Income Taxes (All Registrants)

12 Months Ended

Dec. 31, 2020

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, 2020
	Exelon		Generation		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Included in operations:
Federal
Current	$	26	$	130	$	(24)	$	(7)	$	4	$	25	$	40	$	(13)	$	(4)
Deferred	156		150		112		1		10		(129)		(62)		(20)		(43)
Investment tax credit amortization	(28)		(25)		(2)		—		—		(1)		—		—		—
State
Current	42		40		(27)		—		—		(5)		—		—		—
Deferred	177		(46)		118		(24)		27		33		15		8		6
Total	$	373	$	249	$	177	$	(30)	$	41	$	(77)	$	(7)	$	(25)	$	(41)

	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

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, 2020(a)
	Exelon		Generation		ComEd(b)		PECO(c)		BGE(d)		PHI(d)		Pepco(d)		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	7.8		0.5		11.6		(4.5)		5.5		5.1		4.5		6.6		7.0
Qualified NDT fund income	8.4		23.5		—		—		—		—		—		—		—
Deferred Prosecution Agreement payments	1.8		—		6.8		—		—		—		—		—		—
Amortization of investment tax credit, including deferred taxes on basis difference	(1.1)		(2.6)		(0.3)		—		(0.1)		(0.2)		(0.1)		(0.3)		(0.5)
Plant basis differences	(4.0)		—		(0.6)		(18.7)		(1.5)		(1.6)		(1.7)		(0.4)		(3.0)
Production tax credits and other credits	(2.2)		(5.4)		(0.3)		—		(0.4)		(0.3)		(0.3)		(0.3)		(0.5)
Noncontrolling interests	1.1		3.2		—		—		—		—		—		—		—
Excess deferred tax amortization	(13.6)		—		(11.2)		(4.6)		(13.9)		(42.0)		(25.4)		(51.7)		(82.1)
Tax settlements	(3.7)		(10.3)		—		—		—		—		—		—		—
Other	0.5		(0.1)		1.8		(0.4)		(0.1)		(0.4)		(0.7)		0.1		0.4
Effective income tax rate	16.0	%	29.8	%	28.8	%	(7.2)	%	10.5	%	(18.4)	%	(2.7)	%	(25.0)	%	(57.7)	%

	For the Year Ended December 31, 2019(a)
	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(a)
	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	%

__________

(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.

(b)At ComEd, the higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. See Note 19 — Commitments and Contingencies for additional information.

(c)At PECO, the negative effective tax rate is primarily related to an increase in plant basis differences attributable to tax repair deductions related to an increase in storms and qualifying projects.

(d)At BGE, the lower effective tax rate, and at PHI, Pepco, DPL, and ACE, the negative effective tax rate is primarily attributable to accelerated amortization of transmission related income tax regulatory liabilities as a result of regulatory settlements. See Note 3 — Regulatory Matters for additional information.

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, 2020 and 2019 are presented below:

	As of December 31, 2020
	Exelon		Generation		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Plant basis differences	$	(13,868)	$	(2,592)	$	(4,432)	$	(2,131)	$	(1,711)	$	(2,822)	$	(1,259)	$	(806)	$	(725)
Accrual based contracts	40		(37)		—		—		—		77		—		—		—
Derivatives and other financial instruments	41		(41)		84		—		—		2		—		—		—
Deferred pension and postretirement obligation	1,559		(236)		(288)		(30)		(33)		(80)		(74)		(40)		(7)
Nuclear decommissioning activities	(742)		(742)		—		—		—		—		—		—		—
Deferred debt refinancing costs	169		16		(6)		—		(2)		131		(3)		(1)		(1)
Regulatory assets and liabilities	(1,107)		—		87		(231)		142		(41)		38		67		46
Tax loss carryforward	286		55		—		47		57		90		4		49		38
Tax credit carryforward	841		838		—		—		—		—		—		—		—
Investment in partnerships	(835)		(813)		—		—		—		—		—		—		—
Other, net	1,070		347		223		104		29		220		107		18		27
Deferred income tax liabilities (net)	$	(12,546)	$	(3,205)	$	(4,332)	$	(2,241)	$	(1,518)	$	(2,423)	$	(1,187)	$	(713)	$	(622)
Unamortized investment tax credits(a)	(464)		(445)		(9)		(1)		(3)		(6)		(2)		(2)		(3)
Total deferred income tax liabilities (net) and unamortized investment tax credits	$	(13,010)	$	(3,650)	$	(4,341)	$	(2,242)	$	(1,521)	$	(2,429)	$	(1,189)	$	(715)	$	(625)

__________

(a)Does not include unamortized investment tax credits reclassified to liabilities held for sale.

	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)

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, 2020. ComEd does not have net operating losses or credit carryforwards for the year ended December 31, 2020.

	Exelon		Generation		PECO		BGE		PHI		Pepco		DPL		ACE
Federal
Federal general business credits carryforwards and other carryforwards	$	858	$	852	$	—	$	—	$	—	$	—	$	—	$	—
State
State net operating losses and other carryforwards	5,202		1,118		616		902		1,436		63		728		531
Deferred taxes on state tax attributes (net)	324		76		49		59		98		4		49		38
Valuation allowance on state tax attributes	27		23		1		—		—		—		—		—
Year in which net operating loss or credit carryforwards will begin to expire(a)	2034		2034		2032		2033		2029		2029		2032		2031

__________

(a)Generation's state net operating loss carryforwards will begin expiring in 2029. PECO's Pennsylvania charitable contribution carryforwards and BGE's Maryland charitable deduction and capital loss carryforwards will begin expiring in 2021. ACE's New Jersey tax credit carryforward has an indefinite carryforward period. These amounts are not material.

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, 2018	$	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(a)	(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
Change to positions that only affect timing	6		—		2		3		3		3		1		—		1
Increases based on tax positions related to 2020	3		1		—		—		—		—		—		—		—
Increases based on tax positions prior to 2020	26		23		1		—		—		1		—		—		—
Decreases based on tax positions prior to 2020(b)	(348)		(346)		—		—		—		—		—		—		—
Decrease from settlements with taxing authorities(b)	(69)		(69)		—		—		—		—		—		—		—
Balance at December 31, 2020	$	125	$	50	$	9	$	6	$	10	$	52	$	3	$	1	$	15

__________

(a)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.

(b)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.

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, 2020	$	73	$	39	$	33
December 31, 2019	462		429		32
December 31, 2018	463		408		31

__________

(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.

ACE has $14 million of unrecognized tax benefits as of December 31, 2020, 2019 and 2018 that, if recognized, may be included in future base rates and that portion would have no impact on the effective tax rate. Exelon's, Generation's, ComEd's, PECO's, BGE's, PHI's, Pepco's, and DPL's amounts are not material.

Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date

As of December 31, 2020, ACE has approximately $14 million of unrecognized state tax benefits that could significantly decrease within the 12 months after the reporting date based on the outcome of pending court cases involving other taxpayers. The unrecognized tax benefit, 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, 2020	$	314
December 31, 2019	318

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(a)	2010-2019	All Registrants
Delaware separate corporate income tax returns	Same as federal	DPL
District of Columbia combined corporate income tax returns	2017-2019	Exelon, PHI, Pepco
Illinois unitary corporate income tax returns	2012-2019	Exelon, Generation, ComEd
Maryland separate company corporate net income tax returns	Same as federal	BGE, Pepco, DPL
New Jersey separate corporate income tax returns	2013-2019	Exelon, Generation
New Jersey separate corporate income tax returns	2014-2019	ACE
New York combined corporate income tax returns	2010-March 2012	Exelon, Generation
New York combined corporate income tax returns	2011-2019	Exelon, Generation
Pennsylvania separate corporate income tax returns	2011-2019	Exelon, Generation
Pennsylvania separate corporate income tax returns	2017-2019	PECO

__________

(a)Certain registrants are only open to assessment for tax years since joining the Exelon federal consolidated group; BGE beginning in 2012 and PHI, Pepco, DPL, and ACE beginning in 2016.

Other Tax Matters

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 a 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. The impacts to the Utility Registrants for the years ended December 31, 2020, 2019, and 2018 were not material.

December 31, 2020	Exelon		Generation
Increase (decrease) to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes	$	66	$	(26)
December 31, 2019
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes	$	23	$	9
December 31, 2018
Decrease to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes	$	(50)	$	(53)

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 federal and state benefits 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 tax benefits from Exelon under the Tax Sharing Agreement.

	Generation		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
December 31, 2020(a)	$	64	$	14	$	17	$	—	$	17	$	8	$	6	$	1
December 31, 2019(b)	41		—		14		3		7		6		1		—
December 31, 2018(c)	155		1		48		26		2		—		—		—

__________

(a)BGE 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)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)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 of 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.