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Commitments and Contingencies (All Registrants) | 9 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies (All Registrants) | Commitments and Contingencies (All Registrants) The following is an update to the current status of commitments and contingencies set forth in Note 18 — Commitments and Contingencies of the 2023 Form 10-K. Commitments PHI Merger Commitments (Exelon, PHI, Pepco, DPL, and ACE). Approval of the PHI Merger in Delaware, New Jersey, Maryland, and the District of Columbia was conditioned upon Exelon and PHI agreeing to certain commitments. The following amounts represent total commitment costs that have been recorded since the acquisition date and the total remaining obligations for Exelon, PHI, Pepco, DPL, and ACE at September 30, 2024:
Description | Exelon |  | PHI |  | Pepco |  | DPL |  | ACE
Total commitments | $ | 513 |  |  | $ | 320 |  |  | $ | 120 |  |  | $ | 89 |  |  | $ | 111 |
Remaining commitments(a) | 30 |  |  | 27 |  |  | 24 |  |  | 2 |  |  | 1 |
__________ (a)Remaining commitments extend through 2026 and include escrow funds, charitable contributions, and rate credits. Commercial Commitments (All Registrants). The Registrants’ commercial commitments at September 30, 2024, representing commitments potentially triggered by future events, were as follows:
|  |  | Expiration within
| Total |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | 2029 and beyond
Exelon |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 54 |  |  | $ | 11 |  |  | $ | 43 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 195 |  |  | 86 |  |  | 107 |  |  | — |  |  | 2 |  |  | — |  |  | — |
Financing trust guarantees(c) | 378 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 78 |  |  | 300 |
Guaranteed lease residual values(d) | 26 |  |  | — |  |  | 2 |  |  | 5 |  |  | 4 |  |  | 6 |  |  | 9 |
Total commercial commitments | $ | 653 |  |  | $ | 97 |  |  | $ | 152 |  |  | $ | 5 |  |  | $ | 6 |  |  | $ | 84 |  |  | $ | 309 |
ComEd |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 17 |  |  | $ | 4 |  |  | $ | 13 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 36 |  |  | 5 |  |  | 29 |  |  | — |  |  | 2 |  |  | — |  |  | — |
Financing trust guarantees(c) | 200 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 200 |
Total commercial commitments | $ | 253 |  |  | $ | 9 |  |  | $ | 42 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 200 |
PECO |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 4 |  |  | $ | — |  |  | $ | 4 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 2 |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |
Financing trust guarantees(c) | 178 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 78 |  |  | 100 |
Total commercial commitments | $ | 184 |  |  | $ | — |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | 78 |  |  | $ | 100 |
BGE |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 27 |  |  | $ | 6 |  |  | $ | 21 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 3 |  |  | 1 |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial commitments | $ | 30 |  |  | $ | 7 |  |  | $ | 23 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
PHI |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 3 |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 97 |  |  | 76 |  |  | 21 |  |  | — |  |  | — |  |  | — |  |  | — |
Guaranteed lease residual values(d) | 26 |  |  | — |  |  | 2 |  |  | 5 |  |  | 4 |  |  | 6 |  |  | 9 |
Total commercial commitments | $ | 126 |  |  | $ | 76 |  |  | $ | 26 |  |  | $ | 5 |  |  | $ | 4 |  |  | $ | 6 |  |  | $ | 9 |
Pepco |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 85 |  |  | 71 |  |  | 14 |  |  | — |  |  | — |  |  | — |  |  | — |
Guaranteed lease residual values(d) | 9 |  |  | — |  |  | 1 |  |  | 2 |  |  | 1 |  |  | 2 |  |  | 3 |
Total commercial commitments | $ | 96 |  |  | $ | 71 |  |  | $ | 17 |  |  | $ | 2 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 3 |
DPL |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit(a) | $ | 1 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Surety bonds(b) | 7 |  |  | 3 |  |  | 4 |  |  | — |  |  | — |  |  | — |  |  | — |
Guaranteed lease residual values(d) | 10 |  |  | — |  |  | 1 |  |  | 2 |  |  | 2 |  |  | 2 |  |  | 3 |
Total commercial commitments | $ | 18 |  |  | $ | 3 |  |  | $ | 6 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 3 |
ACE |  |  |  |  |  |  |  |  |  |  |  |  |
Surety bonds(b) | $ | 5 |  |  | $ | 2 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Guaranteed lease residual values(d) | 7 |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 2 |  |  | 3 |
Total commercial commitments | $ | 12 |  |  | $ | 2 |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 3 |
__________ (a)Exelon and certain of its subsidiaries maintain non-debt letters of credit to provide credit support for certain transactions as requested by third parties. (b)Surety bonds—Guarantees issued related to contract and commercial agreements, excluding bid bonds. Historically, payments under the guarantees have not been made and the likelihood of payments being required is remote. (c)Reflects guarantee of ComEd and PECO securities held by ComEd Financing III, PECO Trust III, and PECO Trust IV. (d)Represents the maximum potential obligation in the event the fair value of certain leased equipment and fleet vehicles is zero at the end of the maximum lease term. The lease term associated with these assets ranges from 1 to 9 years. The maximum potential obligation at the end of the minimum lease term would be $60 million guaranteed by Exelon and PHI, of which $21 million, $22 million, and $17 million is guaranteed by Pepco, DPL, and ACE, respectively. Historically, payments under the guarantees have not been made and PHI believes the likelihood of payments being required under the guarantees is remote. Environmental Remediation Matters General (All Registrants). The Registrants’ operations have in the past, and may in the future, require substantial expenditures to comply with environmental laws. Additionally, under federal and state environmental laws, the Registrants are generally liable for the costs of remediating environmental contamination of property now or formerly owned by them and of property contaminated by hazardous substances generated by them. The Registrants own or lease a number of real estate parcels, including parcels on which their operations or the operations of others may have resulted in contamination by substances that are considered hazardous under environmental laws. In addition, the Registrants are currently involved in a number of proceedings relating to sites where hazardous substances have been deposited and may be subject to additional proceedings in the future. Unless otherwise disclosed, the Registrants cannot reasonably estimate whether they will incur significant liabilities for additional investigation and remediation costs at these or additional sites identified by the Registrants, environmental agencies, or others, or whether such costs will be recoverable from third parties, including customers. Additional costs could have a material, unfavorable impact on the Registrants' financial statements. MGP Sites (All Registrants). ComEd, PECO, BGE, and DPL have identified sites where former MGP or gas purification activities have or may have resulted in actual site contamination. For some sites, there are additional PRPs that may share responsibility for the ultimate remediation of each location. •ComEd has 16 sites that are currently under some degree of active study and/or remediation. ComEd expects the majority of the remediation at these sites to continue through at least 2031. •PECO has 6 sites that are currently under some degree of active study and/or remediation. PECO expects the majority of the remediation at these sites to continue through at least 2027. •BGE has 4 sites that currently require some level of remediation and/or ongoing activity. BGE expects the majority of the remediation at these sites to continue through at least 2025. •DPL has 1 site that is currently under study and the required cost at the site is not expected to be material. The historical nature of the MGP and gas purification sites and the fact that many of the sites have been buried and built over, impacts the ability to determine a precise estimate of the ultimate costs prior to initial sampling and determination of the exact scope and method of remedial activity. Management determines its best estimate of remediation costs using all available information at the time of each study, including probabilistic and deterministic modeling for ComEd and PECO, and the remediation standards currently required by the applicable state environmental agency. Prior to completion of any significant clean up, each site remediation plan is approved by the appropriate state environmental agency. ComEd, pursuant to an ICC order, and PECO, pursuant to a PAPUC order, are currently recovering environmental remediation costs of former MGP facility sites through customer rates. While BGE and DPL do not have riders for MGP clean-up costs, they have historically received recovery of actual clean-up costs in distribution rates. During the third quarter of 2024, ComEd and PECO completed an annual study of their future estimated MGP remediation requirements. The study resulted in increases of $13 million and $4 million to the environmental liability and related Regulatory asset for ComEd and PECO, respectively. The increases were primarily due to increased costs resulting from inflation and changes in remediation plans. At September 30, 2024 and December 31, 2023, the Registrants had accrued the following undiscounted amounts for environmental liabilities in Accrued expenses, Other current liabilities, and Other deferred credits and other liabilities in their respective Consolidated Balance Sheets:
| September 30, 2024 |  | December 31, 2023
| Total Environmental Investigation and Remediation Liabilities |  | Portion of Total Related to MGP Investigation and Remediation |  | Total Environmental Investigation and Remediation Liabilities |  | Portion of Total Related to MGP Investigation and Remediation
Exelon | $ | 410 |  |  | $ | 328 |  |  | $ | 428 |  |  | $ | 338 |
ComEd | 290 |  |  | 289 |  |  | 303 |  |  | 302 |
PECO | 31 |  |  | 28 |  |  | 27 |  |  | 25 |
BGE | 14 |  |  | 11 |  |  | 14 |  |  | 11 |
PHI | 75 |  |  | — |  |  | 81 |  |  | — |
Pepco | 73 |  |  | — |  |  | 79 |  |  | — |
DPL | 1 |  |  | — |  |  | 1 |  |  | — |
ACE | 1 |  |  | — |  |  | 1 |  |  | — |
Benning Road Site (Exelon, PHI, and Pepco). In September 2010, PHI received a letter from the EPA identifying the Benning Road site as one of six land-based sites potentially contributing to contamination of the lower Anacostia River. A portion of the site, which is owned by Pepco, was formerly the location of an electric generating facility owned by Pepco subsidiary, Pepco Energy Services (PES), which became a part of Generation following the 2016 merger between PHI and Exelon. This generating facility was deactivated in June 2012. The remaining portion of the site consists of a Pepco transmission and distribution service center that remains in operation. In December 2011, the U.S. District Court for the District of Columbia approved a Consent Decree entered into by Pepco and Pepco Energy Services (hereinafter "Pepco Entities") with the DOEE, which requires the Pepco Entities to conduct a Remedial Investigation and Feasibility Study (RI/FS) for the Benning Road site and an approximately 10 to 15-acre portion of the adjacent Anacostia River. The purpose of this RI/FS is to define the nature and extent of contamination from the Benning Road site and to evaluate remedial alternatives. Pursuant to an internal agreement between the Pepco Entities, since 2013, Pepco has performed the work required by the Consent Decree and has been reimbursed for that work by an agreed upon allocation of costs between the Pepco Entities. In September 2019, the Pepco Entities issued a draft “final” RI report which the DOEE approved on February 3, 2020. The Pepco Entities are completing a FS to evaluate possible remedial alternatives for submission to the DOEE. In October 2022, the DOEE approved dividing the work to complete the landside portion of the FS from the waterside portion to expedite the overall schedule for completion of the project. The landside FS was approved by the DOEE on March 15, 2024, and the waterside FS is scheduled to be complete and approved by the DOEE by the end of the fourth quarter of 2024. Following the completion of each FS, the DOEE will issue a Proposed Plan for public comment and then issue a Record of Decision (ROD) identifying the remedial actions determined to be necessary for the area in question. On October 3, 2023, the DOEE and Pepco entered into an addendum to the Benning Consent Decree pursuant to which Pepco has agreed to fund or perform the remedial actions to be selected by the DOEE for the landside and waterside areas. This addendum to the Benning Consent Decree was entered by the Court on February 27, 2024 and became effective on that date. As part of the separation between Exelon and Constellation in February 2022, the internal agreement between the Pepco Entities for completion and payment for the remaining Consent Decree work was memorialized in a formal agreement for post-separation activities. A second post-separation assumption agreement between Exelon and Constellation transferred any of the potential remaining remediation liability, if any, of PES/Generation to a non-utility subsidiary of Exelon which going forward will be responsible for those liabilities. Exelon, PHI, and Pepco have determined that a loss associated with this matter is probable and have accrued an estimated liability, which is included in the table above. Anacostia River Tidal Reach (Exelon, PHI, and Pepco). Contemporaneous with the Benning Road site RI/FS being performed by the Pepco Entities, the DOEE and NPS have been conducting a separate RI/FS focused on the entire tidal reach of the Anacostia River extending from just north of the Maryland-District of Columbia boundary line to the confluence of the Anacostia and Potomac Rivers. The riverwide RI incorporated the results of the river sampling performed by the Pepco Entities as part of the Benning RI/FS, as well as similar sampling efforts conducted by owners of other sites adjacent to this segment of the river and supplemental river sampling conducted by the DOEE’s contractor. On September 30, 2020, the DOEE released its Interim ROD for the Anacostia River sediments. The Interim ROD reflects an adaptive management approach which will require several identified “hot spots” in the river to be addressed first while continuing to conduct studies and to monitor the river to evaluate improvements and determine potential future remediation plans. The adaptive management process chosen by the DOEE is less intrusive, provides more long-term environmental certainty, is less costly, and allows for site specific remediation plans already underway, including the plan for the Benning Road site to proceed to conclusion. On July 15, 2022, Pepco received a letter from the District of Columbia's Office of the Attorney General (D.C. OAG) on behalf of the DOEE conveying a settlement offer to resolve all PRPs' liability to the District of Columbia (District) for their past costs and their anticipated future costs to complete the work for the Interim ROD. Pepco responded on July 27, 2022 agreeing to enter into settlement discussions. On October 3, 2023, Pepco and the District entered into another consent decree (the “Anacostia River Consent Decree”) pursuant to which Pepco agreed to pay $47 million to resolve its liability to the District for all past costs to perform the riverwide RI/FS and all future costs to complete the work required by the Interim ROD. This amount was agreed to be paid in four equal annual installments beginning a year after the effective date of the Anacostia River Consent Decree. The funds will be deposited into the DOEE’s Clean Land Fund for the District’s costs of the Interim ROD work. The Anacostia River Consent Decree caps Pepco’s liability for these costs and provides Pepco with the right to seek contributions from other potentially responsible parties. The Anacostia River Consent Decree was signed by the judge for the U.S. District Court for the District of Columbia and became effective on April 11, 2024. Exelon, PHI, and Pepco have accrued a liability for Pepco’s payment obligations under the Anacostia Consent Decree and management's best estimate of its share of any other future Anacostia River response costs. Pepco has concluded that incremental exposure remains reasonably possible, but management cannot reasonably estimate a range of loss beyond the amounts recorded, which are included in the table above. In addition to the activities associated with the remedial process outlined above, CERCLA separately requires federal and state (here including Washington, D.C.) Natural Resource Trustees (federal or state agencies designated by the President or the relevant state, respectively, or Indian tribes) to conduct an assessment of any damages to natural resources within their jurisdiction as a result of the contamination that is being remediated. The Trustees can seek compensation from responsible parties for such damages, including restoration costs. During the second quarter of 2018, Pepco became aware that the Trustees are in the beginning stages of a NRD assessment, a process that often takes many years beyond the remedial decision to complete. Pepco has concluded that a loss associated with the eventual NRD assessment is reasonably possible. Due to the very early stage of the NRD process, Pepco cannot reasonably estimate the final range of loss potentially resulting from this process. As noted in the Benning Road Site disclosure above, as part of the separation of Exelon and Constellation in February 2022, an assumption agreement was executed transferring any potential future remediation liabilities associated with the Benning Site remediation to a non-utility subsidiary of Exelon. Similarly, any potential future liability associated with the Anacostia River Sediment Project was also assumed by this entity. Buzzard Point Site (Exelon, PHI, and Pepco). On December 8, 2022, Pepco received a letter from the D.C. OAG, alleging wholly past violations of the District's stormwater discharge and waste disposal requirements related to operations at the Buzzard Point facility, a 9-acre parcel of waterfront property in Washington, D.C. occupied by an active substation and former steam plant building. The letter also alleged wholly past violations by Pepco of stormwater discharge requirements related to its district-wide system of underground vaults. On October 3, 2023, Pepco entered into a Consent Order with the District of Columbia to resolve the alleged violations without any admission of liability. The Consent Order requires Pepco to pay a civil penalty of $10 million. In addition, Pepco has agreed to assess the environmental conditions at its Buzzard Point facility and conduct any remedial actions deemed necessary as a result of the assessment, and also to assess potential environmental impacts associated with the operation of its underground vaults. The court signed and entered the Consent Order, and it became effective on February 2, 2024. Exelon, PHI, and Pepco have accrued a liability for the penalty payments and for the projected costs for the required environmental assessments and remediation. Pepco has concluded that incremental exposure is reasonably possible, but the range of loss cannot be reasonably estimated beyond the amounts included in the table above. Litigation and Regulatory Matters DPA and Related Matters (Exelon and ComEd). Exelon and ComEd received a grand jury subpoena in the second quarter of 2019 from the U.S. Attorney’s Office for the Northern District of Illinois (USAO) requiring production of information concerning their lobbying activities in the State of Illinois. On October 4, 2019, Exelon and ComEd received a second grand jury subpoena from the USAO requiring production of records of any communications with certain individuals and entities. On October 22, 2019, the SEC notified Exelon and ComEd that it had also opened an investigation into their lobbying activities. On July 17, 2020, ComEd entered into a DPA with the USAO to resolve the USAO investigation, which included a payment to the U.S. Treasury of $200 million, which was paid in November 2020. The three-year term of the DPA ended on July 17, 2023, and on that same date the court granted the USAO’s motion to dismiss the pending charge against ComEd that had been deferred by the DPA. On September 28, 2023, Exelon and ComEd reached a settlement with the SEC, concluding and resolving in its entirety the SEC investigation, which related to the conduct identified in the DPA that was entered into by ComEd in July 2020 and successfully exited in July 2023. Under the terms of the settlement, Exelon has agreed to pay a civil penalty of $46.2 million and Exelon and ComEd have agreed to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder. Exelon recorded an accrual for the full amount of the penalty in the second quarter of 2023, which was reflected in Operating and maintenance expense within Exelon's Consolidated Statements of Operations and Comprehensive Income and in Accrued expenses on the Consolidated Balance Sheets. Exelon paid the civil penalty in full on October 4, 2023. Subsequent to Exelon announcing the receipt of the USAO subpoenas, various lawsuits were filed, and various demand letters were received related to the subject of the subpoenas, the conduct described in the DPA and the SEC's investigation, including: •Four putative class action lawsuits against ComEd and Exelon were filed in federal court on behalf of ComEd customers in the third quarter of 2020 alleging, among other things, civil violations of federal racketeering laws. The court granted ComEd and Exelon's motion to dismiss these actions in 2021 and that dismissal was affirmed on appeal in 2022. Plaintiffs have no further appeal rights and therefore the dismissal is final. •Three putative class action lawsuits against ComEd and Exelon were filed in Illinois state court in the third quarter of 2020 seeking restitution and compensatory damages on behalf of ComEd customers. The cases were consolidated into a single action in October of 2020. In 2021, the plaintiffs that filed the class action lawsuits in federal court (“federal plaintiffs”) refiled their dismissed state law claims in state court. ComEd and Exelon moved to dismiss both lawsuits. The court dismissed the original consolidated state court lawsuit in December 2021 and dismissed the federal plaintiffs’ refiled claims in February 2022. Both sets of plaintiffs appealed their dismissals, and the appeals were consolidated in March 2022. On September 8, 2023, the appellate court affirmed the dismissals. On December 22, 2023, plaintiffs collectively filed a petition for leave to appeal to the Illinois Supreme Court, which ComEd and Exelon responded to on January 12, 2024. On March 27, 2024, the Illinois Supreme Court denied plaintiffs' petition for leave to appeal. The dismissal of this action is final. •On November 3, 2022, a plaintiff filed a putative class action complaint in Lake County, Illinois Circuit Court against ComEd and Exelon for unjust enrichment and deceptive business practices in connection with the conduct giving rise to the DPA. Plaintiff seeks an accounting and disgorgement of any benefits ComEd allegedly obtained from said conduct. ComEd and Exelon filed a motion to dismiss the Complaint on February 3, 2023. On June 16, 2023, the court granted ComEd and Exelon's motion to dismiss the action with prejudice. Plaintiff filed its notice of appeal of that dismissal on July 17, 2023. On April 12, 2024, the appellate court issued its decision affirming dismissal of the action. On June 3, 2024, plaintiff filed a petition for leave to appeal the dismissal to the Illinois Supreme Court, which is a discretionary appeal. ComEd and Exelon filed its response to that petition on July 19, 2024. On September 25, 2024, the Illinois Supreme Court denied plaintiff’s petition for leave to appeal. The dismissal of this action is now final. •A putative class action lawsuit against Exelon and certain officers of Exelon and ComEd was filed in federal court in December 2019 alleging misrepresentations and omissions in Exelon’s SEC filings related to ComEd’s lobbying activities and the related investigations. The complaint was amended on September 16, 2020, to dismiss two of the original defendants and add other defendants, including ComEd. Defendants filed a motion to dismiss in November 2020. The court denied the motion in April 2021. Following mediation, the parties reached a settlement of the lawsuit, under which defendants agreed to pay plaintiffs $173 million. On May 26, 2023, plaintiffs filed a motion for preliminary approval of the settlement, which the court granted on June 9, 2023. The court granted final settlement approval on September 7, 2023. The settlement was fully covered by insurance and has been paid in full. •Several shareholders have sent letters to the Exelon Board of Directors since 2020 demanding, among other things, that the Exelon Board of Directors investigate and address alleged breaches of fiduciary duties and other alleged violations by Exelon and ComEd officers and directors related to the conduct described in the DPA. In the first quarter of 2021, the Exelon Board of Directors appointed a Special Litigation Committee (SLC) consisting of disinterested and independent parties to investigate and address these shareholders’ allegations and make recommendations to the Exelon Board of Directors based on the outcome of the SLC’s investigation. In July 2021, one of the demand letter shareholders filed a derivative action against current and former Exelon and ComEd officers and directors, and against Exelon, as nominal defendant, asserting the same claims made in its demand letter. Since that date, multiple parties have filed separate derivative lawsuits that were subsequently consolidated. On October 12, 2021, the parties filed an agreed motion to stay the litigation for 120 days in order to allow the SLC to continue its investigation, which the court granted. The stay was extended several times. Through mediation efforts, a settlement of the derivative claims was reached by the SLC, the Independent Review Committee of the Board (which had been formed in the third quarter of 2022, to ensure the Board’s consideration of any SLC recommendations would be independent and objective), the Board, and certain of the derivative shareholders. On June 16, 2023, the SLC filed a motion for preliminary approval of the settlement, attaching the Stipulation and Agreement of Settlement (Stipulation), which contained the terms of the proposed settlement. The proposed settlement terms include but are not limited to: a payment of $40 million to Exelon by Exelon’s insurers of which $10 million constitutes the attorneys’ fee award to be paid to the Settling Shareholders’ counsel; various compliance and disclosure-related reforms; and certain changes in Board and Committee composition. On June 30, 2023, the court granted the non-settling shareholders’ request for limited discovery into the settlement. Following that discovery, on October 26, 2023, the SLC filed its renewed motion for preliminary approval with supporting submissions filed by the Independent Review Committee, Exelon, and the Settling Shareholders on that same day. The parties briefing on preliminary approval was completed on January 18, 2024. On September 20, 2024, the court denied without prejudice the SLC’s motion for preliminary approval. The court’s order provides that if the SLC can substantiate or otherwise revise the attorneys’ fees aspect of the settlement, then the SLC can renew its motion for preliminary approval by October 21, 2024. Otherwise, the court directed the parties to file a joint status report by October 30, 2024, proposing next steps to advance the case. On October 21, 2024, the SLC filed its second renewed motion for preliminary approval, and the Settling Shareholders filed a brief in support of the SLC's second renewed motion for preliminary approval. In August 2022, the ICC concluded its investigation initiated on August 12, 2021 into rate impacts of conduct admitted in the DPA, including the costs recovered from customers related to the DPA and Exelon's funding of the fine paid by ComEd. On August 17, 2022, the ICC issued its final order accepting ComEd's voluntary customer refund offer of approximately $38 million (of which about $31 million was ICC jurisdictional; the remaining balance was FERC jurisdictional) that resolved the question of whether customer funds were used for DPA related activities. The customer refund included the cost of every individual or entity that was either (i) identified in the DPA or (ii) identified by ComEd as an associate of the former Speaker of the Illinois House of Representatives in the ICC proceeding. The ICC’s DPA investigation is now closed. The ICC jurisdictional refund was made to customers during the April 2023 billing cycle, as required by the ICC. The FERC jurisdictional refund was completed as of May 2024 as part of ComEd's transmission formula rate update proceeding, submitted on May 12, 2023. The customer refund was not recovered in rates or charged to customers and ComEd will not seek or accept reimbursement or indemnification from any source other than Exelon. General (All Registrants). The Registrants are involved in various other litigation matters that are being defended and handled in the ordinary course of business. The Registrants are also from time to time subject to audits and investigations by the FERC and other regulators. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. The Registrants maintain accruals for such losses that are probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of reasonably possible loss, particularly where (1) the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss.

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