Subsequent Events (Exelon and Generation)

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events (Exelon and Generation)

Subsequent Events (Exelon and Generation)

Planned Separation

On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. Under the separation plan, Exelon shareholders will retain their current shares of Exelon stock and receive a pro-rata distribution of shares of the new company’s stock in a transaction that is expected to be tax-free to Exelon and its shareholders for U.S. federal income tax purposes. The actual number of shares to be distributed to Exelon shareholders will be determined prior to closing.

Exelon is targeting to complete the separation in the first quarter of 2022, subject to final approval by Exelon’s Board of Directors, a Form 10 registration statement being declared effective by the SEC, regulatory approvals, and satisfaction of other conditions. The transaction is subject to approval by the FERC, NRC, and NYPSC, and receipt of a private letter ruling from the IRS and tax opinion from Exelon’s tax advisors. There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its terms or timing.

Impacts of February 2021 Weather Events and Texas-based Generating Assets Outages

Beginning on February 15, 2021, Generation’s Texas-based generating assets within the ERCOT market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced periodic outages as a result of historically severe cold weather conditions. In addition, those weather conditions drove increased demand for service, limited the availability of natural gas to fuel power plants, dramatically increased wholesale power prices, and also increased gas prices in certain regions. In response to the high demand and significantly reduced total generation on the system, ERCOT implemented load reductions to maintain the reliability of the grid and required the use of an administrative price cap of $9,000 per megawatt hour during load shedding events.

Exelon and Generation estimate the impact to their Net income for the first quarter of 2021 arising from these market and weather conditions to be approximately $560 million to $710 million. The estimated impact includes favorable results in certain regions within Generation’s wholesale gas business. The ultimate impact to Exelon’s and Generation’s consolidated financial statements may be affected by a number of factors, including final settlement data, the impacts of customer and counterparty credit losses, any state sponsored solutions to address the financial challenges caused by the event, and litigation and contract disputes which may result.

Generation used a combination of commercial paper and letters of credit to manage collateral needs and has posted approximately $1.4 billion of collateral with ERCOT as of February 22, 2021. Generation continues to believe it has sufficient cash on hand and available capacity on its revolver, which was $2.4 billion as of February 22, 2021, to meet its liquidity requirements.