Income Taxes (Tables)

9 Months Ended

Sep. 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 September 30,										Nine Months Ended September 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	40		35.0	%	$	61		35.0	%	$	116		35.0	%	$	116		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		6		5.3	%		11		6.3	%		21		6.3	%		21		6.3	%
Asset removal costs		(4	)	(3.5	)%		(5	)	(2.9	)%		(9	)	(2.7	)%		(11	)	(3.3	)%
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			1		0.6	%		—		—			55		16.6	%
Energy efficiency-related tax deductions		(4	)	(3.5	)%		—		—			(4	)	(1.2	)%		—		—
Establishment of valuation allowances related to deferred tax assets		—		—			—		—			—		—			101		30.4	%
Merger-related costs		—		—			—		—			7		2.1	%		—		—
Other, net		(4	)	(3.2	)%		(3	)	(1.9	)%		(6	)	(1.9	)%		(2	)	(0.7	)%
Consolidated income tax expense related to continuing operations	$	34		30.1	%	$	65		37.1	%	$	125		37.6	%	$	280		84.3	%

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 September 30,										Nine Months Ended September 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	37		35.0	%	$	37		35.0	%	$	79		35.0	%	$	66		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		6		5.7	%		6		5.7	%		13		5.7	%		11		5.9	%
Asset removal costs		(4	)	(3.8	)%		(5	)	(4.7	)%		(9	)	(4.0	)%		(11	)	(5.9	)%
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			—		—			—		—			(4	)	(2.1	)%
Other, net		(1	)	(0.7	)%		2		1.7	%		(1	)	(0.6	)%		—		0.1	%
Income tax expense	$	38		36.2	%	$	40		37.7	%	$	82		36.1	%	$	62		33.0	%

Delmarva Power & Light Co/De [Member]

Reconciliation of Consolidated Income Tax Expense from Continuing Operations

(10) INCOME TAXES

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

	Three Months Ended September 30,										Nine Months Ended September 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	13		35.0	%	$	13		35.0	%	$	46		35.0	%	$	35		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		2		5.6	%		2		5.4	%		7		5.4	%		5		5.0	%
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			—		—			—		—			(1	)	(1.0	)%
Other, net		(2	)	(4.5	)%		(1	)	(2.6	)%		(2	)	(1.2	)%		—		—
Income tax expense	$	13		36.1	%	$	14		37.8	%	$	51		39.2	%	$	39		39.0	%

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 September 30,										Nine Months Ended September 30,
	2014					2013					2014					2013
	(millions of dollars)
Income tax at federal statutory rate	$	13		35.0	%	$	13		35.0	%	$	22		35.0	%	$	19		35.0	%
Increases (decreases) resulting from:
State income taxes, net of federal effect		2		5.4	%		2		5.3	%		4		6.3	%		4		7.3	%
Change in estimates and interest related to uncertain and effectively settled tax positions		—		—			—		—			—		—			(9	)	(16.4	)%
Other, net		(1	)	(2.6	)%		(2	)	(6.1	)%		(2	)	(3.2	)%		—		(0.4	)%
Consolidated income tax expense	$	14		37.8	%	$	13		34.2	%	$	24		38.1	%	$	14		25.5	%