XML 300 R86.htm IDEA: XBRL DOCUMENT

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) from continuing operations is comprised of the following components:


	For the Year Ended December 31, 2023
	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Included in operations:
Federal
Current	$	51	$	130	$	63	$	67	$	71	$	54	$	25	$	9
Deferred	193		45		(36)		16		(8)		(28)		(6)		13
Investment tax credit amortization	(2)		(1)		—		—		(1)		—		—		—
State
Current	4		(13)		—		—		15		12		6		—
Deferred	128		153		(7)		50		39		13		10		14
Total	$	374	$	314	$	20	$	133	$	116	$	51	$	35	$	36


	For the Year Ended December 31, 2022
	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Included in operations:
Federal
Current	$	(24)	$	29	$	13	$	(1)	$	16	$	9	$	(2)	$	6
Deferred	106		117		18		(3)		(23)		(2)		2		(15)
Investment tax credit amortization	(3)		(1)		—		—		(1)		—		—		—
State
Current	(13)		(6)		(4)		—		2		—		—		—
Deferred	283		125		52		12		15		(16)		14		12
Total	$	349	$	264	$	79	$	8	$	9	$	(9)	$	14	$	3


	For the Year Ended December 31, 2021
	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Included in operations:
Federal
Current	$	(152)	$	(30)	$	1	$	(18)	$	18	$	22	$	2	$	1
Deferred	89		113		20		34		(52)		(17)		(14)		(26)
Investment tax credit amortization	(2)		(1)		—		—		(1)		—		—		—
State
Current	(46)		(41)		—		—		—		1		1		—
Deferred	149		131		(9)		(51)		77		9		53		12
Total	$	38	$	172	$	12	$	(35)	$	42	$	15	$	42	$	(13)

Effective Income Tax Rate Reconciliation

The effective income tax rate from continuing operations varies from the U.S. federal statutory rate principally due to the following:


	For the Year Ended December 31, 2023(a)
	Exelon		ComEd		PECO(b)		BGE		PHI		Pepco		DPL		ACE
U.S. federal statutory rate	21.0	%	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)	3.9		7.9		(1.0)		6.4		5.9		5.5		6.1		7.1
Plant basis differences	(3.9)		(0.5)		(14.4)		(0.9)		(1.4)		(2.2)		(0.7)		(0.4)
Excess deferred tax amortization	(6.6)		(5.5)		(2.4)		(4.6)		(8.6)		(9.6)		(9.4)		(4.2)
Amortization of investment tax credit, including deferred taxes on basis differences	(0.1)		(0.1)		—		—		(0.1)		—		(0.1)		(0.2)
Tax credits	(0.6)		(0.6)		—		(0.6)		(0.6)		(0.7)		(0.4)		(0.5)
Other	0.1		0.2		0.2		0.2		0.2		0.3		—		0.3
Effective income tax rate	13.8	%	22.4	%	3.4	%	21.5	%	16.4	%	14.3	%	16.5	%	23.1	%


	For the Year Ended December 31, 2022(a)
	Exelon		ComEd		PECO(d)		BGE(d)		PHI(d)		Pepco(d)		DPL(d)		ACE(d)
U.S. federal statutory rate	21.0	%	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(e)	8.8		8.0		5.8		2.6		2.1		(4.1)		6.5		6.9
Plant basis differences	(4.1)		(0.6)		(11.9)		(1.0)		(1.7)		(2.7)		(0.7)		(0.7)
Excess deferred tax amortization	(11.8)		(5.6)		(3.0)		(19.8)		(19.5)		(16.8)		(18.4)		(24.5)
Amortization of investment tax credit, including deferred taxes on basis differences	(0.1)		(0.1)		—		(0.1)		(0.1)		—		(0.2)		(0.2)
Tax credits(f)	0.1		(0.3)		—		(0.7)		(0.7)		(0.7)		(0.6)		(0.5)
Other(g)	0.6		—		0.2		0.1		0.4		0.3		0.1		—
Effective income tax rate	14.5	%	22.4	%	12.1	%	2.1	%	1.5	%	(3.0)	%	7.7	%	2.0	%


	For the Year Ended December 31, 2021(a)
	Exelon		ComEd		PECO(h)		BGE(h)		PHI		Pepco(h)		DPL(h)		ACE(h)
U.S. federal statutory rate	21.0	%	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	5.0		7.8		(1.4)		(10.8)		10.1		2.7		25.0		7.4
Plant basis differences	(5.4)		(0.8)		(13.6)		(1.7)		(1.1)		(1.6)		(0.8)		(0.2)
Excess deferred tax amortization	(17.2)		(7.6)		(3.8)		(16.3)		(22.4)		(16.4)		(20.0)		(37.1)
Amortization of investment tax credit, including deferred taxes on basis differences	(0.1)		(0.1)		—		(0.1)		(0.1)		—		(0.2)		(0.2)
Tax credits	(0.7)		(0.5)		—		(0.9)		(0.5)		(0.5)		(0.4)		(0.5)
Other	(0.3)		(1.0)		0.1		(0.6)		—		(0.4)		0.1		(0.2)
Effective income tax rate	2.3	%	18.8	%	2.3	%	(9.4)	%	7.0	%	4.8	%	24.7	%	(9.8)	%

__________

(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.

(c)For Exelon, the lower state income taxes, net of federal income tax benefit, is primarily due to the long-term marginal state income tax rate change of $54 million.

(d)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 transmission and distribution rate case settlements.

(e)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 $11 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.

(f)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.

(g)For Exelon, reflects the nondeductible transaction costs of approximately $12 million arising as part of the separation and indemnification adjustments pursuant to the Tax Matters Agreement of $9 million.

(h)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. For BGE, the income tax benefit is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. For Pepco, the lower effective tax rate is primarily related to the acceleration of certain income tax benefits due to transmission and distribution rate case settlements. For DPL, the higher effective tax rate is primarily related to a state income tax expense, net of federal income tax benefit, due to the recognition of a valuation allowance of approximately $31 million against a deferred tax asset associated with Delaware net operating loss carryforwards as a result of a change in Delaware tax law. For ACE, the income tax benefit is primarily due to a distribution rate case settlement which allows ACE to retain certain tax benefits.

Tax Effects of Temporary Differences

The tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred tax assets (liabilities), at December 31, 2023 and 2022 are presented below:


	At December 31, 2023
	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Plant basis differences	$	(12,631)	$	(4,993)	$	(2,264)	$	(2,064)	$	(3,262)	$	(1,454)	$	(947)	$	(850)
Accrual based contracts	8		—		—		—		8		—		—		—
Derivatives and other financial instruments	46		37		—		—		2		—		—		—
Deferred pension and postretirement obligation	524		(299)		(36)		(26)		(78)		(70)		(35)		(2)
Deferred debt refinancing costs	115		(5)		—		(2)		104		(3)		(2)		(1)
Regulatory assets and liabilities	(1,429)		(405)		(208)		(4)		(52)		9		45		(4)
Tax loss carryforward, net of valuation allowances	295		—		47		77		72		—		18		52
Tax credit carryforward	281		—		—		—		—		—		—		—
Corporate Alternative Minimum Tax	264		118		82		55		—		—		2		11
Investment in partnerships	(28)		—		—		—		—		—		—		—
Other, net	619		227		58		21		186		88		16		25
Deferred income tax liabilities (net)	(11,936)		(5,320)		(2,321)		(1,943)		(3,020)		(1,430)		(903)		(769)
Unamortized investment tax credits	(13)		(7)		—		(2)		(4)		(1)		(1)		(2)
Total deferred income tax liabilities (net) and unamortized investment tax credits	$	(11,949)	$	(5,327)	$	(2,321)	$	(1,945)	$	(3,024)	$	(1,431)	$	(904)	$	(771)


	At December 31, 2022
	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Plant basis differences	$	(12,130)	$	(4,823)	$	(2,119)	$	(1,949)	$	(3,131)	$	(1,394)	$	(906)	$	(813)
Accrual based contracts	10		—		—		—		10		—		—		—
Derivatives and other financial instruments	26		23		—		—		2		—		—		—
Deferred pension and postretirement obligation	551		(300)		(31)		(31)		(80)		(76)		(39)		(3)
Deferred debt refinancing costs	132		(5)		—		(2)		111		(4)		(2)		(1)
Regulatory assets and liabilities	(1,107)		(131)		(169)		57		(50)		7		43		11
Tax loss carryforward, net of valuation allowances	250		—		33		72		71		3		20		46
Tax credit carryforward	468		—		—		—		—		—		—		—
Investment in partnerships	(21)		—		—		—		—		—		—		—
Other, net	591		223		73		23		182		83		16		28
Deferred income tax liabilities (net)	(11,230)		(5,013)		(2,213)		(1,830)		(2,885)		(1,381)		(868)		(732)
Unamortized investment tax credits	(14)		(8)		—		(2)		(4)		(1)		(1)		(2)
Total deferred income tax liabilities (net) and unamortized investment tax credits	$	(11,244)	$	(5,021)	$	(2,213)	$	(1,832)	$	(2,889)	$	(1,382)	$	(869)	$	(734)

Summary of Loss Carryforwards

The following table provides Exelon’s, ComEd's, PECO’s, BGE’s, PHI’s, Pepco’s, DPL’s, and ACE’s carryforwards, of which the state related items are presented on a post-apportioned basis, as well as, any corresponding valuation allowances at December 31, 2023.


	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Federal
Federal net operating loss carryforward(a)	$	130	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Deferred taxes on Federal net operating loss	27		—		—		—		—		—		—		—
Federal general business credits carryforwards(b)	281		—		—		—		—		—		—		—
Corporate Alternative Minimum Tax credit carryforward(c)	264		118		82		55		—		—		2		11
State
State net operating loss carryforwards	5,629		—		1,286		1,187		1,509		—		743		736
Deferred taxes on state tax attributes (net of federal taxes)	341		—		51		77		104		—		50		52
Valuation allowance on state tax attributes (net of federal taxes)(d)	73		—		4		—		32		—		32		—
Year in which net operating loss or credit carryforwards will begin to expire(e)	2035		N/A		2032		2033		2029		N/A		2035		2031

__________

(a)For Exelon, the federal net operating loss carryforward has an indefinite carryforward period.

(b)For Exelon, the federal general business credit carryforward will begin expiring in 2035.

(c)For Exelon, ComEd, PECO, BGE, DPL and ACE, the Corporate Alternative Minimum Tax credit carryforward has an indefinite carryforward period.

(d)For Exelon, a full valuation allowance has been recorded against certain separate company state net operating loss carryforwards that are expected to expire before realization. For PECO, a valuation allowance has been recorded against certain Pennsylvania net operating losses that are expected to expire before realization. For DPL, a full valuation allowance has been recorded against Delaware net operating losses carryforwards due to a change in Delaware tax law that restricts the ability for corporate taxpayers to monetize net operating losses.

(e)A portion of Exelon's, BGE's, and DPL's Maryland state net operating loss carryforward have an indefinite carryforward period.

Schedule of Unrecognized Tax Benefits Roll Forward

The following table presents changes in unrecognized tax benefits, for Exelon, PHI, and ACE. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.


	Exelon(a)		PHI		ACE
Balance at January 1, 2021	$	125	$	52	$	15
Change to positions that only affect timing	13		3		1
Increases based on tax positions related to 2021	4		1		—
Increases based on tax positions prior to 2021	4		—		—
Decreases based on tax positions prior to 2021	(3)		—		—

Balance at December 31, 2021	$	143	$	56	$	16
Change to positions that only affect timing	(1)		1		1
Increases based on tax positions related to 2022	3		2		—
Increases based on tax positions prior to 2022	3		—		—
Decreases based on tax positions prior to 2022	—		—		—
Balance at December 31, 2022	$	148	$	59	$	17
Change to positions that only affect timing	(57)		(9)		(2)
Increases based on tax positions related to 2023	3		1		—
Increases based on tax positions prior to 2023	1		—		—
Decreases based on tax positions prior to 2023	(1)		—		—

Balance at December 31, 2023	$	94	$	51	$	15

______

(a)At December 31, 2023 and 2022, Exelon recorded a receivable of $31 million and $50 million, respectively, in noncurrent Other assets in the Consolidated Balance Sheet for Constellation’s share of unrecognized tax benefits for periods prior to the separation.

Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible

The following table presents Exelon's unrecognized tax benefits that, if recognized, would decrease the effective tax rate. The Utility Registrants' amounts are not material.


	Exelon



December 31, 2023	$	71
December 31, 2022	90
December 31, 2021	77

Total amounts of interest and penalties recognized

The following table represents the net interest and penalties receivable (payable) related to tax positions reflected in Exelon's Consolidated Balance Sheets. The Utility Registrants' amounts are not material.


Net interest and penalties receivable at	Exelon
December 31, 2023 (a)	$	62
December 31, 2022 (b)	45

__________

(a)At December 31, 2023, Exelon classified $21 million and $41 million of the interest receivable as current and noncurrent, respectively, based on the expected timing for settlement in cash. At December 31, 2023, Exelon recorded a receivable of $5 million in noncurrent Other assets in the Consolidated Balance Sheet for Constellation's share of net interest for periods prior to the separation.

(b)At December 31, 2022, the interest receivable balance is not expected to be settled in cash within the next twelve months and is therefore classified as a noncurrent receivable. At December 31, 2022, Exelon recorded a receivable of $1 million in noncurrent Other assets in the Consolidated Balance Sheet for Constellation's share of net interest for periods prior to the separation.

Summary of Income Tax Examinations

Description of Tax Years Open to Assessment by Major Jurisdiction


Major Jurisdiction	Open Years	Registrants Impacted
Federal consolidated income tax returns(a)	2010-2022	All Registrants
Delaware separate corporate income tax returns	Same as federal	DPL
District of Columbia combined corporate income tax returns	2020-2022	Exelon, PHI, Pepco
Illinois unitary corporate income tax returns	2012-2022	Exelon, ComEd
Maryland separate company corporate net income tax returns	Same as federal	BGE, Pepco, DPL
New Jersey separate corporate income tax returns	2017-2018	Exelon
New Jersey combined corporate income tax returns	2019-2022	Exelon
New Jersey separate corporate income tax returns	2019-2022	ACE
New York combined corporate income tax returns	2015-2022	Exelon
Pennsylvania separate corporate income tax returns	2020-2022	Exelon
Pennsylvania separate corporate income tax returns	2020-2022	PECO

__________

(a)Certain registrants are only open to assessment for tax years since joining the Exelon federal consolidated group; BGE beginning in 2012 and PHI, Pepco, DPL, and ACE beginning in 2016.

Long-Term Marginal State Income Tax Rate

There were no impacts to ComEd, BGE, PHI, Pepco, DPL, and ACE for the years ended December 31, 2023, 2022, and 2021.

December 31, 2023

Exelon

Decrease to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes

(54)

December 31, 2022

Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes

December 31, 2021

Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes

Allocation of Federal Tax Benefit Under Tax Sharing Agreement

The following table presents the allocation of tax benefits from Exelon under the Tax Sharing Agreement, for the year ended December 31, 2023, 2022, and 2021.


	ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
December 31, 2023(a)	$	13	$	19	$	—	$	10	$	4	$	—	$	2
December 31, 2022(b)	1		47		—		28		23		3		2
December 31, 2021(c)	1		19		—		17		16		—		—

__________

(a)BGE and DPL did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.

(b)BGE did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.

(c)BGE, DPL, and ACE did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.