19. Segment Information (All Registrants)

Operating segments for each of the Registrants are determined based on information used by the chief operating decision maker(s) (CODM) in deciding how to evaluate performance and allocate resources at each of the Registrants.

In the first quarter of 2016, following the consummation of the PHI Merger, three new reportable segments were added: Pepco, DPL and ACE. As a result, Exelon has twelve reportable segments, which include ComEd, PECO, BGE, PHI's three reportable segments consisting of Pepco, DPL, and ACE, and Generation’s six reportable segments consisting of the Mid-Atlantic, Midwest, New England, New York, ERCOT and all other power regions referred to collectively as “Other Power Regions”, which includes activities in the South, West and Canada. ComEd, PECO, BGE, Pepco, DPL and ACE each represent a single reportable segment, and as such, no separate segment information is provided for these Registrants. Exelon, ComEd, PECO, BGE, Pepco, DPL and ACE's CODMs evaluate the performance of and allocate resources to ComEd, PECO, BGE, Pepco, DPL and ACE based on net income and return on equity.

Effective with the consummation of the PHI Merger, PHI's reportable segments have changed based on the information used by the CODM to evaluate performance and allocate resources. PHI's reportable segments consist of Pepco, DPL and ACE. PHI's Predecessor periods' segment information has been recast to conform to the current presentation. The reclassification of the segment information did not impact PHI's reported consolidated revenues or net income. PHI's CODM evaluates the performance of and allocates resources to Pepco, DPL and ACE based on net income and return on equity.

The basis for Generation's reportable segments is the integrated management of its electricity business that is located in different geographic regions, and largely representative of the footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Generation's hedging strategies and risk metrics are also aligned to these same geographic regions. Descriptions of each of Generation’s six reportable segments are as follows:


•	Mid-Atlantic represents operations in the eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia and parts of Pennsylvania and North Carolina.

•

Midwest represents operations in the western half of PJM, which includes portions of Illinois, Pennsylvania, Indiana, Ohio, Michigan, Kentucky and Tennessee, and the United States footprint of MISO, excluding MISO’s Southern Region, which covers all or most of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, the remaining parts of Illinois, Indiana, Michigan and Ohio not covered by PJM, and parts of Montana, Missouri and Kentucky.


•	New England represents the operations within ISO-NE covering the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.


•	New York represents operations within ISO-NY, which covers the state of New York in its entirety.


•	ERCOT represents operations within Electric Reliability Council of Texas, covering most of the state of Texas.


•	Other Power Regions:

•

South represents operations in the FRCC, MISO’s Southern Region, and the remaining portions of the SERC not included within MISO or PJM, which includes all or most of Florida, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Tennessee, North Carolina, South Carolina and parts of Missouri, Kentucky and Texas. Generation’s South region also includes operations in the SPP, covering Kansas, Oklahoma, most of Nebraska and parts of New Mexico, Texas, Louisiana, Missouri, Mississippi and Arkansas.


•	West represents operations in the WECC, which includes California ISO, and covers the states of California, Oregon, Washington, Arizona, Nevada, Utah, Idaho, Colorado and parts of New Mexico, Wyoming and South Dakota.


•	Canada represents operations across the entire country of Canada and includes AESO, OIESO and the Canadian portion of MISO.

The CODMs for Exelon and Generation evaluate the performance of Generation’s electric business activities and allocate resources based on revenues net of purchased power and fuel expense (RNF). Generation believes that RNF is a useful measurement of operational performance. RNF is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report. Generation’s operating revenues include all sales to third parties and affiliated sales to the Utility Registrants. Purchased power costs include all costs associated with the procurement and supply of electricity including capacity, energy and ancillary services. Fuel expense includes the fuel costs for Generation’s owned generation and fuel costs associated with tolling agreements. The results of Generation's other business activities are not regularly reviewed by the CODM and are therefore not classified as operating segments or included in the regional reportable segment amounts. These activities include natural gas, as well as other miscellaneous business activities that are not significant to Generation's overall operating revenues or results of operations. Further, Generation’s unrealized mark-to-market gains and losses on economic hedging activities and its amortization of certain intangible assets and liabilities relating to commodity contracts recorded at fair value from mergers and acquisitions are also excluded from the regional reportable segment amounts. Exelon and Generation do not use a measure of total assets in making decisions regarding allocating resources to or assessing the performance of these reportable segments.

An analysis and reconciliation of the Registrants’ reportable segment information to the respective information in the consolidated financial statements for the three months ended March 31, 2017 and 2016 is as follows:

Three Months Ended March 31, 2017 and 2016



									Successor
	Generation^(a)		ComEd		PECO		BGE		PHI^(b)			Other^(c)			Intersegment Eliminations			Exelon
Operating revenues^(d):
2017
Competitive businesses electric revenues	$	3,720	$	—	$	—	$	—	$	—		$	—		$	(328	)	$	3,392
Competitive businesses natural gas revenues	918		—		—		—		—			—			—			918
Competitive businesses other revenues	250		—		—		—		—			—			—			250
Rate-regulated electric revenues	—		1,298		590		667		1,097			—			(8		)	3,644
Rate-regulated natural gas revenues	—		—		206		284		66			—			(3		)	553
Shared service and other revenues	—		—		—		—		12			419			(431		)	—
2016
Competitive businesses electric revenues	$	3,695	$	—	$	—	$	—	$	—		$	—		$	(266	)	$	3,429
Competitive businesses natural gas revenues	822		—		—		—		—			—			—			822
Competitive businesses other revenues	222		—		—		—		—			—			—			222
Rate-regulated electric revenues	—		1,249		644		680		90			—			(6		)	2,657
Rate-regulated natural gas revenues	—		—		197		249		3			—			(5		)	444
Shared service and other revenues	—		—		—		—		12			405			(418		)	(1		)
Intersegment revenues^(e):
2017	$	328	$	5	$	1	$	5	$	12		$	419		$	(770	)	$	—
2016	266		5		1		5		12			405			(695		)	(1		)
Net income (loss):
2017	$	409	$	141	$	127	$	125	$	140		$	39		$	—		$	981
2016	257		115		124		101		(309		)	(164		)	(1		)	123
Total assets:
March 31, 2017	$	48,609	$	28,756	$	10,932	$	8,821	$	21,018		$	10,700		$	(11,768	)	$	117,068
December 31, 2016	46,974		28,335		10,831		8,704		21,025			10,369			(11,334		)	114,904

_________

(a)

Generation includes the six reportable segments shown below: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions. Intersegment revenues for Generation for the three months ended March 31, 2017 include revenue from sales to PECO of $45 million, sales to BGE of $134 million, sales to Pepco of $83 million, sales to DPL of $51 million, and sales to ACE of $9 million in the Mid-Atlantic region, and sales to ComEd of $5 million in the Midwest region. For the three months ended March 31, 2016, intersegment revenues for Generation include revenue from sales to PECO of $79 million and sales to BGE of $173 million in the Mid-Atlantic region, and sales to ComEd of $5 million in the Midwest region. For the Successor period of March 24, 2016 to March 31, 2016, intersegment revenues for Generation include revenue from sales to Pepco of $6 million, sales to DPL of $4 million, and sales to ACE of $1 million in the Mid-Atlantic region.


(b)	Amounts included represent activity for PHI's successor period, March 24, 2016 through March 31, 2016. PHI includes the three reportable segments: Pepco, DPL and ACE. See tables below for PHI's predecessor periods, including Pepco, DPL and ACE, for January 1, 2016 to March 23, 2016 and for the three months ended March 31, 2016.


(c)	Other primarily includes Exelon’s corporate operations, shared service entities and other financing and investment activities.


(d)	Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses on the Registrants’ Consolidated Statements of Operations and Comprehensive Income. See Note 18 — Supplemental Financial Information for total utility taxes for the three months ended March 31, 2017 and 2016.

(e)

Intersegment revenues exclude sales to unconsolidated affiliates. The intersegment profit associated with Generation’s sale of certain products and services by and between Exelon’s segments is not eliminated in consolidation due to the recognition of intersegment profit in accordance with regulatory accounting guidance. For Exelon, these amounts are included in Operating revenues in the Consolidated Statements of Operations and Comprehensive Income.

Successor and Predecessor PHI:



	Pepco			DPL			ACE			Other^(b)			Intersegment Eliminations			PHI
Operating revenues^(a):
Three Months Ended March 31, 2017 - Successor
Rate-regulated electric revenues	$	530		$	296		$	275		$	—		$	(4	)	$	1,097
Rate-regulated natural gas revenues	—			66			—			—			—			66
Shared service and other revenues	—			—			—			12			—			12
March 24, 2016 to March 31, 2016 - Successor
Rate-regulated electric revenues	$	40		$	24		$	23		$	3		$	—		$	90
Rate-regulated natural gas revenues	—			3			—			—			—			3
Shared service and other revenues	—			—			—			12			—			12
January 1, 2016 to March 23, 2016 - Predecessor
Rate-regulated electric revenues	$	511		$	279		$	268		$	42		$	(4	)	$	1,096
Rate-regulated natural gas revenues	—			56			—			1			—			57
Shared service and other revenues	—			—			—			—			—			—
Intersegment revenues:
Three Months Ended March 31, 2017 - Successor	$	1		$	2		$	1		$	13		$	(5	)	$	12
March 24, 2016 to March 31, 2016 - Successor	—			—			—			12			—			12
January 1, 2016 to March 23, 2016 - Predecessor	1			2			1			—			(4		)	—
Net income (loss):
Three Months Ended March 31, 2017 - Successor	$	58		$	57		$	28		$	(15	)	$	12		$	140
March 24, 2016 to March 31, 2016 - Successor	(140		)	(98		)	(105		)	22			12			(309		)
January 1, 2016 to March 23, 2016 - Predecessor	32			26			5			(44		)	—			19
Total assets:
March 31, 2017 - Successor	$	7,417		$	4,191		$	3,451		$	10,785		$	(4,826	)	$	21,018
December 31, 2016 - Successor	7,335			4,153			3,457			10,804			(4,724		)	21,025

_________


(a)	Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses on the Registrants’ Consolidated Statements of Operations and Comprehensive Income. See Note 18 — Supplemental Financial Information for total utility taxes for the three months ended March 31, 2017 and 2016.


(b)	Other primarily includes PHI’s corporate operations, shared service entities and other financing and investment activities. For the predecessor periods presented, Other includes the activity of PHI’s unregulated businesses which were distributed to Exelon and Generation as a result of the PHI Merger.

Generation total revenues:



	Three Months Ended March 31, 2017							Three Months Ended March 31, 2016
	Revenues from external customers^(a)		Intersegment revenues			Total Revenues		Revenues from external customers^(a)		Intersegment revenues			Total Revenues
Mid-Atlantic	$	1,429	$	(4	)	$	1,425	$	1,532	$	(12	)	$	1,520
Midwest	1,051		2			1,053		1,089		6			1,095
New England	549		(2		)	547		471		(1		)	470
New York	310		(3		)	307		218		(15		)	203
ERCOT	192		(1		)	191		163		—			163
Other Power Regions	189		(5		)	184		222		1			223
Total Revenues for Reportable Segments	3,720		(13		)	3,707		3,695		(21		)	3,674
Other^(b)	1,168		13			1,181		1,044		21			1,065
Total Generation Consolidated Operating Revenues	$	4,888	$	—		$	4,888	$	4,739	$	—		$	4,739

__________


(a)	Includes all wholesale and retail electric sales to third parties and affiliated sales to the Utility Registrants.

(b)

Other represents activities not allocated to a region. See text above for a description of included activities. Includes a $3 million decrease to revenues and a $20 million increase to revenues for the amortization of intangible assets and liabilities related to commodity contracts recorded at fair value for the three months ended March 31, 2017 and 2016, respectively, unrealized mark-to-market gains of $44 million and $63 million for the three months ended March 31, 2017 and 2016, respectively, and elimination of intersegment revenues.

Generation total revenues net of purchased power and fuel expense:



	Three Months Ended March 31, 2017							Three Months Ended March 31, 2016
	RNF from external customers^(a)		Intersegment RNF			Total RNF		RNF from external customers^(a)		Intersegment RN			Total RNF
Mid-Atlantic	$	755	$	18		$	773	$	832	$	9		$	841
Midwest	704		11			715		715		3			718
New England	115		(4		)	111		86		(5		)	81
New York	153		—			153		141		(11		)	130
ERCOT	94		(25		)	69		81		(20		)	61
Other Power Regions	108		(44		)	64		86		(10		)	76
Total Revenues net of purchased power and fuel expense for Reportable Segments	1,929		(44		)	1,885		1,941		(34		)	1,907
Other^(b)	161		44			205		356		34			390
Total Generation Revenues net of purchased power and fuel expense	$	2,090	$	—		$	2,090	$	2,297	$	—		$	2,297

__________


(a)	Includes purchases and sales from/to third parties and affiliated sales to the Utility Registrants.

(b)

Other represents activities not allocated to a region. See text above for a description of included activities. Includes a $3 million decrease to RNF and a $19 million increase to RNF for the amortization of intangible assets and liabilities related to commodity contracts for the three months ended March 31, 2017 and 2016, respectively, unrealized mark-to-market losses of $49 million and gains of $103 million for the three months ended March 31, 2017 and 2016, respectively, and the elimination of intersegment revenue net of purchased power and fuel expense.