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Income Taxes (All Registrants)
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes (All Registrants) Income Taxes (All Registrants)
Components of Income Tax Expense or Benefit
Income tax expense (benefit) from continuing operations is comprised of the following components:
 
For the Year Ended December 31, 2019
 
 Exelon
 
 Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Included in operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
85

 
$
147

 
$
59

 
$
45

 
$
(51
)
 
$
43

 
$
16

 
$
29

 
$
(3
)
Deferred
489

 
346

 
15

 
20

 
95

 
(34
)
 
(6
)
 
(21
)
 
(6
)
Investment tax credit amortization
(72
)
 
(69
)
 
(2
)
 
—

 
—

 
(1
)
 
—

 
—

 
—

State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
5

 
10

 
(5
)
 
—

 
—

 
3

 
—

 
—

 
—

Deferred
267

 
82

 
96

 
—

 
35

 
27

 
6

 
14

 
9

Total
$
774

 
$
516

 
$
163

 
$
65

 
$
79

 
$
38

 
$
16

 
$
22

 
$
—

 
For the Year Ended December 31, 2018
 
 Exelon
 
 Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Included in operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
226

 
$
337

 
$
(63
)
 
$
11

 
$
(5
)
 
$
(4
)
 
$
28

 
$
(3
)
 
$
(14
)
Deferred
(99
)
 
(347
)
 
145

 
10

 
47

 
23

 
(22
)
 
13

 
18

Investment tax credit amortization
(24
)
 
(21
)
 
(2
)
 
—

 
—

 
(1
)
 
—

 
—

 
—

State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
(1
)
 
6

 
(29
)
 
1

 
—

 
7

 
—

 
—

 
—

Deferred
16

 
(83
)
 
117

 
(16
)
 
32

 
8

 
5

 
12

 
8

Total
$
118

 
$
(108
)
 
$
168

 
$
6

 
$
74

 
$
33

 
$
11

 
$
22

 
$
12

 
For the Year Ended December 31, 2017
 
 Exelon
 
 Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Included in operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
$
194

 
$
584

 
$
(191
)
 
$
71

 
$
74

 
$
(60
)
 
$
(20
)
 
$
(24
)
 
$
(12
)
Deferred
(470
)
 
(2,005
)
 
523

 
28

 
101

 
251

 
115

 
82

 
34

Investment tax credit amortization
(25
)
 
(21
)
 
(2
)
 
—

 
(1
)
 
(1
)
 
—

 
—

 
—

State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Current
14

 
65

 
(49
)
 
14

 
(5
)
 
(4
)
 
(2
)
 
—

 
—

Deferred
161

 
1

 
136

 
(9
)
 
49

 
31

 
12

 
13

 
4

Total
$
(126
)
 
$
(1,376
)
 
$
417

 
$
104

 
$
218

 
$
217

 
$
105

 
$
71

 
$
26


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, 2019
 
Exelon
 
Generation
 
ComEd
 
PECO
 
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
 %
 
21.0
 %
Increase (decrease) due to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State income taxes, net of Federal income tax benefit
5.4

 
3.8

 
8.5

 
—

 
6.4

 
4.7

 
2.0

 
6.8

 
7.0

Qualified NDT fund income
5.9

 
12.3

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Amortization of investment tax credit, including deferred taxes on basis difference
(1.5
)
 
(3.0
)
 
(0.2
)
 
—

 
(0.1
)
 
(0.2
)
 
(0.1
)
 
(0.2
)
 
(0.3
)
Plant basis differences
(1.4
)
 
—

 
—

 
(7.2
)
 
(1.2
)
 
(1.2
)
 
(1.8
)
 
(0.4
)
 
(0.7
)
Production tax credits and other credits
(3.1
)
 
(4.8
)
 
(1.2
)
 
—

 
(1.3
)
 
(0.2
)
 
(0.1
)
 
—

 
(0.1
)
Noncontrolling interests
(0.6
)
 
(1.2
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Excess deferred tax amortization
(5.5
)
 
—

 
(9.7
)
 
(2.8
)
 
(6.8
)
 
(17.5
)
 
(15.1
)
 
(14.2
)
 
(27.0
)
Other
(0.8
)
 
(1.2
)
 
0.8

 
—

 
—

 
0.8

 
0.3

 
—

 
0.1

Effective income tax rate
19.4
 %
 
26.9
 %
 
19.2
 %
 
11.0
 %
 
18.0
 %
 
7.4
 %
 
6.2
 %
 
13.0
 %
 
—
 %
 
For the Year Ended December 31, 2018
 
Exelon
 
Generation
 
ComEd
 
PECO
 
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
 %
 
21.0
 %
Increase (decrease) due to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State income taxes, net of Federal income tax benefit
0.5

 
(16.6
)
 
8.3

 
(2.6
)
 
6.6

 
2.9

 
2.0

 
6.7

 
7.4

Qualified NDT fund income
(1.9
)
 
(11.8
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Amortization of investment tax credit, including deferred taxes on basis difference
(1.2
)
 
(6.5
)
 
(0.2
)
 
(0.1
)
 
(0.1
)
 
(0.2
)
 
(0.1
)
 
(0.3
)
 
(0.4
)
Plant basis differences
(3.5
)
 
—

 
(0.2
)
 
(14.1
)
 
(1.3
)
 
(1.6
)
 
(2.8
)
 
(0.3
)
 
(0.5
)
Production tax credits and other credits
(2.2
)
 
(13.5
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Noncontrolling interests
(1.0
)
 
(6.1
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Excess deferred tax amortization
(8.3
)
 
—

 
(9.1
)
 
(3.2
)
 
(8.0
)
 
(14.8
)
 
(15.3
)
 
(12.0
)
 
(14.9
)
Tax Cuts and Jobs Act of 2017
0.9

 
2.7

 
(0.1
)
 
—

 
—

 
0.1

 
—

 
—

 
—

Other
1.0

 
1.3

 
0.5

 
0.3

 
0.9

 
0.4

 
0.3

 
0.4

 
1.2

Effective income tax rate
5.3
 %
 
(29.5
)%
 
20.2
 %
 
1.3
 %
 
19.1
 %
 
7.8
 %
 
5.1
 %
 
15.5
 %
 
13.8
 %
 
For the Year Ended December 31, 2017
 
Exelon
 
Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
U.S. Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increase (decrease) due to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State income taxes, net of Federal income tax benefit
2.2

 
2.9

 
5.7

 
0.6

 
5.4

 
4.8

 
3.1

 
5.4

 
5.6

Qualified NDT fund income
3.8

 
9.9

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Amortization of investment tax credit, including deferred taxes on basis difference
(0.9
)
 
(2.1
)
 
(0.2
)
 
(0.1
)
 
(0.1
)
 
(0.2
)
 
(0.1
)
 
(0.2
)
 
(0.4
)
Plant basis differences(a)
(1.7
)
 
—

 
0.3

 
(13.8
)
 
0.1

 
1.1

 
(0.4
)
 
2.0

 
3.6

Production tax credits and other credits
(1.8
)
 
(4.7
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Like-kind exchange
(1.2
)
 
—

 
1.3

 
—

 
—

 
—

 
—

 
—

 
—

Merger expenses
(3.6
)
 
(1.2
)
 
—

 
—

 
—

 
(9.6
)
 
(6.4
)
 
(7.8
)
 
(19.8
)
FitzPatrick bargain purchase gain
(2.2
)
 
(5.6
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Tax Cuts and Jobs Act of 2017(b)
(33.1
)
 
(128.3
)
 
0.1

 
(2.3
)
 
0.9

 
6.4

 
2.8

 
2.5

 
1.6

Other
0.2

 
(0.5
)
 
0.2

 
(0.1
)
 
0.2

 
0.5

 
0.7

 
0.1

 
(0.4
)
Effective income tax rate
(3.3
)%
 
(94.6
)%
 
42.4
 %
 
19.3
 %
 
41.5
 %

38.0
 %
 
34.7
 %

37.0
 %

25.2
 %

__________
(a)
Includes the charges related to the transmission-related income tax regulatory asset for Exelon, ComEd, BGE, PHI, Pepco, DPL and ACE of $35 million, $3 million, $5 million, $27 million, $14 million, $6 million and $7 million, respectively. See Note 3 - Regulatory Matters for additional information.
(b)
As a result of TCJA, Generation recorded a net decrease to income tax expense, while the Utility Registrants recorded corresponding regulatory liabilities or assets to the extent such amounts are probable of settlement or recovery through customer rates and an adjustment to income tax expense for all other amounts.
Tax Differences and Carryforwards
The tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred tax assets (liabilities), as of December 31, 2019 and 2018 are presented below:
 
As of December 31, 2019
 
Exelon
 
Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Plant basis differences
$
(13,413
)
 
$
(2,814
)
 
$
(4,197
)
 
$
(1,978
)
 
$
(1,578
)
 
$
(2,681
)
 
$
(1,204
)
 
$
(753
)
 
$
(687
)
Accrual based contracts
61

 
(43
)
 
—

 
—

 
—

 
104

 
—

 
—

 
—

Derivatives and other financial instruments
165

 
88

 
84

 
—

 
—

 
2

 
—

 
—

 
—

Deferred pension and postretirement obligation
1,504

 
(220
)
 
(270
)
 
(28
)
 
(28
)
 
(89
)
 
(75
)
 
(42
)
 
(10
)
Nuclear decommissioning activities
(503
)
 
(503
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Deferred debt refinancing costs
183

 
20

 
(7
)
 
—

 
(3
)
 
142

 
(3
)
 
(2
)
 
(1
)
Regulatory assets and liabilities
(884
)
 
—

 
183

 
(169
)
 
157

 
(10
)
 
55

 
88

 
77

Tax loss carryforward
240

 
55

 
—

 
25

 
49

 
93

 
13

 
44

 
31

Tax credit carryforward
892

 
897

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Investment in partnerships
(830
)
 
(808
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other, net
926

 
236

 
196

 
70

 
10

 
181

 
85

 
12

 
16

Deferred income tax liabilities (net)
$
(11,659
)
 
$
(3,092
)
 
$
(4,011
)
 
$
(2,080
)
 
$
(1,393
)

$
(2,258
)

$
(1,129
)

$
(653
)

$
(574
)
Unamortized investment tax credits
(668
)
 
(648
)
 
(10
)
 
(1
)
 
(3
)
 
(7
)
 
(2
)
 
(2
)
 
(3
)
Total deferred income tax liabilities (net) and
unamortized investment tax credits
$
(12,327
)
 
$
(3,740
)
 
$
(4,021
)
 
$
(2,081
)
 
$
(1,396
)

$
(2,265
)

$
(1,131
)

$
(655
)

$
(577
)
 
As of December 31, 2018
 
Exelon
 
Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Plant basis differences
$
(12,533
)
 
$
(2,495
)
 
$
(4,059
)
 
$
(1,862
)
 
$
(1,399
)
 
$
(2,577
)
 
$
(1,148
)
 
$
(743
)
 
$
(645
)
Accrual based contracts
117

 
(44
)
 
—

 
—

 
—

 
161

 
—

 
—

 
—

Derivatives and other financial instruments
89

 
35

 
69

 
—

 
—

 
3

 
—

 
—

 
—

Deferred pension and postretirement obligation
1,435

 
(188
)
 
(255
)
 
(26
)
 
(26
)
 
(102
)
 
(78
)
 
(46
)
 
(14
)
Nuclear decommissioning activities
(351
)
 
(351
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Deferred debt refinancing costs
234

 
23

 
(7
)
 
—

 
(3
)
 
187

 
(4
)
 
(2
)
 
(1
)
Regulatory assets and liabilities
(740
)
 
—

 
300

 
(129
)
 
172

 
(81
)
 
67

 
96

 
83

Tax loss carryforward
237

 
78

 
—

 
18

 
25

 
96

 
12

 
52

 
26

Tax credit carryforward
811

 
816

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Investment in partnerships
(797
)
 
(775
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other, net
934

 
239

 
151

 
67

 
12

 
196

 
98

 
17

 
19

Deferred income tax liabilities (net)
$
(10,564
)
 
$
(2,662
)
 
$
(3,801
)
 
$
(1,932
)
 
$
(1,219
)

$
(2,117
)

$
(1,053
)

$
(626
)

$
(532
)
Unamortized investment tax credits
(724
)
 
(700
)
 
(12
)
 
(1
)
 
(3
)
 
(8
)
 
(2
)
 
(2
)
 
(3
)
Total deferred income tax liabilities (net) and
unamortized investment tax credits
$
(11,288
)
 
$
(3,362
)
 
$
(3,813
)
 
$
(1,933
)
 
$
(1,222
)

$
(2,125
)

$
(1,055
)

$
(628
)

$
(535
)

The following table provides Exelon’s, Generation’s, PECO’s, BGE’s, PHI’s, Pepco’s, DPL’s and ACE’s carryforwards, which are presented on a post-apportioned basis, and any corresponding valuation allowances as of December 31, 2019. ComEd does not have net operating losses or credit carryforwards for the year ended December 31, 2019.
 
Exelon
 
Generation
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Federal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal general business credits carryforwards(a)
$
891

 
$
897


$
—


$
—

 
$
—

 
$
—

 
$
—

 
$
—

State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State net operating losses
3,986

 
1,142

 
312

 
762

 
1,360

 
202

 
654

 
438

Deferred taxes on state tax attributes (net)
264

 
78

 
25

 
50

 
93

 
13

 
44

 
31

Valuation allowance on state tax attributes
26

 
24

 
—

 
1

 
—

 
—

 
—

 
—

Year in which net operating loss or credit carryforwards will begin to expire
2025

 
2029

 
2031

 
2026

 
2028

 
2028

 
2030

 
2031

__________
(a)
Exelon's and Generation's federal general business credit carryforwards will begin expiring in 2034.
Tabular Reconciliation of Unrecognized Tax Benefits
The following table presents changes in unrecognized tax benefits, by Registrant.
 
Exelon
 
Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Balance at January 1, 2017
$
916

 
$
490

 
$
(12
)
 
$
—

 
$
120


$
172


$
80


$
37


$
22

Increases based on tax positions prior to 2017
28

 
—

 
14

 
—

 
—

 
14

 
—

 
—

 
14

Decreases based on tax positions prior to 2017(a)
(196
)
 
(17
)
 
—

 
—

 
—

 
(61
)
 
(21
)
 
(16
)
 
(22
)
Decrease from settlements with taxing authorities
(5
)
 
(5
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Balance at December 31, 2017
743

 
468

 
2

 
—

 
120

 
125

 
59

 
21

 
14

Change to positions that only affect timing
15

 
15

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Increases based on tax positions prior to 2018
30

 
21

 
—

 
—

 
—

 
8

 
7

 
1

 
—

Decreases based on tax positions prior to 2018(b)
(251
)
 
(36
)
 
—

 
—

 
(120
)
 
(88
)
 
(66
)
 
(22
)
 
—

Decrease from settlements with taxing authorities
(53
)
 
(53
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Decreases from expiration of statute of limitations
(7
)
 
(7
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Balance at December 31, 2018
477

 
408

 
2

 
—

 
—

 
45

 
—

 
—

 
14

Change to positions that only affect timing
26

 
12

 
3

 
1

 
4

 
3

 
2

 
1

 
—

Increases based on tax positions related to 2019
2

 
1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Increases based on tax positions prior to 2019
34

 
19

 
3

 
2

 
3

 
—

 
—

 
—

 
—

Decreases based on tax positions prior to 2019
(3
)
 
(3
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Decrease from settlements with taxing authorities
(29
)
 
4

 
(2
)
 
—

 
—

 
—

 
—

 
—

 
—

Balance at December 31, 2019
$
507

 
$
441

 
$
6

 
$
3

 
$
7

 
$
48

 
$
2

 
$
1

 
$
14


__________
(a)
Exelon established a liability for an uncertain tax position associated with the tax deductibility of certain merger commitments incurred by Exelon in connection with the acquisitions of Constellation and PHI. In 2017, as a part of its examination of Exelon's return, the IRS National Office issued guidance concurring with Exelon's position that the merger commitments were deductible. As a result, Exelon, Generation, PHI, Pepco, DPL, and ACE decreased their liability for unrecognized tax benefits by $146 million, $19 million, $59 million, $21 million, $16 million and $22 million, respectively, resulting in a benefit to Income taxes on Exelon's, Generation's, PHI's, Pepco's, DPL's, and ACE's Consolidated Statements of Operations and Comprehensive Income and corresponding decreases in their effective tax rates.
(b)
Exelon, Generation, BGE, PHI, Pepco, and DPL decreased their unrecognized state tax benefits primarily due to the receipt of favorable guidance with respect to the deductibility of certain depreciable fixed assets. The recognition of the tax benefits related to BGE, PHI, Pepco, and DPL was offset by corresponding regulatory liabilities and that portion had no immediate impact to their effective tax rate.
Like-Kind Exchange
In 2016, the Tax Court held that Exelon was not entitled to defer a gain on its 1999 like-kind exchange transaction. In addition to the tax and interest related to the gain deferral, the Tax Court also ruled that Exelon was liable for penalties and interest on the penalties. Exelon had fully paid the amounts assessed resulting from the Tax Court decision in 2017. In September 2017, Exelon appealed the Tax Court decision to the U.S. Court of Appeals for the Seventh Circuit. In October 2018, the U.S. Court of Appeals for the Seventh Circuit affirmed the Tax Court’s decision. Exelon filed a petition seeking rehearing of the Seventh Circuit’s decision, but the Seventh Circuit denied that petition in December 2018.  In the first quarter of 2019, Exelon elected not to seek a further review by the U.S. Supreme
Court. As a result, Exelon's and ComEd's unrecognized tax benefits decreased by approximately $33 million and $2 million, respectively, in the first quarter of 2019.
Recognition of unrecognized tax benefits
The following table presents Exelon's, Generation's and PHI's unrecognized tax benefits that, if recognized, would decrease the effective tax rate. ComEd's, PECO's, BGE's, Pepco's, DPL's and ACE's amounts are not material.
 
Exelon
 
Generation
 
PHI(a)
December 31, 2019
$
462

 
$
429

 
$
32

December 31, 2018
463

 
408

 
31

December 31, 2017
523

 
461

 
32

__________
(a)
PHI has $21 million of unrecognized state tax benefits that, if recognized, $14 million would be in the form of a net operating loss carryforward, which is expected to require a full valuation allowance based on present circumstances.
The following table presents Exelon's, BGE's, PHI's, Pepco's, DPL's and ACE’s unrecognized tax benefits that, if recognized, may be included in future base rates and that portion would have no impact to the effective tax rate. ComEd's and PECO's amounts are not material.
 
Exelon
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
December 31, 2019
$
19

 
$
1

 
$
14

 
$
—

 
$
—

 
$
14

December 31, 2018
14

 
—

 
14

 
—

 
—

 
14

December 31, 2017
214

 
120

 
94

 
59

 
21

 
14


Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
Settlement of Income Tax Audits, Refund Claims, and Litigation
The following table represents Exelon's, Generation's and ACE's unrecognized federal and state tax benefits that could significantly decrease within the 12 months after the reporting date as a result of completing audits, potential settlements, refund claims, and the outcomes of pending court cases as of December 31, 2019. ComEd's, PECO's, BGE's, PHI's, Pepco's and DPL's amounts are not material.
Exelon(a)
 
Generation(a)
 
ACE(b)
$
425

 
$
411

 
$
14

__________
(a)
Exelon and Generation have $411 million that, if recognized, would decrease the effective tax rate.
(b)
The unrecognized tax benefit related to ACE, if recognized, may be included in future base rates and that portion would have no impact to the effective tax rate.
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. Generation's and the Utility Registrants' amounts are not material.
Net interest and penalties receivable as of
Exelon
December 31, 2019
$
318

December 31, 2018
219


The Registrants did not record material interest and penalty expense related to tax positions reflected in their Consolidated Balance Sheets. Interest expense and penalty expense are recorded in Interest expense, net and Other, net, respectively, in Other income and deductions in the Registrants' Consolidated Statements of Operations and Comprehensive Income.
Description of tax years open to assessment by major jurisdiction
Major Jurisdiction
Open Years
Registrants Impacted
Federal consolidated income tax returns
2002-2018
All Registrants
PHI Holdings and subsidiaries consolidated federal income tax returns
2016
Exelon, Generation, PHI, Pepco, DPL, ACE
Delaware separate corporate income tax returns
Same as federal
DPL
District of Columbia combined corporate income tax returns
2016-2018
Exelon, PHI, Pepco
Illinois unitary corporate income tax returns
2010-2018
Exelon, Generation, ComEd
Maryland separate company corporate net income tax returns
Same as federal
BGE, Pepco, DPL
New Jersey separate corporate income tax returns
2013-2018
Exelon, Generation
New Jersey separate corporate income tax returns
2014-2018
ACE
New York combined corporate income tax returns
2010-March 2012
Exelon, Generation
New York combined corporate income tax returns
2011-2018
Exelon, Generation
Pennsylvania separate corporate income tax returns
2011-2018
Exelon, Generation
Pennsylvania separate corporate income tax returns
2016-2018
PECO

Other Tax Matters
Federal Income Tax Law Changes
On December 22, 2017, President Trump signed the TCJA into law. Pursuant to the enactment of the TCJA, the Registrants remeasured their existing deferred income tax balances as of December 31, 2017 to reflect the decrease in the corporate income tax rate from 35% to 21%, which resulted in a material decrease to their net deferred income tax liability balances as shown in the table below. Generation recorded a corresponding net decrease to income tax expense, while the Utility Registrants recorded corresponding regulatory liabilities or assets to the extent such amounts are probable of settlement or recovery through customer rates and an adjustment to income tax expense for all other amounts.
The one-time impacts recorded by the Registrants to remeasure their deferred income tax balances at the 21% corporate federal income tax rate as of December 31, 2017 are presented below:
 
Exelon(b)
 
Generation
 
ComEd
 
PECO(c)
 
BGE
 
PHI
 
Pepco
 
DPL
 
ACE
Net Decrease to Deferred Income Tax Liability Balances

$8,624
 
$1,895
 
$2,819
 
$1,407
 
$1,120
 
$1,944
 
$968
 
$540
 
$456
Net Increase to Regulatory Liabilities Recorded(a)
7,315
 
N/A
 
2,818
 
1,394
 
1,124
 
1,979
 
976
 
545
 
458
Net Deferred Income Tax Benefit/(Expense) Recorded
$1,309
 
$1,895
 
$1
 
$13
 
$(4)
 
$(35)
 
$(8)
 
$(5)
 
$(2)
__________
(a)
Reflects the net regulatory liabilities recorded on a pre-tax basis before taking into consideration the income tax benefits associated with the ultimate settlement with customers.
(b)
Amounts do not sum across due to deferred tax adjustments recorded at the Exelon Corporation parent company, primarily related to certain employee compensation plans.
(c)
Given the regulatory treatment of income tax benefits related to electric and gas distribution repairs, PECO remained in an overall net regulatory asset position as of December 31, 2017 after recording the impacts related to the TCJA.
State Income Tax Law Changes
Illinois - On June 5, 2019, the Governor of Illinois signed a tax bill which would increase the Illinois corporate income tax rate from 9.50% to 10.49% effective for tax years beginning on or after January 1, 2021. The tax rate is contingent upon ratification of state constitutional amendments in November 2020. The effect of the rate change will be recognized in the period in which the new legislation is enacted. Exelon, Generation and ComEd do not expect a material impact to their financial statements as a result of the rate change.
In 2017, Exelon reviewed and updated its marginal state income tax rates based on 2016 state apportionment rates. In addition, Exelon, Generation and ComEd recorded the impacts of Illinois’ statutory rate change, which increased the total corporate income tax rate from 7.75% to 9.50% effective July 1, 2017. The following table provides the one-time impact of the rate changes in 2017 for Exelon, Generation and ComEd:
 
Exelon
 
Generation
 
ComEd
Increase to Deferred Income Taxes
$
250

 
$
20

 
$
270

Increase in Regulatory Assets
270

 
—

 
270

(Decrease)/Increase to Income Tax Expense
(20
)
 
20

 
—

Long-Term Marginal State Income Tax Rate (All Registrants)
Quarterly, Exelon reviews and updates its marginal state income tax rates for changes in state apportionment. The Registrants remeasure their existing deferred income tax balances to reflect the changes in marginal rates, which results in either an increase or decrease to their net deferred income tax liability balances. Utility Registrants record corresponding regulatory liabilities or assets to the extent such amounts are probable of settlement or recovery through customer rates and an adjustment to income tax expense for all other amounts.
December 31, 2019
Exelon
 
Generation
 
PHI
 
DPL
Increase to Deferred Income Tax Liability
$
23

 
$
9

 
$
—

 
$
—

Increase to Income Tax Expense, Net of Federal Taxes
23

 
9

 
—

 
—

December 31, 2018
 
 
 
 
 
 
 
Decrease to Deferred Income Tax Liability
$
50

 
$
53

 
$
4

 
$
2

Decrease to Income Tax Expense, Net of Federal Taxes
50

 
53

 
3

 
—


There were no material adjustments to income tax expense in 2017 as a result of changes in state apportionment.
Allocation of Tax Benefits (All Registrants)
Generation and the Utility Registrants are all party to an agreement with Exelon and other subsidiaries of 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 other Registrants. That allocation is treated as a contribution to the capital of the party receiving the benefit.
The following table presents the allocation of federal tax benefits from Exelon under the Tax Sharing Agreement.
 
Generation
 
ComEd
 
PECO
 
BGE
 
PHI
 
Pepco
 
DPL
December 31, 2019(a)
$
41

 
$
—

 
$
14

 
$
3

 
$
7

 
$
6

 
$
1

December 31, 2018(b)
155

 
1

 
48

 
26

 
2

 
—

 
—

December 31, 2017(c)
102

 
—

 
16

 
10

 
7

 
—

 
—

__________
(a)
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.
(b)
Pepco, 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.
(c)
ComEd, Pepco, 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.
Research and Development Activities
In the fourth quarter 2019, Exelon and Generation recognized additional tax benefits related to certain research and development activities that qualify for federal and state tax incentives for the 2010 through 2018 tax years, which resulted in an increase to Exelon’s and Generation’s net income of $108 million and $75 million, respectively, for the year ended December 31, 2019, reflecting a decrease to Exelon’s and Generation’s Income tax expense of $97 million and $66 million, respectively.