Debt

12 Months Ended

Dec. 31, 2015

Debt

(10) DEBT

Long-Term Debt

The components of long-term debt are shown in the table below:

		At December 31,
Interest Rate	Maturity	2015		2014
		(millions of dollars)
First Mortgage Bonds
Pepco:
3.05%	2022	$	200	$	200
6.20% (a)(b)	2022		110		110
3.60%	2024		400		400
5.75% (c)(d)	2034		100		100
5.40% (c)(d)	2035		175		175
6.50% (a)(c)	2037		500		500
7.90%	2038		250		250
4.15%	2043		450		250
4.95%	2043		150		150
ACE:
7.68% (e)	2015 - 2016		2		17
7.75%	2018		250		250
6.80% (d)(f)	2021		39		39
4.35%	2021		200		200
3.375%	2024		150		150
3.50%	2025		150		—
4.875% (a)(f)	2029		23		23
5.80% (d)(g)	2034		120		120
5.80% (d)(g)	2036		105		105
DPL:
5.22% (h)	2016		100		100
3.50%	2023		500		500
4.00%	2042		250		250
4.15%	2045		200		—
Total First Mortgage Bonds			4,424		3,889
Unsecured Tax-Exempt Bonds
DPL:
5.40%	2031		78		78
Total Unsecured Tax-Exempt Bonds			78		78

NOTE: Schedule is continued on next page.

		At December 31,
Interest Rate	Maturity	2015			2014
		(millions of dollars)
Medium-Term Notes (unsecured)
DPL:
7.56% - 7.58%	2017	$	14		$	14
6.81%	2018		4			4
7.61%	2019		12			12
7.72%	2027		10			10
Total Medium-Term Notes (unsecured)			40			40
Notes (secured)
Pepco Energy Services:
6.70% - 7.46%	2015-2018		3			4
Notes (unsecured)
PHI:
2.70%	2015		—			250
5.90%	2016		190			190
6.125%	2017		81			81
7.45%	2032		185			185
DPL:
5.00%	2015		—			100
Total Notes (unsecured)			456			806
Total Long-Term Debt			5,001			4,817
Net unamortized discount			(2	)		(10	)
Unamortized debt issuance costs			(49	)		(44	)
Current portion of long-term debt			(294	)		(366	)
Total Net Long-Term Debt		$	4,656		$	4,397

(a) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for the issuer’s obligations under the corresponding series of issuer notes or tax-exempt bonds, at such time as the issuer does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds), except that the issuer may not permit such release of collateral unless the issuer substitutes comparable obligations for such collateral.

(b) Represents a series of Collateral First Mortgage Bonds securing a series of senior notes issued by Pepco, which in turn secures a series of tax-exempt bonds issued for the benefit of Pepco.

(c) Represents a series of Collateral First Mortgage Bonds (as defined herein) securing a series of senior notes issued by Pepco.

(d) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for the issuer’s obligations under the corresponding series of issuer notes (as defined herein) or tax-exempt bonds, at such time as the issuer does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds).

(e) Represents a series of Collateral First Mortgage Bonds securing a series of medium-term notes issued by ACE.

(f) Represents a series of Collateral First Mortgage Bonds securing a series of tax-exempt bonds issued for the benefit of ACE.

(g) Represents a series of Collateral First Mortgage Bonds securing a series of senior notes issued by ACE.

(h) Represents a series of Collateral First Mortgage Bonds securing a series of debt securities issued by DPL.

The outstanding first mortgage bonds issued by each of Pepco, DPL and ACE are issued under a mortgage and deed of trust and are secured by a first lien on substantially all of the issuing company’s property, plant and equipment, except for certain property excluded from the lien of the respective mortgage.

PHI’s long-term debt is subject to certain covenants. As of December 31, 2015, PHI and its subsidiaries were in compliance with all such covenants.

The table above does not separately identify $885 million, $100 million and $227 million in aggregate principal amount of senior notes, medium term notes and other debt securities (issuer notes) issued by each of Pepco, DPL and ACE, respectively, and $110 million and $62 million in aggregate principal amount of tax-exempt bonds issued for the benefit of Pepco and ACE, respectively. These issuer notes are secured by a like amount of first mortgage bonds (Collateral First Mortgage Bonds) of each respective issuer. In addition, these tax-exempt bonds are secured by a like amount of Collateral First Mortgage Bonds issued by the utility subsidiary for whose benefit the tax-exempt bonds were issued. The principal terms of each such series of issuer notes, or the issuer’s obligations in respect of each such series of tax-exempt bonds, are identical to the same terms of the corresponding series of Collateral First Mortgage Bonds. Payments of principal and interest made on a series of such issuer notes, or the satisfaction of the issuer’s obligations in respect of a series of such tax-exempt bonds, satisfy the corresponding obligations on the related series of Collateral First Mortgage Bonds. For these reasons, each such series of Collateral First Mortgage Bonds and the corresponding issuer notes and/or tax-exempt bonds together effectively represent a single financial obligation and are not identified in the table above separately.

Bond Issuances

During 2015, Pepco issued $200 million of 4.15% first mortgage bonds due March 15, 2043, with a 3.9% yield to maturity. Net proceeds from the issuance of the bonds, which included a premium of $8 million, were used by Pepco to repay outstanding commercial paper and for general corporate purposes.

During 2015, DPL issued $200 million of 4.15% first mortgage bonds due May 15, 2045. Net proceeds from the issuance of the bonds were used by DPL to repay outstanding commercial paper and for general corporate purposes.

During 2015, ACE issued $150 million of 3.50% first mortgage bonds due December 1, 2025 in a private placement. The net proceeds from the issuance of the bonds were used by ACE to repay outstanding commercial paper and for general corporate purposes.

Note Retirements

During 2015, ACE retired, at maturity, $15 million of its secured medium-term notes series C. The medium-term notes were secured by a like principal amount of its 7.68% first mortgage bonds due August 24, 2015, which under the mortgage and deed of trust were deemed to be satisfied when the medium-term notes were repaid.

During 2015, DPL retired, at maturity, $100 million of its 5.00% unsecured notes due June 1, 2015.

During 2015, PHI retired, at maturity, $250 million of its 2.70% unsecured notes due October 1, 2015.

Transition Bonds Issued by ACE Funding

The components of transition bonds are shown in the table below:

		At December 31,
Interest Rate	Maturity	2015			2014
		(millions of dollars)
4.91%	2017	$	—		$	17
5.05%	2020		39			51
5.55%	2023		132			147
Total Transition Bonds			171			215
Unamortized debt issuance costs			(1	)		(1	)
Current portion of long-term debt			(46	)		(44	)
Total Net Long-Term Transition Bonds		$	124		$	170

For a description of the Transition Bonds, see Note (17), “Variable Interest Entities – ACE Funding.”

Maturities of PHI’s Long-term Debt and Transition Bonds

Maturities of PHI’s long-term debt and Transition Bonds outstanding at December 31, 2015 are $340 million in 2016, $131 million in 2017, $285 million in 2018, $30 million in 2019, $20 million in 2020 and $4,366 million thereafter.

Long-Term Project Funding

As of December 31, 2015 and 2014, Pepco Energy Services had total outstanding long-term project funding (including current maturities) of $5 million and $10 million, respectively, related to energy savings contracts performed by Pepco Energy Services. The aggregate amounts of maturities for the project funding debt outstanding at December 31, 2015 are $1 million in each of the years 2016 and 2017, zero in 2018, $1 million in 2019, $1 million in 2020, and $1 million thereafter.

Short-Term Debt

PHI and its regulated utility subsidiaries have traditionally used a number of sources to fulfill short-term funding needs, such as commercial paper, short-term notes, and bank lines of credit. Proceeds from short-term borrowings are used primarily to meet working capital needs, but may also be used to temporarily fund long-term capital requirements. The components of PHI’s short-term debt at December 31, 2015 and 2014 are as follows:

	2015		2014
	(millions of dollars)
Commercial paper	$	658	$	624
Variable rate demand bonds		105		105
Term loan		300		—
Total	$	1,063	$	729

Commercial Paper

PHI, Pepco, DPL and ACE maintain ongoing commercial paper programs to address short-term liquidity needs. As of December 31, 2015, the maximum capacity available under these programs was $875 million, $500 million, $500 million and $350 million, respectively, subject to available borrowing capacity under the credit facility.

PHI, Pepco, DPL and ACE had $484 million, $64 million, $105 million and $5 million, respectively, of commercial paper outstanding at December 31, 2015. The weighted average interest rate for commercial paper issued by PHI, Pepco, DPL and ACE during 2015 was 0.80%, 0.44%, 0.47% and 0.46%, respectively. The weighted average maturity of all commercial paper issued by PHI, Pepco, DPL and ACE during 2015 was ten, four, four and six days, respectively.

PHI, Pepco, DPL and ACE had $287 million, $104 million, $106 million and $127 million, respectively, of commercial paper outstanding at December 31, 2014. The weighted average interest rate for commercial paper issued by PHI, Pepco, DPL and ACE during 2014 was 0.57%, 0.28%, 0.26% and 0.27%, respectively. The weighted average maturity of all commercial paper issued by PHI, Pepco, DPL and ACE during 2014 was six, six, five and five days, respectively.

Variable Rate Demand Bonds

PHI’s utility subsidiary DPL has outstanding obligations in respect of Variable Rate Demand Bonds (VRDB). VRDBs are subject to repayment on the demand of the holders and, for this reason, are accounted for as short-term debt in accordance with GAAP. However, bonds submitted for purchase are remarketed by a remarketing agent on a best efforts basis. PHI expects that any bonds submitted for purchase will be remarketed successfully due to the creditworthiness of the issuer and, as applicable, the credit support, and because the remarketing resets the interest rate to the then-current market rate. The bonds may be converted to a fixed-rate, fixed-term option to establish a maturity which corresponds to the date of final maturity of the bonds. On this basis, PHI views VRDBs as a source of long-term financing. As of December 31, 2015, $105 million of VRDBs issued on behalf of DPL were outstanding (of which $72 million were secured by Collateral First Mortgage Bonds issued by DPL). During 2014, ACE retired, at maturity, its last remaining VRDBs in the amount of $18 million.

The VRDBs outstanding at December 31, 2015 mature as follows: 2017 ($26 million), 2024 ($33 million), 2028 ($16 million), and 2029 ($30 million). The weighted average interest rate for VRDBs outstanding on December 31, 2015 was 0.13% during 2015 and 0.19% during 2014.

PHI Term Loan Agreements

On January 13, 2016, PHI entered into a $500 million term loan agreement, pursuant to which PHI borrowed $500 million at a rate of interest equal to the prevailing Eurodollar rate, which is determined by reference to the London Interbank Offered Rate with respect to the relevant interest period, all as defined in the loan agreement, plus a margin of 0.90%. PHI used the net proceeds of the loan under the loan agreement to repay its outstanding commercial paper, and for general corporate purposes. All indebtedness incurred under the loan agreement is unsecured, and the aggregate principal amount of all loans, together with any accrued but unpaid interest due under the loan agreement, must be repaid in full on or before July 13, 2016. Pursuant to the term loan agreement, PHI may consummate the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. PHI requested and obtained the consent of the lenders under the term loan to allow for completion of the Merger by June 30, 2016.

On July 30, 2015, PHI entered into a $300 million term loan agreement, pursuant to which PHI borrowed $300 million at a rate of interest equal to the prevailing Eurodollar rate, which is determined by reference to the LIBOR with respect to the relevant interest period, all as defined in the loan agreement, plus a margin of 0.95%. PHI used the net proceeds of the loan under the loan agreement to repay a portion of its outstanding commercial paper, and for general corporate purposes. All indebtedness incurred under the loan agreement is unsecured, and the aggregate principal amount of all loans, together with any accrued but unpaid interest due under the loan agreement, must be repaid in full on or before July 28, 2016. Pursuant to the term loan agreement, PHI may consummate the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. PHI requested and obtained the consent of the lenders under the term loan to allow for completion of the Merger by June 30, 2016.

Credit Facility

PHI, Pepco, DPL and ACE maintain an unsecured syndicated credit facility to provide for their respective liquidity needs, including obtaining letters of credit, borrowing for general corporate purposes and supporting their commercial paper programs. On August 1, 2013, as permitted under the existing terms of the credit agreement, a request by PHI, Pepco, DPL and ACE to extend the credit facility termination date to August 1, 2018 was approved. All of the terms and conditions as well as pricing remained the same.

The aggregate borrowing limit under the amended and restated credit facility is $1.5 billion, all or any portion of which may be used to obtain loans and up to $500 million of which may be used to obtain letters of credit. The facility also includes a swingline loan sub-facility, pursuant to which each company may make same day borrowings in an aggregate amount not to exceed 10% of the total amount of the facility. Any swingline loan must be repaid by the borrower within fourteen days of receipt. The credit sublimit is $750 million for PHI and $250 million for each of Pepco, DPL and ACE. The sublimits may be increased or decreased by the individual borrower during the term of the facility, except that (i) the sum of all of the borrower sublimits following any such increase or decrease must equal the total amount of the facility and (ii) the aggregate amount of credit used at any given time by (a) PHI may not exceed $1.25 billion and (b) each of Pepco, DPL or ACE may not exceed the lesser of $500 million and the maximum amount of short-term debt the company is permitted to have outstanding by its regulatory authorities. The total number of the sublimit reallocations may not exceed eight per year during the term of the facility.

The interest rate payable by each company on utilized funds is, at the borrowing company’s election, (i) the greater of the prevailing prime rate, the federal funds effective rate plus 0.5% and the one month London Interbank Offered Rate (LIBOR) plus 1.0%, or (ii) the prevailing Eurodollar rate, plus a margin that varies according to the credit rating of the borrower.

In order for a borrower to use the facility, certain representations and warranties must be true and correct, and the borrower must be in compliance with specified financial and other covenants, including (i) the requirement that each borrowing company maintain a ratio of total indebtedness to total capitalization of 65% or less, computed in accordance with the terms of the credit agreement, which calculation excludes from the definition of total indebtedness certain trust preferred securities and deferrable interest subordinated debt (not to exceed 15% of total capitalization), (ii) with certain exceptions, a restriction on sales or other dispositions of assets, and (iii) a restriction on the incurrence of liens on the assets of a borrower or any of its significant subsidiaries other than permitted liens. The credit agreement contains certain covenants and other customary agreements and requirements that, if not complied with, could result in an event of default and the acceleration of repayment obligations of one or more of the borrowers thereunder. Each of the borrowers was in compliance with all covenants under this facility at December 31, 2015.

The absence of a material adverse change in PHI’s business, property, results of operations or financial condition is not a condition to the availability of credit under the credit agreement. The credit agreement does not include any rating triggers.

As of December 31, 2015 and December 31, 2014, the amount of cash plus unused borrowing capacity under the credit facility available to meet the future liquidity needs of PHI and its utility subsidiaries on a consolidated basis totaled $851 million and $875 million, respectively. PHI’s utility subsidiaries had combined cash and unused borrowing capacity under the credit facility of $576 million and $413 million at December 31, 2015 and December 31, 2014, respectively.

Credit Facility Amendment

During 2014, PHI, Pepco, DPL and ACE entered into an amendment of and consent with respect to the credit agreement (the Consent). PHI was required to obtain the consent of certain of the lenders under the credit facility in order to permit the consummation of the Merger. Pursuant to the Consent, certain of the lenders consented to the consummation of the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. In addition, the Consent amends the definition of “Change in Control” in the credit agreement to mean, following consummation of the Merger, an event or series of events by which Exelon no longer owns, directly or indirectly, 100% of the outstanding shares of voting stock of Pepco Holdings. PHI requested and obtained an extension of the Consent to allow for completion of the Merger by June 30, 2016.

Other Financing Activities

Sale of Receivables

During 2015, Pepco, as seller, entered into a purchase agreement with a buyer to sell receivables from an energy savings project over a period of time pursuant to a task order. The purchase price to be received by Pepco is $5 million. Pursuant to the purchase agreement, following acceptance of the energy savings project by the buyer, the buyer is entitled to receive the contract payments under the task order payable by the customer over approximately 15 years. The energy savings project will be performed by Pepco Energy Services and is expected to be completed by the end of 2017.

During 2014, Pepco, as seller, entered into a purchase agreement with a buyer to sell receivables from an energy savings project pursuant to a task order entered into under a General Services Administration area-wide agreement. The purchase price received by Pepco was $12 million, which was included in the Current portion of long-term debt and project funding at December 31, 2014. The energy savings project was performed by Pepco Energy Services and was completed in 2014. Pursuant to the purchase agreement, following acceptance of the energy savings project by the buyer, the buyer was entitled to receive the contract payments under the task order payable by the buyer over approximately 9 years. The energy savings project was accepted during the first quarter of 2015 and the amount was removed from the Current portion of long-term debt and project funding.

During 2013, Pepco Energy Services, as seller, entered into a purchase agreement with a buyer to sell receivables from an energy savings project over a period of time pursuant to a task order. The purchase price received by Pepco Energy Services was $7 million, which was included in the Current portion of long-term debt and project funding at December 31, 2014. Pursuant to the purchase agreement, following acceptance of the energy savings project by the buyer, the buyer is entitled to receive the contract payments under the task order payable by the customer over approximately 23 years. The energy savings project was accepted during the first quarter of 2015 and the amount was removed from the Current portion of long-term debt and project funding.

ACE Term Loan Agreement

On May 10, 2013, ACE entered into a $100 million term loan agreement, pursuant to which ACE borrowed $100 million at a rate of interest equal to the prevailing Eurodollar rate, which was determined by reference to the LIBOR with respect to the relevant interest period, all as defined in the loan agreement, plus a margin of 0.75%. On August 21, 2014, ACE repaid the term loan in full.

Potomac Electric Power Co [Member]

Debt

(9) DEBT

Long-Term Debt

The components of long-term debt are shown in the table below:

Type of Debt	Interest Rate			Maturity	2015			2014
					(millions of dollars)
First Mortgage Bonds
		3.05	%	2022	$	200		$	200
		6.20	%(a)(b)	2022		110			110
		3.60	%	2024		400			400
		5.75	%(c)(d)	2034		100			100
		5.40	%(c)(d)	2035		175			175
		6.50	%(a)(c)	2037		500			500
		7.90	%	2038		250			250
		4.15	%	2043		450			250
		4.95	%	2043		150			150
Total long-term debt						2,335			2,135
Net unamortized discount						(3	)		(11	)
Unamortized debt issuance costs						(31	)		(28	)
Total net long-term debt					$	2,301		$	2,096

(a) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for Pepco’s obligations under the corresponding series of senior notes or tax-exempt bonds, at such time as Pepco does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds), except that Pepco may not permit such release of collateral unless Pepco substitutes comparable obligations for such collateral.

(b) Represents a series of Collateral First Mortgage Bonds securing a series of senior notes issued by Pepco, which in turn secures a series of tax-exempt bonds issued for the benefit of Pepco.

(c) Represents a series of Collateral First Mortgage Bonds (as defined herein) securing a series of senior notes issued by Pepco.

(d) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for Pepco’s obligations under the corresponding series of senior notes or tax-exempt bonds, at such time as Pepco does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds).

The outstanding first mortgage bonds are issued under a mortgage and deed of trust and are secured by a first lien on substantially all of Pepco’s property, plant and equipment, except for certain property excluded from the lien of the mortgage.

Maturities of Pepco’s long-term debt outstanding at December 31, 2015, are zero in 2016 through 2020, and $2,335 million, thereafter.

Pepco’s long-term debt is subject to certain covenants. As of December 31, 2015, Pepco is in compliance with all such covenants.

The table above does not separately identify $885 million in aggregate principal amount of senior notes issued by Pepco and $110 million in aggregate principal amount of tax-exempt bonds issued for the benefit of Pepco. These senior notes are secured by a like amount of first mortgage bonds (Collateral First Mortgage Bonds) of Pepco. In addition, these tax-exempt bonds are secured by a like amount of Collateral First Mortgage Bonds issued by Pepco. The principal terms of each such series of senior notes, or Pepco’s obligations in respect of each such series of tax-exempt bonds, are identical to the same terms of the corresponding series of Collateral First Mortgage Bonds. Payments of principal and interest made on a series of such senior notes, or the satisfaction of Pepco’s obligations in respect of a series of such tax-exempt bonds, satisfy the corresponding obligations on the related series of Collateral First Mortgage Bonds. For these reasons, each such series of Collateral First Mortgage Bonds and the corresponding senior notes and/or tax-exempt bonds together effectively represent a single financial obligation and are not identified in the table above separately.

Bond Issuances

During 2015, Pepco issued $200 million of 4.15% first mortgage bonds due March 15, 2043, with a 3.9% yield to maturity. Net proceeds from the issuance of the bonds, which included a premium of $8 million, were used by Pepco to repay outstanding commercial paper and for general corporate purposes.

Short-Term Debt

Pepco has traditionally used a number of sources to fulfill short-term funding needs, such as commercial paper, short-term notes, and bank lines of credit. Proceeds from short-term borrowings are used primarily to meet working capital needs, but may also be used to temporarily fund long-term capital requirements. Pepco’s short-term debt at December 31, 2015 and 2014 consisted of the following:

	2015		2014
	(millions of dollars)
Commercial paper	$	64	$	104

Commercial Paper

Pepco maintains an ongoing commercial paper program to address its short-term liquidity needs. As of December 31, 2015, the maximum capacity available under the program was $500 million, subject to available borrowing capacity under the credit facility.

Pepco had $64 million and $104 million of commercial paper outstanding at December 31, 2015 and 2014, respectively. The weighted average interest rates for commercial paper issued by Pepco during 2015 and 2014 were 0.44% and 0.28%, respectively. The weighted average maturity of all commercial paper issued by Pepco during 2015 and 2014 was four days and six days, respectively.

Credit Facility

PHI, Pepco, DPL and ACE maintain an unsecured syndicated credit facility to provide for their respective liquidity needs, including obtaining letters of credit, borrowing for general corporate purposes and supporting their commercial paper programs. On August 1, 2013, as permitted under the existing terms of the credit agreement, a request by PHI, Pepco, DPL and ACE to extend the credit facility termination date to August 1, 2018 was approved. All of the terms and conditions as well as pricing remained the same.

The aggregate borrowing limit under the amended and restated credit facility is $1.5 billion, all or any portion of which may be used to obtain loans and up to $500 million of which may be used to obtain letters of credit. The facility also includes a swingline loan sub-facility, pursuant to which each company may make same day borrowings in an aggregate amount not to exceed 10% of the total amount of the facility. Any swingline loan must be repaid by the borrower within fourteen days of receipt. The credit sublimit is $750 million for PHI and $250 million for each of Pepco, DPL and ACE. The sublimits may be increased or decreased by the individual borrower during the term of the facility, except that (i) the sum of all of the borrower sublimits following any such increase or decrease must equal the total amount of the facility and (ii) the aggregate amount of credit used at any given time by (a) PHI may not exceed $1.25 billion and (b) each of Pepco, DPL or ACE may not exceed the lesser of $500 million and the maximum amount of short-term debt the company is permitted to have outstanding by its regulatory authorities. The total number of the sublimit reallocations may not exceed eight per year during the term of the facility.

The interest rate payable by each company on utilized funds is, at the borrowing company’s election, (i) the greater of the prevailing prime rate, the federal funds effective rate plus 0.5% and the one month London Interbank Offered Rate plus 1.0%, or (ii) the prevailing Eurodollar rate, plus a margin that varies according to the credit rating of the borrower.

In order for a borrower to use the facility, certain representations and warranties must be true and correct, and the borrower must be in compliance with specified financial and other covenants, including (i) the requirement that each borrowing company maintain a ratio of total indebtedness to total capitalization of 65% or less, computed in accordance with the terms of the credit agreement, which calculation excludes from the definition of total indebtedness certain trust preferred securities and deferrable interest subordinated debt (not to exceed 15% of total capitalization), (ii) with certain exceptions, a restriction on sales or other dispositions of assets, and (iii) a restriction on the incurrence of liens on the assets of a borrower or any of its significant subsidiaries other than permitted liens. The credit agreement contains certain covenants and other customary agreements and requirements that, if not complied with, could result in an event of default and the acceleration of repayment obligations of one or more of the borrowers thereunder. Each of the borrowers was in compliance with all covenants under this facility at December 31, 2015.

The absence of a material adverse change in PHI’s business, property, results of operations or financial condition is not a condition to the availability of credit under the credit agreement. The credit agreement does not include any rating triggers.

As of December 31, 2015 and 2014, the amount of cash plus borrowing capacity under the credit facility available to meet the liquidity needs of PHI’s utility subsidiaries in the aggregate was $576 million and $413 million, respectively. Pepco’s borrowing capacity under the credit facility at any given time depends on the amount of the subsidiary borrowing capacity being utilized by DPL and ACE and the portion of the total capacity being used by PHI.

Credit Facility Amendment

During 2014, PHI, Pepco, DPL and ACE entered into an amendment of and consent with respect to the credit agreement (the Consent). PHI was required to obtain the consent of certain of the lenders under the credit facility in order to permit the consummation of the Merger. Pursuant to the Consent, certain of the lenders consented to the consummation of the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. In addition, the Consent amends the definition of “Change in Control” in the credit agreement to mean, following consummation of the Merger, an event or series of events by which Exelon no longer owns, directly or indirectly, 100% of the outstanding shares of voting stock of Pepco Holdings. PHI requested and obtained an extension of the Consent to allow for completion of the Merger by June 30, 2016.

Other Financing Activities

Sale of Receivables

During 2015, Pepco, as seller, entered into a purchase agreement with a buyer to sell receivables from an energy savings project over a period of time pursuant to a task order. The purchase price to be received by Pepco is $5 million. Pursuant to the purchase agreement, following acceptance of the energy savings project by the buyer, the buyer is entitled to receive the contract payments under the task order payable by the customer over approximately 15 years. The energy savings project will be performed by Pepco Energy Services, Inc. and its subsidiaries (Pepco Energy Services) and is expected to be completed by the end of 2017.

During 2014, Pepco, as seller, entered into a purchase agreement with a buyer to sell receivables from an energy savings project pursuant to a task order entered into under a General Services Administration area-wide agreement. The purchase price received by Pepco was $12 million, which was included in the Current portion of long-term debt and project funding at December 31, 2014. The energy savings project was performed by Pepco Energy Services and was completed in 2014. Pursuant to the purchase agreement, following acceptance of the energy savings project by the buyer, the buyer was entitled to receive the contract payments under the task order payable by the buyer over approximately 9 years. The energy savings project was accepted during the first quarter of 2015 and the amount was removed from the Current portion of long-term debt and project funding.

Delmarva Power & Light Co/De [Member]

Debt

(10) DEBT

Long-Term Debt

The components of long-term debt are shown in the table below:

Type of Debt	Interest Rate	Maturity	2015			2014
			(millions of dollars)
First Mortgage Bonds
	5.22%(a)	2016	$	100		$	100
	3.50%	2023		500			500
	4.00%	2042		250			250
	4.15%	2045		200			—
				1,050			850
Unsecured Tax-Exempt Bonds
	5.40%	2031		78			78
				78			78
Medium-Term Notes (unsecured)
	7.56%-7.58%	2017		14			14
	6.81%	2018		4			4
	7.61%	2019		12			12
	7.72%	2027		10			10
				40			40
Notes (unsecured)
	5.00%	2015		—			100
				—			100
Total long-term debt				1,168			1,068
Net unamortized premium				2			3
Unamortized debt issuance costs				(9	)		(8	)
Current portion of long-term debt				(100	)		(100	)
Total net long-term debt			$	1,061		$	963

(a) Represents a series of Collateral First Mortgage Bonds securing a series of debt securities issued by DPL.

The outstanding first mortgage bonds issued by DPL are issued under a Mortgage and Deed of Trust and are secured by a first lien on substantially all of DPL’s property, plant and equipment, except for certain property excluded from the lien of the mortgage.

Maturities of DPL’s long-term debt outstanding at December 31, 2015 are $100 million in 2016, $14 million in 2017, $4 million in 2018, $12 million in 2019, zero in 2020 and $1,038 million thereafter.

DPL’s long-term debt is subject to certain covenants. As of December 31, 2015, DPL is in compliance with all such covenants.

The table above does not separately identify $100 million in aggregate principal amount of debt securities issued by DPL. These debt securities are secured by a like amount of first mortgage bonds (Collateral First Mortgage Bonds) of DPL. The principal terms of each such series of debt securities are identical to the same terms of the corresponding series of Collateral First Mortgage Bonds. Payments of principal and interest made on a series of such debt securities, satisfy the corresponding obligations on the related series of Collateral First Mortgage Bonds. For these reasons, each such series of Collateral First Mortgage Bonds and the corresponding debt securities together effectively represent a single financial obligation and are not identified in the table above separately.

Bond Issuance

During 2015, DPL issued $200 million of 4.15% first mortgage bonds due May 15, 2045. Net proceeds from the issuance of the bonds were used by DPL to repay outstanding commercial paper and for general corporate purposes.

Note Retirements

During 2015, DPL retired, at maturity, $100 million of its 5.00% unsecured notes due June 1, 2015.

Short-Term Debt

DPL has traditionally used a number of sources to fulfill short-term funding needs, such as commercial paper, short-term notes, and bank lines of credit. Proceeds from short-term borrowings are used primarily to meet working capital needs, but may also be used to temporarily fund long-term capital requirements. The components of DPL’s short-term debt at December 31, 2015 and 2014 are as follows:

	2015		2014
	(millions of dollars)
Commercial paper	$	105	$	106
Variable rate demand bonds		105		105
Total	$	210	$	211

Commercial Paper

DPL maintains an ongoing commercial paper program to address its short-term liquidity needs. As of December 31, 2015, the maximum capacity available under the program was $500 million, subject to available borrowing capacity under the credit facility.

DPL had $105 million and $106 million of commercial paper outstanding at December 31, 2015 and 2014, respectively. The weighted average interest rates for commercial paper issued by DPL during 2015 and 2014 were 0.47% and 0.26%, respectively. The weighted average maturity of all commercial paper issued by DPL during 2015 and 2014 was four days and five days, respectively.

Variable Rate Demand Bonds

Variable Rate Demand Bonds (VRDBs) are subject to repayment on the demand of the holders and, for this reason, are accounted for as short-term debt in accordance with accounting principles generally accepted in the United States of America. However, bonds submitted for purchase are remarketed by a remarketing agent on a best efforts basis. DPL expects that any bonds submitted for purchase will continue to be remarketed successfully due to the creditworthiness of the company and because the remarketing agent resets the interest rate to the then-current market rate. The bonds may be converted to a fixed rate, fixed term option to establish a maturity which corresponds to the date of final maturity of the bonds. On this basis, DPL views VRDBs as a source of long-term financing. The VRDBs outstanding in 2015 mature as follows: 2017 ($26 million), 2024 ($33 million), 2028 ($16 million), and 2029 ($30 million). The weighted average interest rate for VRDBs was 0.13% during 2015 and 0.19% during 2014. As of December 31, 2015, $105 million in VRDBs issued on behalf of DPL were outstanding (of which $72 million were secured by Collateral First Mortgage Bonds issued by DPL).

Credit Facility

PHI, Pepco, DPL and ACE maintain an unsecured syndicated credit facility to provide for their respective liquidity needs, including obtaining letters of credit, borrowing for general corporate purposes and supporting their commercial paper programs. On August 1, 2013, as permitted under the existing terms of the credit agreement, a request by PHI, Pepco, DPL and ACE to extend the credit facility termination date to August 1, 2018 was approved. All of the terms and conditions as well as pricing remained the same.

The aggregate borrowing limit under the amended and restated credit facility is $1.5 billion, all or any portion of which may be used to obtain loans and up to $500 million of which may be used to obtain letters of credit. The facility also includes a swingline loan sub-facility, pursuant to which each company may make same day borrowings in an aggregate amount not to exceed 10% of the total amount of the facility. Any swingline loan must be repaid by the borrower within fourteen days of receipt. The credit sublimit is $750 million for PHI and $250 million for each of Pepco, DPL and ACE. The sublimits may be increased or decreased by the individual borrower during the term of the facility, except that (i) the sum of all of the borrower sublimits following any such increase or decrease must equal the total amount of the facility, and (ii) the aggregate amount of credit used at any given time by (a) PHI may not exceed $1.25 billion, and (b) each of Pepco, DPL or ACE may not exceed the lesser of $500 million or the maximum amount of short-term debt the company is permitted to have outstanding by its regulatory authorities. The total number of the sublimit reallocations may not exceed eight per year during the term of the facility.

The interest rate payable by each company on utilized funds is, at the borrowing company’s election, (i) the greater of the prevailing prime rate, the federal funds effective rate plus 0.5% and the one month London Interbank Offered Rate plus 1.0%, or (ii) the prevailing Eurodollar rate, plus a margin that varies according to the credit rating of the borrower.

In order for a borrower to use the facility, certain representations and warranties must be true and correct, and the borrower must be in compliance with specified financial and other covenants, including (i) the requirement that each borrowing company maintain a ratio of total indebtedness to total capitalization of 65% or less, computed in accordance with the terms of the credit agreement, which calculation excludes from the definition of total indebtedness certain trust preferred securities and deferrable interest subordinated debt (not to exceed 15% of total capitalization), (ii) with certain exceptions, a restriction on sales or other dispositions of assets, and (iii) a restriction on the incurrence of liens on the assets of a borrower or any of its significant subsidiaries other than permitted liens. The credit agreement contains certain covenants and other customary agreements and requirements that, if not complied with, could result in an event of default and the acceleration of repayment obligations of one or more of the borrowers thereunder. Each of the borrowers was in compliance with all covenants under this facility at December 31, 2015.

The absence of a material adverse change in PHI’s business, property, results of operations or financial condition is not a condition to the availability of credit under the credit agreement. The credit agreement does not include any rating triggers.

As of December 31, 2015 and 2014, the amount of cash plus borrowing capacity under the credit facility available to meet the liquidity needs of PHI’s utility subsidiaries in the aggregate was $576 million and $413 million, respectively. DPL’s borrowing capacity under the credit facility at any given time depends on the amount of the subsidiary borrowing capacity being utilized by Pepco and ACE and the portion of the total capacity being used by PHI.

Credit Facility Amendment

During 2014, PHI, Pepco, DPL and ACE entered into an amendment of and consent with respect to the credit agreement (the Consent). PHI was required to obtain the consent of certain of the lenders under the credit facility in order to permit the consummation of the Merger. Pursuant to the Consent, certain of the lenders consented to the consummation of the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. In addition, the Consent amends the definition of “Change in Control” in the credit agreement to mean, following consummation of the Merger, an event or series of events by which Exelon no longer owns, directly or indirectly, 100% of the outstanding shares of voting stock of Pepco Holdings. PHI requested and obtained an extension of the Consent to allow for completion of the Merger by June 30, 2016.

Atlantic City Electric Co [Member]

Debt

(9) DEBT

Long-Term Debt

The components of long-term debt are shown in the table below:

Type of Debt	Interest Rate			Maturity	2015			2014
					(millions of dollars)
First Mortgage Bonds
		7.68	% (a)	2015-2016	$	2		$	17
		7.75	%	2018		250			250
		6.80	% (b)(c)	2021		39			39
		4.35	%	2021		200			200
		3.375	%	2024		150			150
		3.50	%	2025		150			—
		4.875	%(c)(d)	2029		23			23
		5.80	% (b)(e)	2034		120			120
		5.80	% (b)(e)	2036		105			105
Total long-term debt						1,039			904
Net unamortized discount						(1	)		(1	)
Unamortized debt issuance costs						(6	)		(6	)
Current portion of long-term debt						(2	)		(15	)
Total net long-term debt					$	1,030		$	882

(a) Represents a series of Collateral First Mortgage Bonds (as defined herein) securing a series of medium-term notes issued by ACE.

(b) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for ACE’s obligations under the corresponding series of issuer notes (as defined herein) or tax-exempt bonds, at such time as ACE does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds).

(c) Represents a series of Collateral First Mortgage Bonds securing a series of tax-exempt bonds issued for the benefit of ACE.

(d) Represents a series of Collateral First Mortgage Bonds which must be cancelled and released as security for ACE’s obligations under the corresponding series of issuer notes or tax-exempt bonds, at such time as ACE does not have any first mortgage bonds outstanding (other than its Collateral First Mortgage Bonds), except that ACE may not permit such release of collateral unless ACE substitutes comparable obligations for such collateral.

(e) Represents a series of Collateral First Mortgage Bonds securing a series of senior notes issued by ACE.

The outstanding first mortgage bonds issued by ACE are issued under a mortgage and deed of trust and are secured by a first lien on substantially all of ACE’s property, plant and equipment, except for certain property excluded from the lien of the mortgage.

Maturities of ACE’s long-term debt outstanding at December 31, 2015 are $2 million in 2016, zero in 2017, $250 million in 2018, zero in 2019 and 2020, and $787 million thereafter.

ACE’s long-term debt is subject to certain covenants. As of December 31, 2015, ACE was in compliance with all such covenants.

The table above does not separately identify $227 million in aggregate principal amount of senior notes and medium term notes (issuer notes) issued by ACE and $62 million in aggregate principal amount of tax-exempt bonds issued for the benefit of ACE. These issuer notes and tax-exempt bonds are secured by a like amount of first mortgage bonds (Collateral First Mortgage Bonds) of ACE. The principal terms of each such series of issuer notes, or ACE’s obligations in respect of each such series of tax-exempt bonds, are identical to the same terms of the corresponding series of Collateral First Mortgage Bonds. Payments of principal and interest made on a series of such issuer notes, or the satisfaction of ACE obligations in respect of a series of such tax-exempt bonds, satisfy the corresponding obligations on the related series of Collateral First Mortgage Bonds. For these reasons, each such series of Collateral First Mortgage Bonds and the corresponding issuer notes or tax-exempt bonds together effectively represent a single financial obligation and are not identified in the table above separately.

Bond Issuance

During 2015, ACE issued $150 million of 3.50% first mortgage bonds due December 1, 2025 in a private placement. The net proceeds from the issuance of the bonds were used by ACE to repay outstanding commercial paper and for general corporate purposes.

Bond Retirement

During 2015, ACE retired, at maturity, $15 million of its secured medium-term notes series C. The medium-term notes were secured by a like principal amount of its 7.68% first mortgage bonds due August 24, 2015, which under the mortgage and deed of trust were deemed to be satisfied when the medium-term notes were repaid.

Transition Bonds Issued by ACE Funding

The components of transition bonds are shown in the table below:

Type of Debt	Interest Rate			Maturity	2015			2014
					(millions of dollars)
Transition Bonds
		4.91	%	2017	$	—		$	17
		5.05	%	2020		39			51
		5.55	%	2023		132			147
						171			215
Unamortized debt issuance costs						(1	)		(1	)
Current portion of long-term debt						(46	)		(44	)
Total net long-term Transition Bonds					$	124		$	170

For a description of the Transition Bonds, see Note (16), “Variable Interest Entities – ACE Funding.” Maturities of ACE’s Transition Bonds outstanding at December 31, 2015 are $46 million in 2016, $35 million in 2017, $31 million in 2018, $18 million in 2019, $20 million in 2020 and $21 million thereafter.

Short-Term Debt

ACE has traditionally used a number of sources to fulfill short-term funding needs, such as commercial paper, short-term notes, and bank lines of credit. Proceeds from short-term borrowings are used primarily to meet working capital needs, but may also be used to temporarily fund long-term capital requirements. The components of ACE’s short-term debt at December 31, 2015 and 2014 are as follows:

	2015		2014
	(millions of dollars)
Commercial paper	$	5	$	127

Commercial Paper

ACE maintains an ongoing commercial paper program to address its short-term liquidity needs. As of December 31, 2015, the maximum capacity available under the program was $350 million, subject to available borrowing capacity under the credit facility.

ACE had $5 million and $127 million of commercial paper outstanding at December 31, 2015 and 2014, respectively. The weighted average interest rates for commercial paper issued by ACE during 2015 and 2014 were 0.46% and 0.27%, respectively. The weighted average maturity of all commercial paper issued by ACE during 2015 and 2014 was six days and five days, respectively.

Variable Rate Demand Bonds

During 2014, ACE retired, at maturity, its last remaining Variable Rate Demand Bonds (VRDBs) in the amount of $18 million. The weighted average interest rate for VRDBs was 0.05% during 2014.

Credit Facility

PHI, Pepco, DPL and ACE maintain an unsecured syndicated credit facility to provide for their respective liquidity needs, including obtaining letters of credit, borrowing for general corporate purposes and supporting their commercial paper programs. On August 1, 2013, as permitted under the existing terms of the credit agreement, a request by PHI, Pepco, DPL and ACE to extend the credit facility termination date to August 1, 2018 was approved. All of the terms and conditions as well as pricing remained the same.

The aggregate borrowing limit under the amended and restated credit facility is $1.5 billion, all or any portion of which may be used to obtain loans and up to $500 million of which may be used to obtain letters of credit. The facility also includes a swingline loan sub-facility, pursuant to which each company may make same day borrowings in an aggregate amount not to exceed 10% of the total amount of the facility. Any swingline loan must be repaid by the borrower within fourteen days of receipt. The credit sublimit is $750 million for PHI and $250 million for each of Pepco, DPL and ACE. The sublimits may be increased or decreased by the individual borrower during the term of the facility, except that (i) the sum of all of the borrower sublimits following any such increase or decrease must equal the total amount of the facility, and (ii) the aggregate amount of credit used at any given time by (a) PHI may not exceed $1.25 billion, and (b) each of Pepco, DPL or ACE may not exceed the lesser of $500 million or the maximum amount of short-term debt the company is permitted to have outstanding by its regulatory authorities. The total number of the sublimit reallocations may not exceed eight per year during the term of the facility.

The interest rate payable by each company on utilized funds is, at the borrowing company’s election, (i) the greater of the prevailing prime rate, the federal funds effective rate plus 0.5% and the one month London Interbank Offered Rate plus 1.0%, or (ii) the prevailing Eurodollar rate, plus a margin that varies according to the credit rating of the borrower.

In order for a borrower to use the facility, certain representations and warranties must be true and correct, and the borrower must be in compliance with specified financial and other covenants, including (i) the requirement that each borrowing company maintain a ratio of total indebtedness to total capitalization of 65% or less, computed in accordance with the terms of the credit agreement, which calculation excludes from the definition of total indebtedness certain trust preferred securities and deferrable interest subordinated debt (not to exceed 15% of total capitalization), (ii) with certain exceptions, a restriction on sales or other dispositions of assets, and (iii) a restriction on the incurrence of liens on the assets of a borrower or any of its significant subsidiaries other than permitted liens. The credit agreement contains certain covenants and other customary agreements and requirements that, if not complied with, could result in an event of default and the acceleration of repayment obligations of one or more of the borrowers thereunder. Each of the borrowers was in compliance with all covenants under this facility at December 31, 2015.

The absence of a material adverse change in PHI’s business, property, results of operations or financial condition is not a condition to the availability of credit under the credit agreement. The credit agreement does not include any rating triggers.

As of December 31, 2015 and 2014, the amount of cash plus borrowing capacity under the credit facility available to meet the liquidity needs of PHI’s utility subsidiaries in the aggregate was $576 million and $413 million, respectively. ACE’s borrowing capacity under the credit facility at any given time depends on the amount of the subsidiary borrowing capacity being utilized by Pepco and DPL and the portion of the total capacity being used by PHI.

Credit Facility Amendment

During 2014, PHI, Pepco, DPL and ACE entered into an amendment of and consent with respect to the credit agreement (the Consent). PHI was required to obtain the consent of certain of the lenders under the credit facility in order to permit the consummation of the Merger. Pursuant to the Consent, certain of the lenders consented to the consummation of the Merger and the subsequent conversion of PHI from a Delaware corporation to a Delaware limited liability company, provided that the Merger and subsequent conversion are consummated on or before October 29, 2015. In addition, the Consent amends the definition of “Change in Control” in the credit agreement to mean, following consummation of the Merger, an event or series of events by which Exelon no longer owns, directly or indirectly, 100% of the outstanding shares of voting stock of Pepco Holdings. PHI requested and obtained an extension of the Consent to allow for completion of the Merger by June 30, 2016.

Term Loan Agreement

On May 10, 2013, ACE entered into a $100 million term loan agreement, pursuant to which ACE borrowed $100 million at a rate of interest equal to the prevailing Eurodollar rate, which was determined by reference to the London Interbank Offered Rate (LIBOR) with respect to the relevant interest period, all as defined in the loan agreement, plus a margin of 0.75%. On August 21, 2014, ACE repaid the term loan in full.