Exelon Reports Second Quarter 2021 Results

Exelon Corporation (Nasdaq: EXC) today reported its financial results for the second quarter of 2021.

“Ongoing investments in technology and infrastructure continue to drive high reliability and customer satisfaction across our six utilities, and today we announced a new ‘path to clean’ goal that will put Exelon utilities on course to achieve net-zero emissions from operations by 2050,” said Christopher Crane, president and CEO of Exelon. “We also are encouraged to see growing support at the federal level for policies that would value the clean energy from our nuclear fleet, but passage of legislation remains uncertain and, regardless, will come too late to save our Byron and Dresden plants from early retirement this fall. While we remain hopeful that a state solution will pass in time to save the plants, clean energy legislation in Illinois remains caught in negotiations over unrelated policy matters, leaving us no choice but to continue down the path of closing the plants. Looking ahead, we continue to execute our plan to separate our utility and generation businesses into two financially strong, independent companies, and we remain on track to close in the first quarter of 2022.”

“Adjusted (non-GAAP) Operating Earnings of $0.89 per share in the second quarter was $0.34 ahead of the same period last year, driven in part by the absence of storm costs at Exelon utilities and the recovery of costs associated with ongoing investments to improve reliability and service for customers,” said Joseph Nigro, senior executive vice president and CFO of Exelon. “Exelon Generation also had a strong quarter, with year-over-year earnings up $0.14 per share due to unrealized and realized gains on Constellation’s Technology Venture investments, fewer planned nuclear outage days and realized gains in our nuclear decommissioning trust funds. As a result of these and other factors, we are reaffirming our full-year Adjusted (non-GAAP) Operating Earnings guidance range of $2.60-$3.00 per share.”

Second Quarter 2021

Exelon's GAAP Net Income for the second quarter of 2021 decreased to $0.41 per share from $0.53 GAAP Net Income per share in the second quarter of 2020. Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $0.89 per share from $0.55 per share in the second quarter of 2020. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 5.

Adjusted (non-GAAP) Operating Earnings in the second quarter of 2021 primarily reflect:

• Higher utility earnings primarily due to higher electric distribution earnings at ComEd from higher rate base and higher allowed ROE due to an increase in treasury rates; the favorable impacts of the multi-year plan at BGE; regulatory rate increases at PHI; favorable volume at PECO and PHI; and lower storm costs at PECO due to the absence of the June 2020 storms.
• Higher Generation earnings primarily due to higher net unrealized and realized gains on equity investments; higher realized gains on nuclear decommissioning trust (NDT) funds; and decreased nuclear outage days.

Operating Company Results¹

ComEd

ComEd's second quarter of 2021 GAAP Net Income increased to $192 million from a GAAP Net Loss of $(61) million in the second quarter of 2020. ComEd's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $195 million from $150 million in the second quarter of 2020, primarily due to higher electric distribution earnings from higher rate base and higher allowed ROE due to an increase in treasury rates. Due to revenue decoupling, ComEd's distribution earnings are not affected by actual weather or customer usage patterns.

PECO

PECO’s second quarter of 2021 GAAP Net Income increased to $104 million from $39 million in the second quarter of 2020. PECO's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $107 million from $44 million in the second quarter of 2020, primarily due to lower storm costs due to the absence of the June 2020 storms and favorable volume.

__________

¹Exelon’s five business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware; and Generation, which consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products and risk management services.

BGE

BGE’s second quarter of 2021 GAAP Net Income increased to $45 million from $39 million in the second quarter of 2020. BGE's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $48 million from $43 million in the second quarter of 2020, primarily due to the favorable impacts of the multi-year plan. Due to revenue decoupling, BGE's distribution earnings are not affected by actual weather or customer usage patterns.

PHI

PHI’s second quarter of 2021 GAAP Net Income increased to $141 million from $94 million in the second quarter of 2020. PHI’s Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $144 million from $98 million in the second quarter of 2020, primarily due to distribution and transmission rate increases at DPL and ACE, favorable volume at ACE, and lower credit loss expense in 2021 due to an increase in 2020 as a result of COVID-19. Due to revenue decoupling, PHI's distribution earnings related to Pepco Maryland, DPL Maryland and Pepco District of Columbia are not affected by actual weather or customer usage patterns.

Generation

Generation had a GAAP Net Loss of $(61) million in the second quarter of 2021 compared with GAAP Net Income of $476 million in the second quarter of 2020. Generation's Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 increased to $393 million from $252 million in the second quarter of 2020, primarily due to net unrealized and realized gains on equity investments, higher realized gains on NDT funds, and decreased nuclear outage days.

As of June 30, 2021, the percentage of expected generation hedged is 98%-101% for 2021.

Recent Developments and Second Quarter Highlights

• Exelon Utilities “Path to Clean”: Today, the Exelon utilities announced a “path to clean” goal to collectively reduce their operations-driven emissions 50% by 2030 against a 2015 baseline and to reach net zero operations-driven emissions by 2050. This goal builds upon Exelon’s long-standing commitment to reducing our greenhouse gas emissions. The Exelon utilities “path to clean” will include efficiency and clean electricity for operations, vehicle fleet electrification, equipment and processes to reduce sulfur hexafluoride (SF₆) leakage, modern natural gas infrastructure to minimize methane leaks and increase safety and reliability, and investment and collaboration to develop new technologies.
• PECO Pennsylvania Natural Gas Distribution Base Rate Case: On June 22, 2021, the Pennsylvania Public Utility Commission (PAPUC) issued an order approving a $29 million increase in PECO's annual natural gas distribution revenues, reflecting a ROE of 10.24%. The rates were effective on July 1, 2021.
• Pepco District of Columbia Electric Distribution Base Rate Case: On June 8, 2021, the Public Service Commission of the District of Columbia (DCPSC) approved Pepco’s multi-year plan for the 18-months remaining in 2021 through 2022. The order approved an incremental increase in Pepco’s electric distribution rates of $42 million and $67 million, before offsets, for the remainder of 2021 and 2022, respectively, reflecting an ROE of 9.275%. 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. These rates were effective on July 1, 2021.
• Pepco Maryland Electric Distribution Base Rate Case: On June 28, 2021, the Maryland Public Service Commission (MDPSC) approved Pepco’s three-year multi-year plan for April 1, 2021 through March 31, 2024. The order approved an incremental increase in Pepco’s electric distribution rates of $21 million, $16 million, and $15 million, before offsets, for the 12-month periods ending March 31, 2022, 2023, and 2024, respectively, reflecting an ROE of 9.55%. However, the MDPSC 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 a decision on whether to use additional tax benefits to offset the customer rate increases for periods after March 31, 2022. These rates were effective on June 28, 2021.
• ACE New Jersey Electric Distribution Base Rate Case: On July 14, 2021, the New Jersey Board of Public Utilities (NJBPU) approved an increase in ACE's annual electric distribution base rates of $41 million (before New Jersey sales and use tax), reflecting an ROE of 9.6%. The order allows ACE to retain approximately $11 million of certain tax benefits which will result in a decrease to income tax expense in the third quarter of 2021. These rates are effective on Jan. 1, 2022.
• Nuclear Operations: Generation’s nuclear fleet, including its owned output from the Salem Generating Station and 100% of the CENG units, produced 43,575 gigawatt-hours (GWhs) in the second quarter of 2021, compared with 43,416 GWhs in the second quarter of 2020. Excluding Salem, the Exelon-operated nuclear plants at ownership achieved a 93.7% capacity factor for the second quarter of 2021, compared with 95.4% for the second quarter of 2020. The number of planned refueling outage days in the second quarter of 2021 totaled 66, compared with 92 in the second quarter of 2020. There were seven non-refueling outage days in the second quarter of 2021 and none in the second quarter of 2020.
• Fossil and Renewables Operations: The Dispatch Match rate for Generation’s gas and hydro fleet was 99.5% in the second quarter of 2021, compared with 97.4% in the second quarter of 2020.
  
  Energy Capture for the wind and solar fleet was 96.0% in the second quarter of 2021, compared with 92.7% in the second quarter of 2020.
• Financing Activities:
  • On June 10, 2021, BGE issued $600 million of its 2.25% notes due June 15, 2031. BGE used the proceeds to repay a portion of outstanding commercial paper obligations, repay existing indebtedness, and to fund other general corporate purposes.
  • On May 13, 2021, West Medway II, LLC (West Medway II), an indirect subsidiary of Generation, entered into a financing agreement for a $150 million nonrecourse senior secured term loan credit facility scheduled to mature on March 31, 2026. The term loan bears interest at an average blended interest rate of LIBOR plus 3%. Generation used the proceeds for general corporate purposes. In addition to the financing, West Medway II entered into interest rate swaps with an initial notional amount of $113 million at an interest rate of 0.61% to manage a portion of the interest rate exposure in connection with financing.

GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliation

Adjusted (non-GAAP) Operating Earnings for the second quarter of 2021 do not include the following items (after tax) that were included in reported GAAP Net Income:

(in millions)	Exelon Earnings per Diluted Share			Exelon			ComEd			PECO			BGE			PHI			Generation
2021 GAAP Net Income (Loss)	$	0.41		$	401		$	192		$	104		$	45		$	141		$	(61	)
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $79)	(0.24		)	(231		)	—			—			—			—			(234		)
Unrealized Gains Related to NDT Fund Investments (net of taxes of $134)	(0.13		)	(130		)	—			—			—			—			(130		)
Asset Impairments (net of taxes of $124)	0.38			368			—			—			—			—			368
Plant Retirements and Divestitures (net of taxes of $116)	0.35			344			—			—			—			—			344
Cost Management Program (net of taxes of $1)	—			2			—			—			—			—			2
COVID-19 Direct Costs (net of taxes of $3, $0, $0, $1, and $2, respectively)	0.01			9			—			1			1			2			5
Acquisition Related Costs (net of taxes of $1)	—			2			—			—			—			—			2
ERP System Implementation Costs (net of taxes of $1)	—			2			—			—			—			—			2
Planned Separation Costs (net of taxes of $7, $1, $1, $1, $1, and $2, respectively)	0.01			13			2			1			1			2			5
Costs Related to Suspension of Contractual Offset (net of taxes of $12)	0.04			41			—			—			—			—			41
Income Tax-Related Adjustments (entire amount represents tax expense)	—			(2		)	—			—			—			—			—
Noncontrolling Interests (net of taxes of $8)	0.05			50			—			—			—			—			50
2021 Adjusted (non-GAAP) Operating Earnings	$	0.89		$	869		$	195		$	107		$	48		$	144		$	393

Adjusted (non-GAAP) Operating Earnings for the second quarter of 2020 do not include the following items (after tax) that were included in reported GAAP Net Income:

(in millions)	Exelon Earnings per Diluted Share			Exelon			ComEd			PECO			BGE			PHI			Generation
2020 GAAP Net Income (Loss)	$	0.53		$	521		$	(61	)	$	39		$	39		$	94		$	476
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $18 and $20, respectively)	(0.05		)	(51		)	—			—			—			—			(60		)
Unrealized Gains Related to NDT Fund Investments (net of taxes of $275)	(0.31		)	(305		)	—			—			—			—			(305		)
Asset Impairments (net of taxes of $7, $4, and $3, respectively)	0.02			19			11			—			—			—			8
Plant Retirements and Divestitures (net of taxes of $2)	0.01			7			—			—			—			—			7
Cost Management Program (net of taxes of $3, $1, and $2, respectively)	0.01			6			—			—			—			1			5
Change in Environmental Liabilities (net of taxes of $0)	—			1			—			—			—			—			1
COVID-19 Direct Costs (net of taxes of $10, $2, $1, $1, and $6, respectively)	0.03			27			—			5			4			3			16
Deferred Prosecution Agreement Payments (net of taxes of $0)	0.20			200			200			—			—			—			—
Income Tax-Related Adjustments (entire amount represents tax expense)	0.01			5			—			—			—			—			—
Noncontrolling Interests (net of taxes of $20)	0.11			104			—			—			—			—			104
2020 Adjusted (non-GAAP) Operating Earnings	$	0.55		$	536		$	150		$	44		$	43		$	98		$	252

Note:
Amounts may not sum due to rounding.
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income (Loss) and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT fund investments, the marginal statutory income tax rates for 2021 and 2020 ranged from 25.0% to 29.0%. Under IRS regulations, NDT fund investment returns are taxed at different rates for investments if they are in qualified or non-qualified funds. The effective tax rates for the unrealized losses related to NDT fund investments were 50.6% and 47.4% for the three months ended June 30, 2021 and 2020, respectively.

Webcast Information

Exelon will discuss second quarter 2021 earnings in a conference call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time). The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.

About Exelon

Exelon Corporation (Nasdaq: EXC) is a Fortune 100 energy company with the largest number of electricity and natural gas customers in the U.S. Exelon does business in 48 states, the District of Columbia, and Canada and had 2020 revenue of $33 billion. Exelon serves approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey, and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO, and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 31,000 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 2 million residential, public sector, and business customers, including three fourths of the Fortune 100. Follow Exelon on Twitter @Exelon.

Non-GAAP Financial Measures

In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses, and other specified items. This measure is intended to enhance an investor’s overall understanding of period over period operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentation. The Company has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of Adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon’s website: www.exeloncorp.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on Aug. 4, 2021.

Cautionary Statements Regarding Forward-Looking Information

This press release 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 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) include those factors discussed herein, as well as the items discussed in (1) the Registrants' 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) the Registrants' Second Quarter 2021 Quarterly Report on Form 10-Q (to be filed on Aug. 4, 2021) 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, whether written or oral, which apply only as of the date of this press release. 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 press release.

Exelon
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share data)
	Three Months Ended June 30, 2021										Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments						GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	7,915			$	240			(b)		$	7,322			$	(21	)		(b)
Operating expenses
Purchased power and fuel	3,016					500			(b),(c)		2,924					64			(b),(d)
Operating and maintenance	2,447					(364	)		(c),(d),(e),(f), (g),(h),(i),(j)		2,433					(280	)		(b),(d),(e),(f), (m),(n)
Depreciation and amortization	1,666					(633	)		(c),(j)		1,001					(4	)		(c)
Taxes other than income taxes	432					—					411					—
Total operating expenses	7,561										6,769
Gain on sales of assets and businesses	12					(1	)		(c)		12					(4	)		(b),(c)
Operating income	366										565
Other income and (deductions)
Interest expense, net	(396		)			—					(427		)			23			(b),(o)
Other, net	581					(267	)		(b),(j),(k)		656					(569	)		(b),(k)
Total other income and (deductions)	185										229
Income before income taxes	551										794
Income taxes	74					51			(b),(c),(d),(e), (f),(g),(h),(i), (j),(k)		219					(262	)		(b),(c),(d),(e), (f),(k),(o)
Equity in losses of unconsolidated affiliates	(1		)			—					(1		)			—
Net income	476										574
Net income attributable to noncontrolling interests	75					(50	)		(l)		53					(103	)		(l)
Net income attributable to common shareholders	$	401									$	521
Effective tax rate(p)	13.4		%								27.6		%
Earnings per average common share
Basic	$	0.41									$	0.53
Diluted	$	0.41									$	0.53
Average common shares outstanding
Basic	978										976
Diluted	979										976

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations.
(c)	In 2021, adjustment to exclude costs associated with Generation's decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021 and Mystic Units 8 and 9 in 2024. In 2020, adjustment to exclude accelerated depreciation and amortization expenses associated with the early retirement of certain fossil sites.
(d)	Adjustment to exclude reorganization costs related to cost management programs.
(e)	In 2021, adjustment to exclude an impairment in the New England asset group and an impairment recorded as a result of the agreement to sell the Albany Green Energy biomass facility. In 2020, adjustment to exclude an impairment at ComEd related to the acquisition of transmission assets and the impairment of certain wind assets at Generation.
(f)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.
(g)	Adjustment to exclude costs related to the acquisition of Electricite de France SA's (EDF's) interest in CENG.
(h)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(i)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(j)	Adjustment to exclude the impact of suspension of contractual offset for the Byron units in the second quarter of 2021.
(k)	Adjustment to exclude the impact of net unrealized gains on Generation’s NDT fund investments for Non-Regulatory Agreement Units.
(l)	Adjustment to exclude elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to unrealized gains and losses on NDT fund investments for CENG units.
(m)	Adjustment to exclude changes in environmental liabilities.
(n)	Adjustment to exclude the payments made by ComEd under the Deferred Prosecution Agreement, which ComEd entered in July 2020 with the U.S. Attorney’s Office for the Northern District of Illinois.
(o)	Adjustment to exclude income tax related adjustments.
(p)	The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 12.3% and (9.7)% for the three months ended June 30, 2021 and 2020, respectively.

Exelon
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share data)
	Six Months Ended June 30, 2021										Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments						GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	17,805			$	323			(b)		$	16,069			$	(201	)		(b)
Operating expenses
Purchased power and fuel	8,984				705				(b),(c)		6,791				16				(b)
Operating and maintenance	4,426				(192		)		(c),(d),(e),(f), (g),(h),(i),(j), (k)		4,637				(304		)		(c),(d),(e),(f), (k),(n)
Depreciation and amortization	3,363				(1,275		)		(c),(j)		2,023				(14		)		(c)
Taxes other than income taxes	870				—						847				—
Total operating expenses	17,643										14,298
Gain on sales of assets and businesses	83				(69		)		(c)		13				(4		)		(b),(c)
Operating income	245										1,784
Other income and (deductions)
Interest expense, net	(783		)		(4		)		(b)		(837		)		39				(b),(o)
Other, net	806				(184		)		(b),(j),(l)		(68		)		310				(l)
Total other income and (deductions)	23										(905		)
Income before income taxes	268										879
Income taxes	55				162				(b),(c),(d),(e), (f),(g),(h),(i),(j),(k),(l)		(75		)		119				(b),(c),(d),(e), (f),(l),(o)
Equity in losses of unconsolidated affiliates	(2		)		—						(4		)		—
Net income	211										950
Net income (loss) attributable to noncontrolling interests	99				(32		)		(m)		(153		)		42				(m)
Net income attributable to common shareholders	$	112									$	1,103
Effective tax rate(p)	20.5		%								(8.5		)%
Earnings per average common share
Basic	$	0.11									$	1.13
Diluted	$	0.11									$	1.13
Average common shares outstanding
Basic	978										975
Diluted	979										976

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations.
(c)	In 2021, adjustment to exclude costs associated with Generation's decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021 and Mystic Units 8 and 9 in 2024, partially offset by a gain on sale of Generation's solar business. In 2020, adjustment to exclude accelerated depreciation and amortization expenses associated with the early retirement of certain fossil sites.
(d)	Adjustment to exclude reorganization costs related to cost management programs.
(e)	In 2021, adjustment to exclude an impairment in the New England asset group and an impairment recorded as a result of the agreement to sell the Albany Green Energy biomass facility. In 2020, adjustment to exclude an impairment at ComEd related to the acquisition of transmission assets and the impairment of certain wind assets at Generation.
(f)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.
(g)	Adjustment to exclude costs related to the acquisition of Electricite de France SA's (EDF's) interest in CENG.
(h)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(i)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(j)	Adjustment to exclude the impact of suspension of contractual offset for the Byron units in the second quarter of 2021.
(k)	Adjustment to exclude changes in environmental liabilities.
(l)	Adjustment to exclude the impact of net unrealized gains and losses on Generation’s NDT fund investments for Non-Regulatory Agreement Units.
(m)	Adjustment to exclude elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to unrealized gains and losses on NDT fund investments for CENG units.
(n)	Adjustment to exclude the payments made by ComEd under the Deferred Prosecution Agreement, which ComEd entered in July 2020 with the U.S. Attorney’s Office for the Northern District of Illinois.
(o)	Adjustment to exclude income tax related adjustments.
(p)	The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 19.8% and 3.3% for the six months ended June 30, 2021 and 2020, respectively.

ComEd
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	1,517			$	—				$	1,417			$	—
Operating expenses
Purchased power and fuel	500					—				464				—
Operating and maintenance	323					(3	)	(d)		536				(215		)	(b), (c)
Depreciation and amortization	296					—				274				—
Taxes other than income taxes	77					—				71				—
Total operating expenses	1,196									1,345
Operating income	321									72
Other income and (deductions)
Interest expense, net	(98		)			—				(98		)		—
Other, net	15					—				11				—
Total other income and (deductions)	(83		)							(87		)
Income before income taxes	238									(15		)
Income taxes	46					1		(d)		46				4			(b)
Net income	$	192								$	(61	)
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Ajustments
Operating revenues	$	3,052			$	—				$	2,856			$	—
Operating expenses
Purchased power and fuel	1,025					—				951				—
Operating and maintenance	639					(4	)	(d)		853				(215		)	(b), (c)
Depreciation and amortization	589					—				547				—
Taxes other than income taxes	153					—				146				—
Total operating expenses	2,406									2,497
Operating income	646									359
Other income and (deductions)
Interest expense, net	(193		)			—				(192		)		—
Other, net	22					—				22				—
Total other income and (deductions)	(171		)							(170		)
Income before income taxes	475									189
Income taxes	85					1		(d)		82				4			(b)
Net income	$	390								$	107

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude an impairment related to the acquisition of transmission assets.
(c)	Adjustment to exclude the payments made by ComEd under the Deferred Prosecution Agreement, which ComEd entered in July 2020 with the U.S. Attorney’s Office for the Northern District of Illinois.
(d)	Represents costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.

PECO
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	693			$	—				$	681			$	—
Operating expenses
Purchased power and fuel		207				—					216				—
Operating and maintenance		209				(3	)	(b),(c)			275				(7	)	(b),(e)
Depreciation and amortization		87				—					88				—
Taxes other than income taxes		49				—					39				—
Total operating expenses		552									618
Operating income		141									63
Other income and (deductions)
Interest expense, net		(42	)			—					(36	)			—
Other, net		7				—					5				—
Total other income and (deductions)		(35	)								(31	)
Income before income taxes		106									32
Income taxes		2				1		(b),(c)			(7	)			2		(b),(e)
Net income	$	104								$	39
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	1,582			$	—				$	1,493			$	—
Operating expenses
Purchased power and fuel		523				—					499				—
Operating and maintenance		443				(7	)	(b),(c),(d)			492				(10	)	(b),(e)
Depreciation and amortization		173				—					173				—
Taxes other than income taxes		92				—					78				—
Total operating expenses		1,231									1,242
Operating income		351									251
Other income and (deductions)
Interest expense, net		(80	)			—					(71	)			—
Other, net		12				—					7				—
Total other income and (deductions)		(68	)								(64	)
Income before income taxes		283									187
Income taxes		12				2		(b),(c),(d)			9				3		(b),(e)
Net income	$	271								$	178

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.
(c)	Represents costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(d)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(e)	Adjustment to exclude reorganization costs related to cost management programs.

BGE
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	682			$	—				$	616			$	—
Operating expenses
Purchased power and fuel	219				—					194				—
Operating and maintenance	193				(3		)	(b),(c)		187				(6		)	(b),(e)
Depreciation and amortization	141				—					129				—
Taxes other than income taxes	67				—					63				—
Total operating expenses	620									573
Operating income	62									43
Other income and (deductions)
Interest expense, net	(34		)		—					(32		)		—
Other, net	9				—					6				—
Total other income and (deductions)	(25		)							(26		)
Income before income taxes	37									17
Income taxes	(8		)		1			(b),(c)		(22		)		2			(b),(e)
Net income	$	45								$	39
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	1,656			$	—				$	1,554			$	—
Operating expenses
Purchased power and fuel	550				—					483				—
Operating and maintenance	390				(6		)	(b),(c),(d)		376				(7		)	(b),(e)
Depreciation and amortization	293				—					272				—
Taxes other than income taxes	139				—					132				—
Total operating expenses	1,372									1,263
Operating income	284									291
Other income and (deductions)
Interest expense, net	(67		)		—					(64		)		—
Other, net	16				—					10				—
Total other income and (deductions)	(51		)							(54		)
Income before income taxes	233									237
Income taxes	(21		)		2			(b),(c),(d)		18				1			(b),(e)
Net income	$	254								$	219

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.
(c)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(d)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(e)	Adjustment to exclude reorganization costs related to cost management programs.

PHI
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	1,140			$	—				$	1,016			$	—
Operating expenses
Purchased power and fuel	396				—					375				—
Operating and maintenance	256				(5		)	(b),(c),(d),(e)		281				(6		)	(d), (e)
Depreciation and amortization	194				—					191				—
Taxes other than income taxes	109				—					109				—
Total operating expenses	955									956
Operating income	185									60
Other income and (deductions)
Interest expense, net	(67		)		—					(67		)		—
Other, net	20				—					14				—
Total other income and (deductions)	(47		)							(53		)
Income before income taxes	138									7
Income taxes	(3		)		1			(b),(c),(d),(e)		(87		)		2			(d), (e)
Net income	$	141								$	94
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	2,384			$	—				$	2,187			$	—
Operating expenses
Purchased power and fuel	874				—					810				—
Operating and maintenance	513				(8		)	(b),(c),(d),(e)		538				(8		)	(d), (e)
Depreciation and amortization	404				—					385				—
Taxes other than income taxes	222				—					222				—
Total operating expenses	2,013									1,955
Gain on sales of assets	—				—					2				—
Operating income	371									234
Other income and (deductions)
Interest expense, net	(134		)		—					(134		)		—
Other, net	36				—					26				—
Total other income and (deductions)	(98		)							(108		)
Income before income taxes	273									126
Income taxes	5				2			(b),(c),(d),(e)		(76		)		2			(d), (e)
Equity in earnings of unconsolidated affiliates	1									—
Net income	$	269								$	202

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(c)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(d)	Adjustment to exclude reorganization costs related to cost management programs.
(e)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.

Generation
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	4,153			$	240		(b)		$	3,880			$	(21	)	(b)
Operating expenses
Purchased power and fuel	1,947				500			(b),(c)		1,942				64			(b)
Operating and maintenance	1,474				(347		)	(c),(d),(e),(f), (g),(h),(i),(j)		1,189				(46		)	(c),(d),(e),(f), (k)
Depreciation and amortization	930				(633		)	(c),(j)		300				(4		)	(c)
Taxes other than income taxes	118				—					116				—
Total operating expenses	4,469									3,547
Gain on sales of assets and businesses	8				(1		)	(c)		12				(4		)	(b),(c)
Operating (loss) income	(308		)							345
Other income and (deductions)
Interest expense, net	(76		)		—					(87		)		(1		)	(b)
Other, net	508				(270		)	(j),(l)		602				(569		)	(b),(l)
Total other income and (deductions)	432									515
Income before income taxes	124									860
Income taxes	110				44			(b),(c),(d),(e), (f),(g),(h),(i), (j),(l)		329				(282		)	(b),(c),(d),(e), (f),(l)
Equity in losses of unconsolidated affiliates	(1		)		—					(2		)		—
Net income	13									529
Net income attributable to noncontrolling interests	74				(50		)	(m)		53				(103		)	(m)
Net (loss) income attributable to membership interest	$	(61	)							$	476
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (a)				Non-GAAP Adjustments					GAAP (a)				Non-GAAP Adjustments
Operating revenues	$	9,712			$	323		(b)		$	8,613			$	(201	)	(b)
Operating expenses
Purchased power and fuel	6,557				705			(b),(c)		4,646				16			(b)
Operating and maintenance	2,476				(161		)	(c),(d),(e),(f), (g),(h),(i),(j), (k)		2,451				(67		)	(c),(d),(e),(f), (k)
Depreciation and amortization	1,869				(1,275		)	(c),(j)		604				(14		)	(c)
Taxes other than income taxes	239				—					246				—
Total operating expenses	11,141									7,947
Gain on sales of assets and businesses	79				(69		)	(c)		12				(4		)	(b),(c)
Operating (loss) income	(1,350		)							678
Other income and (deductions)
Interest expense, net	(148		)		(4		)	(b)		(197		)		12			(b)
Other, net	675				(186		)	(j),(l)		(168		)		310			(l)
Total other income and (deductions)	527									(365		)
(Loss) income before income taxes	(823		)							313
Income taxes	(70		)		150			(b),(c),(d),(e), (f),(g),(h),(i), (j),(k),(l)		(59		)		97			(b),(c),(d),(e), (f),(l)
Equity in losses of unconsolidated affiliates	(3		)		—					(4		)		—
Net (loss) income	(756		)							368
Net income (loss) attributable to noncontrolling interests	98				(32		)	(m)		(153		)		42			(m)
Net (loss) income attributable to membership interest	$	(854	)							$	521

__________
(a)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)	Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations.
(c)	In 2021, adjustment to exclude costs associated with Generation's decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021 and Mystic Units 8 and 9 in 2024, partially offset by a gain on sale of Generation's solar business. In 2020, adjustment to exclude accelerated depreciation and amortization expenses associated with the early retirement of certain fossil sites.
(d)	Adjustment to exclude reorganization costs related to cost management programs.
(e)	In 2021, adjustment to exclude an impairment in the New England asset group and an impairment recorded as a result of the agreement to sell the Albany Green Energy biomass facility. In 2020, adjustment to exclude the impairment of certain wind assets at Generation.
(f)	Adjustment to exclude direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of employees.
(g)	Adjustment to exclude costs related to the acquisition of Electricite de France SA's (EDF's) interest in CENG.
(h)	Adjustment to exclude costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(i)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(j)	Adjustment to exclude the impact of suspension of contractual offset for the Byron units in the second quarter of 2021.
(k)	Adjustment to exclude changes in environmental liabilities.
(l)	Adjustment to exclude the impact of net unrealized gains and losses on Generation’s NDT fund investments for Non-Regulatory Agreement Units.
(m)	Adjustment to exclude elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to unrealized gains and losses on NDT fund investments for CENG units.

Other (a)
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions)
	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
	GAAP (b)				Non-GAAP Adjustments					GAAP (b)				Non-GAAP Adjustments
Operating revenues	$	(270	)		$	—				$	(288	)		$	—
Operating expenses
Purchased power and fuel	(253		)		—					(267		)		—
Operating and maintenance	(8		)		(3		)	(c)		(35		)		—
Depreciation and amortization	18				—					19				—
Taxes other than income taxes	12				—					13				—
Total operating expenses	(231		)							(270		)
Gain on sales of assets and businesses	4				—					—				—
Operating loss	(35		)							(18		)
Other income and (deductions)
Interest expense, net	(79		)		—					(107		)		24			(d),(e)
Other, net	22				3			(d)		18				—
Total other income and (deductions)	(57		)							(89		)
Loss before income taxes	(92		)							(107		)
Income taxes	(73		)		3			(c),(d),(e)		(40		)		10			(d),(e)
Equity in earnings of unconsolidated affiliates	—				—					1				—
Net loss	(19		)							(66		)
Net income attributable to noncontrolling interests	1									—
Net loss attributable to common shareholders	$	(20	)							$	(66	)
	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
	GAAP (b)				Non-GAAP Adjustments					GAAP (b)				Non-GAAP Adjustments
Operating revenues	$	(581	)		$	—				$	(634	)		$	—
Operating expenses
Purchased power and fuel	(545		)		—					(598		)		—
Operating and maintenance	(35		)		(6		)	(c)		(73		)		3			(f)
Depreciation and amortization	35				—					42				—
Taxes other than income taxes	25				—					23				—
Total operating expenses	(520		)							(606		)
Gain on sales of assets	4				—					(1		)		—
Operating loss	(57		)							(29		)
Other income and (deductions)
Interest expense, net	(161		)		—					(179		)		27			(d),(e)
Other, net	45				2			(d)		35				—
Total other income and (deductions)	(116		)							(144		)
Loss before income taxes	(173		)							(173		)
Income taxes	44				5			(c),(d),(e)		(49		)		12			(d),(e),(f)
Net loss	(217		)							(124		)
Net income attributable to noncontrolling interests	1									—
Net loss attributable to common shareholders	$	(218	)							$	(124	)

__________
(a)	Other primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities, and other financing and investment activities.
(b)	Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(c)	Adjustment to exclude costs related to the planned separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related severance costs.
(d)	Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations.
(e)	Adjustment to exclude income tax-related adjustments.
(f)	Adjustment to exclude reorganization costs related to cost management programs.

 

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