XNYS:EXC Exelon Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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Table of Contents

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

For the Quarterly Period Ended June 30, 2012

or

 

¨ 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

(312) 394-7398

  

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  þ    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  þ    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

   þ              

Exelon Generation Company, LLC

         þ        

Commonwealth Edison Company

         þ        

PECO Energy Company

         þ        

Baltimore Gas and Electric Company

         þ        

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

The number of shares outstanding of each registrant’s common stock as of June 30, 2012 was:

 

Exelon Corporation Common Stock, without par value

   853,573,260

Exelon Generation Company, LLC

   not applicable

Commonwealth Edison Company Common Stock, $12.50 par value

   127,016,620

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

TABLE OF CONTENTS

 

    Page No.  
FILING FORMAT     6   
FORWARD-LOOKING STATEMENTS     6   
WHERE TO FIND MORE INFORMATION     6   
PART I.  

FINANCIAL INFORMATION

    7   
ITEM 1.  

FINANCIAL STATEMENTS

    7   
 

Exelon Corporation

 
 

Consolidated Statements of Operations and Comprehensive Income

    8   
 

Consolidated Statements of Cash Flows

    9   
 

Consolidated Balance Sheets

    10   
 

Consolidated Statement of Changes in Shareholders’ Equity

    12   
 

Exelon Generation Company, LLC

 
 

Consolidated Statements of Operations and Comprehensive Income

    13   
 

Consolidated Statements of Cash Flows

    14   
 

Consolidated Balance Sheets

    15   
 

Consolidated Statement of Changes in Equity

    17   
 

Commonwealth Edison Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    18   
 

Consolidated Statements of Cash Flows

    19   
 

Consolidated Balance Sheets

    20   
 

Consolidated Statement of Changes in Shareholders’ Equity

    22   
 

PECO Energy Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    23   
 

Consolidated Statements of Cash Flows

    24   
 

Consolidated Balance Sheets

    25   
 

Consolidated Statement of Changes in Shareholders’ Equity

    27   
 

Baltimore Gas and Electric Company

 
 

Consolidated Statements of Operations and Comprehensive Income

    28   
 

Consolidated Statements of Cash Flows

    29   
 

Consolidated Balance Sheets

    30   
 

Consolidated Statement of Changes in Shareholders’ Equity

    32   
 

Combined Notes to Consolidated Financial Statements

    33   
 

1. Basis of Presentation

    33   
 

2. New Accounting Pronouncements

    36   
 

3. Merger and Acquisitions

    36   
 

4. Regulatory Matters

    44   
 

5. Investment in Constellation Energy Nuclear Group, LLC

    53   
 

6. Goodwill

    54   

 

1


Table of Contents
    Page No.  
 

7. Fair Value of Financial Assets and Liabilities

    55   
 

8. Derivative Financial Instruments

    78   
 

9. Debt and Credit Agreements

    95   
 

10. Income Taxes

    99   
 

11. Nuclear Decommissioning

    103   
 

12. Retirement Benefits

    106   
 

13. Plant Retirements

    109   
 

14. Stock-Based Compensation Plans

    110   
 

15. Earnings Per Share and Equity

    115   
 

16. Commitments and Contingencies

    115   
 

17. Supplemental Financial Information

    131   
 

18. Segment Information

    137   
ITEM 2.  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    144   
 

Exelon Corporation

    144   
 

General

    144   
 

Executive Overview

    145   
 

Critical Accounting Policies and Estimates

    162   
 

Results of Operations

    162   
 

Liquidity and Capital Resources

    191   
 

Contractual Obligations and Off-Balance Sheet Arrangements

    204   
ITEM 3.  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    205   
ITEM 4.  

CONTROLS AND PROCEDURES

    213   
PART II.  

OTHER INFORMATION

    215   
ITEM 1.  

LEGAL PROCEEDINGS

    215   
ITEM 1A.  

RISK FACTORS

    215   
ITEM 4.  

MINE SAFETY DISCLOSURES

    216   
ITEM 6.  

EXHIBITS

    216   
SIGNATURES     218   
 

Exelon Corporation

    218   
 

Exelon Generation Company, LLC

    218   
 

Commonwealth Edison Company

    218   
 

PECO Energy Company

    219   
 

Baltimore Gas and Electric Company

    219   
CERTIFICATION EXHIBITS     220   
 

Exelon Corporation

    220, 230   
 

Exelon Generation Company, LLC

    222, 232   
 

Commonwealth Edison Company

    224, 234   
 

PECO Energy Company

    226, 236   
 

Baltimore Gas and Electric Company

    228, 238   

 

2


Table of Contents
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.

Exelon Transmission Company

   Exelon Transmission Company, LLC

Exelon Wind

   Exelon Wind, LLC and Exelon Generation Acquisitions Company, LLC

Enterprises

   Exelon Enterprises Company, LLC

Ventures

   Exelon Ventures Company, LLC

AmerGen

   AmerGen Energy Company, LLC

BondCo

   RSB BondCo LLC

PECO Trust III

   PECO Capital Trust III

PECO Trust IV

   PECO Energy Capital Trust IV

Registrants

   Exelon, Generation, ComEd, PECO and BGE, collectively

Other Terms and Abbreviations

Note “    ” of the Exelon 2011 Form 10-K

   Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2011 Annual Report on Form 10-K

Act 11

   Pennsylvania Act 11 of 2012

AEC

   Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source

AESO

   Alberta Electric Systems Operator

AFUDC

   Allowance for Funds Used During Construction

ALJ

   Administrative Law Judge

AMI

   Advanced Metering Infrastructure

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

CAMR

   Federal Clean Air Mercury Rule

CERCLA

   Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended

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

CSAPR

   Cross-State Air Pollution Rule

CTC

   Competitive Transition Charge

DOE

   United States Department of Energy

DOJ

   United States Department of Justice

DSP

   Default Service Provider

EDF

   Electricite de France SA

EE&C

   Energy Efficiency and Conservation/Demand Response

EGS

   Electric Generation Supplier

EIMA

   Illinois Senate Bill 1652 and Illinois House Bill 3036

EPA

   United States Environmental Protection Agency

 

3


Table of Contents
GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations

ERCOT

   Electric Reliability Council of Texas

ERISA

   Employee Retirement Income Security Act of 1974, as amended

EROA

   Expected Rate of Return on Assets

FASB

   Financial Accounting Standards Board

FERC

   Federal Energy Regulatory Commission

FRCC

   Florida Reliability Coordinating Council

GAAP

   Generally Accepted Accounting Principles in the United States

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

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

IPA

   Illinois Power Agency

IRC

   Internal Revenue Code

IRS

   Internal Revenue Service

ISO

   Independent System Operator

ISO-NE

   ISO New England Inc.

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 Rule

MDPSC

   Maryland Public Service Commission

MGP

   Manufactured Gas Plant

MISO

   Midwest Independent Transmission System Operator, Inc.

mmcf

   Million Cubic Feet

Moody’s

   Moody’s Investor Service

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

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

NOV

   Notice of Violation

NPDES

   National Pollutant Discharge Elimination System

NRC

   Nuclear Regulatory Commission

 

4


Table of Contents
GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations

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

PCCA

   Pennsylvania Climate Change Act

PGC

   Purchased Gas Cost Clause

PJM

   PJM Interconnection, LLC

POLR

   Provider of Last Resort

POR

   Purchase of Receivables

PPA

   Power Purchase Agreement

Price-Anderson Act

   Price-Anderson Nuclear Industries Indemnity Act of 1957

PRP

   Potentially Responsible Parties

PSEG

   Public Service Enterprise Group Incorporated

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

RES

   Retail Electric Suppliers

RFP

   Request for Proposal

Rider

   Reconcilable Surcharge Recovery Mechanism

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

SERC

   SERC Reliability Corporation (formerly Southeast Electric Reliability Council)

SERP

   Supplemental Employee Retirement Plan

SFC

   Supplier Forward Contract

SGIG

   Smart Grid Investment Grant

SILO

   Sale-In, Lease-Out

SMP

   Smart Meter Program

SNF

   Spent Nuclear Fuel

SOS

   Standard Offer Service

SPP

   Southwest Power Pool

SSCM

   Simplified Service Cost Method

Tax Relief Act of 2010

   Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010

TEG

   Termoelectrica del Golfo

TEP

   Termoelectrica Penoles

Upstream

   Natural gas exploration and production activities

VIE

   Variable Interest Entity

WECC

   Western Electric Coordinating Council

 

5


Table of Contents

FILING FORMAT

This combined Form 10-Q is being filed separately by the 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

Certain of the matters discussed in this Report are 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 a Registrant include (a) those factors discussed in the following sections of Exelon’s 2011 Annual Report on Form 10-K: ITEM 1A. Risk Factors, as updated by Part II, ITEM 1A of this Report; ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, ITEM 2. of this Report; and ITEM 8. Financial Statements and Supplementary Data: Note 18, as updated by Part I, Item 1. Financial Statements, Note 16 of this Report; (b) those factors discussed in the following sections of Constellation’s 2011 Annual Report on Form 10-K: ITEM 1A. Risk Factors, as updated by Part II, ITEM 1A of this Report; ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, ITEM 2. of this Report; and ITEM 8. Financial Statements and Supplementary Data: Note 12, as updated by Part I, ITEM 1. Financial Statements, Note 16 of this Report; and (c) other factors discussed herein and in other 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.

 

6


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

 

 

 

7


Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
(In millions, except per share data)        2012             2011             2012             2011      

Operating revenues

   $ 5,954     $ 4,496     $ 10,640     $ 9,451  

Operating expenses

        

Purchased power and fuel

     2,606       1,716       4,371       3,716  

Operating and maintenance

     1,829       1,226       3,793       2,449  

Depreciation and amortization

     494       329       876       656  

Taxes other than income

     254       191       448       394  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     5,183       3,462       9,488       7,215  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in loss of unconsolidated affiliates

     (57            (79       
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     714       1,034       1,073       2,236  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (250     (176     (439     (350

Interest expense to affiliates, net

     (6     (6     (12     (13

Other, net

     (43     101       152       196  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (299     (81     (299     (167
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     415       953       774       2,069  

Income taxes

     126       332       284       779  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     289       621       490       1,290  

Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends

     3       1       4       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income on common stock

     286       620       486       1,288  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of income taxes

        

Pension and non-pension postretirement benefit plans:

        

Prior service benefit reclassified to periodic benefit cost

     1        (1     1       (2

Actuarial loss reclassified to periodic cost

     41       34       82       66  

Transition obligation reclassified to periodic cost

            1       2       2  

Pension and non-pension postretirement benefit plans valuation adjustment

     (3 )            (11     39  

Change in unrealized gain (loss) on cash flow hedges

     (156     (145     59       (191

Change in unrealized income on equity investments

     6               6          

Change in unrealized loss on foreign currency translation

     (2            (2       

Change in unrealized loss on marketable securities

     (1                     
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     (114     (111     137       (86
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 175     $ 510     $ 627     $ 1,204  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shares of common stock outstanding:

        

Basic

     853       663       779       663  

Diluted

     856       664       781       664  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per average common share:

        

Basic

   $ 0.34     $ 0.93     $ 0.62     $ 1.94  

Diluted

   $ 0.33     $ 0.93     $ 0.62     $ 1.94  
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per common share

   $ 0.53     $ 0.53     $ 1.05     $ 1.05  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

8


Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended
June 30,
 
(In millions)    2012     2011  

Cash flows from operating activities

    

Net income

   $ 490     $ 1,290  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization, accretion and depletion including nuclear fuel and energy contract amortization

     1,895       1,114  

Deferred income taxes and amortization of investment tax credits

     227       590  

Net fair value changes related to derivatives

     (323     264  

Net realized and unrealized gains on nuclear decommissioning trust fund investments

     (70     (51

Other non-cash operating activities

     959       378  

Changes in assets and liabilities:

    

Accounts receivable

     414         

Inventories

     45       17  

Accounts payable, accrued expenses and other current liabilities

     (1,063     (486

Option premiums (paid) received, net

     (108     38  

Counterparty collateral received (posted), net

     451       (494

Income taxes

     259       691  

Pension and non-pension postretirement benefit contributions

     (90     (2,089

Other assets and liabilities

     (357     (249
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     2,729       1,013  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (2,816     (1,985

Proceeds from nuclear decommissioning trust fund sales

     5,371       1,657  

Investment in nuclear decommissioning trust funds

     (5,483     (1,772

Cash acquired from Constellation

     964         

Proceeds from sales of investments

     12         

Purchases of investments

     (5       

Change in restricted cash

     (15     (2

Other investing activities

     (12     28  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (1,984     (2,074
  

 

 

   

 

 

 

Cash flows from financing activities

    

Changes in short-term debt

     179       140  

Issuance of long-term debt

     850       599  

Retirement of long-term debt

     (649     (2

Dividends paid on common stock

     (773     (695

Dividends paid to former Constellation shareholders

     (51       

Proceeds from employee stock plans

     42       15  

Other financing activities

     (10     (46
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (412     11  
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     333       (1,050

Cash and cash equivalents at beginning of period

     1,016       1,612  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,349     $ 562  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

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Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 1,349      $ 1,016  

Restricted cash and investments

     83        40  

Restricted cash and investments of variable interest entities

     34          

Accounts receivable, net

     

Customer ($296 and $329 gross accounts receivable pledged as collateral as of June 30, 2012 and December 31, 2011, respectively)

     2,886        1,613  

Other

     1,252        1,000  

Accounts receivable, net, variable interest entities

     183          

Mark-to-market derivative assets

     1,170        432  

Unamortized energy contract assets

     1,433        13  

Inventories, net

     

Fossil fuel

     227        208  

Materials and supplies

     772        656  

Deferred income taxes

     63          

Regulatory assets

     867        390  

Other

     1,435        345  
  

 

 

    

 

 

 

Total current assets

     11,754        5,713  
  

 

 

    

 

 

 

Property, plant and equipment, net

     42,613        32,570  

Deferred debits and other assets

     

Regulatory assets

     6,103        4,518  

Nuclear decommissioning trust funds

     6,841        6,507  

Investments

     836        751  

Investments in affiliates

     420        15  

Investment in CENG

     1,878          

Goodwill

     2,625        2,625  

Mark-to-market derivative assets

     1,241        650  

Unamortized energy contracts assets

     1,317        388  

Pledged assets for Zion Station decommissioning

     650        734  

Other

     1,156        524  
  

 

 

    

 

 

 

Total deferred debits and other assets

     23,067        16,712  
  

 

 

    

 

 

 

Total assets

   $ 77,434      $ 54,995  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

10


Table of Contents

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
    December 31,
2011
 
     (Unaudited)        
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities

    

Short-term borrowings

   $ 376     $ 163  

Short-term notes payable — accounts receivable agreement

     225       225  

Long-term debt due within one year

     526       828  

Long-term debt of variable interest entities due within one year

     65         

Accounts payable

     2,183       1,444  

Accounts payable of variable interest entities

     119         

Accrued expenses

     1,452       1,255  

Deferred income taxes

     482       1  

Regulatory liabilities

     259       197  

Dividends payable

     4       349  

Mark-to-market derivative liabilities

     829       112  

Unamortized energy contract liabilities

     616         

Other

     947       560  
  

 

 

   

 

 

 

Total current liabilities

     8,083       5,134  
  

 

 

   

 

 

 

Long-term debt

     17,045       11,799  

Long-term debt to financing trusts

     649       390  

Long-term debt of variable interest entity

     479         

Deferred credits and other liabilities

    

Deferred income taxes and unamortized investment tax credits

     10,823       8,253  

Asset retirement obligations

     4,126       3,884  

Pension obligations

     2,610       2,194  

Non-pension postretirement benefit obligations

     2,703       2,263  

Spent nuclear fuel obligation

     1,019       1,019  

Regulatory liabilities

     3,963       3,627  

Mark-to-market derivative liabilities

     578       126  

Unamortized energy contract liabilities

     747         

Payable for Zion Station decommissioning

     464       563  

Other

     1,736       1,268  
  

 

 

   

 

 

 

Total deferred credits and other liabilities

     28,769       23,197  
  

 

 

   

 

 

 

Total liabilities

     55,025       40,520  
  

 

 

   

 

 

 

Commitments and contingencies

    

Preferred securities of subsidiary

     87       87  

Shareholders’ equity

    

Common stock (No par value, 2,000 shares authorized, 854 shares and 663 shares outstanding at June 30, 2012 and December 31, 2011, respectively)

     16,559       9,107  

Treasury stock, at cost (35 shares at June 30, 2012 and December 31, 2011, respectively)

     (2,327     (2,327

Retained earnings

     10,114       10,055  

Accumulated other comprehensive loss, net

     (2,313     (2,450
  

 

 

   

 

 

 

Total shareholders’ equity

     22,033       14,385  

BGE preference stock not subject to mandatory redemption

     193         

Noncontrolling interest

     96       3  
  

 

 

   

 

 

 

Total equity

     22,322       14,388  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 77,434     $ 54,995  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

11


Table of Contents

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
    Non-controlling
Interest
    BGE
preference
stock not
subject to
mandatory
redemption
    Total
Equity
 

Balance, December 31, 2011

    698,112     $ 9,107     $ (2,327   $ 10,055     $ (2,450   $ 3     $      $ 14,388  

Net income

                         486              (2     6       490  

Long-term incentive plan activity

    2,080       87                                          87  

Common stock dividends

                         (427                          (427

Common stock issuance — Constellation merger

    188,124       7,365                                          7,365  

Noncontrolling interest acquired

                                       95              95  

BGE preference stock acquired

                                              193       193  

Preferred and preference stock dividends

                                              (6     (6

Other comprehensive income net of income taxes of $(146)

                                137                     137  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2012

    888,316     $ 16,559     $ (2,327   $ 10,114     $ (2,313   $ 96     $ 193     $ 22,322  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

12


Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
(In millions)        2012             2011             2012             2011      

Operating revenues

        

Operating revenues

   $ 3,345     $ 2,209     $ 5,718     $ 4,546  

Operating revenues from affiliates

     408       246       774       552  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     3,753       2,455       6,492       5,098  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     1,852       841       2,896       1,724  

Operating and maintenance

     990       692       2,029       1,372  

Operating and maintenance from affiliates

     176       71       311       145  

Depreciation and amortization

     204       138       357       277  

Taxes other than income

     90       66       164       132  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,312       1,808       5,757       3,650  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in loss of unconsolidated affiliates

     (57            (79       
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     384       647       656       1,448  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (85     (45     (138     (91

Other, net

     (76     76       103       152  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (161     31       (35     61  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     223       678       621       1,509  

Income taxes

     58       235       289       571  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     165       443       332       938  

Net loss attributable to noncontrolling interests

     (1            (2       
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income on membership interest

     166       443       334       938  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss), net of income taxes

        

Change in unrealized loss on cash flow hedges

     (266     (254     (14     (323

Change in unrealized income on equity investments

     6               6          

Change in unrealized loss on foreign currency translation

     (2            (2       

Change in unrealized loss on marketable securities

     (1            (1       
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     (263     (254     (11     (323
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ (98   $ 189     $ 321     $ 615  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

13


Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended
June 30,
 
(In millions)        2012             2011      

Cash flows from operating activities

    

Net income

   $ 332     $ 938  

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

     1,423       735  

Deferred income taxes and amortization of investment tax credits

     168       298  

Net fair value changes related to derivatives

     (307     264  

Net realized and unrealized gains on nuclear decommissioning trust fund investments

     (70     (51

Other non-cash operating activities

     318       168  

Changes in assets and liabilities:

    

Accounts receivable

     306       (139

Receivables from and payables to affiliates, net

     (42     223  

Inventories

     30       (5

Accounts payable, accrued expenses and other current liabilities

     (732     (78

Option premiums (paid) received, net

     (108     38  

Counterparty collateral received (paid), net

     443       (525

Income taxes

     314       270  

Pension and non-pension postretirement benefit contributions

     (35     (952

Other assets and liabilities

     (174     (108
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     1,866       1,076  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (1,820     (1,270

Proceeds from nuclear decommissioning trust fund sales

     5,371       1,657  

Investment in nuclear decommissioning trust funds

     (5,483     (1,772

Change in restricted cash

     6         

Cash acquired from Constellation

     708         

Other investing activities

     (66     (3
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (1,284     (1,388
  

 

 

   

 

 

 

Cash flows from financing activities

    

Issuance of long-term debt

     850         

Retirement of long-term debt

     (56     (1

Change in short-term debt

     (42       

Distribution to member

     (891       

Other financing activities

     (9     (34
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (148     (35
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     434       (347

Cash and cash equivalents at beginning of period

     496       456  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 930     $ 109  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

14


Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         

ASSETS

     

Current assets

     

Cash and cash equivalents

   $ 930      $ 496  

Restricted cash and cash equivalents

     2        5  

Restricted cash and cash equivalents, variable interest entities

     12          

Accounts receivable, net

     

Customer

     1,579        578  

Other

     254        257  

Accounts receivable, net, variable interest entities

     183          

Mark-to-market derivative assets

     1,170        432  

Mark-to-market derivative assets with affiliates

     506        503  

Receivables from affiliates

     144        109  

Unamortized energy contract assets

     1,433        13  

Inventories, net

     

Fossil fuel

     134        120  

Materials and supplies

     628        556  

Other

     1,110        148  
  

 

 

    

 

 

 

Total current assets

     8,085        3,217  
  

 

 

    

 

 

 

Property, plant and equipment, net

     17,702        13,475  

Deferred debits and other assets

     

Nuclear decommissioning trust funds

     6,841        6,507  

Investments

     82        41  

Investments in affiliates

     397        1  

Investment in CENG

     1,878          

Mark-to-market derivative assets

     1,227        635  

Mark-to-market derivative assets with affiliates

             191  

Prepaid pension asset

     2,057        2,068  

Pledged assets for Zion Station decommissioning

     650        734  

Unamortized energy contract assets

     1,317        388  

Other

     851        176  
  

 

 

    

 

 

 

Total deferred debits and other assets

     15,300        10,741  
  

 

 

    

 

 

 

Total assets

   $ 41,087      $ 27,433  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

15


Table of Contents

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         

LIABILITIES AND EQUITY

     

Current liabilities

     

Short-term borrowings

   $ 10      $ 2  

Long-term debt due within one year

     23        3  

Long-term debt due within one year of variable interest entities

     3          

Accounts payable

     1,310        753  

Accounts payable of variable interest entities

     119          

Accrued expenses

     885        779  

Payables to affiliates

     115        58  

Deferred income taxes

     567        244  

Mark-to-market derivative liabilities

     810        103  

Unamortized energy contract liabilities

     506          

Other

     378        202  
  

 

 

    

 

 

 

Total current liabilities

     4,726        2,144  
  

 

 

    

 

 

 

Long-term debt

     7,163        3,674  

Long-term debt of variable interest entities

     180          

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     4,892        3,966  

Asset retirement obligations

     3,997        3,767  

Non-pension postretirement benefit obligations

     815        703  

Spent nuclear fuel obligation

     1,019        1,019  

Payables to affiliates

     2,352        2,222  

Mark-to-market derivative liabilities

     485        29  

Unamortized energy contract liabilities

     696          

Payable for Zion Station decommissioning

     464        563  

Other

     793        638  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     15,513        12,907  
  

 

 

    

 

 

 

Total liabilities

     27,582        18,725  
  

 

 

    

 

 

 

Commitments and contingencies

     

Equity

     

Member’s equity

     

Membership interest

     8,828        3,556  

Undistributed earnings

     3,675        4,232  

Accumulated other comprehensive income, net

     904        915  
  

 

 

    

 

 

 

Total member’s equity

     13,407        8,703  

Noncontrolling interest

     98        5  
  

 

 

    

 

 

 

Total equity

     13,505        8,708  
  

 

 

    

 

 

 

Total liabilities and equity

   $ 41,087      $ 27,433  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

16


Table of Contents

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, 2011

   $ 3,556      $ 4,232     $ 915     $ 5     $ 8,708  

Net income

             334              (2     332  

Acquisition of Constellation

     5,272                             5,272  

Noncontrolling interest acquired

                           95       95  

Distribution to member

             (891                   (891

Other comprehensive loss, net of income taxes of $4

                    (11            (11
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2012

   $ 8,828      $ 3,675     $ 904     $ 98     $ 13,505  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

17


Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
(In millions)        2012             2011             2012             2011      

Operating revenues

        

Operating revenues

   $ 1,280     $ 1,444     $ 2,669     $ 2,909  

Operating revenues from affiliates

     1              1       1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     1,281       1,444       2,670       2,910  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power

     384       588       757       1,214  

Purchased power from affiliate

     203       128       451       291  

Operating and maintenance

     293       232       569       461  

Operating and maintenance from affiliate

     38       36       81       73  

Depreciation and amortization

     152       136       300       270  

Taxes other than income

     69       70       144       147  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,139       1,190       2,302       2,456  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     142       254       368       454  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (71     (82     (150     (164

Interest expense to affiliates, net

     (3     (4     (6     (8

Other, net

     3       4       7       8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (71     (82     (149     (164
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     71       172       219       290  

Income taxes

     29       58       90       107  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     42       114       129       183  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income, net of income taxes

        

Change in unrealized gain on marketable securities

                   1         
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

                   1         
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 42     $ 114     $ 130     $ 183  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

18


Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended
June 30,
 
(In millions)        2012             2011      

Cash flows from operating activities

    

Net income

   $ 129     $ 183  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     300       270  

Deferred income taxes and amortization of investment tax credits

     116       184  

Other non-cash operating activities

     241       115  

Changes in assets and liabilities:

    

Accounts receivable

     (26     (62

Receivables from and payables to affiliates, net

     (18     (23

Inventories

     (7     (7

Accounts payable, accrued expenses and other current liabilities

     (54     (108

Counterparty collateral received, net

     8       31  

Income taxes

     149       321  

Pension and non-pension postretirement benefit contributions

     (12     (871

Other assets and liabilities

     (104     38  
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     722       71  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (585     (495

Proceeds from sales of investments

     12       4  

Purchases of investments

     (5     (2

Other investing activities

     11       20  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (567     (473
  

 

 

   

 

 

 

Cash flows from financing activities

    

Changes in short-term debt

     178         

Issuance of long-term debt

            599  

Retirement of long-term debt

     (450     (1

Dividends paid on common stock

     (85     (150

Other financing activities

     (3     (2
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (360     446  
  

 

 

   

 

 

 

(Decrease) Increase in cash and cash equivalents

     (205     44  

Cash and cash equivalents at beginning of period

     234       50  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 29     $ 94  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

19


Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 29      $ 234  

Restricted cash

     3        3  

Accounts receivable, net

     

Customer

     675        655  

Other

     245        385  

Inventories, net

     88        81  

Deferred income taxes

     74        61  

Counterparty collateral deposited

     84        90  

Regulatory assets

     726        657  

Other

     23        22  
  

 

 

    

 

 

 

Total current assets

     1,947        2,188  
  

 

 

    

 

 

 

Property, plant and equipment, net

     13,428        13,121  

Deferred debits and other assets

     

Regulatory assets

     583        699  

Investments

     15        21  

Investments in affiliates

     6        6  

Goodwill

     2,625        2,625  

Receivables from affiliates

     1,963        1,860  

Prepaid pension asset

     1,736        1,803  

Other

     282        315  
  

 

 

    

 

 

 

Total deferred debits and other assets

     7,210        7,329  
  

 

 

    

 

 

 

Total assets

   $ 22,585      $ 22,638  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

20


Table of Contents

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities

     

Short-term borrowings

   $ 178      $   

Long-term debt due within one year

     125        450  

Accounts payable

     349        325  

Accrued expenses

     244        318  

Payables to affiliates

     96        111  

Customer deposits

     138        136  

Regulatory liabilities

     146        137  

Mark-to-market derivative liability

     19        9  

Mark-to-market derivative liability with affiliate

     506        503  

Other

     117        82  
  

 

 

    

 

 

 

Total current liabilities

     1,918        2,071  
  

 

 

    

 

 

 

Long-term debt

     5,091        5,215  

Long-term debt to financing trust

     206        206  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     4,106        3,993  

Asset retirement obligations

     92        89  

Non-pension postretirement benefits obligations

     330        271  

Regulatory liabilities

     3,149        3,042  

Mark-to-market derivative liability

     92        97  

Mark-to-market derivative liability with affiliate

             191  

Other

     506        426  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     8,275        8,109  
  

 

 

    

 

 

 

Total liabilities

     15,490        15,601  
  

 

 

    

 

 

 

Commitments and contingencies

     

Shareholders’ equity

     

Common stock

     1,588        1,588  

Other paid-in capital

     5,016        5,003  

Retained earnings

     491        447  

Accumulated other comprehensive loss, net

             (1
  

 

 

    

 

 

 

Total shareholders’ equity

     7,095        7,037  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 22,585      $ 22,638  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

21


Table of Contents

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
    Accumulated
Other
Comprehensive
Loss, net
    Total
Shareholders’
Equity
 

Balance, December 31, 2011

  $ 1,588     $ 5,003     $ (1,639   $ 2,086     $ (1   $ 7,037  

Net income

                  129                     129  

Appropriation of retained earnings for future dividends

                  (129     129                

Common stock dividends

                         (85            (85

Allocation of tax benefit from parent

           13                            13  

Other comprehensive income, net of income taxes of $0

                                1       1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2012

  $ 1,588     $ 5,016     $ (1,639   $ 2,130     $      $ 7,095  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

22


Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
(In millions)        2012             2011             2012             2011      

Operating revenues

        

Operating revenues

   $ 714     $ 842     $ 1,588     $ 1,994  

Operating revenues from affiliates

     1              2       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     715       842       1,590       1,996  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     171       293       472       785  

Purchased power from affiliate

     125       115       235       257  

Operating and maintenance

     146       150       318       334  

Operating and maintenance from affiliates

     26       22       57       44  

Depreciation and amortization

     54       50       107       98  

Taxes other than income

     42       51       74       106  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     564       681       1,263       1,624  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     151       161       327       372  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (28     (31     (56     (62

Interest expense to affiliates, net

     (3     (3     (6     (6

Other, net

     2       3       5       8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (29     (31     (57     (60
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     122       130       270       312  

Income taxes

     42       47       93       102  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     80       83       177       210  

Preferred security dividends

     1       1       2       2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income on common stock

     79       82       175       208  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income, net of income taxes

        

Net income

     80       83       177       210  

Other comprehensive income, net of income taxes

        

Change in unrealized gains on marketable securities

                   1         
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

                   1         
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 80     $ 83     $ 178     $ 210  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

23


Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended
June 30,
 
(In millions)        2012             2011      

Cash flows from operating activities

    

Net income

   $ 177     $ 210  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     107       98  

Deferred income taxes and amortization of investment tax credits

     19       91  

Other non-cash operating activities

     66       44  

Changes in assets and liabilities:

    

Accounts receivable

     62       221  

Receivables from and payables to affiliates, net

     9       (218

Inventories

     26       29  

Accounts payable, accrued expenses and other current liabilities

     (83     (11

Income taxes

     121       113  

Pension and non-pension postretirement benefit contributions

     (8     (110

Other assets and liabilities

     (87     (108
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     409       359  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (179     (209

Changes in Exelon intercompany money pool

     18       (171

Change in restricted cash

     (3     (2

Other investing activities

     7       11  
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (157     (371
  

 

 

   

 

 

 

Cash flows from financing activities

    

Dividends paid on common stock

     (172     (184

Dividends paid on preferred securities

     (2     (2

Other financing activities

            (5
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (174     (191
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     78       (203

Cash and cash equivalents at beginning of period

     194       522  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 272     $ 319  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

24


Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 272      $ 194  

Restricted cash and cash equivalents

     5        2  

Accounts receivable, net

     

Customer ($296 and $329 gross accounts receivable pledged as collateral as of June 30, 2012 and December 31, 2011, respectively)

     307        380  

Other

     230        376  

Inventories, net

     

Fossil fuel

     58        87  

Materials and supplies

     21        18  

Deferred income taxes

     31        25  

Receivable from Exelon intercompany money pool

     64        82  

Prepaid utility taxes

     99        1  

Regulatory assets

     54        39  

Other

     50        39  
  

 

 

    

 

 

 

Total current assets

     1,191        1,243  
  

 

 

    

 

 

 

Property, plant and equipment, net

     5,960        5,874  

Deferred debits and other assets

     

Regulatory assets

     1,216        1,216  

Investments

     21        22  

Investments in affiliates

     8        8  

Receivable from affiliates

     392        365  

Prepaid pension asset

     379        382  

Other

     37        46  
  

 

 

    

 

 

 

Total deferred debits and other assets

     2,053        2,039  
  

 

 

    

 

 

 

Total assets

   $ 9,204      $ 9,156  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

25


Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities

     

Short-term notes payable — accounts receivable agreement

   $ 225      $ 225  

Long-term debt due within one year

     375        375  

Accounts payable

     198        262  

Accrued expenses

     71        83  

Payables to affiliates

     77        62  

Customer deposits

     52        53  

Regulatory liabilities

     91        60  

Other

     34        25  
  

 

 

    

 

 

 

Total current liabilities

     1,123        1,145  
  

 

 

    

 

 

 

Long-term debt

     1,598        1,597  

Long-term debt to financing trusts

     184        184  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     2,214        2,170  

Asset retirement obligations

     28        28  

Non-pension postretirement benefits obligations

     303        288  

Regulatory liabilities

     606        585  

Other

     119        134  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     3,270        3,205  
  

 

 

    

 

 

 

Total liabilities

     6,175        6,131  
  

 

 

    

 

 

 

Commitments and contingencies

     

Preferred securities

     87        87  

Shareholders’ equity

     

Common stock

     2,379        2,379  

Retained earnings

     562        559  

Accumulated other comprehensive income, net

     1          
  

 

 

    

 

 

 

Total shareholders’ equity

     2,942        2,938  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 9,204      $ 9,156  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

26


Table of Contents

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(In millions)    Common
Stock
     Retained
Earnings
    Accumulated
Other
Comprehensive
Income, net
     Total
Shareholders’
Equity
 

Balance, December 31, 2011

   $ 2,379      $ 559     $       $ 2,938  

Net income

             177               177  

Common stock dividends

             (172             (172

Preferred security dividends

             (2             (2

Other comprehensive income, net of income taxes of $0

                    1        1  
  

 

 

    

 

 

   

 

 

    

 

 

 

Balance, June 30, 2012

   $ 2,379      $ 562     $ 1      $ 2,942  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

27


Table of Contents

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
(In millions)        2012             2011             2012             2011      

Operating revenues

        

Operating revenues

   $ 614     $ 672     $ 1,307     $ 1,647  

Operating revenues from affiliates

     2       2       5       3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     616       674       1,312       1,650  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Purchased power and fuel

     201       267       494       753  

Purchased power from affiliate

     84       73       176       130  

Operating and maintenance

     135       129       288       249  

Operating and maintenance from affiliates

     26       38       68       70  

Depreciation and amortization

     71       67       150       144  

Taxes other than income

     47       46       95       96  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     564       620       1,271       1,442  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     52       54       41       208  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income and (deductions)

        

Interest expense

     (34     (32     (75     (66

Other, net

     7       6       13       13  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and (deductions)

     (27     (26     (62     (53
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     25       28       (21     155  

Income taxes

     9       12       (7     58  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     16       16       (14     97  

Preference stock dividends

     3       3       6       6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) on common stock

   $ 13     $ 13     $ (20   $ 91  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 16     $ 16     $ (14   $ 97  
  

 

 

   

 

 

   

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

28


Table of Contents

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended
June 30,
 
(In millions)        2012             2011      

Cash flows from operating activities

    

Net (loss) income

   $ (14   $ 97  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization and accretion

     150       144  

Deferred income taxes and amortization of investment tax credits

     91       59  

Other non-cash operating activities

     100       54  

Changes in assets and liabilities:

    

Accounts receivable

     92       94  

Receivables from and payables to affiliates, net

     (3     (10

Inventories

     37       7  

Accounts payable, accrued expenses and other current liabilities

     (71     (24

Income taxes

     (48     56  

Pension and non-pension postretirement benefit contributions

     (8     (7

Other assets and liabilities

     43       3  
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     369       473  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (282     (283

Change in restricted cash

     8       4  

Other investing activities

     (10       
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (284     (279
  

 

 

   

 

 

 

Cash flows from financing activities

    

Repayment of long-term debt

     (141     (30

Dividends paid on common stock

            (85

Dividends paid on preference stock

     (6     (6

Contributions from parent

     66         

Other financing activities

            (2
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (81     (123
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     4       71  

Cash and cash equivalents at beginning of period

     49       50  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 53     $ 121  
  

 

 

   

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

29


Table of Contents

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 53      $ 49  

Restricted cash and cash equivalents of variable interest entity

     22        30  

Accounts receivable, net

     

Customer

     324        428  

Other

     99        90  

Income taxes receivable

     67        21  

Inventories, net

     

Gas held in storage

     35        74  

Materials and supplies

     36        34  

Prepaid utility taxes

     5        56  

Regulatory assets

     179        174  

Other

     8        12  
  

 

 

    

 

 

 

Total current assets

     828        968  
  

 

 

    

 

 

 

Property, plant and equipment, net

     5,294        5,132  

Deferred debits and other assets

     

Regulatory assets

     550        550  

Investments

     5          

Investments in affiliates

     8        8  

Prepaid pension asset

     490        514  

Other

     25        33  
  

 

 

    

 

 

 

Total deferred debits and other assets

     1,078        1,105  
  

 

 

    

 

 

 

Total assets

   $ 7,200      $ 7,205  
  

 

 

    

 

 

 

See the Combined Notes to Consolidated Financial Statements

 

30


Table of Contents

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

 

(In millions)    June 30,
2012
     December 31,
2011
 
     (Unaudited)         
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities

     

Long-term debt due within one year

   $       $ 110  

Long-term debt of variable interest entity due within one year

     65        63  

Accounts payable

     161        210  

Accrued expenses

     110        148  

Deferred income taxes

     66        59  

Payables to affiliates

     44        41  

Customer deposits

     80        84  

Regulatory liabilities

     22        18  

Other

     59        25  
  

 

 

    

 

 

 

Total current liabilities

     607        758  
  

 

 

    

 

 

 

Long-term debt

     1,597        1,596  

Long-term debt to financing trust

     258        258  

Long-term debt of variable interest entity

     299        332  

Deferred credits and other liabilities

     

Deferred income taxes and unamortized investment tax credits

     1,577        1,491  

Asset retirement obligations

     8        1  

Non-pension postretirement benefits obligations

     211        212  

Regulatory liabilities

     208        200  

Other

     88        56  
  

 

 

    

 

 

 

Total deferred credits and other liabilities

     2,092        1,960  
  

 

 

    

 

 

 

Total liabilities

     4,853        4,904  
  

 

 

    

 

 

 

Commitments and contingencies

     

Shareholders’ equity

     

Common stock

     1,360        1,294  

Retained earnings

     797        817  
  

 

 

    

 

 

 

Total shareholders’ equity

     2,157        2,111  
  

 

 

    

 

 

 

Preference stock not subject to mandatory redemption

     190        190  
  

 

 

    

 

 

 

Total equity

     2,347        2,301  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 7,200      $ 7,205