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Income Taxes (All Registrants)
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes (All Registrants) Income Taxes (All Registrants)
Rate Reconciliation
The effective income tax rate from continuing operations varies from the U.S. federal statutory rate principally due to the following:
Three Months Ended September 30, 2022(a)
ExelonComEd
PECO(b)
BGE(b)
PHI(b)
Pepco(b)
DPL(b)
ACE(b)
U.S. Federal statutory rate21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %
Increase (decrease) due to:
State income taxes, net of Federal income tax benefit9.0 8.0 20.7 6.8 1.4 (2.7)6.5 7.0 
Plant basis differences(5.3)(0.4)(14.2)(2.6)(1.7)(2.3)(0.8)(1.0)
Excess deferred tax amortization(11.6)(5.6)(3.2)(47.3)(19.3)(14.6)(21.7)(25.5)
Amortization of investment tax credit, including deferred taxes on basis difference(0.1)(0.1)— (0.2)(0.1)— (0.2)(0.2)
Tax credits(0.6)(0.4)— (1.9)(0.9)(0.8)(1.3)(0.7)
Other(0.4)(0.1)0.3 (2.7)0.3 0.1 0.2 0.5 
Effective income tax rate12.0 %22.4 %24.6 %(26.9)%0.7 %0.7 %3.7 %1.1 %
Three Months Ended September 30, 2021(a)
Exelon
ComEd
PECO(c)
BGE(c)
PHI
Pepco
DPL
ACE(c)
U.S. Federal statutory rate21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %
Increase (decrease) due to:
State income taxes, net of Federal income tax benefit7.1 8.0 (4.1)(13.0)5.0 3.4 6.4 7.0 
Plant basis differences(4.7)(0.8)(16.2)(1.4)(1.3)(2.0)(0.6)(0.6)
Excess deferred tax amortization(15.5)(7.6)(3.4)(17.3)(24.9)(17.6)(19.9)(41.4)
Amortization of investment tax credit, including deferred taxes on basis difference(0.1)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Tax credits(0.6)(0.5)— (0.9)(0.5)(0.5)(0.4)(0.5)
Other(0.1)0.3 (0.1)(0.8)— 0.1 (0.6)0.8 
Effective income tax rate7.1 %20.3 %(2.8)%(12.5)%(0.8)%4.4 %5.7 %(13.9)%
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)For PECO, the higher effective tax rate is related to a one-time state income expense, net of federal income tax benefit, of $38 million attributable to the change in the Pennsylvania corporate income tax rate partially offset by plant basis differences attributable to tax repair deductions. For BGE, PHI, Pepco, DPL, and ACE, the lower effective tax rate is primarily related to the acceleration of certain income tax benefits due to distribution and transmission rate case settlements.
(c)For PECO, the income tax benefit is primarily due to plant basis differences attributable to tax repair deductions. For BGE and ACE, the income tax benefit is primarily related to the acceleration of certain income tax benefits due to distribution rate case settlements.
Nine Months Ended September 30, 2022(a)
ExelonComEd
PECO(b)
BGE(b)
PHI(b)
Pepco(b)
DPL(b)
ACE(b)
U.S. Federal statutory rate21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %
Increase (decrease) due to:
State income taxes, net of Federal income tax benefit(c)
9.5 7.9 6.6 2.8 2.0 (3.2)6.5 6.9 
Plant basis differences(4.2)(0.5)(12.2)(1.1)(1.7)(2.4)(0.7)(1.1)
Excess deferred tax amortization(11.3)(5.7)(3.2)(20.7)(18.8)(15.4)(20.4)(24.7)
Amortization of investment tax credit, including deferred taxes on basis difference(0.1)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Tax credits(d)
0.3 (0.3)— (0.7)(0.7)(0.6)(0.7)(0.6)
Other(e)
2.8 — 0.2 (0.1)0.2 (0.2)0.3 0.2 
Effective income tax rate18.0 %22.3 %12.4 %1.1 %1.9 %(0.8)%5.8 %1.5 %

Nine Months Ended September 30, 2021(a)
Exelon
ComEd
PECO(f)
BGE(f)
PHI
Pepco
DPL
ACE(f)
U.S. Federal statutory rate21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %21.0 %
Increase (decrease) due to:
State income taxes, net of Federal income tax benefit3.8 7.6 (2.6)(10.8)4.6 2.5 6.5 7.3 
Plant basis differences(4.0)(0.7)(12.6)(1.5)(1.3)(1.9)(0.7)(0.6)
Excess deferred tax amortization(13.5)(7.2)(3.3)(16.0)(22.8)(17.4)(19.7)(36.3)
Amortization of investment tax credit, including deferred taxes on basis difference(0.1)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Tax credits(0.6)(0.5)— (0.9)(0.5)(0.5)(0.4)(0.5)
Other(1.1)(1.3)(0.2)(0.7)(0.3)(0.4)(0.2)— 
Effective income tax rate5.5 %18.8 %2.3 %(9.0)%0.6 %3.3 %6.3 %(9.3)%
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions partially offset by higher state income taxes, net of federal income tax benefit, related to a one-time expense of $38 million attributable to the change in the Pennsylvania corporate income tax rate. For BGE, PHI, Pepco, DPL and ACE, the lower effective tax rate is primarily related to the acceleration of certain income tax benefits due to distribution and transmission rate case settlements.
(c)For Exelon, the higher state income taxes, net of federal income tax benefit, is primarily due to the long-term marginal state income tax rate change of $67 million and the recognition of a valuation allowance of $40 million against the net deferred tax asset position for certain standalone state filing jurisdictions, partially offset by a one-time impact associated with a state tax benefit of $43 million and indemnification adjustments pursuant to the Tax Matters Agreement of $4 million as a result of the separation. For PECO, the higher state income taxes, net of federal income tax benefit, related to a one-time expense of $38 million attributable to the change in the Pennsylvania corporate income tax rate.
(d)For Exelon, reflects the income tax expense related to the write-off of federal tax credits subject to recapture of $15 million as a result of the separation.
(e)For Exelon, primarily reflects the nondeductible transaction costs of approximately $19 million arising as part of the separation and indemnification adjustments pursuant to the Tax Matters Agreement of $40 million.
(f)For PECO, the lower effective tax rate is primarily due to plant basis differences attributable to tax repair deductions. For BGE and ACE, the income tax benefit is primarily related to the acceleration of certain income tax benefits due to distribution rate case settlements.
Unrecognized Tax Benefits
Exelon, PHI and ACE have the following unrecognized tax benefits as of September 30, 2022 and December 31, 2021. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
Exelon(a)
PHIACE
September 30, 2022$148 $59 $17 
December 31, 2021143 56 16 
__________
(a)As of September 30, 2022, Exelon recorded a receivable of $50 million in Noncurrent other assets in the Consolidated Balance Sheet for Constellation’s share of unrecognized tax benefits for periods prior to the separation.
Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
As of September 30, 2022, ACE has $14 million of unrecognized state tax benefits that could significantly decrease within the 12 months after the reporting date based on the outcome of pending court cases involving other taxpayers. The unrecognized tax benefit, if recognized, may be included in future base rates and that portion would have no impact to the effective tax rate.
Other Tax Matters
Separation (Exelon)

In the first quarter of 2022, in connection with the separation, Exelon recorded an income tax expense related to continuing operations of $148 million primarily due to the long-term marginal state income tax rate change of $67 million discussed further below, the recognition of valuation allowances of approximately $40 million against the net deferred tax assets positions for certain standalone state filing jurisdictions, the write-off of federal and state tax credits subject to recapture of $17 million, and nondeductible transaction costs for federal and state taxes of $24 million.

Tax Matters Agreement (Exelon)
In connection with the separation, Exelon entered into a TMA with Constellation. The TMA governs the respective rights, responsibilities, and obligations between Exelon and Constellation after the separation with respect to tax liabilities, refunds and attributes for open tax years that Constellation was part of Exelon’s consolidated group for U.S. federal, state, and local tax purposes.
Indemnification for Taxes. As a former subsidiary of Exelon, Constellation has joint and several liability with Exelon to the IRS and certain state jurisdictions relating to the taxable periods prior to the separation. The TMA specifies that Constellation is liable for their share of taxes required to be paid by Exelon with respect to taxable periods prior to the separation to the extent Constellation would have been responsible for such taxes under the existing Exelon tax sharing agreement. As a result, Exelon recorded a receivable of $55 million in Current other assets in the Consolidated Balance Sheet for Constellation’s share of taxes for periods prior to the separation, as of March 31, 2022. As of September 30, 2022, the remaining amount of the receivable is $55 million.
Tax Refunds. The TMA specifies that Constellation is entitled to their share of any future tax refunds claimed by Exelon with respect to taxable periods prior to the separation to the extent that Constellation would have received such tax refunds under the existing Exelon tax sharing agreement.
Tax Attributes. At the date of separation certain tax attributes, primarily pre-closing tax credit carryforwards, that were generated by Constellation were required by law to be allocated to Exelon. The TMA provides that Exelon will reimburse Constellation when those allocated tax credit carryforwards are utilized. As of March 31, 2022, Exelon recorded a payable of $11 million and $484 million in Current other liabilities and Noncurrent other liabilities, respectively, in the Consolidated Balance Sheet for tax credit carryforwards that are expected to be utilized and reimbursed to Constellation. As of September 30, 2022, the current and noncurrent payable amounts are $102 million and $392 million, respectively.
Long-Term Marginal State Income Tax Rate (All Registrants)
In the first quarter of 2022, Exelon updated its marginal state income tax rates for changes in state apportionment due to the separation, which resulted in an increase of $67 million to the deferred tax liability at Exelon, and a corresponding adjustment to income tax expense, net of federal taxes.
Pennsylvania Corporate Income Tax Rate Change (Exelon and PECO)
On July 8, 2022, Pennsylvania enacted House Bill 1342, which will permanently reduce the corporate income tax rate from 9.99% to 4.99%. The tax rate will be reduced to 8.99% for the 2023 tax year. Starting with the 2024 tax year, the rate is reduced by 0.50% annually until it reaches 4.99% in 2031. As a result of the rate change, in the third quarter of 2022, Exelon and PECO recorded a one-time decrease to deferred income taxes of $390 million with a corresponding decrease to the deferred income taxes regulatory asset of $428 million for the amounts that are expected to be settled through future customer rates and an increase to income tax expense of $38 million (net of federal taxes). The tax rate decrease is not expected to have a material ongoing impact to Exelon’s and PECO’s financial statements.
Allocation of Tax Benefits (All Registrants)
The Utility Registrants are party to an agreement with Exelon that provides for the allocation of consolidated tax liabilities and benefits (Tax Sharing Agreement). The Tax Sharing Agreement provides that each party is allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. In addition, any net benefit attributable to Exelon is reallocated to the Utility Registrants. That allocation is treated as a contribution to capital from Exelon to the party receiving the benefit.
The following table presents the allocation of tax benefits from Exelon under the Tax Sharing Agreement, for the nine months ended September 30, 2022 and 2021.
ComEdPECOBGEPHIPepcoDPLACE
September 30, 2022
$1 $47 $— $28 $23 $3 $2 
September 30, 20211 19 — 17 16 — — 
Inflation Reduction Act (Exelon)
On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law. The bill extends tax benefits for renewable technologies like solar and wind, creates new tax benefits for alternative clean energy sources like nuclear and hydrogen and it focuses on energy efficiency, electrification, and equity. However, the bill also implements a new 15.0% corporate minimum tax based on adjusted GAAP net income. Exelon estimates the IRA could result in an increase in cash taxes for Exelon of approximately $200 million per year starting in 2023. Exelon is continuing to assess the impacts of the IRA on the financial statements and will update estimates based on guidance to be issued by the U.S. Treasury and IRS in the future.