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Income Taxes (All Registrants)
 6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes (All Registrants) Income Taxes (All Registrants)
Rate Reconciliation
The effective income tax rate from continuing operations varies from the U.S. Federal statutory rate principally due to the following:
 
Three Months Ended June 30, 2020
 
Exelon(a)

Generation(a)

ComEd(b)

PECO(c)

BGE(c)
 
PHI(c)
 
Pepco(c)
 
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%
 
21.0%
Increase (decrease) due to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
State income taxes, net of Federal income tax benefit
3.8
 
3.1
 
(131.7)
 
(9.7)
 
3.8
 
(25.8)
 
2.1
 
6.7
 
7.2
Qualified NDT fund income
18.8
 
17.3
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Deferred Prosecution Agreement payments
5.3
 
—
 
(288.3)
 
—
 
—
 
—
 
—
 
—
 
—
Amortization of investment tax credit, including deferred taxes on basis difference
(0.6)
 
(0.5)
 
2.9
 
—
 
(0.2)
 
(2.2)
 
(0.1)
 
0.5
 
0.3
Plant basis differences
(1.6)
 
—
 
2.4
 
(23.6)
 
(13.4)
 
(44.7)
 
(3.9)
 
(1.1)
 
10.0
Production tax credits and other credits
(1.4)
 
(1.2)
 
3.3
 
—
 
(1.0)
 
(0.7)
 
(0.1)
 
0.1
 
—
Noncontrolling interests
0.1
 
0.1
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Excess deferred tax amortization
(15.5)
 
—
 
116.0
 
(4.8)
 
(137.9)
 
(1,358.5)
 
(89.0)
 
284.0
 
174.5
Tax Settlements
(1.9)
 
(1.8)
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Other
(0.4)
 
0.3
 
(32.3)
 
(4.8)
 
(1.7)
 
168.0
 
(2.7)
 
(0.1)
 
7.0
Effective income tax rate
27.6%
 
38.3%
 
(306.7)%
 
(21.9)%
 
(129.4)%
 
(1,242.9)%
 
(72.7)%
 
311.1%
 
220.0%
_________
(a)
At Exelon and Generation, positive percentages represent income tax expense.
(b)
ComEd recognized a loss before income taxes for the three months ended June 30, 2020. As a result, negative percentages represent income tax expense. The higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. See Note 14 — Commitments and Contingencies for additional information.
(c)
At PECO, BGE, PHI, and Pepco, negative percentages represent an income tax benefit. At PECO, the lower effective tax rate is primarily related to an increase in plant basis differences attributable to storm repairs. At BGE, PHI, and Pepco, the lower effective tax rate is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See Note 2 — Regulatory Matters for additional information.
(d)
DPL and ACE recognized a loss before income taxes for the three months ended June 30, 2020. As a result, positive percentages represent an income tax benefit. At DPL and ACE, the higher effective tax rate is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See Note 2 — Regulatory Matters for additional information.



 
Three Months Ended June 30, 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
 
5.5
 
8.2
 
(1.2)
 
6.5
 
4.8
 
2.0
 
7.0
 
7.0
Qualified NDT fund income
5.1
 
16.2
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Amortization of investment tax credit, including deferred taxes on basis difference
(0.7)
 
(1.9)
 
(0.2)
 
—
 
(0.1)
 
(0.2)
 
(0.1)
 
(0.2)
 
(0.3)
Plant basis differences
(1.7)
 
—
 
(0.6)
 
(5.9)
 
(1.5)
 
(1.7)
 
(2.1)
 
(0.3)
 
(2.2)
Production tax credits and other credits
(0.9)
 
(2.8)
 
—
 
—
 
(0.1)
 
—
 
—
 
—
 
—
Noncontrolling interests
0.1
 
0.4
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Excess deferred tax amortization
(7.8)
 
—
 
(9.0)
 
(2.7)
 
(7.9)
 
(19.4)
 
(18.3)
 
(15.7)
 
(23.1)
Other
1.9
 
0.2
 
0.4
 
0.1
 
1.7
 
0.9
 
0.5
 
—
 
(2.4)
Effective income tax rate
22.4%
 
38.6%
 
19.8%
 
11.3%
 
19.6%
 
5.4%
 
3.0%
 
11.8%
 
—%


 
Six Months Ended June 30, 2020
 
Exelon
 
Generation(a)
 
ComEd(b)
 
PECO(c)
 
BGE(d)
 
PHI(d)
 
Pepco(d)
 
DPL(d)
 
ACE(e)
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
6.7
 
7.2
 
19.1
 
(1.6)
 
5.6
 
4.3
 
3.7
 
6.5
 
12.4
Qualified NDT fund income
(5.7)
 
(16.0)
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Deferred Prosecution Agreement payments
4.8
 
—
 
22.2
 
—
 
—
 
—
 
—
 
—
 
—
Amortization of investment tax credit, including deferred taxes on basis difference
(1.0)
 
(2.3)
 
(0.4)
 
—
 
(0.1)
 
(0.2)
 
(0.1)
 
(0.3)
 
7.2
Plant basis differences
(3.7)
 
—
 
(1.4)
 
(11.0)
 
(2.0)
 
(3.5)
 
(2.7)
 
(0.6)
 
146.2
Production tax credits and other credits
(2.2)
 
(5.5)
 
(0.4)
 
—
 
(0.2)
 
(0.1)
 
(0.1)
 
—
 
0.7
Noncontrolling interests
1.1
 
3.2
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Excess deferred tax amortization
(20.9)
 
—
 
(20.2)
 
(3.3)
 
(16.1)
 
(80.3)
 
(41.6)
 
(72.9)
 
2,613.8
Tax Settlements
(9.3)
 
(26.1)
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Other
0.7
 
(0.3)
 
3.5
 
(0.3)
 
(0.6)
 
(1.5)
 
(1.3)
 
0.8
 
398.7
Effective income tax rate
(8.5)%
 
(18.8)%
 
43.4%
 
4.8%
 
7.6%
 
(60.3)%
 
(21.1)%
 
(45.5)%
 
3,200.0%
_________
(a)
At Generation, the lower effective tax rate is primarily attributable to tax settlements.
(b)
At ComEd, the higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. See Note 14 — Commitments and Contingencies for additional information.
(c)
At PECO, the lower effective tax rate is primarily related to an increase in plant basis differences attributable to storm repairs.
(d)
At BGE, PHI, Pepco, and DPL, the lower effective tax rate is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See Note 2 — Regulatory Matters for additional information.
(e)
ACE recognized a loss before income taxes for the six months ended June 30, 2020. As a result, a positive percentage at ACE represents an income tax benefit for the period presented. At ACE, the higher effective tax rate is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See Note 2 — Regulatory Matters for additional information.



 
Six Months Ended June 30, 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
4.4
 
3.6
 
8.2
 
0.2
 
6.4
 
4.7
 
2.0
 
6.7
 
6.9
Qualified NDT fund income
6.5
 
14.7
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Amortization of investment tax credit, including deferred taxes on basis difference
(0.6)
 
(1.1)
 
(0.2)
 
—
 
(0.1)
 
(0.2)
 
(0.1)
 
(0.2)
 
(0.3)
Plant basis differences
(1.5)
 
—
 
(0.6)
 
(6.4)
 
(1.0)
 
(1.7)
 
(2.0)
 
(0.6)
 
(2.2)
Production tax credits and other credits
(0.8)
 
(1.8)
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Noncontrolling interests
(0.3)
 
(0.8)
 
—
 
—
 
—
 
—
 
—
 
—
 
—
Excess deferred tax amortization
(5.8)
 
—
 
(8.8)
 
(2.6)
 
(7.9)
 
(19.4)
 
(18.1)
 
(15.6)
 
(23.4)
Other
0.7
 
(0.4)
 
0.2
 
(0.1)
 
0.2
 
0.3
 
0.5
 
0.4
 
2.0
Effective income tax rate
23.6%
 
35.2%
 
19.8%
 
12.1%
 
18.6%
 
4.7%
 
3.3%
 
11.7%
 
4.0%


Accounting for Uncertainty in Income Taxes
Exelon, Generation, PHI and ACE have the following unrecognized tax benefits as of June 30, 2020 and December 31, 2019. ComEd, PECO, BGE, Pepco and DPL's amounts are not material.
 
Exelon
 
Generation
 
PHI
 
ACE
June 30, 2020
$
122

 
$
49

 
$
50

 
$
15

December 31, 2019
507

 
441

 
48

 
14


Exelon's and Generation's unrecognized federal and state tax benefits decreased in the first quarter of 2020 by approximately $411 million due to the settlement of a federal refund claim with IRS Appeals. The recognition of these tax benefits resulted in an increase to Exelon's and Generation’s net income of $76 million and $73 million, respectively, in the first quarter of 2020, reflecting a decrease to Exelon's and Generation's income tax expense of $67 million.
Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
The following table represents Exelon's, PHI'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 June 30, 2020. Generation's, ComEd's, PECO's, BGE's, Pepco's and DPL's amounts are not material.
Exelon
 
PHI
 
ACE(a)
$
14

 
$
14

 
$
14

_________
(a)
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.
Other Income Tax Matters
State Income Tax Law Changes
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.