Edgar Filing: EXELON CORP

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number	Name of Registrant; State of Incorporation; Address of Principal Executive Offices; and Telephone Number	IRS Employer Identification Number

1-16169	EXELON CORPORATION		23-2990190
	(a Pennsylvania corporation) 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 (800) 483-3220

333-85496	EXELON GENERATION COMPANY, LLC		23-3064219
	(a Pennsylvania limited liability company) 300 Exelon Way Kennett Square, Pennsylvania 19348-2473 (610) 765-5959

1-1839	COMMONWEALTH EDISON COMPANY		36-0938600
	(an Illinois corporation) 440 South LaSalle Street Chicago, Illinois 60605-1028 (312) 394-4321

000-16844	PECO ENERGY COMPANY		23-0970240
	(a Pennsylvania corporation) P.O. Box 8699 2301 Market Street Philadelphia, Pennsylvania 19101-8699 (215) 841-4000

1-1910	BALTIMORE GAS AND ELECTRIC COMPANY		52-0280210
	(a Maryland corporation) 2 Center Plaza 110 West Fayette Street Baltimore, Maryland 21201-3708 (410) 234-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company
Exelon Corporation	x
Exelon Generation Company, LLC			x
Commonwealth Edison Company			x
PECO Energy Company			x
Baltimore Gas and Electric Company			x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The number of shares outstanding of each registrant’s common stock as of March 31, 2015 was:


Exelon Corporation Common Stock, without par value		861,243,550
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,016,962
PECO Energy Company Common Stock, without par value		170,478,507
Baltimore Gas and Electric Company Common Stock, without par value		1,000

TABLE OF CONTENTS


		Page No.

FILING FORMAT			7

FORWARD-LOOKING STATEMENTS			7

WHERE TO FIND MORE INFORMATION			7

PART I.	FINANCIAL INFORMATION		8

ITEM 1.	FINANCIAL STATEMENTS		8

	Exelon Corporation

	Consolidated Statements of Operations and Comprehensive Income		9

	Consolidated Statements of Cash Flows		10

	Consolidated Balance Sheets		11

	Consolidated Statement of Changes in Shareholders’ Equity		13

	Exelon Generation Company, LLC

	Consolidated Statements of Operations and Comprehensive Income		14

	Consolidated Statements of Cash Flows		15

	Consolidated Balance Sheets		16

	Consolidated Statement of Changes in Equity		18

	Commonwealth Edison Company

	Consolidated Statements of Operations and Comprehensive Income		19

	Consolidated Statements of Cash Flows		20

	Consolidated Balance Sheets		21

	Consolidated Statement of Changes in Shareholders’ Equity		23

	PECO Energy Company

	Consolidated Statements of Operations and Comprehensive Income		24

	Consolidated Statements of Cash Flows		25

	Consolidated Balance Sheets		26

	Consolidated Statement of Changes in Shareholders’ Equity		28

	Baltimore Gas and Electric Company

	Consolidated Statements of Operations and Comprehensive Income		29

	Consolidated Statements of Cash Flows		30

	Consolidated Balance Sheets		31

	Consolidated Statement of Changes in Shareholders’ Equity		33

	Combined Notes to Consolidated Financial Statements		34

	1. Basis of Presentation		34

	2. New Accounting Pronouncements		35

	3. Variable Interest Entities		36

	4. Mergers, Acquisitions and Dispositions		41

	5. Regulatory Matters		44

	6. Investment in Constellation Energy Nuclear Group, LLC		56

	7. Fair Value of Financial Assets and Liabilities		58


		Page No.

	8. Derivative Financial Instruments		73

	9. Debt and Credit Agreements		88

	10. Income Taxes		92

	11. Nuclear Decommissioning		95

	12. Retirement Benefits		98

	13. Severance		100

	14. Changes in Accumulated Other Comprehensive Income		101

	15. Common Stock		104

	16. Earnings Per Share and Equity		105

	17. Commitments and Contingencies		105

	18. Supplemental Financial Information		119

	19. Segment Information		123

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		128

	Exelon Corporation		128

	General		128

	Executive Overview		129

	Critical Accounting Policies and Estimates		149

	Results of Operations		150

	Liquidity and Capital Resources		172

	Contractual Obligations and Off-Balance Sheet Arrangements		182

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		184

ITEM 4.	CONTROLS AND PROCEDURES		193

PART II.	OTHER INFORMATION		194

ITEM 1.	LEGAL PROCEEDINGS		194

ITEM 1A.	RISK FACTORS		194

ITEM 4.	MINE SAFETY DISCLOSURES		194

ITEM 6.	EXHIBITS		194

SIGNATURES			196

	Exelon Corporation		196

	Exelon Generation Company, LLC		196

	Commonwealth Edison Company		197

	PECO Energy Company		197

	Baltimore Gas and Electric Company		197

GLOSSARY OF TERMS AND ABBREVIATIONS


Exelon Corporation and Related Entities
Exelon		Exelon Corporation
Generation		Exelon Generation Company, LLC
ComEd		Commonwealth Edison Company
PECO		PECO Energy Company
BGE		Baltimore Gas and Electric Company
BSC		Exelon Business Services Company, LLC
Exelon Corporate		Exelon’s holding company
CENG		Constellation Energy Nuclear Group, LLC
Constellation		Constellation Energy Group, Inc.
Antelope Valley, AVSR		Antelope Valley Solar Ranch One
Exelon Transmission Company		Exelon Transmission Company, LLC
Exelon Wind		Exelon Wind, LLC and Exelon Generation Acquisition Company, LLC
Ventures		Exelon Ventures Company, LLC
AmerGen		AmerGen Energy Company, LLC
BondCo		RSB BondCo LLC
ComEd Financing III		ComEd Financing III
PEC L.P.		PECO Energy Capital, L.P.
PECO Trust III		PECO Energy Capital Trust III
PECO Trust IV		PECO Energy Capital Trust IV
BGE Trust II		BGE Capital Trust II
PETT		PECO Energy Transition Trust
Registrants		Exelon, Generation, ComEd, PECO and BGE, collectively


Other Terms and Abbreviations
Note “—” of the Exelon 2014 Form 10-K		Reference to a specific Combined Note to Consolidated Financial Statements within Exelon’s 2014 Annual Report on Form 10-K
1998 restructuring settlement		PECO’s 1998 settlement of its restructuring case mandated by the Competition Act
Act 11		Pennsylvania Act 11 of 2012
Act 129		Pennsylvania Act 129 of 2008
AEC		Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source
AEPS		Pennsylvania Alternative Energy Portfolio Standards
AEPS Act		Pennsylvania Alternative Energy Portfolio Standards Act of 2004, as amended
AESO		Alberta Electric Systems Operator
AFUDC		Allowance for Funds Used During Construction
ALJ		Administrative Law Judge
AMI		Advanced Metering Infrastructure
AMP		Advanced Metering Program
ARC		Asset Retirement Cost
ARO		Asset Retirement Obligation
ARP		Title IV Acid Rain Program
ARRA of 2009		American Recovery and Reinvestment Act of 2009
Block contracts		Forward Purchase Energy Block Contracts
CAIR		Clean Air Interstate Rule
CAISO		California ISO
CAMR		Federal Clean Air Mercury Rule

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CFL		Compact Fluorescent Light
Clean Air Act		Clean Air Act of 1963, as amended
Clean Water Act		Federal Water Pollution Control Amendments of 1972, as amended
Competition Act		Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996
CPI		Consumer Price Index
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
CTC		Competitive Transition Charge
DC Circuit Court		United States Court of Appeals for the District of Columbia Circuit
DOE		United States Department of Energy
DOJ		United States Department of Justice
DSP		Default Service Provider
DSP Program		Default Service Provider Program
EDF		Electricite de France SA
EE&C		Energy Efficiency and Conservation/Demand Response
EGR		ExGen Renewables I, LLC
EGS		Electric Generation Supplier
EGTP		ExGen Texas Power, LLC
EIMA		Illinois Energy Infrastructure Modernization Act
EPA		United States Environmental Protection Agency
ERCOT		Electric Reliability Council of Texas
ERISA		Employee Retirement Income Security Act of 1974, as amended
EROA		Expected Rate of Return on Assets
ESPP		Employee Stock Purchase Plan
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FRCC		Florida Reliability Coordinating Council
FTC		Federal Trade Commission
GAAP		Generally Accepted Accounting Principles in the United States
GDP		Gross Domestic Product
GHG		Greenhouse Gas
GRT		Gross Receipts Tax
GSA		Generation Supply Adjustment
GWh		Gigawatt hour
HAP		Hazardous air pollutants
Health Care Reform Acts		Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010
IBEW		International Brotherhood of Electrical Workers
ICC		Illinois Commerce Commission
ICE		Intercontinental Exchange
Illinois Act		Illinois Electric Service Customer Choice and Rate Relief Law of 1997
Illinois EPA		Illinois Environmental Protection Agency
Illinois Settlement Legislation		Legislation enacted in 2007 affecting electric utilities in Illinois
Integrys		Integrys Energy Services, Inc.
IPA		Illinois Power Agency
IRC		Internal Revenue Code

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
IRS		Internal Revenue Service
ISO		Independent System Operator
ISO-NE		ISO New England Inc.
ISO-NY		New York Independent System Operator
kV		Kilovolt
kW		Kilowatt
kWh		Kilowatt-hour
LIBOR		London Interbank Offered Rate
LILO		Lease-In, Lease-Out
LLRW		Low-Level Radioactive Waste
LTIP		Long-Term Incentive Plan
MATS		U.S. EPA Mercury and Air Toxics Standard Rule
MBR		Market Based Rates Incentive
MDE		Maryland Department of the Environment
MDPSC		Maryland Public Service Commission
MGP		Manufactured Gas Plant
MISO		Midcontinent Independent System Operator, Inc.
mmcf		Million Cubic Feet
Moody’s		Moody’s Investor Service
MOPR		Minimum Offer Price Rule
MRV		Market-Related Value
MW		Megawatt
MWh		Megawatt hour
NAAQS		National Ambient Air Quality Standards
n.m.		not meaningful
NAV		Net Asset Value
NDT		Nuclear Decommissioning Trust
NEIL		Nuclear Electric Insurance Limited
NERC		North American Electric Reliability Corporation
NGS		Natural Gas Supplier
NJDEP		New Jersey Department of Environmental Protection
Non-Regulatory Agreements Units		Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting including the CENG units (Calvert Cliffs, Nine Mile Point, and R.E. Ginna), Clinton, Oyster Creek, Three Mile Island, Zion (a former ComEd unit), and portions of Peach Bottom (a former PECO unit)
NOSA		Nuclear Operating Services Agreement
NOV		Notice of Violation
NPDES		National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission
NSPS		New Source Performance Standards
NWPA		Nuclear Waste Policy Act of 1982
NYMEX		New York Mercantile Exchange
OCI		Other Comprehensive Income
OIESO		Ontario Independent Electricity System Operator
OPEB		Other Postretirement Employee Benefits
PA DEP		Pennsylvania Department of Environmental Protection
PAPUC		Pennsylvania Public Utility Commission
PGC		Purchased Gas Cost Clause

GLOSSARY OF TERMS AND ABBREVIATIONS


Other Terms and Abbreviations
PHI		Pepco Holdings, Inc.
PJM		PJM Interconnection, LLC
POLR		Provider of Last Resort
POR		Purchase of Receivables
PPA		Power Purchase Agreement
PPL		PPL Holtwood, LLC
Price-Anderson Act		Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP		Potentially Responsible Parties
PSEG		Public Service Enterprise Group Incorporated
PURTA		Pennsylvania Public Realty Tax Act
PV		Photovoltaic
RCRA		Resource Conservation and Recovery Act of 1976, as amended
REC		Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source
Regulatory Agreement Units		Nuclear generating units whose decommissioning-related activities are subject to contractual elimination under regulatory accounting including the former ComEd units (Braidwood, Bryon, Dresden, LaSalle, Quad Cities) and the former PECO units (Limerick, Peach Bottom, Salem)
RES		Retail Electric Suppliers
RFP		Request for Proposal
Rider		Reconcilable Surcharge Recovery Mechanism
RGGI		Regional Greenhouse Gas Initiative
RMC		Risk Management Committee
RPM		PJM Reliability Pricing Model
RPS		Renewable Energy Portfolio Standards
RTEP		Regional Transmission Expansion Plan
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Services
SEC		United States Securities and Exchange Commission
Senate Bill 1		Maryland Senate Bill 1
SERC		SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
SERP		Supplemental Employee Retirement Plan
SGIG		Smart Grid Investment Grant
SGIP		Smart Grid Initiative Program
SILO		Sale-In, Lease-Out
SMP		Smart Meter Program
SMPIP		Smart Meter Procurement and Installation Plan
SNF		Spent Nuclear Fuel
SOA		Society of Actuaries
SOS		Standard Offer Service
SPP		Southwest Power Pool
Tax Relief Act of 2010		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
Upstream		Natural gas and oil exploration and production activities
VIE		Variable Interest Entity
WECC		Western Electric Coordinating Council

FILING FORMAT

This combined Form 10-Q is being filed separately by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company and Baltimore Gas and Electric Company (Registrants). Information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.

FORWARD-LOOKING STATEMENTS

This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2014 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 22; (2) this Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors, (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 17; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The public may read and copy any reports or other information that the Registrants file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These documents are also available to the public from commercial document retrieval services, the website maintained by the SEC at www.sec.gov and the Registrants’ websites at www.exeloncorp.com. Information contained on the Registrants’ websites shall not be deemed incorporated into, or to be a part of, this Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)	2015			2014
Operating revenues	$	8,830		$	7,237
Operating expenses
Purchased power and fuel		4,470			4,006
Purchased power and fuel from affiliates		—			334
Operating and maintenance		2,081			1,858
Depreciation and amortization		610			564
Taxes other than income		304			293

Total operating expenses		7,465			7,055

Equity in losses of unconsolidated affiliates		—			(19	)
Gain on sales of assets		1			5

Operating income		1,366			168

Other income and (deductions)
Interest expense, net		(335	)		(217	)
Interest expense to affiliates		(10	)		(10	)
Other, net		80			98

Total other income and (deductions)		(265	)		(129	)

Income before income taxes		1,101			39
Income taxes		363			(54	)

Net income		738			93

Net income attributable to noncontrolling interest and preference stock dividends		45			3

Net income attributable to common shareholders		693			90

Comprehensive income, net of income taxes
Net income		738			93
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service (benefit) cost reclassified to periodic benefit cost		(11	)		1
Actuarial loss reclassified to periodic cost		54			34
Pension and non-pension postretirement benefit plans valuation adjustment		(26	)		(13	)
Unrealized gain (loss) on cash flow hedges		6			(25	)
Unrealized gain on equity investments		—			12
Unrealized loss on foreign currency translation		(12	)		(5	)

Other comprehensive income		11			4

Comprehensive income	$	749		$	97

Average shares of common stock outstanding:
Basic		862			858
Diluted		867			861
Earnings per average common share:
Basic	$	0.80		$	0.10
Diluted	$	0.80		$	0.10

Dividends per common share	$	0.31		$	0.31

Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	738		$	93
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		948			908
Impairment of long-lived assets		—			1
Gain on sales of assets		(1	)		(5	)
Deferred income taxes and amortization of investment tax credits		129			(48	)
Net fair value changes related to derivatives		(91	)		730
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(47	)		(26	)
Other non-cash operating activities		344			276
Changes in assets and liabilities:
Accounts receivable		(270	)		(606	)
Inventories		291			80
Accounts payable, accrued expenses and other current liabilities		(607	)		157
Option premiums received, net		5			15
Counterparty collateral received (posted), net		31			(677	)
Income taxes		174			17
Pension and non-pension postretirement benefit contributions		(269	)		(472	)
Other assets and liabilities		115			(278	)

Net cash flows provided by operating activities		1,490			165

Cash flows from investing activities
Capital expenditures		(1,784	)		(1,217	)
Proceeds from nuclear decommissioning trust fund sales		1,681			1,825
Investment in nuclear decommissioning trust funds		(1,747	)		(1,878	)
Acquisition of businesses		(15	)		—
Proceeds from sale of long-lived assets		142			18
Proceeds from termination of direct financing lease investment		—			335
Change in restricted cash		(26	)		(40	)
Other investing activities		(2	)		(54	)

Net cash flows used in investing activities		(1,751	)		(1,011	)

Cash flows from financing activities
Changes in short-term borrowings		(141	)		638
Issuance of long-term debt		1,206			950
Retirement of long-term debt		(580	)		(1,150	)
Dividends paid on common stock		(269	)		(266	)
Proceeds from employee stock plans		8			7
Other financing activities		(16	)		(28	)

Net cash flows provided by financing activities		208			151

Decrease in cash and cash equivalents		(53	)		(695	)
Cash and cash equivalents at beginning of period		1,878			1,609

Cash and cash equivalents at end of period	$	1,825		$	914

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,825	$	1,878
Restricted cash and cash equivalents		297		271
Accounts receivable, net
Customer		3,702		3,482
Other		1,077		1,227
Mark-to-market derivative assets		1,117		1,279
Unamortized energy contract assets		209		254
Inventories, net
Fossil fuel and emission allowances		266		579
Materials and supplies		1,035		1,024
Deferred income taxes		231		244
Regulatory assets		804		847
Assets held for sale		1		147
Other		793		865

Total current assets		11,357		12,097

Property, plant and equipment, net		53,001		52,087
Deferred debits and other assets
Regulatory assets		6,068		6,076
Nuclear decommissioning trust funds		10,712		10,537
Investments		568		544
Goodwill		2,672		2,672
Mark-to-market derivative assets		913		773
Unamortized energy contracts assets		558		549
Pledged assets for Zion Station decommissioning		308		319
Other		1,234		1,160

Total deferred debits and other assets		23,033		22,630

Total assets^(a)	$	87,391	$	86,814

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015			December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	309		$	460
Long-term debt due within one year		1,260			1,802
Accounts payable		2,839			3,048
Accrued expenses		1,230			1,539
Payables to affiliates		8			8
Regulatory liabilities		421			310
Mark-to-market derivative liabilities		117			234
Unamortized energy contract liabilities		172			238
Other		1,018			1,123

Total current liabilities		7,374			8,762

Long-term debt		20,519			19,362
Long-term debt to financing trusts		648			648
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		13,218			13,019
Asset retirement obligations		7,446			7,295
Pension obligations		3,154			3,366
Non-pension postretirement benefit obligations		1,825			1,742
Spent nuclear fuel obligation		1,021			1,021
Regulatory liabilities		4,566			4,550
Mark-to-market derivative liabilities		491			403
Unamortized energy contract liabilities		189			211
Payable for Zion Station decommissioning		136			155
Other		2,166			2,147

Total deferred credits and other liabilities		34,212			33,909

Total liabilities^(a)		62,753			62,681

Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 861 shares and 860 shares outstanding at March 31, 2015 and December 31, 2014, respectively)		16,731			16,709
Treasury stock, at cost (35 shares at both March 31, 2015 and December 31, 2014)		(2,327	)		(2,327	)
Retained earnings		11,334			10,910
Accumulated other comprehensive loss, net		(2,673	)		(2,684	)

Total shareholders’ equity		23,065			22,608
BGE preference stock not subject to mandatory redemption		193			193
Noncontrolling interest		1,380			1,332

Total equity		24,638			24,133

Total liabilities and shareholders’ equity	$	87,391		$	86,814

(a)

Exelon’s consolidated assets include $8,182 million and $8,160 million at March 31, 2015 and December 31, 2014, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated liabilities include $2,702 million and $2,723 million at March 31, 2015 and December 31, 2014, respectively, of certain VIEs for which the VIE creditors do not have recourse to Exelon. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions, shares in thousands)	Issued Shares		Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss, net			Noncontrolling Interest		Preference Stock			Total Equity
Balance, December 31, 2014		894,568	$	16,709	$	(2,327	)	$	10,910		$	(2,684	)	$	1,332	$	193		$	24,133
Net income		—		—		—			693			—			42		3			738
Long-term incentive plan activity		1,156		12		—			—			—			—		—			12
Employee stock purchase plan issuances		255		8		—			—			—			—		—			8
Tax benefit on stock compensation		—		2		—			—			—			—		—			2
Changes in equity of noncontrolling interest		—		—		—			—			—			6		—			6
Common stock dividends		—		—		—			(269	)		—			—		—			(269	)
Preference stock dividends		—		—		—			—			—			—		(3	)		(3	)
Other comprehensive income, net of income taxes		—		—		—			—			11			—		—			11

Balance, March 31, 2015		895,979	$	16,731	$	(2,327	)	$	11,334		$	(2,673	)	$	1,380	$	193		$	24,638

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Operating revenues
Operating revenues	$	5,629		$	4,056
Operating revenues from affiliates		211			334

Total operating revenues		5,840			4,390

Operating expenses
Purchased power and fuel		3,426			3,008
Purchased power and fuel from affiliates		7			349
Operating and maintenance		1,162			938
Operating and maintenance from affiliates		149			149
Depreciation and amortization		254			211
Taxes other than income		122			105

Total operating expenses		5,120			4,760

Equity in losses of unconsolidated affiliates		—			(19	)
(Loss) gain on sales of assets		(1	)		5

Operating income (loss)		719			(384	)

Other income and (deductions)
Interest expense		(90	)		(73	)
Interest expense to affiliates, net		(12	)		(12	)
Other, net		94			85

Total other income and (deductions)		(8	)		—

Income (loss) before income taxes		711			(384	)
Income taxes		226			(199	)

Net income (loss)		485			(185	)
Net income attributable to noncontrolling interests		42			—

Net income (loss) attributable to membership interest		443			(185	)

Comprehensive income (loss), net of income taxes
Net income (loss)		485			(185	)
Other comprehensive income (loss), net of income taxes
Unrealized loss on cash flow hedges		(5	)		(25	)
Unrealized gain on equity investments		—			12
Unrealized loss on foreign currency translation		(12	)		(5	)
Unrealized loss on marketable securities		—			(3	)

Other comprehensive loss		(17	)		(21	)

Comprehensive income (loss)	$	468		$	(206	)

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows from operating activities
Net income (loss)	$	485		$	(185	)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		591			557
Impairment of long-lived assets		—			1
Loss (gain) on sales of assets		1			(5	)
Deferred income taxes and amortization of investment tax credits		89			(161	)
Net fair value changes related to derivatives		(165	)		737
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(47	)		(26	)
Other non-cash operating activities		45			89
Changes in assets and liabilities:
Accounts receivable		24			(295	)
Receivables from and payables to affiliates, net		(10	)		3
Inventories		228			1
Accounts payable, accrued expenses and other current liabilities		(345	)		128
Option premiums received, net		5			15
Counterparty collateral (posted) received, net		62			(699	)
Income taxes		(104	)		(35	)
Pension and non-pension postretirement benefit contributions		(107	)		(191	)
Other assets and liabilities		85			(103	)

Net cash flows provided by (used in) operating activities		837			(169	)

Cash flows from investing activities
Capital expenditures		(937	)		(535	)
Proceeds from nuclear decommissioning trust fund sales		1,681			1,825
Investment in nuclear decommissioning trust funds		(1,747	)		(1,878	)
Acquisition of businesses		(15	)		—
Proceeds from sale of long-lived assets		142			18
Change in restricted cash		(21	)		9
Changes in Exelon intercompany money pool		—			44
Other investing activities		(2	)		(77	)

Net cash flows used in investing activities		(899	)		(594	)

Cash flows from financing activities
Change in short-term borrowings		(1	)		354
Issuance of long-term debt		806			300
Retirement of long-term debt		(18	)		(532	)
Retirement of long-term debt to affiliate		(550	)		—
Changes in Exelon intercompany money pool		936			—
Distribution to member		(1,356	)		(30	)
Other financing activities		(3	)		(21	)

Net cash flows provided by (used in) financing activities		(186	)		71

Decrease in cash and cash equivalents		(248	)		(692	)
Cash and cash equivalents at beginning of period		780			1,258

Cash and cash equivalents at end of period	$	532		$	566

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	532	$	780
Restricted cash and cash equivalents		179		158
Accounts receivable, net
Customer		2,320		2,295
Other		378		318
Mark-to-market derivative assets		1,116		1,276
Receivables from affiliates		115		113
Unamortized energy contract assets		209		254
Inventories, net
Fossil fuel and emission allowances		232		465
Materials and supplies		841		847
Deferred income taxes		266		327
Assets held for sale		1		147
Other		530		658

Total current assets		6,719		7,638

Property, plant and equipment, net		23,414		22,945
Deferred debits and other assets
Nuclear decommissioning trust funds		10,712		10,537
Investments		122		104
Goodwill		47		47
Mark-to-market derivative assets		911		771
Prepaid pension asset		1,748		1,704
Pledged assets for Zion Station decommissioning		308		319
Unamortized energy contract assets		558		549
Deferred income taxes		3		3
Other		776		731

Total deferred debits and other assets		15,185		14,765

Total assets^(a)	$	45,318	$	45,348

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015			December 31, 2014
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	25		$	36
Long-term debt due within one year		75			58
Long-term debt to affiliates due within one year		—			556
Accounts payable		1,634			1,759
Accrued expenses		694			886
Payables to affiliates		110			107
Borrowings from Exelon intercompany money pool		936			—
Mark-to-market derivative liabilities		97			214
Unamortized energy contract liabilities		172			238
Other		532			605

Total current liabilities		4,275			4,459

Long-term debt		7,477			6,709
Long-term debt to affiliate		940			943
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		6,091			6,034
Asset retirement obligations		7,296			7,146
Non-pension postretirement benefit obligations		919			915
Spent nuclear fuel obligation		1,021			1,021
Payables to affiliates		2,921			2,880
Mark-to-market derivative liabilities		121			105
Unamortized energy contract liabilities		189			211
Payable for Zion Station decommissioning		136			155
Other		764			719

Total deferred credits and other liabilities		19,458			19,186

Total liabilities^(a)		32,150			31,297

Commitments and contingencies
Equity
Member’s equity
Membership interest		8,951			8,951
Undistributed earnings		2,890			3,803
Accumulated other comprehensive income, net		(53	)		(36	)

Total member’s equity		11,788			12,718
Noncontrolling interest		1,380			1,333

Total equity		13,168			14,051

Total liabilities and equity	$	45,318		$	45,348

(a)

Generation’s consolidated assets include $8,118 million and $8,119 million at March 31, 2015 and December 31, 2014, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Generation’s consolidated liabilities include $2,486 million and $2,507 million at March 31, 2015 and December 31, 2014, respectively, of certain VIEs for which the VIE creditors do not have recourse to Generation. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


	Member’s Equity
(In millions)	Membership Interest		Undistributed Earnings			Accumulated Other Comprehensive Income, net			Noncontrolling Interest		Total Equity
Balance, December 31, 2014	$	8,951	$	3,803		$	(36	)	$	1,333	$	14,051
Net income		—		443			—			42		485
Changes in equity of noncontrolling interest		—		—			—			5		5
Distribution to member		—		(1,356	)		—			—		(1,356	)
Other comprehensive loss, net of income taxes		—		—			(17	)		—		(17	)

Balance, March 31, 2015	$	8,951	$	2,890		$	(53	)	$	1,380	$	13,168

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Operating revenues
Operating revenues	$	1,184		$	1,133
Operating revenues from affiliates		1			1

Total operating revenues		1,185			1,134

Operating expenses
Purchased power		318			212
Purchased power from affiliate		9			108
Operating and maintenance		333			287
Operating and maintenance from affiliate		45			39
Depreciation and amortization		175			173
Taxes other than income		75			77

Total operating expenses		955			896

Operating income		230			238

Other income and (deductions)
Interest expense, net		(81	)		(77	)
Interest expense to affiliates		(3	)		(3	)
Other, net		3			5

Total other income and (deductions)		(81	)		(75	)

Income before income taxes		149			163
Income taxes		59			65

Net income		90			98

Comprehensive income	$	90		$	98

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	90		$	98
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Depreciation, amortization and accretion		175			173
Deferred income taxes and amortization of investment tax credits		35			35
Other non-cash operating activities		126			36
Changes in assets and liabilities:
Accounts receivable		(38	)		(64	)
Receivables from and payables to affiliates, net		(2	)		(19	)
Inventories		(10	)		2
Accounts payable, accrued expenses and other current liabilities		(126	)		(57	)
Income taxes		131			44
Pension and non-pension postretirement benefit contributions		(121	)		(233	)
Other assets and liabilities		(9	)		(24	)

Net cash flows provided by (used in) operating activities		251			(9	)

Cash flows from investing activities
Capital expenditures		(530	)		(341	)
Proceeds from sales of investments		—			3
Other investing activities		7			8

Net cash flows used in investing activities		(523	)		(330	)

Cash flows from financing activities
Changes in short-term borrowings		(21	)		350
Issuance of long-term debt		400			650
Retirement of long-term debt		—			(617	)
Contributions from parent		14			38
Dividends paid on common stock		(75	)		(76	)
Other financing activities		(4	)		(1	)

Net cash flows provided by financing activities		314			344

Increase in cash and cash equivalents		42			5
Cash and cash equivalents at beginning of period		66			36

Cash and cash equivalents at end of period	$	108		$	41

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	108	$	66
Restricted cash		4		4
Accounts receivable, net
Customer		503		477
Other		512		648
Receivables from affiliates		17		14
Inventories, net		135		125
Regulatory assets		317		349
Other		41		40

Total current assets		1,637		1,723

Property, plant and equipment, net		16,099		15,793
Deferred debits and other assets
Regulatory assets		866		852
Investments		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,603		2,571
Prepaid pension asset		1,619		1,551
Other		276		271

Total deferred debits and other assets		7,995		7,876

Total assets	$	25,731	$	25,392

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	283	$	304
Long-term debt due within one year		260		260
Accounts payable		534		598
Accrued expenses		223		331
Payables to affiliates		84		84
Customer deposits		128		128
Regulatory liabilities		131		125
Deferred income taxes		44		63
Mark-to-market derivative liability		20		20
Other		69		73

Total current liabilities		1,776		1,986

Long-term debt		6,099		5,698
Long-term debt to financing trust		206		206
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		4,553		4,498
Asset retirement obligations		103		103
Non-pension postretirement benefits obligations		262		263
Regulatory liabilities		3,692		3,655
Mark-to-market derivative liability		221		187
Other		881		889

Total deferred credits and other liabilities		9,712		9,595

Total liabilities		17,793		17,485

Commitments and contingencies
Shareholders’ equity
Common stock		1,588		1,588
Other paid-in capital		5,484		5,468
Retained earnings		866		851

Total shareholders’ equity		7,938		7,907

Total liabilities and shareholders’ equity	$	25,731	$	25,392

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Other Paid- In Capital		Retained Deficit Unappropriated			Retained Earnings Appropriated			Total Shareholders’ Equity
Balance, December 31, 2014	$	1,588	$	5,468	$	(1,639	)	$	2,490		$	7,907
Net income		—		—		90			—			90
Appropriation of retained earnings for future dividends		—		—		(90	)		90			—
Common stock dividends		—		—		—			(75	)		(75	)
Contribution from parent		—		14		—			—			14
Parent tax matter indemnification		—		2		—			—			2

Balance, March 31, 2015	$	1,588	$	5,484	$	(1,639	)	$	2,505		$	7,938

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Operating revenues
Operating revenues	$	985		$	992
Operating revenues from affiliates		—			1

Total operating revenues		985			993

Operating expenses
Purchased power and fuel		376			377
Purchased power from affiliate		62			87
Operating and maintenance		197			256
Operating and maintenance from affiliates		25			24
Depreciation and amortization		62			58
Taxes other than income		41			42

Total operating expenses		763			844

Gain on sale of assets		1			—

Operating income		223			149

Other income and (deductions)
Interest expense, net		(25	)		(25	)
Interest expense to affiliates		(3	)		(3	)
Other, net		2			2

Total other income and (deductions)		(26	)		(26	)

Income before income taxes		197			123
Income taxes		58			34

Net income attributable to common shareholder	$	139		$	89

Comprehensive income	$	139		$	89

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	139		$	89
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		62			58
Deferred income taxes and amortization of investment tax credits		5			(2	)
Other non-cash operating activities		44			49
Changes in assets and liabilities:
Accounts receivable		(115	)		(110	)
Receivables from and payables to affiliates, net		5			2
Inventories		34			45
Accounts payable, accrued expenses and other current liabilities		1			117
Income taxes		67			33
Pension and non-pension postretirement benefit contributions		(12	)		(11	)
Other assets and liabilities		(72	)		(127	)

Net cash flows provided by operating activities		158			143

Cash flows from investing activities
Capital expenditures		(148	)		(184	)
Other investing activities		4			2

Net cash flows used in investing activities		(144	)		(182	)

Cash flows from financing activities
Change in Exelon intercompany money pool		65			—
Dividends paid on common stock		(70	)		(80	)
Other financing activities		(1	)		—

Net cash flows used in financing activities		(6	)		(80	)

Increase in cash and cash equivalents		8			(119	)
Cash and cash equivalents at beginning of period		30			217

Cash and cash equivalents at end of period	$	38		$	98

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	38	$	30
Restricted cash and cash equivalents		2		2
Accounts receivable, net
Customer		390		320
Other		123		141
Receivables from affiliates		3		3
Inventories, net
Fossil fuel		19		57
Materials and supplies		26		22
Deferred income taxes		70		69
Prepaid utility taxes		107		10
Regulatory assets		41		29
Other		30		31

Total current assets		849		714

Property, plant and equipment, net		6,867		6,801
Deferred debits and other assets
Regulatory assets		1,543		1,529
Investments		31		31
Receivable from affiliates		500		490
Prepaid pension asset		347		344
Other		32		34

Total deferred debits and other assets		2,453		2,428

Total assets	$	10,169	$	9,943

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	334	$	337
Accrued expenses		109		91
Payables to affiliates		57		52
Borrowings from Exelon intercompany money pool		65		—
Customer deposits		53		52
Regulatory liabilities		119		90
Other		31		31

Total current liabilities		768		653

Long-term debt		2,246		2,246
Long-term debt to financing trusts		184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,708		2,671
Asset retirement obligations		29		29
Non-pension postretirement benefits obligations		287		287
Regulatory liabilities		662		657
Other		95		95

Total deferred credits and other liabilities		3,781		3,739

Total liabilities		6,979		6,822

Commitments and contingencies
Shareholder’s equity
Common stock		2,439		2,439
Retained earnings		750		681
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,190		3,121

Total liabilities and shareholder’s equity	$	10,169	$	9,943

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Accumulated Other Comprehensive Income, net		Total Shareholder’s Equity
Balance, December 31, 2014	$	2,439	$	681		$	1	$	3,121
Net income		—		139			—		139
Common stock dividends		—		(70	)		—		(70	)

Balance, March 31, 2015	$	2,439	$	750		$	1	$	3,190

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Operating revenue
Operating revenue	$	1,029		$	1,038
Operating revenue from affiliates		7			16

Total operating revenues		1,036			1,054

Operating expenses
Purchased power and fuel		350			409
Purchased power from affiliate		137			120
Operating and maintenance		156			163
Operating and maintenance from affiliates		26			25
Depreciation and amortization		106			108
Taxes other than income		57			60

Total operating expenses		832			885

Operating income		204			169

Other income and (deductions)
Interest expense, net		(21	)		(23	)
Interest expense to affiliates		(4	)		(4	)
Other, net		4			4

Total other income and (deductions)		(21	)		(23	)

Income before income taxes		183			146
Income taxes		74			58

Net income		109			88
Preference stock dividends		3			3

Net income attributable to common shareholder	$	106		$	85

Comprehensive income	$	109		$	88

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows from operating activities
Net income	$	109		$	88
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		106			108
Deferred income taxes and amortization of investment tax credits		33			27
Other non-cash operating activities		64			43
Changes in assets and liabilities:
Accounts receivable		(141	)		(132	)
Receivables from and payables to affiliates, net		(8	)		(8	)
Inventories		38			33
Accounts payable, accrued expenses and other current liabilities		(8	)		(16	)
Counterparty collateral (posted) received, net		(27	)		22
Income taxes		26			31
Pension and non-pension postretirement benefit contributions		(4	)		(5	)
Other assets and liabilities		93			44

Net cash flows provided by operating activities		281			235

Cash flows from investing activities
Capital expenditures		(136	)		(146	)
Change in restricted cash		2			(47	)
Other investing activities		2			6

Net cash flows used in investing activities		(132	)		(187	)

Cash flows from financing activities
Changes in short-term borrowings		(120	)		(66	)
Dividends paid on preference stock		(3	)		(3	)
Dividends paid on common stock		(36	)		—
Other financing activities		(13	)		13

Net cash flows used in financing activities		(172	)		(56	)

Decrease in cash and cash equivalents		(23	)		(8	)
Cash and cash equivalents at beginning of period		64			31

Cash and cash equivalents at end of period	$	41		$	23

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	41	$	64
Restricted cash and cash equivalents		48		50
Accounts receivable, net
Customer		489		390
Other		99		82
Inventories, net
Gas held in storage		16		57
Materials and supplies		33		30
Deferred income taxes		15		6
Prepaid utility taxes		30		59
Regulatory assets		187		214
Other		4		5

Total current assets		962		957

Property, plant and equipment, net		6,280		6,204
Deferred debits and other assets
Regulatory assets		491		510
Investments		12		12
Prepaid pension asset		357		370
Other		28		25

Total deferred debits and other assets		888		917

Total assets^(a)	$	8,130	$	8,078

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	March 31, 2015		December 31, 2014
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	—	$	120
Long-term debt due within one year		75		75
Accounts payable		222		215
Accrued expenses		155		131
Deferred income taxes		36		52
Payables to affiliates		46		66
Customer deposits		95		92
Regulatory liabilities		124		44
Other		27		51

Total current liabilities		780		846

Long-term debt		1,867		1,867
Long-term debt to financing trust		258		258
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		1,924		1,865
Asset retirement obligations		18		17
Non-pension postretirement benefits obligations		211		212
Regulatory liabilities		187		200
Other		62		60

Total deferred credits and other liabilities		2,402		2,354

Total liabilities^(a)		5,307		5,325

Commitments and contingencies
Shareholders’ equity
Common stock		1,360		1,360
Retained earnings		1,273		1,203

Total shareholder’s equity		2,633		2,563

Preference stock not subject to mandatory redemption		190		190

Total equity		2,823		2,753

Total liabilities and shareholders’ equity	$	8,130	$	8,078

(a)

BGE’s consolidated assets include $49 million and $24 million at March 31, 2015 and December 31, 2014, respectively, of BGE’s consolidated VIE that can only be used to settle the liabilities of the VIE. BGE’s consolidated liabilities include $200 million and $197 million at March 31, 2015 and December 31, 2014, respectively, of BGE’s consolidated VIE for which the VIE creditors do not have recourse to BGE. See Note 3 — Variable Interest Entities.

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Total Shareholders’ Equity			Preference Stock Not Subject To Mandatory Redemption		Total Equity
Balance, December 31, 2014	$	1,360	$	1,203		$	2,563		$	190	$	2,753
Net income		—		109			109			—		109
Preference stock dividends		—		(3	)		(3	)		—		(3	)
Common stock dividends	$	—	$	(36	)	$	(36	)	$	—	$	(36	)

Balance, March 31, 2015	$	1,360	$	1,273		$	2,633		$	190	$	2,823

See the Combined Notes to Consolidated Financial Statements

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise noted)

1. Basis of Presentation (Exelon, Generation, ComEd, PECO and BGE)

Exelon is a utility services holding company engaged through its principal subsidiaries in the energy generation and energy distribution businesses.

The energy generation business includes:

•

Generation: Physical delivery and marketing of owned and contracted electric generation capacity and provision of renewable and other energy-related products and services, and natural gas exploration and production activities. Generation has six reportable segments consisting of the Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions.

The energy delivery businesses include:

•

ComEd: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in northern Illinois, including the City of Chicago.

•

PECO: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in southeastern Pennsylvania, including the City of Philadelphia, and the purchase and regulated retail sale of natural gas and the provision of distribution services in the Pennsylvania counties surrounding the City of Philadelphia.

•

BGE: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in central Maryland, including the City of Baltimore, and the purchase and regulated retail sale of natural gas and the provision of distribution services in central Maryland, including the City of Baltimore.

Each of the Registrant’s consolidated financial statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated. As a result of the Registrants’ 2014 divestiture of certain unconsolidated affiliates considered integral to their operations and the consolidation of CENG during 2014, all Equity in earnings (losses) from unconsolidated affiliates will be presented below Income taxes in the Registrants’ Statement of Operations and Comprehensive Income starting in the first quarter of 2015. For the three months ended March 31, 2015, Equity in earnings (losses) of unconsolidated affiliates was less than $1 million.

The accompanying consolidated financial statements as of March 31, 2015 and 2014 and for the three months then ended are unaudited but, in the opinion of the management of each Registrant include all adjustments that are considered necessary for a fair statement of the Registrants’ respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The December 31, 2014 Consolidated Balance Sheets were obtained from audited financial statements. Financial results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2015. These Combined Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These notes should be read in conjunction with the Combined Notes to Consolidated Financial Statements of all Registrants included in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA of their respective 2014 Form 10-K Reports.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

2. New Accounting Pronouncements (Exelon, Generation, ComEd, PECO and BGE)

The following recently issued accounting standards are not yet required to be reflected in the combined financial statements of the Registrants.

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

In April 2015, the FASB issued authoritative guidance that clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. A cloud computing arrangement would include a software license if (1) the customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty and (2) it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. If the arrangement does not contain a software license, it would be accounted for as a service contract. The guidance is effective for the Registrants for fiscal years beginning after December 15, 2015. Early adoption is permitted. The guidance can be applied retrospectively to each prior reporting period presented or prospectively to arrangements entered into, or materially modified, after the effective date. The Registrants are currently assessing the impact this guidance may have on their financial positions, results of operations, cash flows and disclosures as well as the transition method that they will use to adopt the guidance.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued authoritative guidance that changes the presentation of debt issuance costs in financial statements. The new guidance requires entity’s to present such costs in the balance sheet as a direct reduction to the related debt liability rather than as a deferred cost (i.e., an asset) as required by current guidance. The new standard does not change the recognition or measurement of debt issuance costs. The guidance is effective for the Registrants for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The guidance is required to be applied retrospectively to all prior periods presented. The Registrants are currently assessing the impact this guidance may have on their financial positions and disclosures, as well as whether to early adopt. The standard will not impact the results of operations and cash flows of the Registrants.

Amendments to the Consolidation Analysis

In February 2015, the FASB issued authoritative guidance that amends the consolidation analysis for variable interest entities (VIEs) as well as voting interest entities. The new guidance primarily (1) changes the assessment of limited partnerships as VIEs, (2) amends the effect that fees paid to a decision maker or service provider have on the VIE analysis, (3) amends how variable interests held by a reporting entity’s related parties and de facto agents impact its consolidation conclusion, (4) clarifies how to determine whether equity holders (as a group) have power over an entity and (5) provides a scope exception for registered and similar unregistered money market funds. The guidance is effective for the Registrants for the first interim period within annual reporting periods beginning on or after December 15, 2015. Early adoption is permitted. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of adoption (modified retrospective method). The Registrants are currently assessing the impact this guidance may have on their financial positions, results of operations, cash flows and disclosures as well as the transition method that they will use to adopt the guidance. The Registrants do not plan to early adopt the standard.

Revenue from Contracts with Customers

In May 2014, the FASB issued authoritative guidance that changes the criteria for recognizing revenue from a contract with a customer. The new guidance replaces existing guidance on revenue recognition, including most

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

industry specific guidance, with a five step model for recognizing and measuring revenue from contracts with customers. The objective of the new standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance also requires a number of disclosures regarding the nature, amount, timing and uncertainty of revenue and the related cash flows. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of initial adoption (modified retrospective method). The Registrants are currently assessing the impacts this guidance may have on their financial positions, results of operations, cash flows and disclosures as well as the transition method that they will use to adopt the guidance. The guidance is effective for the Registrants for the first interim period within annual reporting periods beginning on or after December 15, 2016; and early adoption would not be permitted. However, in April 2015, FASB proposed a one year deferral of the effective date to annual reporting periods beginning on or after December 15, 2017. In addition, the FASB proposal would include an option to early adopt the guidance for annual periods beginning on or after December 15, 2016.

3. Variable Interest Entities (Exelon, Generation, ComEd, PECO and BGE)

Under the applicable authoritative guidance, a VIE is a legal entity that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity owners who do not have the obligation to absorb expected losses or the right to receive the expected residual returns of the entity. Companies are required to consolidate a VIE if they are its primary beneficiary, which is the enterprise that has the power to direct the activities that most significantly affect the entity’s economic performance.

At March 31, 2015 and December 31, 2014, Exelon, Generation, and BGE collectively consolidated six VIEs or VIE groups for which the applicable Registrant was the primary beneficiary (see Consolidated Variable Interest Entities below). As of March 31, 2015 and December 31, 2014, the Registrants had significant interests in seven and six other VIEs, respectively, for which the Registrants do not have the power to direct the entities’ activities and, accordingly, were not the primary beneficiary.

Consolidated Variable Interest Entities

Exelon, Generation and BGE’s consolidated VIEs consist of:

•

BondCo, a special purpose bankruptcy remote limited liability company formed by BGE to acquire, hold, issue and service bonds secured by rate stabilization property,

•

a retail gas group formed by Generation to enter into a collateralized gas supply agreement with a third-party gas supplier

•

a group of solar project limited liability companies formed by Generation to build, own and operate solar power facilities,

•

several wind project companies designed by Generation to develop, construct and operate wind generation facilities,

•

certain retail power companies for which Generation is the sole supplier of energy, and

•

CENG.

As of March 31, 2015 and December 31, 2014, ComEd and PECO do not have any material consolidated VIEs.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

As of March 31, 2015 and December 31, 2014, Exelon, Generation, and BGE provided the following support to their respective consolidated VIEs:

•

In the case of BondCo, BGE is required to remit all payments it receives from all residential customers through non-bypassable, rate stabilization charges to BondCo. During the three months ended March 31, 2015 and March 31, 2014, BGE remitted $21 million and $21 million to BondCo, respectively.

•

Generation provides operating and capital funding to the solar entities for ongoing construction, operations and maintenance of the solar power facilities and provides limited recourse related to the Antelope Valley project.

•

Generation and Exelon, where indicated, provide the following support to CENG (see Note 6 — Investment in Constellation Energy Nuclear Group, LLC, and Note 25 — Related Party Transactions, of the Exelon 2014 Form 10-K for additional information regarding Generation’s and Exelon’s transactions with CENG):

•

under the NOSA, Generation conducts all activities related to the operation of the CENG nuclear generation fleet owned by CENG subsidiaries (the CENG fleet) and provides corporate and administrative services for the remaining life and decommissioning of the CENG nuclear plants as if they were a part of the Generation nuclear fleet, subject to the CENG member rights of EDF Inc. (EDFI) (a subsidiary of EDF),

•

under the Power Services Agency Agreement (PSAA), Generation provides scheduling, asset management, and billing services to the CENG fleet for the remaining operating life of the CENG nuclear plants,

•

under power purchase agreements with CENG, Generation will purchase 50.01% of the available output generated by the CENG nuclear plants from January 2015 through the end of the operating life of each respective plant. However, pursuant to amendments dated March 31, 2015, the energy obligations under the Ginna Nuclear Power Plant (Ginna) PPAs have been suspended during the term of the Reliability Support Services Agreement (RSSA) which Ginna entered into with Rochester Gas and Electric Corporation (RG&E) on February 13, 2015. The obligations under the RSSA commenced on April 1, 2015 and are effective through September 30, 2018, (see Note 5 — Regulatory Matters for additional details),

•

Generation provided a $400 million loan to CENG. As of March 31, 2015, the remaining obligation is $288 million, which reflects the principal payment made in January 2015 (see Note 5 — Investment in Constellation Energy Nuclear Group, LLC of the Exelon 2014 Form 10-K for additional details),

•

Generation executed an Indemnity Agreement pursuant to which Generation agreed to indemnify EDF and its affiliates 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. (See Note 17 — Commitments and Contingencies for more details),

•

in connection with CENG’s severance obligations, Generation has agreed to reimburse CENG for a total of approximately $6 million of the severance benefits paid or to be paid in 2014 through 2016. As of March 31, 2015, the remaining obligation is approximately $2 million,

•

Generation and EDFI share in the $637 million of contingent payment obligations for the payment of contingent retrospective premium adjustments for the nuclear liability insurance (see Note 17 — Commitments and Contingencies for more details),

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

•

Generation provides a guarantee of approximately $7 million associated with hazardous waste management facilities and underground storage tanks. In addition, EDFI executed a reimbursement agreement that provides reimbursement to Exelon for 49.99% of any amounts paid by Generation under this guarantee,

•

Generation and EDFI are the members-insured with Nuclear Electric Insurance Limited (NEIL) and have assigned the loss benefits under the insurance and the NEIL premium costs to CENG and guarantee the obligations of CENG under these insurance programs in proportion to their respective member interests (see Note 17 — Commitments and Contingencies for more details), and

•

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.

•

Generation provides approximately $7 million in credit support for the retail power companies for which Generation is the sole supplier of energy, and

•

Generation provides a $75 million parental guarantee to the third-party gas supplier in support of its retail gas group.

For each of the consolidated VIEs, except as otherwise noted:

•

the assets of the VIEs are restricted and can only be used to settle obligations of the respective VIE;

•

Exelon, Generation and BGE did not provide any additional material financial support to the VIEs;

•

Exelon, Generation and BGE did not have any material contractual commitments or obligations to provide financial support to the VIEs; and

•

the creditors of the VIEs did not have recourse to Exelon’s, Generation’s or BGE’s general credit.

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in Exelon’s, Generation’s, and BGE’s consolidated financial statements at March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015						December 31, 2014
	Exelon^(a)		Generation		BGE		Exelon^(a)		Generation		BGE
Current assets	$	1,185	$	1,134	$	46	$	1,271	$	1,242	$	21
Noncurrent assets		7,676		7,664		3		7,580		7,566		3

Total assets	$	8,861	$	8,798	$	49	$	8,851	$	8,808	$	24

Current liabilities	$	520	$	434	$	80	$	611	$	526	$	77
Noncurrent liabilities		2,812		2,682		120		2,730		2,600		120

Total liabilities	$	3,332	$	3,116	$	200	$	3,341	$	3,126	$	197

(a)	Includes certain purchase accounting adjustments not pushed down to the BGE standalone entity.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Assets and Liabilities of Consolidated VIEs

Included within the balances above are assets and liabilities of certain consolidated VIEs for which the assets can only be used to settle obligations of those VIEs, and liabilities that creditors, or beneficiaries, do not have recourse to the general credit of the Registrants. As of March 31, 2015 and December 31, 2014, these assets and liabilities primarily consisted of the following:


	March 31, 2015						December 31, 2014
	Exelon		Generation		BGE		Exelon		Generation		BGE
Cash and cash equivalents	$	334	$	334	$	—	$	392	$	392	$	—
Restricted cash		159		113		46		117		96		21
Accounts receivable, net
Customer		296		296		—		297		297		—
Other		33		33		—		57		57		—
Mark-to-market derivatives assets		130		130		—		171		171		—
Inventory
Materials and supplies		168		168		—		172		172		—
Other current assets		40		34		—		33		26		—

Total current assets		1,160		1,108		46		1,239		1,211		21

Property, plant and equipment, net		4,720		4,720		—		4,638		4,638		—
Nuclear decommissioning trust funds		2,114		2,114		—		2,097		2,097		—
Goodwill		47		47		—		47		47		—
Mark-to-market derivatives assets		51		51		—		44		44		—
Other noncurrent assets		90		78		3		95		82		3

Total noncurrent assets		7,022		7,010		3		6,921		6,908		3

Total assets	$	8,182	$	8,118	$	49	$	8,160	$	8,119	$	24

Long-term debt due within one year	$	85	$	5	$	75	$	87	$	5	$	75
Accounts payable		268		268		—		292		292		—
Accrued expenses		77		71		5		111		108		2
Mark-to-market derivative liabilities		10		10		—		24		24		—
Unamortized energy contract liabilities		9		9		—		22		22		—
Other current liabilities		18		18		—		25		25		—

Total current liabilities		467		381		80		561		476		77

Long-term debt		211		81		120		212		81		120
Asset retirement obligations		1,843		1,843		—		1,763		1,763		—
Pension obligation^(a)		9		9		—		9		9		—
Unamortized energy contract liabilities		48		48		—		51		51		—
Other noncurrent liabilities		124		124		—		127		127		—

Noncurrent liabilities		2,235		2,105		120		2,162		2,031		120

Total liabilities	$	2,702	$	2,486	$	200	$	2,723	$	2,507	$	197

(a)	Includes CNEG retail gas pension obligation, which is presented as a net asset balance within the Prepaid Pension asset line item on Generation’s balance sheet. See Note 12 — Retirement Benefits for additional details.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Unconsolidated Variable Interest Entities

Exelon’s and Generation’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 on Exelon’s and Generation’s Consolidated Balance Sheets in Investments. For the energy purchase and sale contracts and the fuel purchase commitments (commercial agreements), the carrying amount of assets and liabilities in Exelon’s and Generation’s Consolidated Balance Sheets that relate to their involvement with the VIEs are predominately related to working capital accounts and generally represent the amounts owed by, or owed to, Exelon and Generation for the deliveries associated with the current billing cycles under the commercial agreements. Further, Exelon and Generation have not provided material debt or equity support, liquidity arrangements or performance guarantees associated with these commercial agreements.

The Registrants’ unconsolidated VIEs consist of:

•

Energy purchase and sale agreements with VIEs for which Generation has concluded that consolidation is not required.

•

Asset sale agreement with ZionSolutions, LLC and EnergySolutions, Inc. in which Generation has a variable interest but has concluded that consolidation is not required.

•

Equity investments in energy development projects and energy generating facilities for which Generation has concluded that consolidation is not required.

As of March 31, 2015 and December 31, 2014, Exelon and Generation had significant unconsolidated variable interests in seven and six VIEs, respectively, for which Exelon or Generation, as applicable, was not the primary beneficiary; including certain equity method investments and certain commercial agreements. The increase in the number of unconsolidated VIEs is due to the execution of an energy purchase and sale agreement with a new unconsolidated VIE. The following tables present summary information about Exelon and Generation’s significant unconsolidated VIE entities:


March 31, 2015	Commercial Agreement VIEs		Equity Investment VIEs		Total
Total assets^(a)	$	259	$	85	$	344
Total liabilities^(a)		32		47		79
Exelon’s ownership interest in VIE^(a)		—		9		9
Other ownership interests in VIE^(a)		227		29		256
Registrants’ maximum exposure to loss: