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Income Taxes (All Registrants)
 12 Months Ended
Dec. 31, 2022
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, 2022
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$(24)$29 $13 $(1)$16 $9 $(2)$6 
Deferred106 117 18 (3)(23)(2)2 (15)
Investment tax credit amortization(3)(1)— — (1)— — — 
State
Current(13)(6)(4)— 2 — — — 
Deferred283 125 52 12 15 (16)14 12 
Total$349 $264 $79 $8 $9 $(9)$14 $3 
For the Year Ended December 31, 2021
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$(152)$(30)$1 $(18)$18 $22 $2 $1 
Deferred89 113 20 34 (52)(17)(14)(26)
Investment tax credit amortization(2)(1)— — (1)— — — 
State
Current(46)(41)— — — 1 1 — 
Deferred149 131 (9)(51)77 9 53 12 
Total$38 $172 $12 $(35)$42 $15 $42 $(13)
For the Year Ended December 31, 2020
 ExelonComEdPECOBGEPHIPepcoDPLACE
Included in operations:
Federal
Current$(180)$(24)$(7)$4 $25 $40 $(13)$(4)
Deferred10 112 1 10 (129)(62)(20)(43)
Investment tax credit amortization(3)(2)— — (1)— — — 
State
Current(37)(27)— — (5)— — — 
Deferred203 118 (24)27 33 15 8 6 
Total$(7)$177 $(30)$41 $(77)$(7)$(25)$(41)
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, 2022(a)
ExelonComEd
PECO(b)
BGE(b)
PHI(b)
Pepco(b)
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(c)
8.8 8.0 5.8 2.6 2.1 (4.1)6.5 6.9 
Plant basis differences(4.1)(0.6)(11.9)(1.0)(1.7)(2.7)(0.7)(0.7)
Excess deferred tax amortization(11.8)(5.6)(3.0)(19.8)(19.5)(16.8)(18.4)(24.5)
Amortization of investment tax credit, including deferred taxes on basis differences(0.1)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Tax credits(d)
0.1 (0.3)— (0.7)(0.7)(0.7)(0.6)(0.5)
Other(e)
0.6 — 0.2 0.1 0.4 0.3 0.1 — 
Effective income tax rate14.5 %22.4 %12.1 %2.1 %1.5 %(3.0)%7.7 %2.0 %
For the Year Ended December 31, 2021(a)
ExelonComEd
PECO(f)
BGE(f)
PHI
Pepco(f)
DPL(f)
ACE(f)
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 benefit5.0 7.8 (1.4)(10.8)10.1 2.7 25.0 7.4 
Plant basis differences(5.4)(0.8)(13.6)(1.7)(1.1)(1.6)(0.8)(0.2)
Excess deferred tax amortization(17.2)(7.6)(3.8)(16.3)(22.4)(16.4)(20.0)(37.1)
Amortization of investment tax credit, including deferred taxes on basis differences(0.1)(0.1)— (0.1)(0.1)— (0.2)(0.2)
Tax credits(0.7)(0.5)— (0.9)(0.5)(0.5)(0.4)(0.5)
Other(0.3)(1.0)0.1 (0.6)— (0.4)0.1 (0.2)
Effective income tax rate2.3 %18.8 %2.3 %(9.4)%7.0 %4.8 %24.7 %(9.8)%
For the Year Ended December 31, 2020(a)
Exelon
ComEd(g)
PECO(g)
BGE(h)
PHI(h)
Pepco(h)
DPL(h)
ACE(h)
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 benefit11.9 11.6 (4.5)5.5 5.1 4.5 6.6 7.0 
Plant basis differences(8.6)(0.6)(18.7)(1.5)(1.6)(1.7)(0.4)(3.0)
Excess deferred tax amortization(29.1)(11.2)(4.6)(13.9)(42.0)(25.4)(51.7)(82.1)
Amortization of investment tax credit, including deferred taxes on basis differences(0.3)(0.3)— (0.1)(0.2)(0.1)(0.3)(0.5)
Tax credits(0.5)(0.3)— (0.4)(0.3)(0.3)(0.3)(0.5)
Deferred Prosecution Agreement payments3.8 6.8 — — — — — — 
Other1.2 1.8 (0.4)(0.1)(0.4)(0.7)0.1 0.4 
Effective income tax rate(0.6)%28.8 %(7.2)%10.5 %(18.4)%(2.7)%(25.0)%(57.7)%
__________
(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 partially offset by higher state income taxes, net of federal income tax benefit, related to a one-time expense of $38 million attributable to the change in the Pennsylvania corporate income tax rate. For BGE, PHI, Pepco, DPL, and ACE, the lower effective tax rate is primarily related to the acceleration of certain income tax benefits due to distribution and transmission rate case settlements.
(c)For Exelon, the higher state income taxes, net of federal income tax benefit, is primarily due to the long-term marginal state income tax rate change of $67 million and the recognition of a valuation allowance of $40 million against the net deferred tax asset position for certain standalone state filing jurisdictions, partially offset by a one-time impact associated with a state tax benefit of $43 million and indemnification adjustments pursuant to the Tax Matters Agreement of $11 million as a result of the separation. For PECO, the higher state income taxes, net of federal income tax benefit, related to a one-time expense of $38 million attributable to the change in the Pennsylvania corporate income tax rate.
(d)For Exelon, reflects the income tax expense related to the write-off of federal tax credits subject to recapture of $15 million as a result of the separation.
(e)For Exelon, reflects the nondeductible transaction costs of approximately $12 million arising as part of the separation and indemnification adjustments pursuant to the Tax Matters Agreement of $9 million.
(f)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 Pepco, the lower effective tax rate is primarily related to the acceleration of certain income tax benefits due to distribution and transmission rate case settlements. 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 $31 million against a deferred tax asset associated with Delaware net operating loss carryforwards as a result of a change in Delaware tax law. For ACE, the income tax benefit is primarily due to a distribution rate case settlement which allows ACE to retain certain tax benefits.
(g)For ComEd, the higher effective tax rate is primarily related to the nondeductible DPA payments. For PECO, the negative effective tax rate is primarily related to an increase in plant basis differences attributable to tax repair deductions related to an increase in storms and qualifying projects in 2021.
(h)For BGE, PHI, Pepco, DPL, and ACE, the income tax benefit is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See Note 3 — Regulatory Matters for additional information.
Tax Differences and Carryforwards
The tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred tax assets (liabilities), as of December 31, 2022 and 2021 are presented below:
As of December 31, 2022
ExelonComEdPECOBGEPHIPepcoDPLACE
Plant basis differences$(12,130)$(4,823)$(2,119)$(1,949)$(3,131)$(1,394)$(906)$(813)
Accrual based contracts10 — — — 10 — — — 
Derivatives and other financial instruments26 23 — — 2 — — — 
Deferred pension and postretirement obligation551 (300)(31)(31)(80)(76)(39)(3)
Deferred debt refinancing costs132 (5)— (2)111 (4)(2)(1)
Regulatory assets and liabilities(1,107)(131)(169)57 (50)7 43 11 
Tax loss carryforward, net of valuation allowances250 — 33 72 71 3 20 46 
Tax credit carryforward468 — — — — — — — 
Investment in partnerships(21)— — — — — — — 
Other, net591 223 73 23 182 83 16 28 
Deferred income tax liabilities (net)$(11,230)$(5,013)$(2,213)$(1,830)$(2,885)$(1,381)$(868)$(732)
Unamortized investment tax credits(14)(8)— (2)(4)(1)(1)(2)
Total deferred income tax liabilities (net) and unamortized investment tax credits$(11,244)$(5,021)$(2,213)$(1,832)$(2,889)$(1,382)$(869)$(734)
As of December 31, 2021
ExelonComEdPECOBGEPHIPepcoDPLACE
Plant basis differences$(11,606)$(4,648)$(2,271)$(1,826)$(2,976)$(1,321)$(853)$(777)
Accrual based contracts56 — — — 56 — — — 
Derivatives and other financial instruments63 61 — — 2 — — — 
Deferred pension and postretirement obligation641 (308)(32)(37)(90)(76)(40)(6)
Deferred debt refinancing costs146 (6)— (2)123 (2)(1)(1)
Regulatory assets and liabilities(1,130)8 (280)92 (53)24 55 31 
Tax loss carryforward, net of valuation allowances242 — 65 68 64 2 18 42 
Tax credit carryforward584 — — — — — — — 
Investment in partnerships(21)— — — — — — — 
Other, net449 216 97 21 212 99 19 34 
Deferred income tax liabilities (net)$(10,576)$(4,677)$(2,421)$(1,684)$(2,662)$(1,274)$(802)$(677)
Unamortized investment tax credits(15)(8)— (2)(5)(1)(1)(2)
Total deferred income tax liabilities (net) and
unamortized investment tax credits		$(10,591)$(4,685)$(2,421)$(1,686)$(2,667)$(1,275)$(803)$(679)
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, as well as, any corresponding valuation allowances as of December 31, 2022. ComEd does not have net operating losses or credit carryforwards for the year ended December 31, 2022.
ExelonPECOBGEPHIPepcoDPLACE
Federal
Federal general business credits carryforwards(a)
$468 $— $— $— $— $— $— 
State
State net operating loss carryforwards4,991 970 1,142 1,501 50 768 651 
Deferred taxes on state tax attributes (net of federal taxes)307 37 72 104 3 52 46 
Valuation allowance on state tax attributes (net of federal taxes)(b)
57 4 — 33 — 32 — 
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)For Exelon, a full valuation allowance has been recorded against certain separate company state net operating loss carryforwards that are expected to expire before realization. For PECO, a valuation allowance has been recorded against certain Pennsylvania net operating losses that are expected to expire before realization. For 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.
Exelon(a)
PHIACE
Balance at January 1, 2020$95 $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(5)— — 
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)— — 
Balance at December 31, 2021143 56 16 
Change to positions that only affect timing(1)1 1 
Increases based on tax positions related to 20223 2 — 
Increases based on tax positions prior to 20223 — — 
Decreases based on tax positions prior to 2022— — — 
Balance at December 31, 2022$148 $59 $17 
______
(a)As of December 31, 2022, Exelon recorded a receivable of $50 million in noncurrent Other assets in the Consolidated Balance Sheet for Constellation’s share of unrecognized tax benefits for periods prior to the separation.
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, 2022$90 
December 31, 202177 
December 31, 202073 
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, 2022, 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, 2022 (a) (b)
$45 
December 31, 2021 (c)
43 
__________
(a)As of December 31, 2022, the interest receivable balance is not expected to be settled in cash within the next twelve months and is therefore classified as a noncurrent receivable.
(b)As of December 31, 2022, Exelon recorded a receivable of $1 million in noncurrent Other assets in the Consolidated Balance Sheet for Constellation's share of net interest for periods prior to the separation.
(c)As of December 31, 2021, the interest receivable balance is not expected to be settled in cash within the next twelve months and is therefore classified as a noncurrent 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)
2010-2021All Registrants
Delaware separate corporate income tax returnsSame as federalDPL
District of Columbia combined corporate income tax returns2019-2021Exelon, PHI, Pepco
Illinois unitary corporate income tax returns2012-2021Exelon, 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 returns2019-2021Exelon
New Jersey separate corporate income tax returns2018-2021ACE
New York combined corporate income tax returns2015-2021Exelon
Pennsylvania separate corporate income tax returns2011-2016Exelon
Pennsylvania separate corporate income tax returns2019-2021Exelon
Pennsylvania separate corporate income tax returns2019-2021PECO
__________
(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
Separation (Exelon)
In the first quarter of 2022, in connection with the separation, Exelon recorded an income tax expense related to continuing operations of $148 million primarily due to the long-term marginal state income tax rate change of $67 million discussed further below, the recognition of valuation allowances of approximately $40 million against the net deferred tax assets positions for certain standalone state filing jurisdictions, the write-off of federal and state tax credits subject to recapture of $17 million, and nondeductible transaction costs for federal and state taxes of $24 million.
Tax Matters Agreement (Exelon)
In connection with the separation, Exelon entered into a TMA with Constellation. The TMA governs the respective rights, responsibilities, and obligations between Exelon and Constellation after the separation with respect to tax liabilities, refunds and attributes for open tax years that Constellation was part of Exelon’s consolidated group for U.S. federal, state, and local tax purposes.
Indemnification for Taxes. As a former subsidiary of Exelon, Constellation has joint and several liability with Exelon to the IRS and certain state jurisdictions relating to the taxable periods prior to the separation. The TMA specifies that Constellation is liable for their share of taxes required to be paid by Exelon with respect to taxable periods prior to the separation to the extent Constellation would have been responsible for such taxes under the existing Exelon tax sharing agreement. As a result, as of March 31, 2022, Exelon recorded a receivable of $55 million in Current other assets in the Consolidated Balance Sheet for Constellation’s share of taxes for periods
prior to the separation. As of December 31, 2022, Exelon recorded a payable of $18 million in Current other liabilities that is due to Constellation.
Tax Refunds. The TMA specifies that Constellation is entitled to their share of any future tax refunds claimed by Exelon with respect to taxable periods prior to the separation to the extent that Constellation would have received such tax refunds under the existing Exelon tax sharing agreement.
Tax Attributes. At the date of separation certain tax attributes, primarily pre-closing tax credit carryforwards, that were generated by Constellation were required by law to be allocated to Exelon. The TMA also provides that Exelon will reimburse Constellation when those allocated tax attribute carryforwards are utilized. As of March 31, 2022, Exelon recorded a payable of $11 million and $484 million in Current other liabilities and Noncurrent other liabilities, respectively, in the Consolidated Balance Sheet for tax credit carryforwards that are expected to be utilized and reimbursed to Constellation. As of December 31, 2022, the current and noncurrent payable amounts are $169 million and $362 million, respectively.
Long-Term Marginal State Income Tax Rate (All Registrants)
Quarterly, Exelon reviews and updates its marginal state income tax rates 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. In the first quarter of 2022, Exelon updated its marginal state income tax rates for changes in state apportionment due to the separation, which resulted in an increase of $67 million to the deferred tax liability at Exelon, and a corresponding adjustment to income tax expense, net of federal taxes. The impacts to ComEd, BGE, PHI, Pepco, DPL, and ACE for the years ended December 31, 2022, 2021, and 2020 were not material.
December 31, 2022Exelon
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes$67 
December 31, 2021
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 
Pennsylvania Corporate Income Tax Rate Change (Exelon and PECO)
On July 8, 2022, Pennsylvania enacted House Bill 1342, which will permanently reduce the corporate income tax rate from 9.99% to 4.99%. The tax rate will be reduced to 8.99% for the 2023 tax year. Starting with the 2024 tax year, the rate is reduced by 0.50% annually until it reaches 4.99% in 2031. As a result of the rate change, in the third quarter of 2022, Exelon and PECO recorded a one-time decrease to deferred income taxes of $390 million with a corresponding decrease to the deferred income taxes regulatory asset of $428 million for the amounts that are expected to be settled through future customer rates and an increase to income tax expense of $38 million (net of federal taxes). The tax rate decrease is not expected to have a material ongoing impact to Exelon’s and PECO’s financial statements. PECO did not update its marginal state income tax rates for the years ended December 31, 2021 and 2020.
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, for the year ended December 31, 2022, 2021, and 2020.
ComEdPECOBGEPHIPepcoDPLACE
December 31, 2022(a)
$1 $47 $— $28 $23 $3 $2 
December 31, 2021(b)
1 19 — 17 16 — — 
December 31, 2020(c)
14 17 — 17 8 6 1 
__________
(a)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.
(b)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.
(c)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.