Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

Reconciliation of Consolidated Income Tax Expense from Continuing Operations

A reconciliation of PHI’s consolidated effective income tax rates from continuing operations is as follows:

	Three Months Ended June 30,										Six Months Ended June 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	34		35.0	%	$	29		35.0	%	$	77		35.0	%	$	55		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		7		7.1	%		6		7.2	%		15		6.8	%		10		6.4	%
Asset removal costs		(2	)	(2.0	)%		(3	)	(3.6	)%		(5	)	(2.3	)%		(6	)	(3.8	)%
Merger-related costs		7		7.1	%		—		—			7		3.2	%		—		—
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			3		3.6	%		—		—			54		34.4	%
Establishment of valuation allowances related to deferred tax assets		—		—			—		—			—		—			101		64.3	%
Other, net		(1	)	(1.3	)%		(5	)	(6.1	)%		(3	)	(1.1	)%		1		0.6	%
Consolidated income tax expense related to continuing operations	$	45		45.9	%	$	30		36.1	%	$	91		41.6	%	$	215		136.9	%

Potomac Electric Power Co [Member]

Reconciliation of Consolidated Income Tax Expense from Continuing Operations

A reconciliation of Pepco’s effective income tax rates is as follows:

	Three Months Ended June 30,										Six Months Ended June 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	26		35.0	%	$	20		35.0	%	$	43		35.0	%	$	29		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		4		5.4	%		3		5.3	%		7		5.7	%		5		6.1	%
Asset removal costs		(2	)	(2.7	)%		(3	)	(5.3	)%		(5	)	(4.1	)%		(6	)	(7.3	)%
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			1		1.8	%		(1	)	(0.8	)%		(4	)	(4.9	)%
Other, net		—		0.1	%		(1	)	(1.7	)%		—		0.3	%		(2	)	(2.1	)%
Income tax expense	$	28		37.8	%	$	20		35.1	%	$	44		36.1	%	$	22		26.8	%

Delmarva Power & Light Co/De [Member]

Reconciliation of Consolidated Income Tax Expense from Continuing Operations

A reconciliation of DPL’s effective income tax rates is as follows:

	Three Months Ended June 30,								Six Months Ended June 30,
	2014				2013				2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	11	35.0	%	$	7	35.0	%	$	33		35.0	%	$	22		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		2	6.3	%		1	4.8	%		5		5.3	%		3		4.8	%
Change in estimates and interest related to uncertain and effectively settled tax positions		—	—			—	—			—		—			(1	)	(1.6	)%
Depreciation		—	—			—	—			(1	)	(1.1	)%		—		—
Other, net		—	(0.7	)%		1	3.1	%		1		1.2	%		1		1.5	%
Income tax expense	$	13	40.6	%	$	9	42.9	%	$	38		40.4	%	$	25		39.7	%

Atlantic City Electric Co [Member]

Reconciliation of Consolidated Income Tax Expense from Continuing Operations

A reconciliation of ACE’s consolidated effective income tax rates is as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
	2014				2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	3	35.0	%	$	4		35.0	%	$	9		35.0	%	$	6		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		1	10.0	%		1		9.1	%		2		7.7	%		1		5.9	%
Change in estimates and interest related to uncertain and effectively settled tax positions		—	—			1		9.1	%		—		—			(9	)	(52.9	)%
Depreciation		—	—			—		—			(1	)	(3.8	)%		—		—
Other, net		—	(5.0	)%		(2	)	(16.8	)%		—		(0.4	)%		3		17.9	%
Consolidated income tax expense	$	4	40.0	%	$	4		36.4	%	$	10		38.5	%	$	1		5.9	%