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Income Taxes (All Registrants)
 12 Months Ended
Dec. 31, 2021
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, 2021
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$322 $(30)$1 $(18)$18 $22 $2 $1 
Deferred(66)113 20 34 (52)(17)(14)(26)
Investment tax credit amortization(18)(1)— — (1)— — — 
State
Current32 (41)— — — 1 1 — 
Deferred100 131 (9)(51)77 9 53 12 
Total$370 $172 $12 $(35)$42 $15 $42 $(13)
For the Year Ended December 31, 2020
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$26 $(24)$(7)$4 $25 $40 $(13)$(4)
Deferred156 112 1 10 (129)(62)(20)(43)
Investment tax credit amortization(28)(2)— — (1)— — — 
State
Current42 (27)— — (5)— — — 
Deferred177 118 (24)27 33 15 8 6 
Total$373 $177 $(30)$41 $(77)$(7)$(25)$(41)
For the Year Ended December 31, 2019
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$85 $59 $45 $(51)$43 $16 $29 $(3)
Deferred489 15 20 95 (34)(6)(21)(6)
Investment tax credit amortization(72)(2)— — (1)— — — 
State
Current5 (5)— — 3 — — — 
Deferred267 96 — 35 27 6 14 9 
Total$774 $163 $65 $79 $38 $16 $22 $— 
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, 2021(a)
ExelonComEd
PECO(b)
BGE(b)
PHIPepco
DPL(b)
ACE(b)
U.S. federal statutory rate21.0 %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 4.8 7.8 (1.4)(10.8)10.1 2.7 25.0 7.4 
Qualified NDT fund income11.3 — — — — — — — 
Amortization of investment tax credit, including deferred taxes on basis differences(0.7)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Plant basis differences(4.1)(0.8)(13.6)(1.7)(1.1)(1.6)(0.8)(0.2)
Production tax credits and other credits(2.5)(0.5)— (0.9)(0.5)(0.5)(0.4)(0.5)
Excess deferred tax amortization(12.9)(7.6)(3.8)(16.3)(22.4)(16.4)(20.0)(37.1)
Other(0.1)(1.0)0.1 (0.6)— (0.4)0.1 (0.2)
Effective income tax rate16.8 %18.8 %2.3 %(9.4)%7.0 %4.8 %24.7 %(9.8)%
For the Year Ended December 31, 2020(a)
Exelon
ComEd(c)
PECO(c)
BGE(d)
PHI(d)
Pepco(d)
DPL(d)
ACE(d)
U.S. federal statutory rate21.0 %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 benefit7.8 11.6 (4.5)5.5 5.1 4.5 6.6 7.0 
Qualified NDT fund income8.4 — — — — — — — 
Deferred Prosecution Agreement payments1.8 6.8 — — — — — — 
Amortization of investment tax credit, including deferred taxes on basis differences(1.1)(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)(0.3)— (0.4)(0.3)(0.3)(0.3)(0.5)
Noncontrolling interests1.1 — — — — — — — 
Excess deferred tax amortization(13.6)(11.2)(4.6)(13.9)(42.0)(25.4)(51.7)(82.1)
Tax Settlements(e)
(3.7)— — — — — — — 
Other0.5 1.8 (0.4)(0.1)(0.4)(0.7)0.1 0.4 
Effective income tax rate16.0 %28.8 %(7.2)%10.5 %(18.4)%(2.7)%(25.0)%(57.7)%
For the Year Ended December 31, 2019(a)
ExelonComEdPECOBGEPHI PepcoDPL ACE
U.S. federal statutory rate21.0 %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 benefit5.4 8.5 — 6.4 4.7 2.0 6.8 7.0 
Qualified NDT fund income5.9 — — — — — — — 
Amortization of investment tax credit, including deferred taxes on basis differences(1.5)(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)(1.2)— (1.3)(0.2)(0.1)— (0.1)
Noncontrolling interests(0.6)— — — — — — — 
Excess deferred tax amortization(5.5)(9.7)(2.8)(6.8)(17.5)(15.1)(14.2)(27.0)
Other(0.8)0.8 — — 0.8 0.3 — 0.1 
Effective income tax rate19.4 %19.2 %11.0 %18.0 %7.4 %6.2 %13.0 %— %
__________
(a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b)For PECO, the lower effective tax rate is primarily related 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 DPL, the higher effective tax rate is primarily related to a state income tax expense, net of federal income tax benefit, due to the recognition of a valuation allowance of approximately $31 million against a deferred tax asset associated with Delaware net operating loss carryforwards as a result of a change in Delaware tax law. For ACE, the income tax benefit is primarily due to a distribution rate case settlement which allows ACE to retain certain tax benefits.
(c)At ComEd, the higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. 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 in 2021.
(d)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. See Note 3 — Regulatory Matters for additional information.
(e)Exelon'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 benefits resulted in an increase to Exelon’s net income of $76 million for the first quarter of 2020, reflecting a decrease to Exelon’s income tax expense of $67 million.
Tax Differences and Carryforwards
The tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred tax assets (liabilities), as of December 31, 2021 and 2020 are presented below:
As of December 31, 2021
ExelonComEdPECOBGEPHIPepcoDPLACE
Plant basis differences$(14,429)$(4,648)$(2,271)$(1,826)$(2,976)$(1,321)$(853)$(777)
Accrual based contracts18 — — — 56 — — — 
Derivatives and other financial instruments(109)61 — — 2 — — — 
Deferred pension and postretirement obligation1,054 (308)(32)(37)(90)(76)(40)(6)
Nuclear decommissioning activities(912)— — — — — — — 
Deferred debt refinancing costs161 (6)— (2)123 (2)(1)(1)
Regulatory assets and liabilities(1,130)8 (280)92 (53)24 55 31 
Tax loss carryforward, net of valuation allowances295 — 65 68 64 2 18 42 
Tax credit carryforward778 — — — — — — — 
Investment in partnerships(273)— — — — — — — 
Other, net789 216 97 21 212 99 19 34 
Deferred income tax liabilities (net)$(13,758)$(4,677)$(2,421)$(1,684)$(2,662)$(1,274)$(802)$(677)
Unamortized investment tax credits(384)(8)— (2)(5)(1)(1)(2)
Total deferred income tax liabilities (net) and unamortized investment tax credits$(14,142)$(4,685)$(2,421)$(1,686)$(2,667)$(1,275)$(803)$(679)
As of December 31, 2020
ExelonComEdPECOBGEPHIPepcoDPLACE
Plant basis differences$(13,868)$(4,432)$(2,131)$(1,711)$(2,822)$(1,259)$(806)$(725)
Accrual based contracts40 — — — 77 — — — 
Derivatives and other financial instruments41 84 — — 2 — — — 
Deferred pension and postretirement obligation1,559 (288)(30)(33)(80)(74)(40)(7)
Nuclear decommissioning activities(742)— — — — — — — 
Deferred debt refinancing costs169 (6)— (2)131 (3)(1)(1)
Regulatory assets and liabilities(1,107)87 (231)142 (41)38 67 46 
Tax loss carryforward, net of valuation allowances286 — 47 57 90 4 49 38 
Tax credit carryforward841 — — — — — — — 
Investment in partnerships(835)— — — — — — — 
Other, net1,070 223 104 29 220 107 18 27 
Deferred income tax liabilities (net)$(12,546)$(4,332)$(2,241)$(1,518)$(2,423)$(1,187)$(713)$(622)
Unamortized investment tax credits(a)
(464)(9)(1)(3)(6)(2)(2)(3)
Total deferred income tax liabilities (net) and
unamortized investment tax credits		$(13,010)$(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.
The following table provides Exelon’s, PECO’s, BGE’s, PHI’s, Pepco’s, DPL’s, and ACE’s carryforwards, of which the state related items are presented on a post-apportioned basis, and any corresponding valuation allowances as of December 31, 2021. ComEd does not have net operating losses or credit carryforwards for the year ended December 31, 2021.
ExelonPECOBGEPHIPepcoDPLACE
Federal
Federal general business credits carryforwards and other carryforwards(a)
$806 $— $— $— $— $— $— 
State
State net operating losses and other carryforwards5,485 890 1,098 1,512 42 736 605 
Deferred taxes on state tax attributes (net of federal taxes)365 70 72 104 3 50 43 
Valuation allowance on state tax attributes (net of federal taxes)(b)
59 3 — 31 — 31 — 
Year in which net operating loss or credit carryforwards will begin to expire(c)
2035203220332029N/A20322031
__________
(a)For Exelon, the federal general business credit carryforward will begin expiring in 2035.
(b)At Exelon, a full valuation allowance has been recorded against certain separate company state net operating loss carryforwards that are expected to expire before realization. At PECO, a full valuation allowance has been recorded against Pennsylvania charitable contributions carryforwards that are expected to expire before realization. At DPL, a full valuation allowance has been recorded against Delaware net operating losses carryforwards due to a change in Delaware tax law.
(c)A portion of Exelon's, BGE's, Pepco's, and DPL's Maryland state net operating loss carryforward have an indefinite carryforward period.
Tabular Reconciliation of Unrecognized Tax Benefits
The following table presents changes in unrecognized tax benefits, for Exelon, PHI, and ACE. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
ExelonPHIACE
Balance at January 1, 2019$477 $45 $14 
Change to positions that only affect timing26 3 — 
Increases based on tax positions related to 20192 — — 
Increases based on tax positions prior to 201934 — — 
Decreases based on tax positions prior to 2019(3)— — 
Decrease from settlements with taxing authorities(29)— — 
Balance at December 31, 2019507 48 14 
Change to positions that only affect timing6 3 1 
Increases based on tax positions related to 20203 — — 
Increases based on tax positions prior to 202026 1 — 
Decreases based on tax positions prior to 2020(a)
(348)— — 
Decrease from settlements with taxing authorities(a)
(69)— — 
Balance at December 31, 2020125 52 15 
Change to positions that only affect timing13 3 1 
Increases based on tax positions related to 20214 1 — 
Increases based on tax positions prior to 20214 — — 
Decreases based on tax positions prior to 2021(3)— — 
Decrease from settlements with taxing authorities— — — 
Balance at December 31, 2021$143 $56 $16 
__________
(a)Exelon'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 net income of $76 million in the first quarter of 2020, reflecting a decrease to Exelon's income tax expense of $67 million.
Recognition of unrecognized tax benefits
The following table presents Exelon's unrecognized tax benefits that, if recognized, would decrease the effective tax rate. The Utility Registrants' amounts are not material.
Exelon
December 31, 2021$77 
December 31, 202073 
December 31, 2019462 
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, 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.
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. The Utility Registrants' amounts are not material.
Net interest and penalties receivable as ofExelon
December 31, 2021(a)
$43 
December 31, 2020314 
__________
(a)As of December 31, 2021, the interest receivable balance is not expected to be settled in cash within the next twelve months and therefore classified as non-current receivable. In December of 2021, Exelon received a refund of approximately $272 million related to an interest netting refund claim.
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 JurisdictionOpen YearsRegistrants Impacted
Federal consolidated income tax returns(a)
2010-2020All Registrants
Delaware separate corporate income tax returnsSame as federalDPL
District of Columbia combined corporate income tax returns2018-2020Exelon, PHI, Pepco
Illinois unitary corporate income tax returns2012-2020Exelon, ComEd
Maryland separate company corporate net income tax returnsSame as federalBGE, Pepco, DPL
New Jersey separate corporate income tax returns2017-2018Exelon
New Jersey combined corporate income tax returns2019-2020Exelon
New Jersey separate corporate income tax returns2017-2020ACE
New York combined corporate income tax returns2011-2020Exelon
Pennsylvania separate corporate income tax returns2011-2016Exelon
Pennsylvania separate corporate income tax returns2018-2020Exelon
Pennsylvania separate corporate income tax returns2018-2020PECO
__________
(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
CENG Put Option (Exelon)
On August 6, 2021, Generation entered into a settlement agreement pursuant to which Generation purchased EDF’s equity interest in CENG. Exelon recorded deferred tax liabilities of $290 million against Common Stock in Exelon’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)
Quarterly, Exelon reviews and updates its marginal state income tax rates and updates for material changes in state tax laws and 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, 2021, 2020, and 2019 were not material.
December 31, 2021Exelon
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes$27 
December 31, 2020
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes$66 
December 31, 2019
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes$20 
Allocation of Tax Benefits (All Registrants)
The Utility Registrants are 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 are reallocated to the other Registrants. That allocation is treated as a contribution from Exelon to the party receiving the benefit.
The following table presents the allocation of tax benefits from Exelon under the Tax Sharing Agreement.
ComEdPECOBGEPHIPepcoDPLACE
December 31, 2021(a)
$1 $19 $— $17 $16 $— $— 
December 31, 2020(b)
14 17 — 17 8 6 1 
December 31, 2019(c)
— 14 3 7 6 1 — 
__________
(a)BGE, 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.
(b)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.
(c)ComEd 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 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 net income of $108 million for the year ended December 31, 2019, reflecting a decrease to Exelon’s Income tax expense of $97 million.