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Income Taxes (All Registrants) | 9 Months Ended
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Sep. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes (All Registrants) | Income Taxes (All Registrants) Rate Reconciliation The effective income tax rate from continuing operations varies from the U.S. federal statutory rate principally due to the following:
| Three Months Ended September 30, 2024(a) |
| Exelon |  | ComEd(b) |  | PECO(c) |  | BGE(b) |  | PHI |  | Pepco |  | DPL |  | ACE |
U.S. Federal statutory rate | 21.0 | % |  | 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 | 5.7 |  |  | 7.6 |  |  | (2.1) |  |  | 6.5 |  |  | 6.5 |  |  | 6.2 |  |  | 6.3 |  |  | 7.4 |  |
Plant basis differences | (4.8) |  |  | (0.8) |  |  | (19.5) |  |  | (0.8) |  |  | (0.8) |  |  | (1.2) |  |  | (0.8) |  |  | — |  |
Excess deferred tax amortization | (14.0) |  |  | (16.6) |  |  | (2.6) |  |  | (18.6) |  |  | (5.5) |  |  | (6.7) |  |  | (5.9) |  |  | (1.6) |  |
Amortization of investment tax credit, including deferred taxes on basis difference | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |  |
Tax credits | (0.9) |  |  | (2.6) |  |  | — |  |  | (0.6) |  |  | (0.6) |  |  | (0.5) |  |  | (0.6) |  |  | (0.5) |  |
Other | (0.3) |  |  | 0.6 |  |  | (0.3) |  |  | 0.8 |  |  | 0.1 |  |  | (0.2) |  |  | 0.4 |  |  | 0.3 |  |
Effective income tax rate | 6.6 | % |  | 9.1 | % |  | (3.5) | % |  | 8.2 | % |  | 20.6 | % |  | 18.6 | % |  | 20.3 | % |  | 26.5 | % |
| Three Months Ended September 30, 2023(a)
| Exelon |  | ComEd |  | PECO(c) |  | BGE |  | PHI |  | Pepco |  | DPL |  | ACE
U.S. Federal statutory rate | 21.0 | % |  | 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 (d) | (2.7) |  |  | 7.8 |  |  | (1.2) |  |  | 6.6 |  |  | 6.2 |  |  | 5.5 |  |  | 6.1 |  |  | 7.0 |
Plant basis differences | (4.4) |  |  | (0.4) |  |  | (15.6) |  |  | (0.2) |  |  | (1.5) |  |  | (2.4) |  |  | (0.9) |  |  | (0.5) |
Excess deferred tax amortization | (6.4) |  |  | (5.3) |  |  | (2.4) |  |  | (5.4) |  |  | (8.0) |  |  | (9.2) |  |  | (10.0) |  |  | (3.1) |
Amortization of investment tax credit, including deferred taxes on basis difference | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |
Tax credits | (0.5) |  |  | (1.2) |  |  | — |  |  | (2.0) |  |  | (0.5) |  |  | (0.6) |  |  | (0.4) |  |  | (0.3) |
Other | 1.8 |  |  | 0.2 |  |  | 0.2 |  |  | (0.3) |  |  | 0.3 |  |  | 0.6 |  |  | — |  |  | 0.5 |
Effective income tax rate | 8.7 | % |  | 22.0 | % |  | 2.0 | % |  | 19.6 | % |  | 17.4 | % |  | 14.9 | % |  | 15.7 | % |  | 24.5 | %
__________ (a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit. (b)For ComEd, the lower effective tax rate is primarily due to CEJA which resulted in the acceleration of certain income tax benefits. For BGE, the lower effective tax rate is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. (c)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. (d)For Exelon, the lower state income taxes, net of federal income tax expense, is primarily due to the long-term marginal state income tax rate change of $54 million.
| Nine Months Ended September 30, 2024(a) |
| Exelon |  | ComEd(b) |  | PECO(c) |  | BGE(b) |  | PHI |  | Pepco |  | DPL |  | ACE |
U.S. Federal statutory rate | 21.0 | % |  | 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 | 5.8 |  |  | 7.7 |  |  | (1.2) |  |  | 6.3 |  |  | 6.5 |  |  | 6.2 |  |  | 6.2 |  |  | 7.4 |  |
Plant basis differences | (4.2) |  |  | (0.8) |  |  | (14.7) |  |  | (1.2) |  |  | (0.9) |  |  | (1.3) |  |  | (0.9) |  |  | 0.1 |  |
Excess deferred tax amortization | (14.1) |  |  | (17.4) |  |  | (2.4) |  |  | (17.6) |  |  | (5.4) |  |  | (6.8) |  |  | (5.8) |  |  | (1.6) |  |
Amortization of investment tax credit, including deferred taxes on basis difference | (0.1) |  |  | (0.1) |  |  | — |  |  | — |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |  |
Tax credits | (0.6) |  |  | (1.4) |  |  | — |  |  | (0.4) |  |  | (0.5) |  |  | (0.4) |  |  | (0.4) |  |  | (0.4) |  |
Other | 0.2 |  |  | 0.4 |  |  | (0.2) |  |  | 0.2 |  |  | 0.2 |  |  | (0.1) |  |  | — |  |  | 0.1 |  |
Effective income tax rate | 8.0 | % |  | 9.4 | % |  | 2.5 | % |  | 8.3 | % |  | 20.8 | % |  | 18.6 | % |  | 20.0 | % |  | 26.5 | % |
| Nine Months Ended September 30, 2023(a)
| Exelon |  | ComEd |  | PECO(c) |  | BGE |  | PHI |  | Pepco |  | DPL |  | ACE
U.S. Federal statutory rate | 21.0 | % |  | 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(d) | 2.8 |  |  | 7.8 |  |  | (1.3) |  |  | 6.5 |  |  | 6.1 |  |  | 5.5 |  |  | 6.2 |  |  | 6.9 |
Plant basis differences | (4.3) |  |  | (0.4) |  |  | (15.5) |  |  | (0.5) |  |  | (1.6) |  |  | (2.5) |  |  | (1.0) |  |  | (0.5) |
Excess deferred tax amortization | (6.6) |  |  | (5.5) |  |  | (2.4) |  |  | (5.4) |  |  | (7.7) |  |  | (9.2) |  |  | (9.4) |  |  | (2.6) |
Amortization of investment tax credit, including deferred taxes on basis difference | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |  |  | — |  |  | (0.1) |  |  | (0.1) |
Tax credits | (0.5) |  |  | (0.7) |  |  | — |  |  | (0.7) |  |  | (0.6) |  |  | (0.7) |  |  | (0.4) |  |  | (0.3) |
Other | 1.5 |  |  | 0.1 |  |  | 0.1 |  |  | 0.2 |  |  | 0.3 |  |  | 0.6 |  |  | — |  |  | 0.3 |
Effective income tax rate | 13.8 | % |  | 22.2 | % |  | 1.9 | % |  | 21.0 | % |  | 17.4 | % |  | 14.7 | % |  | 16.3 | % |  | 24.7 | %
__________ (a)Positive percentages represent income tax expense. Negative percentages represent income tax benefit. (b)For ComEd, the lower effective tax rate is primarily due to CEJA which resulted in the acceleration of certain income tax benefits. For BGE, the lower effective tax rate is primarily due to the Maryland multi-year plan which resulted in the acceleration of certain income tax benefits. (c)For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. (d)For Exelon, the lower state income taxes, net of federal income tax expense, is primarily due to the long-term marginal state income tax rate change of $54 million. Unrecognized Tax Benefits Exelon, PHI and ACE have the following unrecognized tax benefits at September 30, 2024 and December 31, 2023. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
| Exelon(a) |  |  |  | PHI |  | ACE
September 30, 2024 | $ | 85 |  |  |  |  | $ | 38 |  |  | $ | 1 |
December 31, 2023 | 94 |  |  |  |  | 51 |  |  | 15 |
__________ (a)At September 30, 2024 and December 31, 2023, Exelon's unrecognized tax benefits is inclusive of $31 million related to Constellation's share of unrecognized tax benefits for periods prior to the separation. Exelon reflected an offsetting receivable of $31 million in Other deferred debits and other assets in the Consolidated Balance Sheet for these amounts. Other Tax Matters 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. 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 provides that Exelon will reimburse Constellation when those allocated tax credit carryforwards are utilized. As of September 30, 2024, Exelon recorded a payable of $130 million and $201 million in Other current liabilities and Other deferred credits and other liabilities, respectively, in the Consolidated Balance Sheet for tax attribute carryforwards that are expected to be utilized and reimbursed to Constellation. Corporate Alternative Minimum Tax (All Registrants) On August 16, 2022, the IRA was signed into law and implements a new corporate alternative minimum tax (CAMT) that imposes a 15.0% tax on modified GAAP net income. Corporations are entitled to a tax credit (minimum tax credit) to the extent the CAMT liability exceeds the regular tax liability. This amount can be carried forward indefinitely and used in future years when regular tax exceeds the CAMT. Beginning in 2023, based on the existing statute, Exelon and each of the Utility Registrants will be subject to and will report the CAMT on a separate Registrant basis in the Consolidated Statements of Operations and Comprehensive Income and the Consolidated Balance Sheets. The deferred tax asset related to the minimum tax credit carryforward will be realized to the extent Exelon’s consolidated deferred tax liabilities exceed the minimum tax credit carryforward. Exelon’s deferred tax liabilities are expected to exceed the minimum tax credit carryforward for the foreseeable future and thus no valuation allowance is required. On September 12, 2024, the U.S. Treasury issued proposed regulations providing further guidance addressing the implementation of CAMT. The proposed regulations are consistent with Exelon’s prior interpretation and therefore there are no financial statement impacts. Exelon will continue to monitor and assess the potential financial statement impacts of final regulations or other guidance when issued. Allocation of Tax Benefits (All Registrants) The Utility Registrants are party to an agreement with 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 benefit attributable to Exelon is reallocated to the Utility Registrants. That allocation is treated as a contribution to capital 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 three and nine months ended September 30, 2024, and 2023.
| ComEd |  | PECO |  | BGE |  | PHI |  | Pepco |  | DPL |  | ACE
September 30, 2024 | $ | 30 |  |  | $ | 15 |  |  | $ | 14 |  |  | $ | 16 |  |  | $ | 9 |  |  | $ | 5 |  |  | $ | 2 |
September 30, 2023 | $ | 13 |  |  | $ | 19 |  |  | $ | — |  |  | $ | 10 |  |  | $ | 4 |  |  | $ | — |  |  | $ | 2 |
Allocation of Income Taxes to Regulated Utilities (All Registrants) In Q2 2024, the IRS issued a series of private letter rulings (PLR), to another taxpayer, providing guidance with respect to the application of the tax normalization rules to the allocation of consolidated tax benefits among the members of a consolidated group associated with NOLC for ratemaking purposes. The rulings provide that for ratemaking purposes the tax benefit of NOLC should be reflected on a separate company basis not taking into consideration any payments received for the utilization of losses by other affiliates under a tax sharing agreement. For the Registrants, the impact of these PLRs could result in a material reduction of the regulatory liability established for EDITs arising from the TCJA corporate tax rate change that are being amortized and flowed through to customers as well as a reduction in the accumulated deferred income taxes that reduce rate base for ratemaking purposes. A PLR issued to another taxpayer may not be relied on as precedent. However, Management is analyzing this guidance and plans to work collaboratively with Exelon's regulatory commissions to address potential impacts. The Registrants will record the impact, if any, after either obtaining approval from their regulatory commissions or upon receiving their own PLRs from the IRS.

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