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Discontinued Operations (Exelon)
 12 Months Ended
Dec. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations (Exelon) Discontinued Operations (Exelon)
On February 21, 2021, Exelon's Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies ("the separation").
On February 25, 2021, Exelon filed applications with FERC, NYPSC, and NRC seeking approvals for the separation of Generation. On March 25, 2021, Exelon filed a request for a private letter ruling with the IRS to confirm the tax-free treatment of the separation, which was received on September 23, 2021. Exelon received approval from FERC on August 24, 2021, NRC on November 16, 2021, and NYPSC on December 16, 2021 for the separation.
The Form 10 registration statement was declared effective by the SEC on December 29, 2021.
Exelon completed the separation on February 1, 2022, through the distribution of 326,663,937 common stock shares of Constellation Energy Corporation, the new publicly traded company, to Exelon shareholders. Under the separation plan, Exelon shareholders retained their current shares of Exelon stock and received one share of Constellation Energy Corporation common stock for every three shares of Exelon common stock held on January 20, 2022, the record date for the distribution, in a transaction that is tax-free to Exelon and its shareholders for U.S. federal income tax purposes.
Constellation Energy Corporation was newly formed and incorporated in Pennsylvania on June 15, 2021 for the purposes of separation and holds Generation (including Generation's subsidiaries).
Pursuant to the separation:
•Exelon entered into four term loans consisting of a 364-day term loan for $1.15 billion and three 18-month term loans for $300 million, $300 million and $250 million, respectively. Exelon issued these term loans primarily to fund the cash payment described below to Constellation Energy Corporation and for general corporate purposes. See Note 15 — Debt and Credit Agreements for additional information.
•Exelon made a cash payment of $1.75 billion to Constellation Energy Corporation on January 31, 2022.
•Exelon contributed its equity ownership interest in Generation (including its subsidiaries) to Constellation Energy Corporation. Exelon no longer retains any equity ownership interest in Generation or Constellation Energy Corporation.
•Exelon transferred certain corporate assets and employee-related obligations to Constellation Energy Corporation.
•Exelon received cash from Generation of $258 million to settle the intercompany loan on January 31, 2022. See Note 15 — Debt and Credit Agreements for additional information.
Continuing Involvement
In order to govern the ongoing relationships between Exelon and Constellation Energy Corporation after the separation, and to facilitate an orderly transition, Exelon and Constellation Energy Corporation have entered into several agreements, including the following:
•Separation Agreement – governs the rights and obligations between Exelon and Constellation Energy Corporation regarding certain actions to be taken in connection with the separation, among others, including the allocation of assets and liabilities between Exelon and Constellation Energy Corporation.
•Transition Services Agreement (TSA) – governs the terms and conditions of the services that Exelon will provide to Constellation Energy Corporation and Constellation Energy Corporation will provide to Exelon for an expected period of two years, provided that certain services may be longer than the term and services may be extended with approval from both parties. The services include specified accounting, finance, information technology, human resources, employee benefits and other services that have historically been provided on a centralized basis by BSC.
•Tax Matters Agreement (TMA) – governs the respective rights, responsibilities and obligations of Exelon and Constellation Energy Corporation with respect to all tax matters, including tax liabilities and benefits, tax attributes, tax returns, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns.
In addition, the Utility Registrants will continue to incur expenses from transactions with Generation after the separation. Prior to the separation, such expenses were primarily recorded as Purchased power from affiliates and an immaterial amount recorded as Operating and maintenance expense from affiliates at the Utility Registrants.
•ComEd had an ICC-approved RFP contract with Generation to provide a portion of ComEd’s electric supply requirements. ComEd also purchased RECs and ZECs from Generation.
•PECO received electric supply from Generation under contracts executed through PECO’s competitive procurement process. In addition, PECO had a ten-year agreement with Generation to sell solar AECs.
•BGE received a portion of its energy requirements from Generation under its MDPSC-approved market-based SOS and gas commodity programs.
•Pepco received electric supply from Generation under contracts executed through Pepco’s competitive procurement process approved by the MDPSC and DCPSC.
•DPL received a portion of its energy requirements from Generation under its MDPSC and DEPSC approved market-based SOS commodity programs.
•ACE received electric supply from Generation under contracts executed through ACE’s competitive procurement process approved by the NJBPU.
ComEd and PECO also have receivables with Generation as a result of the nuclear decommissioning contractual construct whereby, to the extent NDT funds are greater than the underlying ARO at the end of decommissioning, such amounts are due back to ComEd and PECO, as applicable, for payment to their respective customers. See Note 3 — Regulatory Matters for additional information.
Discontinued Operations
The separation represented a strategic shift that would have a major effect on Exelon’s operations and financial results. Accordingly, the separation meets the criteria for discontinued operations.
The following table presents the results of Generation that have been reclassified from continuing operations and included in discontinued operations within Exelon’s Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2021, 2020, and 2019.
These results are primarily Generation, which is comprised of Exelon’s Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions reportable segments, and include the impact of transaction costs, certain BSC costs, including any transition costs, that were historically allocated and directly attributable to Generation, transactions between Generation and the Utility Registrants, and tax-related adjustments. Transaction costs include costs for external bankers, accountants, appraisers, lawyers, external counsels and other advisors, among others, who are involved in the negotiation, appraisal, due diligence and regulatory approval of the separation. Transition costs are primarily employee-related costs such as recruitment expenses, costs to establish certain stand-alone functions and information technology systems, professional services fees and other separation-related costs during the transition to separate Generation. For the purposes of reporting discontinued operations, these results also include transactions between Generation and the Utility Registrants that were historically eliminated within Exelon’s Consolidated Statements of Operations as these transactions will be ongoing after the separation. Certain BSC costs that were historically allocated to Generation are presented as part of continuing operations in Exelon’s Consolidated Statements of Operations as these costs do not qualify as expenses of the discontinued operations per the accounting rules.
Year Ended
December 31,
202120202019
Operating revenues
Competitive business revenues$18,466 $16,399 $17,754 
Competitive business revenues from affiliates1,189 1,206 1,171 
Total operating revenues19,655 17,605 18,925 
Operating expenses
Competitive businesses purchased power and fuel12,163 9,585 10,856 
Operating and maintenance(a)
4,174 4,794 4,324 
Depreciation and amortization3,003 2,123 1,535 
Taxes other than income taxes475 482 519 
Total operating expenses19,815 16,984 17,234 
Gain on sales of assets and businesses201 11 27 
Operating income41 632 1,718 
Other income and (deductions)
Interest expense, net(282)(328)(394)
Other, net795 937 1,023 
Total other income513 609 629 
Income before income taxes554 1,241 2,347 
Income taxes332 380 621 
Equity in losses of unconsolidated affiliates(9)(6)(184)
Net income213 855 1,542 
Net income (loss) attributable to noncontrolling interests123 (9)92 
Net income from discontinued operations$90 $864 $1,450 
__________
(a)Includes transaction and transition costs related to the separation of $24 million and $19 million for the year ended December 31, 2021. There were no separation related costs incurred in 2020 or 2019. See discussion above for additional information.
The following table presents the assets and liabilities of discontinued operations in Exelon’s Consolidated Balance Sheets as of December 31, 2021 and 2020.
December 31, 2021December 31, 2020
ASSETS
Current assets
Cash and cash equivalents$510 $231 
Restricted cash and cash equivalents72 89 
Accounts receivable
Customer accounts receivable1,7241,331
Customer allowance for credit losses(55)(32)
Customer accounts receivable, net1,669 1,299 
Other accounts receivable596352
Other allowance for credit losses(4)—
Other accounts receivable, net592 352 
Mark-to-market derivative assets2,169 644 
Inventories, net
Fossil fuel and emission allowances284 233 
Materials and supplies1,004 978 
Renewable energy credits529 633 
Assets held for sale 13 958 
Other993 1,424 
Total current assets of discontinued operations7,835 6,841 
Property, plant, and equipment (net of accumulated depreciation and amortization of $15,888 and $13,381, respectively)
19,661 22,252 
Deferred debits and other assets
Nuclear decommissioning trust funds15,938 14,464 
Investments193 202 
Mark-to-market derivative assets949 555 
Other1,768 2,180 
Total property, plant, and equipment, deferred debits, and other assets of discontinued operations38,509 39,653 
Total assets of discontinued operations$46,344 $46,494 
December 31, 2021December 31, 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings$2,082 $840 
Long-term debt due within one year1,220 197 
Accounts payable1,757 1,253 
Accrued expenses818 848 
Mark-to-market derivative liabilities981 262 
Renewable energy credit obligation779 661 
Liabilities held for sale 3 375 
Other300 487 
Total current liabilities of discontinued operations7,940 4,923 
Long-term debt4,575 5,566 
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits3,583 3,443 
Asset retirement obligations12,819 12,054 
Pension obligations939 1,557 
Non-pension postretirement benefit obligations876 1,009 
Spent nuclear fuel obligation1,210 1,208 
Mark-to-market derivative liabilities513 205 
Other1,161 1,303 
Total long-term debt, deferred credits, and other liabilities of discontinued operations25,676 26,345 
Total liabilities of discontinued operations$33,616 $31,268 
The following table presents selected financial information regarding cash flows of the discontinued operations that are included within Exelon’s Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019.
Year Ended
December 31,
202120202019
Non-cash items included in net income (loss) from discontinued operations:
Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization$4,540 $3,636 $3,063 
Asset impairments545 563 201 
Gain on sales of assets and businesses(201)(11)(27)
Deferred income taxes and amortization of investment tax credits(224)94 376 
Net fair value changes related to derivatives(568)(270)228 
Net realized and unrealized gains on NDT fund investments(586)(461)(663)
Net unrealized losses (gains) on equity investments160 (186)— 
Other decommissioning-related activity(946)(659)(506)
Cash flows from investing activities:
Capital expenditures(1,341)(1,759)(1,849)
Collection of DPP3,902 3,771 — 
Supplemental cash flow information:
Increase (decrease) in capital expenditures not paid96 (88)(34)
Increase in DPP3,652 4,441 — 
Increase in PP&E related to ARO update618 850 959