ITEM 4.  

CONTROLS AND PROCEDURES

    232   
PART II.  

OTHER INFORMATION

    233   
ITEM 1.  

LEGAL PROCEEDINGS

    233   
ITEM 1A.  

RISK FACTORS

    233   
ITEM 4.  

MINE SAFETY DISCLOSURES

    233   
ITEM 6.  

EXHIBITS

    233   
SIGNATURES     236   
 

Exelon Corporation

    236   
 

Exelon Generation Company, LLC

    236   
 

Commonwealth Edison Company

    236   
 

PECO Energy Company

    237   
 

Baltimore Gas and Electric Company

    237   
CERTIFICATION EXHIBITS     238   
 

Exelon Corporation

    238, 248   
 

Exelon Generation Company, LLC

    240, 250   
 

Commonwealth Edison Company

    242, 252   
 

PECO Energy Company

    244, 254   
 

Baltimore Gas and Electric Company

    246, 256   

 

2


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

BSC

   Exelon Business Services Company, LLC

Exelon Corporate

   Exelon in its corporate capacity as a holding company

CENG

   Constellation Energy Nuclear Group, LLC

Constellation

   Constellation Energy Group, Inc.

Exelon Transmission Company

   Exelon Transmission Company, LLC

Exelon Wind

   Exelon Wind, LLC and Exelon Generation Acquisition Company, LLC

Ventures

   Exelon Ventures Company, LLC

AmerGen

   AmerGen Energy Company, LLC

BondCo

   RSB BondCo LLC

PEC L.P.

   PECO Energy Capital, L.P.

PECO Trust III

   PECO Capital Trust III

PECO Trust IV

   PECO Energy Capital Trust IV

PETT

   PECO Energy Transition Trust

Registrants

   Exelon, Generation, ComEd, PECO and BGE, collectively

Other Terms and Abbreviations

Note "—" of the Exelon 2012 Form 10-K

   Reference to specific Combined Note to Consolidated Financial Statements within Exelon's 2012 Annual Report on Form 10-K

1998 restructuring settlement

   PECO's 1998 settlement of its restructuring case mandated by the Competition Act

Act 11

   Pennsylvania Act 11 of 2012

Act 129

   Pennsylvania Act 129 of 2008

AEC

   Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source

AEPS

   Pennsylvania Alternative Energy Portfolio Standards

AEPS Act

   Pennsylvania Alternative Energy Portfolio Standards Act of 2004, as amended

AESO

   Alberta Electric Systems Operator

AFUDC

   Allowance for Funds Used During Construction

ALJ

   Administrative Law Judge

AMI

   Advanced Metering Infrastructure

ARC

   Asset Retirement Cost

ARO

   Asset Retirement Obligation

ARP

   Title IV Acid Rain Program

ARRA of 2009

   American Recovery and Reinvestment Act of 2009

Block contracts

   Forward Purchase Energy Block Contracts

CAIR

   Clean Air Interstate Rule

CAISO

   California ISO

CAMR

   Federal Clean Air Mercury Rule

CERCLA

   Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended

CFL

   Compact Fluorescent Light

Clean Air Act

   Clean Air Act of 1963, as amended

Clean Water Act

   Federal Water Pollution Control Amendments of 1972, as amended

Competition Act

   Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996

 

3


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations

CPI

   Consumer Price Index

CPUC

   California Public Utilities Commission

CSAPR

   Cross-State Air Pollution Rule

CTC

   Competitive Transition Charge

DOE

   United States Department of Energy

DOJ

   United States Department of Justice

DSP

   Default Service Provider

DSP Program

   Default Service Provider Program

EDF

   Electricite de France SA

EE&C

   Energy Efficiency and Conservation/Demand Response

EGS

   Electric Generation Supplier

EIMA

   Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)

EPA

   United States Environmental Protection Agency

ERCOT

   Electric Reliability Council of Texas

ERISA

   Employee Retirement Income Security Act of 1974, as amended

EROA

   Expected Rate of Return on Assets

ESPP

   Employee Stock Purchase Plan

FASB

   Financial Accounting Standards Board

FERC

   Federal Energy Regulatory Commission

FRCC

   Florida Reliability Coordinating Council

FTC

   Federal Trade Commission

GAAP

   Generally Accepted Accounting Principles in the United States

GHG

   Greenhouse Gas

GRT

   Gross Receipts Tax

GSA

   Generation Supply Adjustment

GWh

   Gigawatt hour

HAP

   Hazardous air pollutants

Health Care Reform Acts

   Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010

IBEW

   International Brotherhood of Electrical Workers

ICC

   Illinois Commerce Commission

ICE

   Intercontinental Exchange

Illinois Act

   Illinois Electric Service Customer Choice and Rate Relief Law of 1997

Illinois EPA

   Illinois Environmental Protection Agency

Illinois Settlement Legislation

   Legislation enacted in 2007 affecting electric utilities in Illinois

IPA

   Illinois Power Agency

IRC

   Internal Revenue Code

IRS

   Internal Revenue Service

ISO

   Independent System Operator

ISO-NE

   ISO New England Inc.

ISO-NY

   ISO New York

kV

   Kilovolt

kW

   Kilowatt

kWh

   Kilowatt-hour

LIBOR

   London Interbank Offered Rate

LILO

   Lease-In, Lease-Out

LLRW

   Low-Level Radioactive Waste

LTIP

   Long-Term Incentive Plan

MATS

   U.S. EPA Mercury and Air Toxics Rule

 

4


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations

MBR

   Market Based Rates Incentive

MDE

   Maryland Department of the Environment

MDPSC

   Maryland Public Service Commission

MGP

   Manufactured Gas Plant

MISO

   Midcontinent Independent System Operator, Inc.

mmcf

   Million Cubic Feet

Moody's

   Moody's Investor Service

MOPR

   Minimum Offer Price Rule

MRV

   Market-Related Value

MW

   Megawatt

MWh

   Megawatt hour

NAAQS

   National Ambient Air Quality Standards

n.m.

   not meaningful

NAV

   Net Asset Value

NDT

   Nuclear Decommissioning Trust

NEIL

   Nuclear Electric Insurance Limited

NERC

   North American Electric Reliability Corporation

NGS

   Natural Gas Supplier

NJDEP

   New Jersey Department of Environmental Protection

Non-Regulatory Agreements Units

   Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting

NOV

   Notice of Violation

NPDES

   National Pollutant Discharge Elimination System

NRC

   Nuclear Regulatory Commission

NSPS

   New Source Performance Standards

NWPA

   Nuclear Waste Policy Act of 1982

NYMEX

   New York Mercantile Exchange

OCI

   Other Comprehensive Income

OIESO

   Ontario Independent Electricity System Operator

OPEB

   Other Postretirement Employee Benefits

PA DEP

   Pennsylvania Department of Environmental Protection

PAPUC

   Pennsylvania Public Utility Commission

PGC

   Purchased Gas Cost Clause

PJM

   PJM Interconnection, LLC

POLR

   Provider of Last Resort

POR

   Purchase of Receivables

PPA

   Power Purchase Agreement

Price-Anderson Act

   Price-Anderson Nuclear Industries Indemnity Act of 1957

PRP

   Potentially Responsible Parties

PSEG

   Public Service Enterprise Group Incorporated

PURTA

   Pennsylvania Public Realty Tax Act

PV

   Photovoltaic

RCRA

   Resource Conservation and Recovery Act of 1976, as amended

REC

   Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source

Regulatory Agreement Units

   Nuclear generating units whose decommissioning-related activities are subject to contractual elimination under regulatory accounting

RES

   Retail Electric Suppliers

RFP

   Request for Proposal

Rider

   Reconcilable Surcharge Recovery Mechanism

 

5


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations

RGGI

   Regional Greenhouse Gas Initiative

RMC

   Risk Management Committee

RPM

   PJM Reliability Pricing Model

RPS

   Renewable Energy Portfolio Standards

RTEP

   Regional Transmission Expansion Plan

RTO

   Regional Transmission Organization

S&P

   Standard & Poor's Ratings Services

SEC

   United States Securities and Exchange Commission

Senate Bill 1

   Maryland Senate Bill 1

SERC

   SERC Reliability Corporation (formerly Southeast Electric Reliability Council)

SERP

   Supplemental Employee Retirement Plan

SFC

   Supplier Forward Contract

SGIG

   Smart Grid Investment Grant

SGIP

   Smart Grid Initiative Program

SILO

   Sale-In, Lease-Out

SMP

   Smart Meter Program

SMPIP

   Smart Meter Procurement and Installation Plan

SNF

   Spent Nuclear Fuel

SOS

   Standard Offer Service

SPP

   Southwest Power Pool

Tax Relief Act of 2010

   Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

TEG

   Termoelectrica del Golfo

TEP

   Termoelectrica Penoles

Upstream

   Natural gas exploration and production activities

VIE

   Variable Interest Entity

WECC

   Western Electric Coordinating Council

 

6


FILING FORMAT

This combined Form 10-Q is being filed separately by the Registrants. Information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.

FORWARD-LOOKING STATEMENTS

This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company and Baltimore Gas and Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2012 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 19; (2) this Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors, (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

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

 

7


 

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

 

 

 

 

 

8


EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(In millions, except per share data)        2013             2012             2013             2012      

Operating revenues

   $ 6,502     $ 6,579     $ 18,725     $ 17,235  

Operating expenses

        

Purchased power and fuel

     2,743       3,026       8,143       7,398  

Operating and maintenance

     1,735       2,170       5,391       5,979  

Depreciation and amortization

     530       500       1,606       1,376  

Taxes other than income

     277       290       825       737  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     5,285       5,986       15,965       15,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in earnings (loss) of unconsolidated affiliates

     37       10       7       (69

Operating income

     1,254       603       2,767       1,676  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (228     (240     (1,091     (678

Interest expense to affiliates, net

     (6     (6     (19     (19

Other, net

     155       101       311       253  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (79     (145     (799     (444
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     1,175       458       1,968       1,232  

Income taxes

     439       161       733       445  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     736       297       1,235       787  

Net income (loss) attributable to noncontrolling interests, preferred security dividends and redemption and preference stock dividends

     (2     1       11       5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholders

     738       296       1,224       782  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss), net of income taxes

        

Net income

     736       297       1,235       787  

Other comprehensive income (loss), net of income taxes

        

Pension and non-pension postretirement benefit plans:

        

Prior service benefit reclassified to periodic benefit cost

     1                   1  

Actuarial loss reclassified to periodic cost

     49       44       151       126  

Transition obligation reclassified to periodic cost

                       2  

Pension and non-pension postretirement benefit plans valuation adjustment

     (8     (67     69       (78

Deferred compensation unit valuation adjustment

                 10        

Change in unrealized loss on cash flow hedges

     (46     (88     (169     (29

Change in unrealized income on equity investments

     16       17       51       23  

Change in unrealized gain (loss) on foreign currency translation

           2       (5      

Change in unrealized loss on marketable securities

                 (1      
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     12       (92     106       45  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 748     $ 205     $ 1,341     $ 832  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shares of common stock outstanding:

        

Basic

     857       854       856       804  

Diluted

     860       857       860       806  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per average common share:

        

Basic

   $ 0.86     $ 0.35     $ 1.43     $ 0.97  

Diluted

   $ 0.86     $ 0.35     $ 1.42     $ 0.97  
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per common share

   $ 0.31     $ 0.53     $ 1.15     $ 1.58  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

9


EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended
September 30,
 
(In millions)    2013     2012  

Cash flows from operating activities

    

Net income

   $ 1,235     $ 787  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization

     2,844       2,909  

Impairment of assets held for sale

           278  

Deferred income taxes and amortization of investment tax credits

     (164     263  

Net fair value changes related to derivatives

     (229     (377

Net realized and unrealized gains on nuclear decommissioning trust fund investments

     (95     (142

Other non-cash operating activities

     738       1,235  

Changes in assets and liabilities:

    

Accounts receivable

     54       228  

Inventories

     (103     12  

Accounts payable, accrued expenses and other current liabilities

     (243     (817

Option premiums paid, net

     (38     (122

Counterparty collateral (posted) received, net

     (73     408  

Income taxes

     863       465  

Pension and non-pension postretirement benefit contributions

     (360     (131

Other assets and liabilities

     (35     (422
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     4,394       4,574  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (3,887     (4,162

Proceeds from nuclear decommissioning trust fund sales

     3,344       6,262  

Investment in nuclear decommissioning trust funds

     (3,518     (6,422

Cash and restricted cash acquired from Constellation

           964  

Proceeds from sale of long-lived assets

     32        

Proceeds from sales of investments

     20       26  

Purchases of investments

     (3     (13

Change in restricted cash

     (23     (38

Other investing activities

     65       41  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (3,970     (3,342
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payment of accounts receivable agreement

     (210      

Changes in short-term debt

     205       (139

Issuance of long-term debt

     2,031       1,558  

Retirement of long-term debt

     (1,156     (731

Redemption of preferred securities

     (93      

Dividends paid on common stock

     (981     (1,226

Dividends paid to former Constellation shareholders

           (51

Proceeds from employee stock plans

     40       61  

Other financing activities

     (102     (20
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (266     (548
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     158       684  

Cash and cash equivalents at beginning of period

     1,486       1,016  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,644     $ 1,700  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

10


EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 1,600      $ 1,411  

Cash and cash equivalents of variable interest entities

     44        75  

Restricted cash and investments

     60        86  

Restricted cash and investments of variable interest entities

     87        47  

Accounts receivable, net

     

Customer ($0 and $289 gross accounts receivable pledged as collateral as of September 30, 2013 and December 31, 2012, respectively)

     2,584        2,795  

Other

     1,232        1,141  

Accounts receivable, net, variable interest entities

     177        292  

Mark-to-market derivative assets

     730        938  

Unamortized energy contract assets

     460        886  

Inventories, net

     

Fossil fuel

     288        246  

Materials and supplies

     821        768  

Deferred income taxes

     292        131  

Regulatory assets

     877        764  

Other

     699        560  
  

 

 

    

 

 

 

Total current assets

     9,951        10,140  
  

 

 

    

 

 

 

Property, plant and equipment, net

     46,495        45,186  

Deferred debits and other assets

     

Regulatory assets

     6,509        6,497  

Nuclear decommissioning trust funds

     7,776        7,248  

Investments

     1,154        1,184  

Investments in affiliates

     23        22  

Investment in CENG

     1,939        1,849  

Goodwill

     2,625        2,625  

Mark-to-market derivative assets

     779        937  

Unamortized energy contracts assets

     803        1,073  

Pledged assets for Zion Station decommissioning

     486        614  

Other

     1,121        1,186  
  

 

 

    

 

 

 

Total deferred debits and other assets

     23,215        23,235  
  

 

 

    

 

 

 

Total assets

   $ 79,661      $ 78,561  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

11


EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
    December 31,
2012
 
     (Unaudited)        
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities

    

Short-term borrowings

   $ 214     $  

Short-term notes payable — accounts receivable agreement

           210  

Long-term debt due within one year

     1,461       975  

Long-term debt due within one year of variable interest entities

     182       72  

Accounts payable

     2,369       2,446  

Accounts payable of variable interest entities

     108       202  

Accrued expenses

     1,540       1,800  

Deferred income taxes

     50       58  

Regulatory liabilities

     314       368  

Mark-to-market derivative liabilities

     126       352  

Unamortized energy contract liabilities

     305       455  

Other

     838       853  
  

 

 

   

 

 

 

Total current liabilities

     7,507       7,791  
  

 

 

   

 

 

 

Long-term debt

     17,583       17,190  

Long-term debt to financing trusts

     648       648  

Long-term debt of variable interest entities

     339       508  

Deferred credits and other liabilities

    

Deferred income taxes and unamortized investment tax credits

     11,931       11,551  

Asset retirement obligations

     5,118       5,074  

Pension obligations

     3,094       3,428  

Non-pension postretirement benefit obligations

     2,764       2,662  

Spent nuclear fuel obligation

     1,021       1,020  

Regulatory liabilities

     4,204       3,981  

Mark-to-market derivative liabilities

     218       281  

Unamortized energy contract liabilities

     314       528  

Payable for Zion Station decommissioning

     339       432  

Other

     2,514       1,650  
  

 

 

   

 

 

 

Total deferred credits and other liabilities

     31,517       30,607  
  

 

 

   

 

 

 

Total liabilities

     57,594       56,744  
  

 

 

   

 

 

 

Commitments and contingencies

    

Preferred securities of subsidiary

           87  

Shareholders’ equity

    

Common stock (No par value, 2,000 shares authorized, 857 shares and 855 shares outstanding at September 30, 2013 and December 31, 2012, respectively)

     16,716       16,632  

Treasury stock, at cost (35 shares at September 30, 2013 and December 31, 2012, respectively)

     (2,327     (2,327

Retained earnings

     10,131       9,893  

Accumulated other comprehensive loss, net

     (2,661     (2,767
  

 

 

   

 

 

 

Total shareholders’ equity

     21,859       21,431  

BGE preference stock not subject to mandatory redemption

     193       193  

Noncontrolling interest

     15       106  
  

 

 

   

 

 

 

Total equity

     22,067       21,730  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 79,661     $ 78,561  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

12


EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(In millions, shares

in thousands)

  Issued
Shares
    Common
Stock
    Treasury
Stock
    Retained
Earnings
    Accumulated
Other
Comprehensive
Loss, net
    Non-controlling
Interest
    Preferred and
Preference
Stock
    Total
Equity
 

Balance, December 31, 2012

    889,525     $ 16,632     $ (2,327   $ 9,893     $ (2,767   $ 106     $ 193     $ 21,730  

Net income (loss)

                      1,224             (6     17       1,235  

Long-term incentive plan activity

    2,122       84                                     84  

Common stock dividends

                      (986                       (986

Impairment of long-lived assets

                                  (4           (4

Consolidated VIE dividend to non-controlling interest

                                  (63           (63

Deconsolidation of VIE

                                  (18           (18

Redemption of preferred securities

                                        (6     (6

Preferred and preference stock dividends

                                        (11     (11

Other comprehensive income net of income taxes of $(70)

                            106                   106  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 30, 2013

    891,647     $ 16,716     $ (2,327   $ 10,131     $ (2,661   $ 15     $ 193     $ 22,067  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

13


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(In millions)        2013             2012             2013             2012      

Operating revenues

        

Operating revenues

   $ 3,871     $ 3,558     $ 10,729     $ 9,276  

Operating revenues from affiliates

     384       473       1,129       1,263  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     4,255       4,031       11,858       10,539  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     2,179       2,122       6,294       5,018  

Operating and maintenance

     936       1,289       2,943       3,319  

Operating and maintenance from affiliates

     140       140       434       467  

Depreciation and amortization

     218       207       643       564  

Taxes other than income

     98       109       292       272  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,571       3,867       10,606       9,640  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in earnings (loss) of unconsolidated affiliates

     37       10       7       (69

Operating income

     721       174       1,259       830  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (82     (85     (257     (223

Other, net

     134       83       229       185  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     52       (2     (28     (38
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     773       172       1,231       792  

Income taxes

     288       85       436       373  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     485       87       795       419  

Net loss attributable to noncontrolling interests

     (5     (4     (6     (6
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to membership interest

     490       91       801       425  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss), net of income taxes

        

Net income

     485       87       795       419  

Other comprehensive (loss) income, net of income taxes

        

Change in unrealized loss on cash flow hedges

     (49     (171     (316     (185

Change in unrealized income on equity investments

     16       17       52       23  

Change in unrealized income (loss) on foreign currency translation

     1       2       (5      

Change in unrealized loss on marketable securities

                 (1     (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     (32     (152     (270     (163
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 453     $ (65   $ 525     $ 256  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

14


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended
September 30,
 
(In millions)        2013             2012      

Cash flows from operating activities

    

Net income

   $ 795     $ 419  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization

     1,937       2,178  

Impairment on assets held for sale

           278  

Deferred income taxes and amortization of investment tax credits

     183       69  

Net fair value changes related to derivatives

     (222     (345

Net realized and unrealized gains on nuclear decommissioning trust fund investments

     (95     (142

Other non-cash operating activities

     375       422  

Changes in assets and liabilities:

    

Accounts receivable

     57       189  

Receivables from and payables to affiliates, net

     2       (58

Inventories

     (81     34  

Accounts payable, accrued expenses and other current liabilities

     (162     (546

Option premiums paid, net

     (38     (122

Counterparty collateral (paid) received, net

     (123     315  

Income taxes

     315       565  

Pension and non-pension postretirement benefit contributions

     (123     (48

Other assets and liabilities

     (163     (195
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     2,657       3,013  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (1,995     (2,602

Proceeds from nuclear decommissioning trust fund sales

     3,344       6,262  

Investment in nuclear decommissioning trust funds

     (3,518     (6,422

Change in restricted cash

     (30      

Proceeds from sale of long-lived assets

     32        

Cash acquired from Constellation

           708  

Other investing activities

     18       (2
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (2,149     (2,056
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of long-term debt

     831       957  

Retirement of long-term debt

     (471     (138

Change in short-term debt

     12       (41

Distribution to member

     (550     (1,384

Other financing activities

     (73     (17
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (251     (623
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     257       334  

Cash and cash equivalents at beginning of period

     671       496  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 928     $ 830  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

15


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 884      $ 596  

Cash and cash equivalents of variable interest entities

     44        75  

Restricted cash and cash equivalents of variable interest entities

     37        16  

Accounts receivable, net

     

Customer

     1,489        1,482  

Other

     417        472  

Accounts receivable, net, variable interest entities

     175        292  

Mark-to-market derivative assets

     730        938  

Mark-to-market derivative assets with affiliates

            226  

Receivables from affiliates

     107        141  

Unamortized energy contract assets

     460        886  

Inventories, net

     

Fossil fuel

     169        130  

Materials and supplies

     661        626  

Deferred income taxes

     177         

Other

     455        331  
  

 

 

    

 

 

 

Total current assets

     5,805        6,211  
  

 

 

    

 

 

 

Property, plant and equipment, net

     19,797        19,531  

Deferred debits and other assets

     

Nuclear decommissioning trust funds

     7,776        7,248  

Investments

     401        420  

Investment in CENG

     1,939        1,849  

Mark-to-market derivative assets

     766        924  

Prepaid pension asset

     1,927        1,975  

Pledged assets for Zion Station decommissioning

     486        614  

Unamortized energy contract assets

     803        1,073  

Other

     798        836  
  

 

 

    

 

 

 

Total deferred debits and other assets

     14,896        14,939  
  

 

 

    

 

 

 

Total assets

   $ 40,498      $ 40,681  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

16


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
LIABILITIES AND EQUITY      

Current liabilities

     

Short-term borrowings

   $ 21      $  

Long-term debt due within one year

     544        24  

Long-term debt due within one year of variable interest entities

     104        4  

Accounts payable

     1,254        1,346  

Accounts payable of variable interest entities

     108        202  

Accrued expenses

     925        1,116  

Payables to affiliates

     162        193  

Deferred income taxes

     44        128  

Mark-to-market derivative liabilities

     110        334  

Unamortized energy contract liabilities

     276        378  

Other

     348        372  
  

 

 

    

 

 

 

Total current liabilities

     3,896        4,097  
  

 

 

    

 

 

 

Long-term debt

     5,545        5,245  

Long-term debt to affiliate

     1,528        2,007  

Long-term debt of variable interest entities

     88        203  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     5,899        5,398  

Asset retirement obligations

     4,983        4,938  

Non-pension postretirement benefit obligations

     843        755  

Spent nuclear fuel obligation

     1,021        1,020  

Payables to affiliates

     2,593        2,397  

Mark-to-market derivative liabilities

     112        232  

Unamortized energy contract liabilities

     311        516  

Payable for Zion Station decommissioning

     339        432  

Other

     789        776  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     16,890        16,464  
  

 

 

    

 

 

 

Total liabilities

     27,947        28,016  
  

 

 

    

 

 

 

Commitments and contingencies

     

Equity

     

Member’s equity

     

Membership interest

     8,872        8,876  

Undistributed earnings

     3,419        3,168  

Accumulated other comprehensive income, net

     243        513  
  

 

 

    

 

 

 

Total member’s equity

     12,534        12,557  

Noncontrolling interest

     17        108  
  

 

 

    

 

 

 

Total equity

     12,551        12,665  
  

 

 

    

 

 

 

Total liabilities and equity

   $ 40,498      $ 40,681  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

17


EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

 

     Member’s Equity              
(In millions)    Membership
Interest
    Undistributed
Earnings
    Accumulated
Other
Comprehensive
Income, net
    Noncontrolling
Interest
    Total
Equity
 

Balance, December 31, 2012

   $ 8,876     $ 3,168     $ 513     $ 108     $ 12,665  

Net income (loss)

           801             (6     795  

Noncontrolling interest acquired

     (3                       (3

Distribution to member

           (550                 (550

Consolidated VIE dividend to non-controlling interest

                       (63     (63

Deconsolidation of VIE

     (1                 (18     (19

Impairment of long-lived assets

                       (4     (4

Other comprehensive loss, net of income taxes of $177

                 (270           (270
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 30, 2013

   $ 8,872     $ 3,419     $ 243     $ 17     $ 12,551  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

18


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(In millions)        2013             2012             2013             2012      

Operating revenues

        

Operating revenues

   $ 1,155     $ 1,484     $ 3,393     $ 4,152  

Operating revenues from affiliates

     1             2       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,156       1,484       3,395       4,154  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power

     158       498       522       1,255  

Purchased power from affiliate

     143       180       409       631  

Operating and maintenance

     296       313       907       882  

Operating and maintenance from affiliate

     37       37       113       118  

Depreciation and amortization

     164       157       501       458  

Taxes other than income

     80       81       225       224  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     878       1,266       2,677       3,568  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     278       218       718       586  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (71     (71     (493     (221

Interest expense to affiliates, net

     (3     (3     (10     (9

Other, net

     7       5       18       12  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (67     (69     (485     (218
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     211       149       233       368  

Income taxes

     85       59       93       149  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     126       90       140       219  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income, net of income taxes

        

Change in unrealized gain on marketable securities

                       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

                       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 126     $ 90     $ 140     $ 220  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

19


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended
September 30,
 
(In millions)        2013             2012      

Cash flows from operating activities

    

Net income

   $ 140     $ 219  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     501       458  

Deferred income taxes and amortization of investment tax credits

     (152     198  

Other non-cash operating activities

     26       310  

Changes in assets and liabilities:

    

Accounts receivable

     (21     22  

Receivables from and payables to affiliates, net

     (32     (32

Inventories

     (12     (11

Accounts payable, accrued expenses and other current liabilities

     48       (49

Counterparty collateral received, net

     50       93  

Income taxes

     262       116  

Pension and non-pension postretirement benefit contributions

     (120     (19

Other assets and liabilities

     160       (124
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     850       1,181  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (1,074     (896

Proceeds from sales of investments

     5       26  

Purchases of investments

     (3     (13

Change in restricted cash

     (3      

Other investing activities

     33       12  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (1,042     (871
  

 

 

   

 

 

 

Cash flows from financing activities

    

Changes in short-term debt

     153       35  

Issuance of long-term debt

     350        

Retirement of long-term debt

     (252     (450

Dividends paid on common stock

     (165     (95

Other financing activities

     (4     (3
  

 

 

   

 

 

 

Net cash flows provided by (used in) financing activities

     82       (513
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (110     (203

Cash and cash equivalents at beginning of period

     144       234  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 34     $ 31  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

20


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 34      $ 144  

Restricted cash

     3         

Accounts receivable, net

     

Customer

     443        539  

Other

     525        452  

Inventories, net

     103        91  

Deferred income taxes

     18        83  

Counterparty collateral deposited

     3        53  

Regulatory assets

     335        388  

Other

     31        25  
  

 

 

    

 

 

 

Total current assets

     1,495        1,775  
  

 

 

    

 

 

 

Property, plant and equipment, net

     14,444        13,826  

Deferred debits and other assets

     

Regulatory assets

     819        666  

Investments

     5        8  

Investments in affiliates

     6        6  

Goodwill

     2,625        2,625  

Receivables from affiliates

     2,361        2,039  

Prepaid pension asset

     1,631        1,661  

Other

     300        299  
  

 

 

    

 

 

 

Total deferred debits and other assets

     7,747        7,304  
  

 

 

    

 

 

 

Total assets

   $ 23,686      $ 22,905  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

21


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities

     

Short-term borrowings

   $ 153      $  

Long-term debt due within one year

     617        252  

Accounts payable

     474        379  

Accrued expenses

     238        295  

Payables to affiliates

     61        97  

Customer deposits

     133        136  

Regulatory liabilities

     171        170  

Mark-to-market derivative liability

     16        18  

Mark-to-market derivative liability with affiliate

            226  

Other

     84        82  
  

 

 

    

 

 

 

Total current liabilities

     1,947        1,655  
  

 

 

    

 

 

 

Long-term debt

     5,057        5,315  

Long-term debt to financing trust

     206        206  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     4,057        4,272  

Asset retirement obligations

     99        99  

Non-pension postretirement benefits obligations

     354        273  

Regulatory liabilities

     3,393        3,229  

Mark-to-market derivative liability

     106        49  

Other

     994        484  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     9,003        8,406  
  

 

 

    

 

 

 

Total liabilities

     16,213        15,582  
  

 

 

    

 

 

 

Commitments and contingencies

     

Shareholders’ equity

     

Common stock

     1,588        1,588  

Other paid-in capital

     5,189        5,014  

Retained earnings

     696        721  
  

 

 

    

 

 

 

Total shareholders’ equity

     7,473        7,323  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 23,686      $ 22,905  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

22


COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(In millions)   Common
Stock
    Other
Paid-In
Capital
    Retained Deficit
Unappropriated
    Retained
Earnings
Appropriated
    Accumulated
Other
Comprehensive
Income, net
    Total
Shareholders’
Equity
 

Balance, December 31, 2012

  $ 1,588     $ 5,014     $ (1,639   $ 2,360     $      $ 7,323  

Net income

                140                   140  

Appropriation of retained earnings for future dividends

                (140     140              

Common stock dividends

                      (165           (165

Parent tax matter indemnification

          175                         175  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 30, 2013

  $ 1,588     $ 5,189     $ (1,639   $ 2,335     $      $ 7,473  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

23


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(In millions)        2013             2012             2013             2012      

Operating revenues

        

Operating revenues

   $ 727     $ 805     $ 2,294     $ 2,393  

Operating revenues from affiliates

     1       1       1       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     728       806       2,295       2,396  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     207       155       632       626  

Purchased power from affiliate

     82       171       321       407  

Operating and maintenance

     162       172       480       491  

Operating and maintenance from affiliates

     24       27       74       83  

Depreciation and amortization

     57       55       171       161  

Taxes other than income

     41       48       121       122  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     573       628       1,799       1,890  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     155       178       496       506  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (26     (29     (77     (85

Interest expense to affiliates, net

     (3     (3     (9     (9

Other, net

     1       2       4       6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (28     (30     (82     (88
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     127       148       414       418  

Income taxes

     35       25       122       118  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     92       123       292       300  

Preferred security dividends and redemption

           1       7       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholder

     92       122       285       297  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income, net of income taxes

        

Net income

     92       123       292       300  

Other comprehensive income, net of income taxes

        

Change in unrealized gains on marketable securities

                       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

                       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 92     $ 123     $ 292     $ 301  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

24


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended
September 30,
 
(In millions)        2013             2012      

Cash flows from operating activities

    

Net income

   $ 292     $ 300  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     171       161  

Deferred income taxes and amortization of investment tax credits

     35       27  

Other non-cash operating activities

     84       96  

Changes in assets and liabilities:

    

Accounts receivable

     41       36  

Receivables from and payables to affiliates, net

     (25     15  

Inventories

     4       10  

Accounts payable, accrued expenses and other current liabilities

     9       (75

Income taxes

     66       127  

Pension and non-pension postretirement benefit contributions

     (10     (12

Other assets and liabilities

     (47     (57
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     620       628  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (374     (274

Changes in intercompany money pool

     (1     5  

Change in restricted cash

     (1     2  

Other investing activities

     8       8  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (368     (259
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payment of accounts receivable agreement

     (210      

Issuance of long-term debt

     550       350  

Dividends paid on common stock

     (248     (258

Dividends paid on preferred securities

     (1     (3

Redemption of preferred securities

     (93      

Other financing activities

     (3     (4
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (5     85  
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     247       454  

Cash and cash equivalents at beginning of period

     362       194  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 609     $ 648  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

25


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 609      $ 362  

Restricted cash and cash equivalents

     1         

Accounts receivable, net ($0 and $289 gross accounts receivable pledged as collateral as of September 30, 2013 and December 31, 2012, respectively)

     

Customer

     250        364  

Other

     116        161  

Inventories, net

     

Fossil fuel

     58        65  

Materials and supplies

     21        19  

Deferred income taxes

     48        40  

Receivable from Exelon intercompany money pool

     1         

Prepaid utility taxes

     38        21  

Regulatory assets

     22        32  

Other

     46        30  
  

 

 

    

 

 

 

Total current assets

     1,210        1,094  
  

 

 

    

 

 

 

Property, plant and equipment, net

     6,270        6,078  

Deferred debits and other assets

     

Regulatory assets

     1,419        1,378  

Investments

     22        22  

Investments in affiliates

     8        8  

Receivable from affiliates

     410        360  

Prepaid pension asset

     368        373  

Other

     38        40  
  

 

 

    

 

 

 

Total deferred debits and other assets

     2,265        2,181  
  

 

 

    

 

 

 

Total assets

   $ 9,745      $ 9,353  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

26


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities

     

Short-term notes payable — accounts receivable agreement

   $       $ 210  

Long-term debt due within one year

     300        300  

Accounts payable

     249        244  

Accrued expenses

     91        82  

Payables to affiliates

     51        76  

Customer deposits

     49        51  

Regulatory liabilities

     111        169  

Other

     28        26  
  

 

 

    

 

 

 

Total current liabilities

     879        1,158  
  

 

 

    

 

 

 

Long-term debt

     2,196        1,647  

Long-term debt to financing trusts

     184        184  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     2,440        2,331  

Asset retirement obligations

     29        29  

Non-pension postretirement benefits obligations

     301        284  

Regulatory liabilities

     592        538  

Other

     105        113  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     3,467        3,295  
  

 

 

    

 

 

 

Total liabilities

     6,726        6,284  
  

 

 

    

 

 

 

Commitments and contingencies

     

Preferred securities

            87  

Shareholder's equity

     

Common stock

     2,388        2,388  

Retained earnings

     630        593  

Accumulated other comprehensive income, net

     1        1  
  

 

 

    

 

 

 

Total shareholder's equity

     3,019        2,982  
  

 

 

    

 

 

 

Total liabilities and shareholders' equity

   $ 9,745      $ 9,353  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

27


PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(In millions)    Common
Stock
     Retained
Earnings
    Accumulated
Other
Comprehensive
Income, net
     Total
Shareholders’
Equity
 

Balance, December 31, 2012

   $ 2,388      $ 593     $ 1      $ 2,982  

Net income

            292              292  

Common stock dividends

            (248            (248

Preferred security dividends

            (1            (1

Redemption of preferred securities

            (6            (6
  

 

 

    

 

 

   

 

 

    

 

 

 

Balance, September 30, 2013

   $ 2,388      $ 630     $ 1      $ 3,019  
  

 

 

    

 

 

   

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

28


BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(In millions)        2013             2012             2013             2012      

Operating revenues

        

Operating revenues

   $ 735     $ 716     $ 2,261     $ 2,023  

Operating revenues from affiliates

     2       4       10       9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     737       720       2,271       2,032  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     202       253       703       747  

Purchased power from affiliate

     144       120       356       296  

Operating and maintenance

     125       172       391       460  

Operating and maintenance from affiliates

     21       29       59       97  

Depreciation and amortization

     78       68       252       218  

Taxes other than income

     53       48       162       143  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     623       690       1,923       1,961  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     114       30       348       71  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (29     (35     (94     (110

Other, net

     4       5       13       18  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (25     (30     (81     (92
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     89             267       (21

Income taxes

     36             107       (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     53             160       (14

Preference stock dividends

     3       4       10       10  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common shareholder

     50       (4     150       (24
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 53     $     $ 160     $ (14
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

29


BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended
September 30,
 
(In millions)        2013             2012      

Cash flows from operating activities

    

Net (loss) income

   $ 160     $ (14

Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     252       218  

Deferred income taxes and amortization of investment tax credits

     105       101  

Other non-cash operating activities

     105       148  

Changes in assets and liabilities:

    

Accounts receivable

     (28      

Receivables from and payables to affiliates, net

     (12     2  

Inventories

     (15     21  

Accounts payable, accrued expenses and other current liabilities

     (5     4  

Income taxes

     6       (50

Pension and non-pension postretirement benefit contributions

     (16     (13

Other assets and liabilities

     (119     (77
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     433       340  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (391     (419

Change in restricted cash

     (20     (19

Other investing activities

     2       8  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (409     (430
  

 

 

   

 

 

 

Cash flows from financing activities

    

Changes in short-term debt

     40        

Issuance of long-term debt

     300       250  

Repayment of long-term debt

     (433     (141

Dividends paid on preference stock

     (10     (10

Contributions from parent

           66  

Other financing activities

     (3     (3
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (106     162  
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (82     72  

Cash and cash equivalents at beginning of period

     89       49  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 7     $ 121  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

30


BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 7      $ 89  

Restricted cash and cash equivalents of variable interest entity

     50        30  

Accounts receivable, net

     

Customer

     404        409  

Other

     132        111  

Income taxes receivable

            3  

Inventories, net

     

Gas held in storage

     61        51  

Materials and supplies

     36        31  

Deferred income taxes

     5        1  

Prepaid utility taxes

     76        57  

Regulatory assets

     184        190  

Other

     7        8  
  

 

 

    

 

 

 

Total current assets

     962        980  
  

 

 

    

 

 

 

Property, plant and equipment, net

     5,713        5,498  

Deferred debits and other assets

     

Regulatory assets

     509        522  

Investments

     5        5  

Investments in affiliates

     8        8  

Prepaid pension asset

     434        467  

Other

     26        26  
  

 

 

    

 

 

 

Total deferred debits and other assets

     982        1,028  
  

 

 

    

 

 

 

Total assets

   $ 7,657      $ 7,506  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

31


BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    September 30,
2013
     December 31,
2012
 
     (Unaudited)         
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities

     

Short-term borrowings

   $ 40      $  

Long-term debt due within one year

            400  

Long-term debt of variable interest entity due within one year

     69        67  

Accounts payable

     184        195  

Accrued expenses

     127        106  

Deferred income taxes

     9         

Payables to affiliates

     54        65  

Customer deposits

     72        71  

Regulatory liabilities

     31        29  

Other

     58        47  
  

 

 

    

 

 

 

Total current liabilities

     644        980  
  

 

 

    

 

 

 

Long-term debt

     1,746        1,446  

Long-term debt to financing trust

     258        258  

Long-term debt of variable interest entity

     230        265  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     1,759        1,658  

Asset retirement obligations

     7        8  

Non-pension postretirement benefits obligations

     221        229  

Regulatory liabilities

     218        214  

Other

     66        90  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     2,271        2,199  
  

 

 

    

 

 

 

Total liabilities

     5,149        5,148  
  

 

 

    

 

 

 

Commitments and contingencies

     

Shareholders’ equity

     

Common stock

     1,360        1,360  

Retained earnings

     958        808  
  

 

 

    

 

 

 

Total shareholder's equity

     2,318        2,168  
  

 

 

    

 

 

 

Preference stock not subject to mandatory redemption

     190        190  
  

 

 

    

 

 

 

Total equity

     2,508        2,358  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 7,657      $ 7,506  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

32


BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(In millions)    Common
Stock
     Retained
Earnings
    Total
Shareholders’
Equity
    Preference stock
not subject to
mandatory
redemption
     Total Equity  

Balance, December 31, 2012

   $ 1,360      $ 808     $ 2,168     $ 190      $ 2,358  

Net income

            160       160              160  

Preference stock dividends

            (10     (10            (10
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Balance, September 30, 2013

   $ 1,360      $ 958     $ 2,318     $ 190      $ 2,508  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

33


COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1.    Basis of Presentation (Exelon, Generation, ComEd, PECO and BGE)

Exelon is a utility services holding company engaged through its principal subsidiaries in the energy generation and energy distribution businesses. Prior to March 12, 2012, Exelon’s principal, wholly owned subsidiaries included ComEd, PECO and Generation. On March 12, 2012, Constellation merged into Exelon with Exelon continuing as the surviving corporation pursuant to the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”). As a result of the merger transaction, Generation now includes the former Constellation generation and customer supply operations. BGE, formerly Constellation’s regulated utility subsidiary, is now a subsidiary of Exelon. Refer to Note 4 — Merger and Acquisitions for further information regarding the merger transaction.

The energy generation business includes:

 

   

Generation:    Physical delivery and marketing of owned and contracted electric generation capacity and provision of renewable and other energy-related products and services, and natural gas exploration and production activities. Generation has six reportable segments consisting of the Mid-Atlantic, Midwest, New England, New York, ERCOT and Other regions.

The energy delivery businesses include:

 

   

ComEd:    Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in northern Illinois, including the City of Chicago.

 

   

PECO:    Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in southeastern Pennsylvania, including the City of Philadelphia, and the purchase and regulated retail sale of natural gas and the provision of distribution services in the Pennsylvania counties surrounding the City of Philadelphia.

 

   

BGE:    Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in central Maryland, including the City of Baltimore, and the purchase and regulated retail sale of natural gas and the provision of distribution services in central Maryland, including the City of Baltimore.

For financial statement purposes, beginning on March 12, 2012, disclosures that solely relate to Constellation or BGE activities now also apply to Exelon, unless otherwise noted. When appropriate, Exelon, Generation, ComEd, PECO and BGE are named specifically for their related activities and disclosures.

Exelon did not apply push-down accounting to BGE. As a result, BGE continues to maintain its reporting requirements as an SEC registrant. The information disclosed for BGE represents the activity of the standalone entity for the three and nine months ended September 30, 2013 and 2012 and the financial position as of September 30, 2013 and December 31, 2012. However, for Exelon’s financial reporting, Exelon is reporting BGE activity for the three and nine months ended September 30, 2013 and from March 12, 2012 through September 30, 2012 and the financial position as of September 30, 2013 and December 31, 2012.

Each of the Registrant’s Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated.

For the nine months ended September 30, 2013, BGE recorded a $2 million correcting adjustment to decrease amortization expense related to regulatory assets that were originally recorded during 2012 and a $4 million correcting adjustment to decrease operating and maintenance expense for an overstatement of BGE’s life insurance obligation related to post-employment benefits in prior years. Exelon and BGE have concluded that these correcting adjustments are not material to their respective results of operations or cash flows for the nine

 

34


COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

 

months ended September 30, 2013 or any prior period presented. Exelon and BGE do not expect these correcting adjustments to have a material impact on their respective results of operations or cash flows for the year ended December 31, 2013.

The accompanying consolidated financial statements as of September 30, 2013 and 2012 and for the three and nine months then ended 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 disclosed. The December 31, 2012 Consolidated Balance Sheets were obtained from audited financial statements. Certain prior year amounts in Exelon’s and BGE’s Consolidated Statements of Cash Flows, Exelon’s, Generation's and BGE’s Consolidated Statements of Operations and Comprehensive Income and in Exelon’s, Generation's, ComEd’s, and BGE’s Consolidated Balance Sheets have been reclassified between line items for comparative purposes. BGE recorded an adjustment to its Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 to reflect the change in operating cash flows and capital expenditures related to amounts not paid of approximately $17 million. The reclassifications did not materially affect any of the Registrants’ net income or cash flows from operating or investing activities. Financial results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for fiscal year ended December 31, 2013. 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. These notes should be read in conjunction with the Notes to Combined Consolidated Financial Statements of all Registrants included in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA of their respective 2012 Form 10-K Reports.

2.    New Accounting Pronouncements (Exelon, Generation, ComEd, PECO and BGE)

The following recently issued accounting standards were adopted by or are effective for the Registrants during 2013.

Presentation of Items Reclassified out of Accumulated Other Comprehensive Income

In February 2013, the FASB issued authoritative guidance requiring entities to present either in the notes or parenthetically on the face of the financial statements, reclassifications from each component of accumulated other comprehensive income and the affected income statement line items. Entities only need to disclose the affected income statement line item for components reclassified to net income in their entirety; otherwise, a cross-reference to the related note should be provided. This guidance was effective for the Registrants for periods beginning after December 15, 2012 and was required to be applied prospectively. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Registrants’ results of operations, cash flows or financial positions. See Note 16 — Changes in Accumulated Other Comprehensive Income for the new disclosures.

Disclosures About Offsetting Assets and Liabilities

In December 2011, the FASB issued (and amended in January 2013), authoritative guidance requiring entities to disclose both gross and net information about recognized derivative instruments, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities borrowing or lending transactions that are offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the balance sheet. This guidance was effective for the Registrants for periods beginning on or after January 1, 2013 and is required to be applied retrospectively. This guidance is primarily applicable to certain derivative transactions for Exelon and Generation. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Registrants’ results of operations, cash flows or financial positions. See Note 10 — Derivative Financial Instruments for the new disclosures.

 

35


COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

 

Inclusion of the Fed Funds Effective Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In July 2013, the FASB issued authoritative guidance permitting entities to designate the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes. Prior to the issuance of this guidance, only interest rates on direct treasury obligations of the