XML 148 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes (All Registrants)
 9 Months Ended
Sep. 30, 2021
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 September 30, 2021
Exelon(a)
Generation(a)
ComEd(a)
PECO(a)(b)
BGE(a)(b)
PHI(a)
Pepco(a)
DPL(a)
ACE(a)(b)
U.S. Federal statutory rate21.0%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 benefit6.04.48.0(4.1)(13.0)5.03.46.47.0
Qualified NDT fund income0.50.9———————
Amortization of investment tax credit, including deferred taxes on basis difference(0.4)(0.7)(0.1)—(0.1)(0.1)—(0.2)(0.2)
Plant basis differences(1.7)—(0.8)(16.2)(1.4)(1.3)(2.0)(0.6)(0.6)
Production tax credits and other credits(1.0)(1.4)(0.5)—(0.9)(0.5)(0.5)(0.4)(0.5)
Noncontrolling interests(0.4)(0.6)———————
Excess deferred tax amortization(6.8)—(7.6)(3.4)(17.3)(24.9)(17.6)(19.9)(41.4)
Other(c)
(4.8)(1.9)0.3(0.1)(0.8)—0.1(0.6)0.8
Effective income tax rate12.4%21.7%20.3%(2.8)%(12.5)%(0.8)%4.4%5.7%(13.9)%

Three Months Ended September 30, 2020
Exelon(a)
Generation(a)
ComEd(a)
PECO(a)(d)
BGE(a)(d)
PHI(a)(d)
Pepco(a)(d)
DPL(a)(d)
ACE(a)(d)
U.S. Federal statutory rate21.0%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 benefit12.3(10.3)8.1(6.2)5.15.54.66.66.9
Qualified NDT fund income13.247.4———————
Amortization of investment tax credit, including deferred taxes on basis difference(1.4)(4.5)(0.2)—(0.1)(0.2)(0.1)(0.2)(0.3)
Plant basis differences(4.3)—(0.6)(23.3)(1.2)(1.5)(2.1)(0.4)(1.3)
Production tax credits and other credits(3.0)(9.2)(0.4)—(0.8)(0.5)(0.5)(0.5)(0.4)
Noncontrolling interests0.82.9———————
Excess deferred tax amortization(10.1)—(5.6)(3.8)(10.6)(24.9)(20.0)(23.6)(36.8)
Tax Settlements(0.2)(0.7)———————
Other
(0.8)(0.9)1.1(0.8)(0.3)0.1(0.4)0.70.6
Effective income tax rate27.5%45.7%23.4%(13.1)%13.1%(0.5)%2.5%3.6%(10.3)%
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)For PECO, the income tax benefit is primarily due to plant basis differences attributable to tax repair deductions. For BGE,
the income tax benefit is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. For ACE, the income tax benefit is primarily due to a distribution rate case settlement which allows ACE to retain certain tax benefits.
(c)For Exelon, "Other" is primarily driven by the reversal of the consolidating income tax adjustment recorded at Exelon Corporate in the first quarter of 2021 that was required pursuant to GAAP interim reporting guidance.
(d)At PECO, the lower effective tax rate is primarily related to an increase in plant basis differences attributable to storm tax repair deductions. At BGE, PHI, Pepco, DPL and ACE, 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.


Nine Months Ended September 30, 2021
Exelon(a)
Generation(b)
ComEd(a)
PECO(a)(c)
BGE(a)(c)
PHI(a)
Pepco(a)
DPL(a)
ACE(a)(c)
U.S. Federal statutory rate21.0%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 benefit3.090.27.6(2.6)(10.8)4.62.56.57.3
Qualified NDT fund income9.4(1,932.6)———————
Amortization of investment tax credit, including deferred taxes on basis difference(0.8)130.6(0.1)—(0.1)(0.1)—(0.2)(0.2)
Plant basis differences(3.9)—(0.7)(12.6)(1.5)(1.3)(1.9)(0.7)(0.6)
Production tax credits and other credits(2.6)425.1(0.5)—(0.9)(0.5)(0.5)(0.4)(0.5)
Noncontrolling interests(0.7)145.2———————
Excess deferred tax amortization(13.9)—(7.2)(3.3)(16.0)(22.8)(17.4)(19.7)(36.3)
Other(d)
2.2(229.5)(1.3)(0.2)(0.7)(0.3)(0.4)(0.2)—
Effective income tax rate13.7%(1,350.0)%18.8%2.3%(9.0)%0.6%3.3%6.3%(9.3)%
Nine Months Ended September 30, 2020
Exelon(a)
Generation(a)
ComEd(a)(e)
PECO(a)(e)
BGE(a)(e)
PHI(a)(e)
Pepco(a)(e)
DPL(a)(e)
ACE(a)(e)
U.S. Federal statutory rate21.0%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 benefit9.3—12.7(3.4)5.55.04.26.56.8
Qualified NDT fund income3.210.0———————
Deferred Prosecution Agreement payments2.5—9.4——————
Amortization of investment tax credit, including deferred taxes on basis difference(1.2)(3.2)(0.3)—(0.1)(0.2)(0.1)(0.3)(0.5)
Plant basis differences(4.0)—(0.9)(15.9)(1.8)(2.2)(2.4)(0.5)(3.7)
Production tax credits and other credits(2.6)(7.0)(0.4)—(0.4)(0.3)(0.3)(0.2)(0.4)
Noncontrolling interests1.03.1———————
Excess deferred tax amortization(15.8)—(11.8)(3.5)(15.0)(45.3)(29.2)(53.6)(81.4)
Tax Settlements(f)
(5.0)(15.7)———————
Other0.1(0.5)2.1(0.5)(0.5)(0.6)(0.8)(1.1)—
Effective income tax rate8.5%7.7%31.8%(2.3)%8.7%(22.6)%(7.6)%(28.2)%(58.2)%
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)Generation recognized a loss before income taxes for the nine months ended September 30, 2021. As a result, a negative percentage represents an income tax expense for the period presented.
(c)For PECO, the lower effective tax rate is primarily related to an increase in plant basis differences attributable to tax repair deductions. For BGE, the income tax benefit is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. For ACE, the income tax benefit is primarily due to a distribution rate case settlement which allows ACE to retain certain tax benefits.
(d)For Exelon, "Other" is primarily driven by the consolidating income tax adjustment recorded at Exelon Corporate in the first quarter of 2021 that was required pursuant to GAAP interim reporting guidance. This incremental expense will reverse by year-end and will not have an impact on annual results.
(e)For ComEd, the higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. For PECO, the income tax benefit is primarily related to an increase in plant basis differences attributable to storm tax repairs deductions. For BGE, PHI, Pepco, DPL, and ACE, the income tax benefit is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements.
(f)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.

Unrecognized Tax Benefits
PHI and ACE have the following unrecognized tax benefits as of September 30, 2021 and December 31, 2020. Exelon's, Generation's, ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
PHIACE
September 30, 2021$56 $16 
December 31, 202052 15 
Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
As of September 30, 2021, 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.
Other Income Tax Matters
CENG Put Option (Exelon and Generation)
On August 6, 2021, Generation and EDF entered into a settlement agreement pursuant to which Generation purchased EDF’s equity interest in CENG. Exelon and Generation recorded deferred tax liabilities of $290 million and $288 million, respectively, against Common Stock in Exelon’s Consolidated Balance Sheet and Membership Interest in Generation’s Consolidated Balance Sheet. The deferred tax liabilities represent the tax effect on the difference between the net purchase price and EDF’s noncontrolling interest as of August 6, 2021. The deferred tax liabilities will reverse during the remaining operating lives and during decommissioning of the CENG nuclear plants. See Note 2 – Mergers, Acquisitions, and Dispositions for additional information.
Long-Term Marginal State Income Tax Rate (All Registrants)
In the third quarter of 2021 and 2020, Exelon updated its marginal state income tax rates for changes in state apportionment. The changes in marginal rates in the third quarter of 2021 resulted in an increase of $27 million to the deferred income tax liability at Exelon, and a corresponding adjustment to income tax expense, net of federal taxes. The changes in marginal rates in the third quarter of 2020 resulted in an increase of $66 million and a decrease of $26 million to the deferred income tax liability at Exelon and Generation, respectively. Exelon and Generation recorded a corresponding adjustment to income tax expense, net of federal taxes.
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.
GenerationComEdPECOBGEPHIPepcoDPLACE
September 30, 2021$64 $1 $19 $— $17 $16 $— $— 
September 30, 202064 14 17 — 17 8 6 1