Variable Interest Entities (Exelon, PHI, and ACE)

12 Months Ended

Dec. 31, 2021

Variable Interest Entities (Exelon, PHI, and ACE)At December 31, 2021 and 2020, Exelon, PHI, and ACE collectively consolidated several VIEs or VIE groups for which the applicable Registrant was the primary beneficiary (see Consolidated VIEs below) and had significant interests in several other VIEs for which the applicable Registrant does not have the power to direct the entities’ activities and, accordingly, was not the primary beneficiary (see Unconsolidated VIEs below). Consolidated and unconsolidated VIEs are aggregated to the extent that the entities have similar risk profiles.

Consolidated VIEs

The table below shows the carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the consolidated financial statements of Exelon, PHI, and ACE as of December 31, 2021 and 2020. The assets, except as noted in the footnotes to the table below, can only be used to settle obligations of the VIEs. The liabilities, except as noted in the footnotes to the table below, are such that creditors, or beneficiaries, do not have recourse to the general credit of Exelon, PHI, and ACE.


	December 31, 2021				December 31, 2020
	Exelon		PHI		ACE		Exelon		PHI(a)		ACE
Cash and cash equivalents	$	35	$	—	$	—	$	98	$	—	$	—
Restricted cash and cash equivalents	48		—		—		47		3		3
Accounts receivable
Customer	24		—		—		148		—		—
Other	6		—		—		36		—		—

Inventories, net

Materials and supplies	14		—		—		244		—		—
Assets held for sale(b)	—		—		—		101		—		—
Other current assets	405		—		—		696		5		—
Total current assets	532		—		—		1,370		8		3

Property, plant and equipment, net	2,027		—		—		5,803		—		—
Nuclear decommissioning trust funds	—		—		—		3,007		—		—


Other noncurrent assets	215		—		—		301		10		10
Total noncurrent assets	2,242		—		—		9,111		10		10
Total assets(c)	$	2,774	$	—	$	—	$	10,481	$	18	$	13

Long-term debt due within one year	$	70	$	—	$	—	$	94	$	26	$	21
Accounts payable	10		—		—		81		—		—
Accrued expenses	21		—		—		70		—		—

Unamortized energy contract liabilities	—		—		—		4		—		—
Liabilities held for sale(b)	—		—		—		16		—		—
Other current liabilities	1		—		—		5		—		—
Total current liabilities	102		—		—		270		26		21

Long-term debt	822		—		—		889		—		—

Asset retirement obligations	151		—		—		2,318		—		—




Other noncurrent liabilities	3		—		—		129		—		—
Total noncurrent liabilities	976		—		—		3,336		—		—
Total liabilities(d)	$	1,078	$	—	$	—	$	3,606	$	26	$	21

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(a)Includes certain purchase accounting adjustments from the PHI merger not pushed down to ACE.

(b)Generation entered into an agreement for the sale of a significant portion of Generation's solar business. As a result of this transaction, in the fourth quarter of 2020, Exelon reclassified the consolidated VIEs' solar assets and liabilities as held for sale. Refer to Note 2 — Mergers, Acquisitions, and Dispositions for additional information on the sale of the solar business.

(c)Exelon's balances include unrestricted assets for current unamortized energy contract assets of $23 million and $22 million, disclosed within other current assets in the table above, non-current unamortized energy contract assets of $202 million and $249 million, disclosed within other noncurrent assets in the table above, Assets held for sale of $0 million and $9 million, and other unrestricted assets of $0 million and $1 million as of December 31, 2021 and 2020, respectively.

(d)Exelon's balances include liabilities with recourse of $1 million and $8 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, Exelon's consolidated VIEs associated with Generation included the following:


Consolidated VIE or VIE groups:	Reason entity is a VIE:	Reason Exelon is primary beneficiary:
CENG - A joint venture between Generation and EDF. Generation had a 50.01% equity ownership in CENG as of December 31, 2020 and acquired EDF's 49.99% equity interest on August 6, 2021 resulting in CENG no longer being classified as a consolidated VIE beginning in the third quarter of 2021. See additional discussion below.	Disproportionate relationship between equity interest and operational control as a result of the NOSA described further below.	Generation conducts the operational activities.
CRP - A collection of wind and solar project entities. Generation has a 51% equity ownership in CRP. See additional discussion below.	Similar structure to a limited partnership and the limited partners do not have kick out rights with respect to the general partner.	Generation conducts the operational activities.
Bluestem Wind Energy Holdings, LLC - A Tax Equity structure which is consolidated by CRP. Generation has a noncontrolling interest.	Similar structure to a limited partnership and the limited partners do not have kick out rights with respect to the general partner.	Generation conducts the operational activities.
Antelope Valley - A solar generating facility, which is 100% owned by Generation. Antelope Valley sells all of its output to PG&E through a PPA.	The PPA contract absorbs variability through a performance guarantee.	Generation conducts all activities.
Equity investment in distributed energy company - Generation has a 31% equity ownership. This distributed energy company has an interest in an unconsolidated VIE. (See Unconsolidated VIEs disclosure below). Exelon fully impaired this investment in the third quarter of 2019. Refer to Note 12 — Asset Impairments for additional information.	Similar structure to a limited partnership and the limited partners do not have kick out rights with respect to the general partner.	Generation conducts the operational activities.
NER - A bankruptcy remote, special purpose entity which is 100% owned by Generation, which purchases certain of Generation’s customer accounts receivable arising from the sale of retail electricity. NER’s assets will be available first and foremost to satisfy the claims of the creditors of NER. Refer to Note 6 —Accounts Receivable for additional information on the sale of receivables.	Equity capitalization is insufficient to support its operations.	Generation conducts all activities.

CENG - On April 1, 2014, Generation, CENG, and subsidiaries of CENG executed the NOSA pursuant to which Generation conducts all activities associated with the operations of the CENG fleet and provides corporate and administrative services to CENG and the CENG fleet for the remaining life of the CENG nuclear plants as if they were a part of the Generation nuclear fleet, subject to the CENG member rights of EDF.

On November 20, 2019, Generation received notice of EDF's intention to exercise the put option to sell its interest in CENG to Generation and the put automatically exercised on January 19, 2020. On August 6, 2021, Generation and EDF entered into a settlement agreement pursuant to which Generation purchased EDF's equity interest in CENG and resulted in CENG no longer being classified as a consolidated VIE beginning in the third quarter of 2021. Refer to Note 2 — Mergers, Acquisitions, and Dispositions for additional information.

Exelon and Generation, where indicated, provide the following support to CENG:

•Generation executed an Indemnity Agreement pursuant to which Generation agreed to indemnify EDF against third-party claims that may arise from any future nuclear incident (as defined in the Price-Anderson Act) in connection with the CENG nuclear plants or their operations. Exelon guarantees Generation’s obligations under this Indemnity Agreement and will continue to do so post-separation, however, any calls on this guarantee would require Generation to reimburse Exelon under the terms of the Separation Agreement. See Note 19 — Commitments and Contingencies and Note 26 - Separation for more details.

•Exelon has executed an agreement to provide up to $245 million to support the operations of CENG as well as a $165 million guarantee of CENG’s cash pooling agreement with its subsidiaries. Both the support agreement and guarantee terminated upon separation.

Prior to August 6, 2021, Generation and EDF shared in the $688 million of the contingent payment obligations for the payment of contingent retrospective premium adjustments for the nuclear liability insurance. Following the execution of the settlement agreement, EDF no longer shares in the obligation.

CRP - CRP is a collection of wind and solar project entities and some of these project entities are VIEs that are consolidated by CRP. While Generation or CRP owns 100% of the solar entities and 100% of the majority of the wind entities, it has been determined that the wholly owned solar and wind entities are VIEs because the entities' customers absorb price variability from the entities through fixed price power and/or REC purchase agreements. Additionally, for the wind entities that have minority interests, it has been determined that these entities are VIEs because the governance rights of some investors are not proportional to their financial rights. Generation is the primary beneficiary of these solar and wind entities that qualify as VIEs because Generation controls operations and direct all activities of the facilities. There is limited recourse to Generation related to certain solar and wind entities.

In 2017, Exelon's interests in CRP were contributed to and are pledged for the CR non-recourse debt project financing structure. Refer to Note 17 — Debt and Credit Agreements for additional information.

As of December 31, 2021 and 2020, Exelon's, PHI's and ACE's consolidated VIE consists of:


Consolidated VIEs:	Reason entity is a VIE:	Reason ACE is the primary beneficiary:
ACE Funding - A special purpose entity formed by ACE for the purpose of securitizing authorized portions of ACE’s recoverable stranded costs through the issuance and sale of Transition Bonds. Proceeds from the sale of each series of Transition Bonds by ATF were transferred to ACE in exchange for the transfer by ACE to ATF of the right to collect a non-bypassable Transition Bond Charge from ACE customers pursuant to bondable stranded costs rate orders issued by the NJBPU in an amount sufficient to fund the principal and interest payments on Transition Bonds and related taxes, expenses, and fees. In the fourth quarter of 2021, the Transition bonds were fully redeemed and ACE remitted its final payment to ATF. Upon redemption of the bonds, ATF no longer meets the definition of a variable interest entity.	ACE’s equity investment is a variable interest as, by design, it absorbs any initial variability of ATF. The bondholders also have a variable interest for the investment made to purchase the Transition Bonds.	ACE controls the servicing activities.

Unconsolidated VIEs

Exelon’s variable interests in unconsolidated VIEs generally include equity investments and energy purchase and sale contracts. For the equity investments, the carrying amount of the investments is reflected in Exelon’s Consolidated Balance Sheets in Investments. For the energy purchase and sale contracts (commercial agreements), the carrying amount of assets and liabilities in Exelon’s Consolidated Balance Sheets that relate to their involvement with the VIEs are predominantly related to working capital accounts and generally represent the amounts owed by, or owed to, Exelon for the deliveries associated with the current billing cycles under the commercial agreements.

As of December 31, 2021 and 2020, Exelon had significant unconsolidated variable interests in several VIEs for which Exelon was not the primary beneficiary. These interests include certain equity method investments and certain commercial agreements.

The following table presents summary information about Exelon's significant unconsolidated VIE entities:


	December 31, 2021						December 31, 2020
	Commercial Agreement VIEs		Equity Investment VIEs		Total		Commercial Agreement VIEs		Equity Investment VIEs		Total
Total assets(a)	$	772	$	372	$	1,144	$	777	$	401	$	1,178
Total liabilities(a)	80		216		296		61		223		284
Exelon's ownership interest in VIE(a)	—		139		139		—		157		157
Other ownership interests in VIE(a)	692		17		709		716		21		737

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(a)These items represent amounts in the unconsolidated VIE balance sheets, not in Exelon’s Consolidated Balance Sheets. These items are included to provide information regarding the relative size of the unconsolidated VIEs. Exelon does not have any exposure to loss as they do not have a carrying amount in the equity investment VIEs as of December 31, 2021 and 2020.

As of December 31, 2021 and 2020, Exelon's unconsolidated VIEs consist of:


Unconsolidated VIE groups:	Reason entity is a VIE:	Reason Exelon is not the primary beneficiary:
Equity investments in distributed energy companies - 1) Generation has a 90% equity ownership in a distributed energy company. 2) Generation, via a consolidated VIE, has a 90% equity ownership in another distributed energy company (See Consolidated VIEs disclosure above). Exelon fully impaired this investment in the third quarter of 2019. Refer to Note 12 — Asset Impairments for additional information.	Similar structures to a limited partnership and the limited partners do not have kick out rights with respect to the general partner.	Generation does not conduct the operational activities.
Energy Purchase and Sale agreements - Generation has several energy purchase and sale agreements with generating facilities.	PPA contracts that absorb variability through fixed pricing.	Generation does not conduct the operational activities.