EXELON CORP - Annual Report: 2021 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


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

For the Fiscal Year Ended December 31, 2021


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


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

001-16169	EXELON CORPORATION	23-2990190
	(a Pennsylvania corporation) 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 (800) 483-3220




001-01839	COMMONWEALTH EDISON COMPANY	36-0938600
	(an Illinois corporation) 10 South Dearborn Street 49th Floor Chicago, Illinois 60603-2300 (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

001-01910	BALTIMORE GAS AND ELECTRIC COMPANY	52-0280210
	(a Maryland corporation) 2 Center Plaza 110 West Fayette Street Baltimore, Maryland 21201-3708 (410) 234-5000

001-31403	PEPCO HOLDINGS LLC	52-2297449
	(a Delaware limited liability company) 701 Ninth Street, N.W. Washington, District of Columbia 20068-0001 (202) 872-2000

001-01072	POTOMAC ELECTRIC POWER COMPANY	53-0127880
	(a District of Columbia and Virginia corporation) 701 Ninth Street, N.W. Washington, District of Columbia 20068-0001 (202) 872-2000

001-01405	DELMARVA POWER & LIGHT COMPANY	51-0084283
	(a Delaware and Virginia corporation) 500 North Wakefield Drive Newark, Delaware 19702-5440 (202) 872-2000

001-03559	ATLANTIC CITY ELECTRIC COMPANY	21-0398280
	(a New Jersey corporation) 500 North Wakefield Drive Newark, Delaware 19702-5440 (202) 872-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

EXELON CORPORATION:

Common Stock, without par value

EXC

The Nasdaq Stock Market LLC

PECO ENERGY COMPANY:

Trust Receipts of PECO Energy Capital Trust III, each representing a 7.38% Cumulative Preferred Security, Series D, $25 stated value, issued by PECO Energy Capital, L.P. and unconditionally guaranteed by PECO Energy Company

EXC/28

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:


Title of Each Class
COMMONWEALTH EDISON COMPANY:
Common Stock Purchase Warrants (1971 Warrants and Series B Warrants)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Exelon Corporation

Yes

☐

Commonwealth Edison Company

Yes

☐

PECO Energy Company

Yes

☐

Baltimore Gas and Electric Company

Yes

☐

Pepco Holdings LLC

Yes

☐

Potomac Electric Power Company

Yes

☐

Delmarva Power & Light Company

Yes

☐

Atlantic City Electric Company

Yes

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Exelon Corporation

Yes

☐

Commonwealth Edison Company

Yes

☐

PECO Energy Company

Yes

☐

Baltimore Gas and Electric Company

Yes

☐

Pepco Holdings LLC

Yes

☐

Potomac Electric Power Company

Yes

☐

Delmarva Power & Light Company

Yes

☐

Atlantic City Electric Company

Yes

☐

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 ý No ¨

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

Exelon Corporation

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

Commonwealth Edison Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

PECO Energy Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

Baltimore Gas and Electric Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

Pepco Holdings LLC

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

Potomac Electric Power Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

Delmarva Power & Light Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

Atlantic City Electric Company

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. x

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

The estimated aggregate market value of the voting and non-voting common equity held by nonaffiliates of each registrant as of June 30, 2021 was as follows:


Exelon Corporation Common Stock, without par value			$43,290,833,498

Commonwealth Edison Company Common Stock, $12.50 par value			No established market
PECO Energy Company Common Stock, without par value			None
Baltimore Gas and Electric Company, without par value			None
Pepco Holdings LLC			Not applicable
Potomac Electric Power Company			None
Delmarva Power & Light Company			None
Atlantic City Electric Company			None

The number of shares outstanding of each registrant’s common stock as of January 31, 2022 was as follows:


Exelon Corporation Common Stock, without par value			980,136,968

Commonwealth Edison Company Common Stock, $12.50 par value			127,021,391
PECO Energy Company Common Stock, without par value			170,478,507
Baltimore Gas and Electric Company Common Stock, without par value			1,000
Pepco Holdings LLC			Not applicable
Potomac Electric Power Company Common Stock, $0.01 par value			100
Delmarva Power & Light Company Common Stock, $2.25 par value			1,000
Atlantic City Electric Company Common Stock, $3.00 par value			8,546,017

Documents Incorporated by Reference

Portions of the Exelon Proxy Statement for the 2021 Annual Meeting of Shareholders and the Commonwealth Edison Company 2021 Information Statement are incorporated by reference in Part III.

PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company meet the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and are therefore filing this Form in the reduced disclosure format.

TABLE OF CONTENTS


		Page No.
GLOSSARY OF TERMS AND ABBREVIATIONS		1
FILING FORMAT		6
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION		6
WHERE TO FIND MORE INFORMATION		6

PART I
ITEM 1.	BUSINESS	7
	General	7
	Constellation Energy Generation, LLC	8
	Utility Operations	15
	Exelon's Strategy and Outlook	18
	Employees	19
	Environmental Matters and Regulation	21
	Executive Officers of the Registrants	25
ITEM 1A.	RISK FACTORS	29
ITEM 1B.	UNRESOLVED STAFF COMMENTS	40
ITEM 2.	PROPERTIES	41
	Constellation Energy Generation, LLC	41
	The Utility Registrants	44
ITEM 3.	LEGAL PROCEEDINGS	45
ITEM 4.	MINE SAFETY DISCLOSURES	46
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES	47
ITEM 6.	SELECTED FINANCIAL DATA	51









ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	52
	Exelon Corporation	52
	Executive Overview	52
	Financial Results of Operations	53
	Significant 2021 Transactions and Recent Developments	56

	Other Key Business Drivers and Management Strategies	60
	Critical Accounting Policies and Estimates	61
	Results of Operations	72

	Commonwealth Edison Company	72
	PECO Energy Company	75
	Baltimore Gas and Electric Company	79
	Pepco Holdings LLC	82
	Potomac Electric Power Company	83
	Delmarva Power & Light Company	86
	Atlantic City Electric Company	90
	Constellation Energy Generation, LLC	93
	Liquidity and Capital Resources	101

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	119









ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	126
	Exelon Corporation	151


		Page No.
	Commonwealth Edison Company	156
	PECO Energy Company	161
	Baltimore Gas and Electric Company	166
	Pepco Holdings LLC	171
	Potomac Electric Power Company	176
	Delmarva Power & Light Company	181
	Atlantic City Electric Company	186
	Combined Notes to Consolidated Financial Statements	191
	1. Significant Accounting Policies	191
	2. Mergers, Acquisitions, and Dispositions	200
	3. Regulatory Matters	202
	4. Revenue from Contracts with Customers	221
	5. Segment Information	225
	6. Accounts Receivable	236
	7. Early Plant Retirements	240
	8. Property, Plant, and Equipment	243
	9. Jointly Owned Electric Utility Plant	245
	10. Asset Retirement Obligations	246
	11. Leases	250
	12. Asset Impairments	255
	13. Intangible Assets	255
	14. Income Taxes	258
	15. Retirement Benefits	264
	16. Derivative Financial Instruments	276
	17. Debt and Credit Agreements	281
	18. Fair Value of Financial Assets and Liabilities	291
	19. Commitments and Contingencies	305

	20. Shareholders' Equity	316
	21. Stock-Based Compensation Plans	317
	22. Changes in Accumulated Other Comprehensive Income	320
	23. Variable Interest Entities	321
	24. Supplemental Financial Information	326
	25. Related Party Transactions	333
	26. Separation	335


ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	336
ITEM 9A.	CONTROLS AND PROCEDURES	336
ITEM 9B.	OTHER INFORMATION	337
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	337


















PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	338
ITEM 11.	EXECUTIVE COMPENSATION	339
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	340
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	341
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	342


		Page No.
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	343
ITEM 16.	FORM 10-K SUMMARY	383
SIGNATURES		384
	Exelon Corporation	384

	Commonwealth Edison Company	385
	PECO Energy Company	386
	Baltimore Gas and Electric Company	387
	Pepco Holdings LLC	388
	Potomac Electric Power Company	389
	Delmarva Power & Light Company	390
	Atlantic City Electric Company	391

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GLOSSARY OF TERMS AND ABBREVIATIONS
Exelon Corporation and Related Entities
Exelon						Exelon Corporation
Generation						Constellation Energy Generation, LLC (formerly Exelon Generation Company, LLC, a subsidiary of Exelon as of December 31, 2021 prior to separation on February 1, 2022)
ComEd						Commonwealth Edison Company
PECO						PECO Energy Company
BGE						Baltimore Gas and Electric Company
Pepco Holdings or PHI						Pepco Holdings LLC (formerly Pepco Holdings, Inc.)
Pepco						Potomac Electric Power Company
DPL						Delmarva Power & Light Company
ACE						Atlantic City Electric Company
Registrants						Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE, collectively
Utility Registrants						ComEd, PECO, BGE, Pepco, DPL, and ACE, collectively
Legacy PHI						PHI, Pepco, DPL, ACE, PES, and PCI, collectively
ACE Funding or ATF						Atlantic City Electric Transition Funding LLC
Antelope Valley						Antelope Valley Solar Ranch One
BondCo						RSB BondCo LLC
BSC						Exelon Business Services Company, LLC
CENG						Constellation Energy Nuclear Group, LLC

Constellation						Constellation Energy Group, Inc.
CR						Constellation Renewables, LLC (formerly ExGen Renewables IV, LLC)
CRP						Constellation Renewables Partners, LLC (formerly ExGen Renewables Partners, LLC)
EEDC						Exelon Energy Delivery Company, LLC
Exelon Corporate						Exelon in its corporate capacity as a holding company
Exelon Transmission Company						Exelon Transmission Company, LLC
FitzPatrick						James A. FitzPatrick nuclear generating station
Ginna						R. E. Ginna nuclear generating station
NER						NewEnergy Receivables LLC
PCI						Potomac Capital Investment Corporation and its subsidiaries
PEC L.P.						PECO Energy Capital, L.P.
PECO Trust III						PECO Energy Capital Trust III
PECO Trust IV						PECO Energy Capital Trust IV
Pepco Energy Services or PES						Pepco Energy Services, Inc. and its subsidiaries
PHI Corporate						PHI in its corporate capacity as a holding company
PHISCO						PHI Service Company
RPG						Renewable Power Generation, LLC
SolGen						SolGen, LLC
TMI						Three Mile Island nuclear facility
UII						Unicom Investments, Inc.

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GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations


ABO						Accumulated Benefit Obligation
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
AMI						Advanced Metering Infrastructure
AOCI						Accumulated Other Comprehensive Income (Loss)
ARC						Asset Retirement Cost
ARO						Asset Retirement Obligation
ARP						Alternative Revenue Program
ASA						Asset Sale Agreement

BGS						Basic Generation Service
Brookfield Renewable						Brookfield Renewable Partners, L.P.
BSA						Bill Stabilization Adjustment
CAISO						California ISO
CBAs						Collective Bargaining Agreements
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
CMC						Carbon Mitigation Credit
CODM						Chief Operating Decision Maker
Conectiv						Conectiv, LLC, a wholly owned subsidiary of PHI and the parent of DPL and ACE during the Predecessor periods
DC PLUG						District of Columbia Power Line Undergrounding Initiative
DCPSC						District of Columbia Public Service Commission

DEPSC						Delaware Public Service Commission
DOE						United States Department of Energy
DOEE						Department of Energy & Environment
DOJ						United States Department of Justice
DPP						Deferred Purchase Price

DSP						Default Service Provider
EDF						Electricite de France SA and its subsidiaries


EIMA						Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
EPA						United States Environmental Protection Agency
ERCOT						Electric Reliability Council of Texas
ERISA						Employee Retirement Income Security Act of 1974, as amended
EROA						Expected Rate of Return on Assets

ERP						Enterprise Resource Program

FEJA						Illinois Public Act 99-0906 or Future Energy Jobs Act
FERC						Federal Energy Regulatory Commission
FRCC						Florida Reliability Coordinating Council
FRR						Fixed Resource Requirement
GAAP						Generally Accepted Accounting Principles in the United States
GCR						Gas Cost Rate
GHG						Greenhouse Gas
GSA						Generation Supply Adjustment

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GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
GWh						Gigawatt hour
ICC						Illinois Commerce Commission
ICE						Intercontinental Exchange
IIP						Infrastructure Investment Program
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.
NYISO						New York ISO
kV						Kilovolt
kWh						Kilowatt-hour
LIBOR						London Interbank Offered Rate
LLRW						Low-Level Radioactive Waste
LNG						Liquefied Natural Gas

LTIP						Long-Term Incentive Plan

LTRRPP						Long-Term Renewable Resources Procurement Plan
MDE						Maryland Department of the Environment
MDPSC						Maryland Public Service Commission
MGP						Manufactured Gas Plant
MISO						Midcontinent Independent System Operator, Inc.
mmcf						Million Cubic Feet
MOPR						Minimum Offer Price Rule
MPSC						Missouri Public Service Commission
MRV						Market-Related Value
MW						Megawatt
MWh						Megawatt hour
N/A						Not applicable
NAV						Net Asset Value
NDT						Nuclear Decommissioning Trust
NEIL						Nuclear Electric Insurance Limited
NERC						North American Electric Reliability Corporation
NGX						Natural Gas Exchange
NJBPU						New Jersey Board of Public Utilities

Non-Regulatory Agreement Units						Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting
NOSA						Nuclear Operating Services Agreement
NPDES						National Pollutant Discharge Elimination System
NPNS						Normal Purchase Normal Sale scope exception
NRC						Nuclear Regulatory Commission

NWPA						Nuclear Waste Policy Act of 1982
NYMEX						New York Mercantile Exchange
NYPSC						New York Public Service Commission
OCEP						Oyster Creek Environmental Protection, LLC
OCI						Other Comprehensive Income

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GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
OIESO						Ontario Independent Electricity System Operator
OPEB						Other Postretirement Employee Benefits

PA DEP						Pennsylvania Department of Environmental Protection
PAPUC						Pennsylvania Public Utility Commission
PCB						Polychlorinated Biphenyl
PGC						Purchased Gas Cost Clause

PG&E						Pacific Gas and Electric Company
PJM						PJM Interconnection, LLC
POLR						Provider of Last Resort
PPA						Power Purchase Agreement
PP&E						Property, Plant, and Equipment
Price-Anderson Act						Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP						Potentially Responsible Parties
PSEG						Public Service Enterprise Group Incorporated
PUCT						Public Utility Commission of Texas
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 or portions thereof 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
RGGI						Regional Greenhouse Gas Initiative
RMC						Risk Management Committee
RNF						Revenue Net of Purchased Power and Fuel Expense
ROE						Return on equity
ROU						Right-of-use
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)

SNF						Spent Nuclear Fuel
SOA						Society of Actuaries
SOFR						Secured Overnight Financing Rate
SOS						Standard Offer Service
SPP						Southwest Power Pool
SSA						Social Security Administration
STRIDE						Maryland Strategic Infrastructure Development and Enhancement Program
TCJA						Tax Cuts and Jobs Act
Transition Bond Charge						Revenue ACE receives, and pays to ACE Funding, to fund the principal and interest payments on Transition Bonds and related taxes, expenses, and fees

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GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations
Transition Bonds						Transition Bonds issued by ACE Funding
U.S. Court of Appeals for the D.C. Circuit						United States Court of Appeals for the District of Columbia Circuit
VIE						Variable Interest Entity
WECC						Western Electric Coordinating Council
ZEC						Zero Emission Credit
ZES						Zero Emission Standard

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FILING FORMAT

This combined Annual Report on Form 10-K is being filed separately by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants). Information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance, are intended to identify such forward-looking statements.

The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, including those factors discussed with respect to the Registrants discussed in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies, and (d) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that the Registrants file electronically with the SEC. These documents are also available to the public from commercial document retrieval services and the Registrants’ website at www.exeloncorp.com. Information contained on the Registrants’ website shall not be deemed incorporated into, or to be a part of, this Report.

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PART I


ITEM 1.

General

Corporate Structure and Business and Other Information

As of December 31, 2021, Exelon was a utility services holding company engaged in the generation, delivery, and marketing of energy through Generation and the energy distribution and transmission businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.

On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies with the resources necessary to best serve customers and sustain long-term investment and operating excellence. The separation was completed on February 1, 2022 and gives each company the financial and strategic independence to focus on its specific customer needs, while executing its core business strategy. See Note 26 – Separation of the Combined Notes to Consolidated Financial Statements for additional information.

Name of Registrant / Subsidiary

Business

Service Territories

Commonwealth Edison Company (registrant)

Purchase and regulated retail sale of electricity

Northern Illinois, including the City of Chicago

Transmission and distribution of electricity to retail customers

PECO Energy Company (registrant)

Purchase and regulated retail sale of electricity and natural gas

Southeastern Pennsylvania, including the City of Philadelphia (electricity)

Transmission and distribution of electricity and distribution of natural gas to retail customers

Pennsylvania counties surrounding the City of Philadelphia (natural gas)

Baltimore Gas and Electric Company (registrant)

Purchase and regulated retail sale of electricity and natural gas

Central Maryland, including the City of Baltimore (electricity and natural gas)

Transmission and distribution of electricity and distribution of natural gas to retail customers

Pepco Holdings LLC (registrant)

Utility services holding company engaged, through its reportable segments Pepco, DPL, and ACE

Service Territories of Pepco, DPL, and ACE

Potomac Electric Power Company (registrant)

Purchase and regulated retail sale of electricity

District of Columbia and Major portions of Montgomery and Prince George’s Counties, Maryland

Transmission and distribution of electricity to retail customers

Delmarva Power & Light Company (registrant)

Purchase and regulated retail sale of electricity and natural gas

Portions of Delaware and Maryland (electricity)

Transmission and distribution of electricity and distribution of natural gas to retail customers

Portions of New Castle County, Delaware (natural gas)

Atlantic City Electric Company (registrant)

Purchase and regulated retail sale of electricity

Portions of Southern New Jersey

Transmission and distribution of electricity to retail customers

Constellation Energy Generation, LLC (formerly Exelon Generation
Company, LLC) (subsidiary)

Generation, physical delivery, and marketing of power across multiple geographical regions through its customer-facing business, Constellation, which sells electricity to both wholesale and retail customers. Generation also sells natural gas, renewable energy, and other energy-related products and services.

Five reportable segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions

Business Services

Through its business services subsidiary, BSC, Exelon provides its subsidiaries with a variety of support services at cost, including legal, human resources, financial, information technology, and supply management services. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services at cost, including legal, accounting, engineering, customer operations, distribution and transmission planning, asset management, system operations, and power procurement, to PHI operating companies. The costs of BSC and PHISCO are directly charged or allocated to the applicable subsidiaries. The results of Exelon’s corporate

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operations are presented as “Other” within the consolidated financial statements and include intercompany eliminations unless otherwise disclosed.

Generation

Generation, one of the largest competitive electric generation companies in the United States as measured by owned and contracted MW, physically delivers and markets power across multiple geographic regions through its customer-facing business, Constellation. Constellation sells electricity and natural gas, including renewable energy and associated attributes, in competitive domestic energy markets to both wholesale and retail customers. Generation leverages its generation portfolio to serve customers under both long-term and short-term contracts, as well as spot market sales. Generation operates in well-developed energy markets and employs integrated and ratable hedging strategies to manage commodity price volatility. Generation's fleet also provides geographic and supply source diversity. Generation’s customers include distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive markets. Generation’s customer-facing activities foster development and delivery of other innovative energy-related products and services for its customers.

Generation is a public utility as defined under the Federal Power Act and is subject to FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce. Under the Federal Power Act, FERC has the authority to grant or deny market-based rates for sales of energy, capacity, and ancillary services to ensure that such sales are just and reasonable. FERC’s jurisdiction over ratemaking includes the authority to suspend the market-based rates of utilities and set cost-based rates should FERC find that its previous grant of market-based rates authority is no longer just and reasonable. Other matters subject to FERC jurisdiction include, but are not limited to, third-party financings; review of mergers; dispositions of jurisdictional facilities and acquisitions of securities of another public utility or an existing operational generating facility; affiliate transactions; intercompany financings and cash management arrangements; certain internal corporate reorganizations; and certain holding company acquisitions of public utility and holding company securities.

RTOs and ISOs exist in a number of regions to provide transmission service across multiple transmission systems. FERC has approved PJM, MISO, ISO-NE, and SPP as RTOs and CAISO and NYISO as ISOs. These entities are responsible for regional planning, managing transmission congestion, developing wholesale markets for energy and capacity, maintaining reliability, market monitoring, the scheduling of physical power sales brokered through ICE and NYMEX, and the elimination or reduction of redundant transmission charges imposed by multiple transmission providers when wholesale customers take transmission service across several transmission systems. ERCOT is not subject to regulation by FERC but performs a similar function in Texas to that performed by RTOs in markets regulated by FERC.

Specific operations of Generation are also subject to the jurisdiction of various other Federal, state, regional, and local agencies, including the NRC, and Federal and state environmental protection agencies. Additionally, Generation is subject to NERC mandatory reliability standards, which protect the nation’s bulk power system against potential disruptions from cyber and physical security breaches.

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Generating Resources

At December 31, 2021, the generating resources of Generation consisted of the following:


Type of Capacity			MW
Owned generation assets(a)
Nuclear			20,899
Fossil (primarily natural gas and oil)			8,819
Renewable(b)			2,682
Owned generation assets			32,400
Contracted generation(c)			4,102
Total generating resources			36,502

__________

(a)Net generation capacity is stated at proportionate ownership share. See ITEM 2. PROPERTIES—Generation for additional information.

(b)Includes wind, hydroelectric, and solar generating assets.

(c)Electric supply procured under unit-specific agreements.

Generation has five reportable segments, as described in the table below, representing the different geographical areas in which Generation’s owned generating resources are located and Generation's customer-facing activities are conducted.


Segment	Net Generation Capacity (MW)(a)	% of Net Generation Capacity		Geographical Area
Mid-Atlantic	10,508	32	%	Eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia, and parts of Pennsylvania and North Carolina
Midwest	11,898	37	%	Western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region
New York	3,093	10	%	NYISO
ERCOT	3,610	11	%	Electric Reliability Council of Texas
Other Power Regions	3,291	10	%	New England, South, West, and Canada
Total	32,400	100	%

__________

(a)Net generation capacity is stated at proportionate ownership share. See ITEM 2. PROPERTIES—Generation for additional information.

Nuclear Facilities

Generation has ownership interests in thirteen nuclear generating stations currently in service, consisting of 23 units with an aggregate of 20,899 MW of capacity. These stations exclude TMI located in Middletown, Pennsylvania, which permanently ceased generation operations on September 20, 2019 and Oyster Creek located in Forked River, New Jersey, which permanently ceased generation operations on September 17, 2018 and was subsequently sold to Holtec International (Holtec) on July 1, 2019. Generation wholly owns all of its nuclear generating stations, except for undivided ownership interests in four jointly-owned nuclear stations: Quad Cities (75% ownership), Peach Bottom (50% ownership), Salem (42.59% ownership), and Nine Mile Point Unit 2 (82% ownership), which are consolidated in Exelon’s financial statements relative to its proportionate ownership interest in each unit.

Generation had a 50.01% membership interest in CENG, a joint venture with EDF, which wholly owns the Calvert Cliffs and Ginna nuclear stations and Nine Mile Point Unit 1, in addition to an 82% undivided ownership interest in Nine Mile Point Unit 2. EDF had the option to sell its 49.99% equity interest in CENG to Generation exercisable beginning on January 1, 2016 and thereafter until June 30, 2022. On August 6, 2021, Generation and

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EDF entered into a settlement agreement pursuant to which Generation, through a wholly owned subsidiary, purchased EDF’s equity interest in CENG for a net purchase price of $885 million.

See ITEM 2. PROPERTIES for additional information on Generation's nuclear facilities, Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements for additional information on the acquisition of EDF's equity interest in CENG and the disposition of Oyster Creek, and Note 23 — Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information regarding the CENG consolidation.

Generation’s nuclear generating stations are all operated by Generation, with the exception of the two units at Salem, which are operated by PSEG Nuclear, LLC (PSEG Nuclear), an indirect, wholly owned subsidiary of PSEG. In 2021, 2020, and 2019 electric supply (in GWh) generated from the nuclear generating facilities was 65%, 62%, and 64%, respectively, of Generation’s total electric supply, which also includes fossil, hydroelectric, and renewable generation and electric supply purchased for resale. Generation’s wholesale and retail power marketing activities are, in part, supplied by the output from the nuclear generating stations. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for additional information of Generation’s electric supply sources.

Nuclear Operations

Capacity factors, which are significantly affected by the number and duration of refueling and non-refueling outages, can have a significant impact on Generation’s results of operations. Generation’s operations from its nuclear plants have historically had minimal environmental impact and the plants have a safe operating history.

Generation manages its scheduled refueling outages to minimize their duration and to maintain high nuclear generating capacity factors, resulting in a stable generation base for Generation’s wholesale and retail power marketing activities. During scheduled refueling outages, Generation performs maintenance and equipment upgrades in order to minimize the occurrence of unplanned outages and to maintain safe, reliable operations. During 2021, 2020, and 2019, the nuclear generating facilities operated by Generation, achieved capacity factors of 94.5%, 95.4%, and 95.7%, respectively, at ownership percentage.

In addition to the maintenance and equipment upgrades performed by Generation during scheduled refueling outages, Generation has extensive operating and security procedures in place to ensure the safe operation of the nuclear units. Generation also has extensive safety systems in place to protect the plant, personnel, and surrounding area in the unlikely event of an accident or other incident.

Regulation of Nuclear Power Generation

Generation is subject to the jurisdiction of the NRC with respect to the operation of its nuclear generating stations, including the licensing for operation of each unit. The NRC subjects nuclear generating stations to continuing review and regulation covering, among other things, operations, maintenance, emergency planning, security, and environmental and radiological aspects of those stations. As part of its reactor oversight process, the NRC continuously assesses unit performance indicators and inspection results and communicates its assessment on a semi-annual basis. All nuclear generating stations operated by Generation are categorized by the NRC in the Licensee Response Column, which is the highest of five performance bands. The NRC may modify, suspend, or revoke operating licenses and impose civil penalties for failure to comply with the Atomic Energy Act or the terms of the operating licenses. Changes in regulations by the NRC may require a substantial increase in capital expenditures and/or operating costs for nuclear generating facilities.

Licenses

Generation has original 40-year operating licenses from the NRC for each of its nuclear units and has received 20-year operating license renewals from the NRC for all its nuclear units except Clinton. PSEG has received 20-year operating license renewals for Salem Units 1 and 2. Peach Bottom has received a second 20-year license renewal from the NRC for Units 2 and 3.

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The following table summarizes the current license expiration dates for Generation’s operating nuclear facilities in service:


Station	Unit	In-Service Date(a)	Current License Expiration
Braidwood	1	1988	2046
	2	1988	2047
Byron	1	1985	2044
	2	1987	2046
Calvert Cliffs	1	1975	2034
	2	1977	2036
Clinton(b)	1	1987	2027
Dresden	2	1970	2029
	3	1971	2031
FitzPatrick	1	1975	2034
LaSalle	1	1984	2042
	2	1984	2043
Limerick	1	1986	2044
	2	1990	2049
Nine Mile Point	1	1969	2029
	2	1988	2046
Peach Bottom	2	1974	2053
	3	1974	2054
Quad Cities	1	1973	2032
	2	1973	2032
Ginna	1	1970	2029
Salem	1	1977	2036
	2	1981	2040

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(a)Denotes year in which nuclear unit began commercial operations.

(b)Although timing has been delayed, Generation currently plans to seek license renewal for Clinton and has received a Timely Renewal Exemption from the NRC that allows for the license renewal application to be filed in the first quarter of 2024.

The operating license renewal process takes approximately four to five years from the commencement of the renewal process, which includes approximately two years for Generation to develop the application and approximately two years for the NRC to review the application. Depreciation provisions are based on the estimated useful lives of the stations, which corresponds with the term of the NRC operating licenses denoted in the table above as of December 31, 2021. From August 27, 2020 through September 15, 2021, Byron and Dresden depreciation provisions were accelerated to reflect the previously announced shutdown dates of September 2021 and November 2021, respectively. On September 15, 2021, Generation updated the expected useful lives for both facilities to reflect the end of the available NRC operating license for each unit consistent with the table above. See Note 7 — Early Plant Retirements of the Combined Notes to Consolidated Financial Statements for additional information on Byron and Dresden.

Nuclear Waste Storage and Disposal

There are no facilities for the reprocessing or permanent disposal of SNF currently in operation in the United States, nor has the NRC licensed any such facilities. Generation currently stores all SNF generated by its nuclear generating facilities on-site in storage pools or in dry cask storage facilities. Since Generation’s SNF storage pools generally do not have sufficient storage capacity for the life of the respective plant, Generation has developed dry cask storage facilities to support operations.

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As of December 31, 2021, Generation had approximately 89,400 SNF assemblies (21,900 tons) stored on site in SNF pools or wet and dry cask storage which includes SNF assemblies at Zion Station, for which Generation retains ownership and responsibility for the decommissioning of the Zion Independent Spent Fuel Storage Installation. All currently operating Generation-owned nuclear sites have on-site dry cask storage. TMI's on-site dry cask storage is projected to be in operation in 2022. On-site dry cask storage in concert with on-site storage pools will be capable of meeting all current and future SNF storage requirements at Generation’s sites through the end of the license renewal periods and through decommissioning.

For a discussion of matters associated with Generation’s contracts with the DOE for the disposal of SNF, see Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.

As a by-product of their operations, nuclear generating units produce LLRW. LLRW is accumulated at each generating station and permanently disposed of at licensed disposal facilities. The Federal Low-Level Radioactive Waste Policy Act of 1980 provides that states may enter into agreements to provide regional disposal facilities for LLRW and restrict use of those facilities to waste generated within the region. Illinois and Kentucky have entered into such an agreement, although neither state currently has an operational site and none is anticipated to be operational for the next ten years.

Generation ships its Class A LLRW, which represents 93% of LLRW generated at its stations, to disposal facilities in Utah and South Carolina, which have enough storage capacity to store all Class A LLRW for the life of all stations in Generation's nuclear fleet. The disposal facility in South Carolina at present is only receiving LLRW from LLRW generators in South Carolina, New Jersey (which includes Salem), and Connecticut.

Generation utilizes on-site storage capacity at all its stations to store and stage for shipping Class B and Class C LLRW. Generation has a contract through 2040 to ship Class B and Class C LLRW to a disposal facility in Texas. The agreement provides for disposal of all current Class B and Class C LLRW currently stored at each station as well as the Class B and Class C LLRW generated during the term of the agreement. However, because the production of LLRW from Generation’s nuclear fleet will exceed the capacity at the Texas site (3.9 million curies for 15 years beginning in 2012), Generation will still be required to utilize on-site storage at its stations for Class B and Class C LLRW. Generation currently has enough storage capacity to store all Class B and Class C LLRW for the life of all stations in Generation’s nuclear fleet. Generation continues to pursue alternative disposal strategies for LLRW, including an LLRW reduction program to minimize on-site storage and cost impacts.

Nuclear Insurance

Generation is subject to liability, property damage, and other risks associated with major incidents at all of its nuclear stations. Generation has reduced its financial exposure to these risks through insurance and other industry risk-sharing provisions. See “Nuclear Insurance” within Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information.

For information regarding property insurance, see ITEM 2. PROPERTIES — Generation. Generation is self-insured to the extent that any losses may exceed the amount of insurance maintained or are within the policy deductible for its insured losses.

Fossil and Renewable Facilities (including Hydroelectric)

Generation wholly owns all its fossil and renewable generating stations, except for: (1) Wyman; (2) certain wind project entities; and (3) CRP, which is owned 49% by another owner. See Note 23 — Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information regarding CRP which is a VIE. Generation’s fossil and renewable generating stations are all operated by Generation, except for Wyman, which is operated by the principal owner, NextEra Energy Resources LLC, a subsidiary of the FPL Group, Inc. In 2021, 2020, and 2019, electric supply (in GWh) generated from owned fossil and renewable generating facilities was 10%, 9%, and 11%, respectively, of Generation’s total electric supply. Much of this output was dispatched to support Generation’s wholesale and retail power marketing activities. On March 31, 2021 and June 30, 2021, Generation completed the sale of a significant portion of its solar business and its interest in the Albany Green Energy biomass facility, respectively. See ITEM 2. PROPERTIES for additional information regarding Generation's electric generating facilities and Note 2 - Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements for additional information on these dispositions.

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Licenses

Fossil and renewable generation plants are generally not licensed, and, therefore, the decision on when to retire plants is, fundamentally, a commercial one. FERC has the exclusive authority to license most non-Federal hydropower projects located on navigable waterways or Federal lands, or connected to the interstate electric grid, which include Generation's Conowingo Hydroelectric Project (Conowingo) and Muddy Run Pumped Storage Facility Project (Muddy Run). Muddy Run's license expires on December 1, 2055 and Conowingo's on February 28, 2071. The stations are currently being depreciated over their estimated useful lives, which correspond with the license terms. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on Conowingo.

Insurance

Generation maintains business interruption insurance for its renewable projects, but not for its fossil and hydroelectric operations unless required by contract or financing agreements. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on financing agreements. Generation maintains both property damage and liability insurance. For property damage and liability claims for these operations, Generation is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance maintained. For information regarding property insurance, see ITEM 2. PROPERTIES — Generation.

Contracted Generation

In addition to energy produced by owned generation assets, Generation sources electricity from plants it does not own under long-term contracts. The following tables summarize Generation’s long-term contracts to purchase unit-specific physical power with an original term in excess of one year in duration, by region, in effect as of December 31, 2021:


Region	Number of Agreements	Expiration Dates	Capacity (MW)
Mid-Atlantic	7	2022 - 2032	176
Midwest	3	2026 - 2032	351
New York	4	2022	26
ERCOT	5	2022 - 2035	864
Other Power Regions	12	2022 - 2033	2,685
Total	31		4,102


	2022	2023	2024	2025	2026	Thereafter	Total
Capacity Expiring (MW)	1,084	114	101	490	398	1,915	4,102

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Fuel

The following table shows sources of electric supply in GWh for 2021 and 2020:


	Source of Electric Supply
	2021	2020
Nuclear(a)	174,987	175,085
Purchases — non-trading portfolio	67,605	79,972
Fossil (primarily natural gas and oil)	19,960	19,501
Renewable(b)	6,577	7,052
Total supply	269,129	281,610

__________

(a)Includes the proportionate share of output where Generation has an undivided ownership interest in jointly-owned generating plants and includes the total output of plants that are fully consolidated.

(b)Includes wind, hydroelectric, solar, and biomass generating assets.

The cycle of production and utilization of nuclear fuel includes the mining and milling of uranium ore into uranium concentrates, the conversion of uranium concentrates to uranium hexafluoride, the enrichment of the uranium hexafluoride, and the fabrication of fuel assemblies. Generation has inventory in various forms and does not anticipate difficulty in obtaining the necessary uranium concentrates or conversion, enrichment, or fabrication services to meet the nuclear fuel requirements of its nuclear units.

Natural gas is procured through long-term and short-term contracts, as well as spot-market purchases. Fuel oil inventories are managed so that in the winter months sufficient volumes of fuel are available in the event of extreme weather conditions and during the remaining months to take advantage of favorable market pricing.

Generation uses financial instruments to mitigate price risk associated with certain commodity price exposures, using both over-the-counter and exchange-traded instruments. See ITEM 1A. RISK FACTORS, ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Critical Accounting Policies and Estimates and Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information regarding derivative financial instruments.

Power Marketing

Generation’s integrated business operations include physical delivery and marketing of power and natural gas. Generation largely obtains physical power supply from its owned and contracted generation in multiple geographic regions. The commodity risks associated with the output from owned and contracted generation is managed using various commodity transactions including sales to customers and its ratable hedging program. The main objective is to obtain low-cost energy supply to meet physical delivery obligations to both wholesale and retail customers. Generation sells electricity, natural gas, and other energy related products and solutions to various customers, including distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive markets.

Price and Supply Risk Management

Generation uses a combination of wholesale and retail customer load sales, as well as non-derivative and derivative contracts, including financially-settled swaps, futures contracts and swap options, and physical options and physical forward contracts, all with credit-approved counterparties, to hedge the price risk of the generation portfolio. Generation implements a three-year ratable sales plan to align its hedging strategy with its financial objectives. Generation may also enter into transactions that are outside of this ratable hedging program.

A portion of Generation’s hedging strategy may be implemented using fuel products based on assumed correlations between power and fuel prices. The risk management group monitors the financial risks of the wholesale and retail power marketing activities. Generation also uses financial and commodity contracts for proprietary trading purposes, but this activity accounts for only a small portion of Generation’s efforts. The

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proprietary trading portfolio is subject to a risk management policy that includes stringent risk management limits. See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for additional information.

Utility Registrants

Utility Operations

Service Territories and Franchise Agreements

The following table presents the size of service territories, populations of each service territory, and the number of customers within each service territory for the Utility Registrants as of December 31, 2021:


	ComEd	PECO	BGE	Pepco	DPL	ACE
Service Territories (in square miles)
Electric	11,450	2,100	2,300	650	5,400	2,750
Natural Gas	N/A	1,900	3,050	N/A	250	N/A
Total(a)	11,450	2,100	3,250	650	5,400	2,750

Service Territory Population (in millions)
Electric	9.3	4.0	3.0	2.4	1.5	1.2
Natural Gas	N/A	2.5	2.9	N/A	0.6	N/A
Total(b)	9.3	4.0	3.1	2.4	1.5	1.2
Main City	Chicago	Philadelphia	Baltimore	District of Columbia	Wilmington	Atlantic City
Main City Population	2.7	1.6	0.6	0.7	0.1	0.1

Number of Customers (in millions)
Electric	4.1	1.7	1.3	0.9	0.5	0.6
Natural Gas	N/A	0.5	0.7	N/A	0.1	N/A
Total(c)	4.1	1.7	1.3	0.9	0.5	0.6

___________

(a)The number of total service territory square miles counts once only a square mile that includes both electric and natural gas services, and thus does not represent the combined total square mileage of electric and natural gas service territories.

(b)The total service territory population counts once only an individual who lives in a region that includes both electric and natural gas services, and thus does not represent the combined total population of electric and natural gas service territories.

(c)The number of total customers counts once only a customer who is both an electric and a natural gas customer, and thus does not represent the combined total of electric customers and natural gas customers.

The Utility Registrants have the necessary authorizations to perform their current business of providing regulated electric and natural gas distribution services in the various municipalities and territories in which they now supply such services. These authorizations include charters, franchises, permits, and certificates of public convenience issued by local and state governments and state utility commissions. ComEd's, BGE's (gas), Pepco DC's, and ACE's rights are generally non-exclusive while PECO's, BGE's (electric), Pepco MD's, and DPL's rights are generally exclusive. Certain authorizations are perpetual while others have varying expiration dates. The Utility Registrants anticipate working with the appropriate governmental bodies to extend or replace the authorizations prior to their expirations.

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Utility Regulations

State utility commissions regulate the Utility Registrants' electric and gas distribution rates and service, issuances of certain securities, and certain other aspects of the business. The following table outlines the state commissions responsible for utility oversight:


Registrant						Commission
ComEd						ICC
PECO						PAPUC
BGE						MDPSC
Pepco						DCPSC/MDPSC
DPL						DEPSC/MDPSC
ACE						NJBPU

The Utility Registrants are public utilities under the Federal Power Act subject to regulation by FERC related to transmission rates and certain other aspects of the utilities' business. The U.S. Department of Transportation also regulates pipeline safety and other areas of gas operations for PECO, BGE, and DPL. The U.S. Department of Homeland Security (Transportation Security Administration) provided new security directives in 2021 that regulate cyber risks for certain gas distribution operators. Additionally, the Utility Registrants are subject to NERC mandatory reliability standards, which protect the nation's bulk power system against potential disruptions from cyber and physical security breaches.

Seasonality Impacts on Delivery Volumes

The Utility Registrants' electric distribution volumes are generally higher during the summer and winter months when temperature extremes create demand for either summer cooling or winter heating. For PECO, BGE, and DPL, natural gas distribution volumes are generally higher during the winter months when cold temperatures create demand for winter heating.

ComEd, BGE, Pepco, DPL Maryland, and ACE have electric distribution decoupling mechanisms and BGE has a natural gas decoupling mechanism that eliminate the favorable and unfavorable impacts of weather and customer usage patterns on electric distribution and natural gas delivery volumes. As a result, ComEd's, BGE's, Pepco's, DPL Maryland's, and ACE's electric distribution revenues and BGE's natural gas distribution revenues are not materially impacted by delivery volumes. PECO's and DPL Delaware's electric distribution revenues and natural gas distribution revenues are impacted by delivery volumes.

Electric and Natural Gas Distribution Services

The Utility Registrants are allowed to recover reasonable costs and fair and prudent capital expenditures associated with electric and natural gas distribution services and earn a return on those capital expenditures, subject to commission approval. ComEd recovers costs through a performance-based rate formula. ComEd is required to file an update to the performance-based rate formula on an annual basis. On September 15, 2021, Illinois passed the Clean Energy Law, which contains requirements for ComEd to transition away from the performance-based rate formula by the end of 2022 and would allow for the submission of either a general rate or multi-year rate plan. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information. PECO's, BGE's, and DPL's electric and gas distribution costs and Pepco's and ACE's electric distribution costs have generally been recovered through traditional rate case proceedings. However, the MDPSC and the DCPSC allow utilities to file multi-year rate plans. In certain instances, the Utility Registrants use specific recovery mechanisms as approved by their respective regulatory agencies.

ComEd, Pepco, DPL and ACE customers have the choice to purchase electricity, and PECO and BGE customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. DPL customers, with the exception of certain commercial and industrial customers, do not have the choice to purchase natural gas from competitive natural gas suppliers. The Utility Registrants remain the distribution service providers for all customers and are obligated to deliver electricity and natural gas to customers in their respective service territories while charging a regulated rate for distribution service. In addition, the Utility Registrants also retain significant default service obligations to provide electricity to certain groups of customers in their respective service areas who do not choose a competitive electric generation supplier. PECO,

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BGE, and DPL also retain significant default service obligations to provide natural gas to certain groups of customers in their respective service areas who do not choose a competitive natural gas supplier.

For customers that choose to purchase electric generation or natural gas from competitive suppliers, the Utility Registrants act as the billing agent and therefore do not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase electric generation or natural gas from a Utility Registrant, the Utility Registrants are permitted to recover the electricity and natural gas procurement costs from customers without mark-up or with a slight mark-up and therefore record the amounts in Operating revenues and Purchased power and fuel expense. As a result, fluctuations in electricity or natural gas sales and procurement costs have no significant impact on the Utility Registrants’ Net income.

See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Results of Operations and Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information regarding electric and natural gas distribution services.

Procurement of Electricity and Natural Gas

The Utility Registrants' electric supply for its customers is primarily procured through contracts as required by their respective state commissions. The Utility Registrants procure electricity supply from various approved bidders, including Generation. RTO spot market purchases and sales are utilized to balance the utility electric load and supply as required. Charges incurred for electric supply procured through contracts with Generation are included in Purchased power from affiliates on the Utility Registrants' Statements of Operations and Comprehensive Income.

PECO's, BGE’s, and DPL's natural gas supplies are purchased from a number of suppliers for terms of up to three years. PECO, BGE, and DPL have annual firm supply and transportation contracts of 137,000 mmcf, 268,000 mmcf and 61,000 mmcf, respectively. In addition, to supplement gas supply at times of heavy winter demands and in the event of temporary emergencies, PECO, BGE, and DPL have available storage capacity from the following sources:


	Peak Natural Gas Sources (in mmcf)
	LNG Facility	Propane-Air Plant	Underground Storage Service Agreements (a)
PECO	1,200	150	19,400
BGE	1,056	550	22,000
DPL	250	N/A	3,900

___________

(a)Natural gas from underground storage represents approximately 28%, 20%, and 33% of PECO's, BGE’s, and DPL's 2021-2022 heating season planned supplies, respectively.

PECO, BGE, and DPL have long-term interstate pipeline contracts and also participate in the interstate markets by releasing pipeline capacity or bundling pipeline capacity with gas for off-system sales. Off-system gas sales are low-margin direct sales of gas to wholesale suppliers of natural gas. Earnings from these activities are shared between the utilities and customers. PECO, BGE, and DPL make these sales as part of a program to balance its supply and cost of natural gas. The off-system gas sales are not material to PECO, BGE, and DPL.

See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, Commodity Price Risk (All Registrants), for additional information regarding Utility Registrants' contracts to procure electric supply and natural gas.

Energy Efficiency Programs

The Utility Registrants are generally allowed to recover costs associated with the energy efficiency and demand response programs they offer. Each commission approved program seeks to meet mandated electric consumption reduction targets and implement demand response measures to reduce peak demand. The programs are designed to meet standards required by each respective regulatory agency.

ComEd is allowed to earn a return on its energy efficiency costs. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.

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Capital Investment

The Utility Registrants' businesses are capital intensive and require significant investments, primarily in electric transmission and distribution and natural gas transportation and distribution facilities, to ensure the adequate capacity, reliability, and efficiency of their systems. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Liquidity and Capital Resources, for additional information regarding projected 2022 capital expenditures.

Transmission Services

Under FERC’s open access transmission policy, the Utility Registrants, as owners of transmission facilities, are required to provide open access to their transmission facilities under filed tariffs at cost-based rates approved by FERC. The Utility Registrants and their affiliates are required to comply with FERC’s Standards of Conduct regulation governing the communication of non-public transmission information between the transmission owner’s employees and wholesale merchant employees.

PJM is the regional grid operator and operates pursuant to FERC-approved tariffs. PJM is the transmission provider under, and the administrator of, the PJM Open Access Transmission Tariff (PJM Tariff). PJM operates the PJM energy, capacity, and other markets, and, through central dispatch, controls the day-to-day operations of the bulk power system for the region. The Utility Registrants are members of PJM and provide regional transmission service pursuant to the PJM Tariff. The Utility Registrants and the other transmission owners in PJM have turned over control of certain of their transmission facilities to PJM, and their transmission systems are under the dispatch control of PJM. Under the PJM Tariff, transmission service is provided on a region-wide, open-access basis using the transmission facilities of the PJM transmission owners at rates based on the costs of transmission service.

The Utility Registrants' transmission rates are established based on a FERC approved formula as shown below:


			Approval Date
ComEd			January 2008
PECO			December 2019
BGE			April 2006
Pepco			April 2006
DPL			April 2006
ACE			April 2006

Exelon’s Strategy and Outlook

In 2021, the businesses remained focused on maintaining industry leading operational excellence, meeting or exceeding their financial commitments, ensuring timely recovery on investments to enable customer benefits, supporting enactment of clean energy policies, and continued commitment to corporate responsibility.

Exelon’s strategy is to improve reliability and operations, enhance the customer experience, and advance clean and affordable energy choices, while ensuring ratemaking mechanisms provide the utilities fair financial returns. The Utility Registrants only invest in rate base where it provides a benefit to customers and the community by improving reliability and the service experience or otherwise meeting customer needs. The Utility Registrants make these investments at the lowest reasonable cost to customers. Exelon seeks to leverage its scale and expertise across the utilities platform through enhanced standardization and sharing of resources and best practices to achieve improved operational and financial results. Additionally, the Utility Registrants anticipate making significant future investments in smart grid technology, transmission projects, gas infrastructure, and electric system improvement projects, providing greater reliability, improved service for our customers, increased capacity to accommodate new technologies, and a stable return for the company.

Management continually evaluates growth opportunities aligned with Exelon’s businesses, assets and markets leveraging Exelon’s expertise in those areas and offering sustainable returns.

The Utility Registrants anticipate investing approximately $29 billion over the next four years in electric and natural gas infrastructure improvements and modernization projects, including smart grid technology, storm

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hardening, advanced reliability technologies, and transmission projects, which is projected to result in an increase to current rate base of approximately $17 billion by the end of 2025. The Utility Registrants invest in rate base where beneficial to customers and the community by increasing reliability and the service experience or otherwise meeting customer needs. These investments are made at the lowest reasonable cost to customers.

In August 2021, the Utility Registrants announced a “path to clean” goal to collectively reduce their operations-driven emissions 50% by 2030 against a 2015 baseline, and to reach net zero operations-driven emissions by 2050. This goal builds upon Exelon’s long-standing commitment to reducing our GHG emissions. See ITEM 1. BUSINESS — Environmental Matters and Regulation — Climate Change for additional information.

Various market, financial, regulatory, legislative and operational factors could affect Exelon's success in pursuing its strategies. Exelon continues to assess infrastructure, operational, policy, and legal solutions to these issues. See ITEM 1A. RISK FACTORS for additional information.

Employees

The Registrants strive to create a workplace that is diverse, innovative, and safe for their employees. In order to provide the services and products that their customers expect, the Registrants must create the best teams. These teams must reflect the diversity of the communities that the Registrants serve. Therefore, the Registrants strive to attract highly qualified and diverse talent and routinely review their hiring and promotion practices to ensure they maintain equitable and bias free processes to neutralize any unconscious bias. The Registrants provide growth opportunities, competitive compensation and benefits, and a variety of training and development programs. The Registrants are committed to helping employees grow their skills and careers largely through numerous training opportunities in technical, safety and business acumen areas, mentorship programs, and continuous feedback and development discussions and evaluations. Employees are encouraged to thrive outside the workplace as well. The Registrants provide a full suite of wellness benefits targeted at supporting work-life balance, physical, mental and financial health, and industry-leading paid leave policies.

The Registrants generally conduct an employee engagement survey every other year to help identify their successes and areas where they can grow. The survey results are reviewed with senior management and the Exelon Board of Directors.

Diversity Metrics

The following tables show diversity metrics for all employees and management as of December 31, 2021. The Exelon numbers include all subsidiaries, including Generation.


Employees	Exelon	ComEd	PECO	BGE	PHI	Pepco	DPL	ACE
Female(a) (b)	7,892	1,505	752	753	1,269	339	143	105
People of Color(b)	9,436	2,464	929	1,115	1,760	873	196	139
Aged <30	3,236	653	315	280	413	169	87	58
Aged 30-50	17,008	3,566	1,337	1,728	2,241	748	458	361
Aged >50	11,274	2,037	1,157	1,120	1,532	472	365	214
Total Employees(c)	31,518	6,256	2,809	3,128	4,186	1,389	910	633


Management(d)	Exelon	ComEd	PECO	BGE	PHI	Pepco	DPL	ACE
Female(a) (b)	1,242	219	123	116	179	49	11	19
People of Color(b)	1,233	308	117	146	246	113	27	20
Aged <30	73	6	7	1	8	3	—	2
Aged 30-50	2,857	469	157	256	356	105	58	44
Aged >50	2,107	365	194	161	266	67	59	40
Within 10 years of retirement eligibility	2,876	497	239	226	368	92	74	53
Total Employees in Management(c)	5,037	840	358	418	630	175	117	86

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__________

(a)The Registrants are devoted to creating an environment that allows women to stay in the workforce, grow with the company, and move up the ranks, all with parity of pay. Exelon employs an independent third-party vendor to run regression analysis on all management positions each year. The analysis consistently shows that the Registrants have no systemic pay equity issues.

(b)This is based on self-disclosed information.

(c)Total employees represents the sum of the aged categories.

(d)Management is defined as executive/senior level officials and managers as well as all employees who have direct reports and supervisory responsibilities.

Turnover Rates

As turnover is inherent, management succession planning is performed and tracked for all executives and critical key manager positions. Management frequently reviews succession planning to ensure the Registrants are prepared when positions become available.

The table below shows the average turnover rate for all employees for the last three years of 2019 to 2021. The Exelon numbers include all subsidiaries, including Generation.


	Exelon		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Retirement Age	4.27	%	3.82	%	3.47	%	3.70	%	4.02	%	4.37	%	4.10	%	3.17	%
Voluntary	2.98	%	1.49	%	1.76	%	1.36	%	2.06	%	2.36	%	1.11	%	1.20	%
Non-Voluntary	0.98	%	0.56	%	1.06	%	0.94	%	0.96	%	1.87	%	0.32	%	0.68	%

Collective Bargaining Agreements

Approximately 37% of Exelon’s employees participate in CBAs. The following table presents employee information, including information about CBAs, as of December 31, 2021. The Exelon numbers include all subsidiaries, including Generation.


	Total Employees Covered by CBAs	Number of CBAs	CBAs New and Renewed in 2021(a)	Total Employees Under CBAs New and Renewed in 2021
Exelon	11,770	32	8	6,476

ComEd	3,478	2	2	3,478
PECO	1,351	2	2	1,351
BGE	1,416	1	—	—
PHI	2,161	5	—	—
Pepco	929	1	—	—
DPL	631	2	—	—
ACE	387	2	—	—

__________

(a)Does not include CBAs that were extended in 2021 while negotiations are ongoing for renewal.

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Environmental Matters and Regulation

On February 21, 2021, Exelon's Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. The separation was completed on February 1, 2022. See Note 26 — Separation of the Combined Notes to Consolidated Financial Statements for additional information. As such, the disclosures below do not include disclosures associated with Generation.

The Registrants are subject to comprehensive and complex environmental legislation and regulation at the federal, state, and local levels, including requirements relating to climate change, air and water quality, solid and hazardous waste, and impacts on species and habitats.

The Exelon Board of Directors is responsible for overseeing the management of environmental matters. Exelon has a management team to address environmental compliance and strategy, including the CEO; the Senior Vice President and Chief Strategy and Sustainability Officer; as well as senior management of the Utility Registrants. Performance of those individuals directly involved in environmental compliance and strategy is reviewed and affects compensation as part of the annual individual performance review process. The Exelon Board of Directors has delegated to the Corporate Governance Committee the authority to oversee Exelon’s compliance with health, environmental, and safety laws and regulations and its strategies and efforts to protect and improve the quality of the environment, including Exelon’s internal climate change and sustainability policies and programs, as discussed in further detail below. The respective Boards of the Utility Registrants oversee environmental, health, and safety issues related to these companies.

Climate Change

As detailed below, the Registrants face climate change mitigation and transition risks as well as adaptation risks. Mitigation and transition risks include changes to the energy systems as a result of new technologies, changing customer expectations and/or voluntary GHG goals, as well as local, state or federal regulatory requirements intended to reduce GHG emissions. Adaptation risk refers to risks to the Registrants' facilities or operations that may result from changes in the physical climate, such as changes to temperature, weather patterns and sea level.

Climate Change Mitigation and Transition

The Registrants support comprehensive federal climate legislation that addresses the urgent need to substantially reduce national GHG emissions while providing appropriate protections for consumers, businesses, and the economy. In the absence of comprehensive federal legislation, Exelon supports EPA moving forward with meaningful regulation of GHG emissions under the Clean Air Act.

The Registrants currently are subject to, and may become subject to additional, federal and/or state legislation and/or regulations addressing GHG emissions. GHG emission sources associated with the Registrants include natural gas (methane) leakage on the natural gas systems, sulfur hexafluoride (SF6) leakage from electric transmission and distribution operations, refrigerant leakage from chilling and cooling equipment, and fossil fuel combustion in motor vehicles. In addition, PECO, BGE, and DPL distribute natural gas; and consumers' use of such natural gas produces GHG emissions.

Since its inception, Exelon has positioned itself as a leader in climate change mitigation. In 2020, Exelon's Scope 1 and 2 GHG emissions, as revised following the separation, were just over 5.6 million metric tons carbon dioxide equivalent using the World Resources Institute Corporate Standard Market-based accounting. Of these emissions, 551,000 metric tons are considered to be operations-driven and in more direct control of our employees and processes. The remaining 5 million metric tons, approximately 90%, are the indirect emissions associated with electric distribution and transmission system uses and losses resulting from the Utility Registrant's delivery of electricity to their customers. These system uses and losses are driven primarily by customer use and generation assets on the grid that are not under our ownership.

In August 2021, the Utility Registrants announced a "path to clean" goal to collectively reduce their operations-driven emissions 50% by 2030 against a 2015 baseline, and to reach net zero operations-driven emissions by 2050, while also supporting customers and communities to achieve their clean energy and emissions goals. This goal builds upon Exelon's long-standing commitment to reducing our GHG emissions. The Utility Registrants "path to clean" will include efficiency and clean electricity for operations, vehicle fleet electrification, equipment

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and processes to reduce sulfur hexafluoride (SF6) leakage, modern natural gas infrastructure to minimize methane leaks and increase safety and reliability, and investment and collaboration to develop new technologies. Over the next 10 years, Exelon anticipates investing approximately $4.8 billion towards its "path to clean" goal. Exelon believes it has line of sight into solutions available today to achieve 80% of its "path to clean" goal and that achieving full net-zero operations will require some technology advancement and continued policy support. Exelon is laying the groundwork by partnering with national labs, universities and research consortia to research, develop and pilot clean technologies. The Utility Registrants are also driving customer-driven emissions reductions in their communities through some of the nation's largest energy efficiency programs. During 2022 - 2025, estimated energy efficiency investments across the Utility Registrants total $3.4 billion. These programs enable customer savings through home energy audits, lighting discounts, appliance recycling, home improvement rebates, equipment upgrade incentives and innovative programs like smart thermostats and combined heat and power programs.

The electric sector plays a key role in lowering GHG emissions across much of the economy. Electrification, where feasible for transportation, buildings, and industry coupled with simultaneous decarbonization of electric generation can be a key lever for emissions reductions. To support this transition, Exelon is advocating for public policy supportive of vehicle electrification, investing in enabling infrastructure and technology, and supporting customer education and adoption. In addition, the Utility Registrants will electrify 30% of their own vehicle fleet by 2025, increasing to 50% by 2030. Exelon also continues to explore other decarbonization opportunities, supporting pilots of emerging energy technologies and clean fuels to support both operational and customer-driven emissions reductions.

International Climate Change Agreements. At the international level, the United States is a party to the United Nations Framework Convention on Climate Change (UNFCCC). The Parties to the UNFCCC adopted the Paris Agreement at the 21st session of the UNFCCC Conference of the Parties (COP 21) on December 12, 2015. Under the Agreement, which became effective on November 4, 2016, the parties committed to try to limit the global average temperature increase and to develop national GHG reduction commitments. On November 4, 2020, the United States formally withdrew from the Paris Agreement, retracting its commitment to reduce domestic GHG emissions by 26%-28% by 2025 compared with 2005 levels. However, on January 20, 2021, President Biden accepted the Paris Agreement, which resulted in the United States’ formal re-entry on February 19, 2021. The Biden administration has announced its intent to pursue ambitious GHG reductions in the United States and internationally, and the United States has now set an economy-wide target of reducing its net GHG emissions by 50-52% below 2005 levels by 2030. The 2021 UNFCCC Conference of the Parties (COP26) and resulting Glasgow Climate Pact indicated important global support for the Paris Agreement and continued progress toward decarbonization.

Federal Climate Change Legislation and Regulation. It is uncertain whether federal legislation to significantly reduce GHG emissions will be enacted in the near-term. On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act's (IIJA) into law, which does include provisions intended to address climate change. Exelon anticipates pursuing opportunities under IIJA.

Regulation of GHGs from Power Plants under the Clean Air Act. The EPA’s 2015 Clean Power Plan (CPP) established regulations addressing carbon dioxide emissions from existing fossil-fired power plants under Clean Air Act Section 111(d). The CPP’s carbon pollution limits could be met through changes to the electric generation system, including shifting generation from higher-emitting units to lower- or zero-emitting units, as well as the development of new or expanded zero-emissions generation. In July 2019, the EPA published its final Affordable Clean Energy rule, which repealed the CPP and replaced it with less stringent emissions guidelines for existing fossil-fired power plants based on heat rate improvement measures that could be achieved within the fence line of individual plants. Exelon, together with a coalition of other electric utilities, filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit on September 6, 2019, challenging the Affordable Clean Energy rule as unlawful. This lawsuit was consolidated with separate challenges to the Affordable Clean Energy rule filed by various states, non-governmental organizations, and business coalitions. On January 19, 2021, the U.S. Court of Appeals for the D.C. Circuit held the Affordable Clean Energy Rule to be unlawful, vacated the rule, and remanded it to the EPA. On October 29, 2021, the Supreme Court granted certiorari to examine the extent of EPA's authority to regulate GHGs from power plants; a decision is expected in 2022. The EPA has indicated it will promulgate new GHG limits for existing power plants. Increased regulation of GHG emissions from power plants could increase the cost of electricity delivered or sold by The Registrants. As of February 1, 2022, the Registrants no longer directly own electric generation plants.

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State Climate Change Legislation and Regulation. A number of states in which the Registrants operate have state and regional programs to reduce GHG emissions and renewable and other portfolio standards, which impact the power sector. See discussion below for additional information on renewable and other portfolio standards.

Eleven northeast and mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia) currently participate in the RGGI, which is in the process of strengthening its requirements. The program requires most fossil fuel-fired power plants in the region to hold allowances, purchased at auction, for each ton of CO2 emissions. Non-emitting resources do not have to purchase or hold these allowances. In October 2019, the Governor of Pennsylvania issued an Executive Order directing the PA DEP to begin a rulemaking process to allow Pennsylvania to join the RGGI, with the goal of reducing carbon emissions from the electricity sector. On November 7, 2020, the PA DEP proposed its rule, which is anticipated to support Pennsylvania's participation in RGGI beginning sometime in 2022.

Broader state programs impact other sectors as well, such as the District of Columbia's Clean Energy DC Omnibus Act and cross-sector GHG reduction plans, which resulted in recent requirements for Pepco to develop 5-year and 30-year decarbonization programs and strategies. Maryland has a statewide GHG reduction mandate to reduce GHG emissions by 40% no later than 2030, which it expects to meet and surpass. New Jersey accelerated its goals through Executive Order 274, which establishes an interim goal of 50% reductions below 2006 levels by 2030 and affirms its goal of achieving 80% reductions by 2050 and includes programs to drive greater amounts of electrified transportation. Finally, the Clean Energy Law establishes decarbonization requirements for Illinois as well as programs to support the retention and development of emissions-free sources of electricity. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on the Clean Energy Law.

The Registrants cannot predict the nature of future regulations or how such regulations might impact future financial statements.

Renewable and Clean Energy Standards. The states where Exelon operates have adopted some form of renewable or clean energy procurement requirement. These standards impose varying levels of mandates for procurement of renewable or clean electricity (the definition of which varies by state) and/or energy efficiency. These are generally expressed as a percentage of annual electric load, often increasing by year. The Utility Registrants comply with these various requirements through purchasing qualifying renewables, implementing efficiency programs, acquiring sufficient credits (e.g., RECs), paying an alternative compliance payment, and/or a combination of these compliance alternatives. The Utility Registrants are permitted to recover from retail customers the costs of complying with their state RPS requirements, including the procurement of RECs or other alternative energy resources. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.

Climate Change Adaptation

The Registrants' facilities and operations are subject to the global impacts of climate change. Long-term shifts in climactic patterns, such as sustained higher temperatures and sea level rise, may present challenges for the Registrants and their service territories. Exelon believes its operations could be significantly affected by the physical risks of climate change. See ITEM 1A. RISK FACTORS, The Registrants are subject to risks associated with climate change, for additional information.

The Registrants' assets undergo seasonal readiness efforts to ensure they are ready for the weather projections of the summer and winter months. The Registrants consider and review national climate assessments to inform their planning. Each of the Utility Registrants also has well establish system recovery plans and is investing in its systems to install advanced equipment and reinforce the local electric system, making it more weather resistant and less vulnerable to anticipated storm damage.

Other Environmental Regulation

Water Quality

Under the federal Clean Water Act, NPDES permits for discharges into waterways are required to be obtained from the EPA or from the state environmental agency to which the permit program has been delegated, and

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permits must be renewed periodically. Certain of Exelon's facilities discharge water into waterways and are therefore subject to these regulations and operate under NPDES permits.

Under Clean Water Act Section 404 and state laws and regulations, the Registrants may be required to obtain permits for projects involving dredge or fill activities in Waters of the United States.

Where Registrants’ facilities are required to secure a federal license or permit for activities that may result in a discharge to covered waters, they may be required to obtain a state water quality certification under Clean Water Act section 401.

Solid and Hazardous Waste and Environmental Remediation

CERCLA provides for response and removal actions coordinated by the EPA in the event of threatened releases of hazardous substances and authorizes the EPA either to clean up sites at which hazardous substances have created actual or potential environmental hazards or to order persons responsible for the situation to do so. Under CERCLA, generators and transporters of hazardous substances, as well as past and present owners and operators of hazardous waste sites, are strictly, jointly and severally liable for the cleanup costs of hazardous waste at sites, many of which are listed by the EPA on the National Priorities List (NPL). These PRPs can be ordered to perform a cleanup, can be sued for costs associated with an EPA-directed cleanup, may voluntarily settle with the EPA concerning their liability for cleanup costs, or may voluntarily begin a site investigation and site remediation under state oversight. Most states have also enacted statutes that contain provisions substantially similar to CERCLA. Such statutes apply in many states where the Registrants currently own or operate, or previously owned or operated, facilities, including Delaware, Illinois, Maryland, New Jersey, and Pennsylvania and the District of Columbia. In addition, RCRA governs treatment, storage and disposal of solid and hazardous wastes and cleanup of sites where such activities were conducted.

The Registrants’ operations have in the past, and may in the future, require substantial expenditures in order to comply with these Federal and state environmental laws. Under these laws, the Registrants may be 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. The Registrants and their subsidiaries are, or could become in the future, parties to proceedings initiated by the EPA, state agencies, and/or other responsible parties under CERCLA and RCRA or similar state laws with respect to a number of sites or may undertake to investigate and remediate sites for which they may be subject to enforcement actions by an agency or third-party.

ComEd’s and PECO’s environmental liabilities primarily arise from contamination at former MGP sites. ComEd, pursuant to an ICC order, and PECO, pursuant to settlements of natural gas distribution rate cases with the PAPUC, have an on-going process to recover environmental remediation costs of the MGP sites through a provision within customer rates. BGE, ACE, Pepco, and DPL do not have material contingent liabilities relating to MGP sites. The amount to be expended in 2022 for compliance with environmental remediation related to contamination at former MGP sites and other gas purification sites is estimated to be approximately $54 million which consists primarily of $48 million at ComEd.

As of December 31, 2021, the Registrants have established appropriate contingent liabilities for environmental remediation requirements. In addition, the Registrants may be required to make significant additional expenditures not presently determinable for other environmental remediation costs.

See Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information regarding the Registrants’ environmental matters, remediation efforts, and related impacts to the Registrants’ Consolidated Financial Statements.

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Information about our Executive Officers as of February 25, 2022

Exelon

Name

Age

Position

Period

Crane, Christopher M.

Chief Executive Officer, Exelon;

2012 - Present

President, Exelon

2008 - Present

Butler, Calvin G.

Senior Executive Vice President, Exelon; Chief Operations Officer, Exelon

2021 - Present

Senior Executive Vice President, Exelon; Chief Executive Officer, Exelon Utilities

2019 - 2021

Chief Executive Officer, BGE

2014 - 2019

Glockner, David

Executive Vice President, Compliance and Audit, Exelon

2020 - Present

Chief Compliance Officer, Citadel LLC

2017 - 2020

Regional Director, U.S. Securities and Exchange Commission

2013 - 2017

Littleton, Gayle E.

Executive Vice President, General Counsel, Exelon

2020- Present

Partner, Jenner & Block LLP

2015 -2020

Quiniones, Gil

Chief Executive Officer, ComEd

2021 - Present

President and Chief Executive Officer, New York Power Authority

2011 - 2021

Innocenzo, Michael A.

President and Chief Executive Officer, PECO

2018 - Present

Senior Vice President and Chief Operations Officer, PECO

2012 - 2018

Khouzami, Carim V.

Chief Executive Officer, BGE

2019 - Present

Senior Vice President, Chief Operating Officer, Exelon Utilities

2018 - 2019

Senior Vice President, Chief Financial Officer, Exelon Utilities

2016 - 2018

Anthony, J. Tyler

President and Chief Executive Officer, PHI

2021 - Present

Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE

2016 - 2021

Nigro, Joseph

Senior Executive Vice President and Chief Financial Officer, Exelon

2018 - Present

Executive Vice President, Exelon; Chief Executive Officer, Constellation

2013 - 2018

Souza, Fabian E.

Senior Vice President and Corporate Controller, Exelon

2018 - Present

Senior Vice President and Deputy Controller, Exelon

2017 - 2018

Vice President, Controller and Chief Accounting Officer, The AES Corporation

2015 - 2017

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ComEd

Name

Age

Position

Period

Quiniones, Gil

Chief Executive Officer, ComEd

2021 - Present

President and Chief Executive Officer, New York Power Authority

2011 - 2021

Donnelly, Terence R.

President and Chief Operating Officer, ComEd

2018 - Present

Executive Vice President and Chief Operating Officer, ComEd

2012 - 2018

Trpik, Joseph

Interim Senior Vice President, Chief Financial Officer and Treasurer, ComEd

2021 - Present

Senior Vice President, Chief Financial Officer, Exelon Utilities

2018 - Present

Senior Vice President, Chief Financial Officer and Treasurer, ComEd

2009 - 2018

Rippie, E. Glenn

Senior Vice President and General Counsel, ComEd

2022 - Present

Partner, Jenner & Block LLP

2019 - 2021

Partner and Chief Financial Officer, Rooney, Rippie & Ratnaswamy, LLP

2010 - 2019

Washington, Melissa

Senior Vice President, Customer Operations and Chief Customer Officer, ComEd

2021 - Present

Senior Vice President, Governmental and External Affairs, ComEd

2019 - 2021

Vice President, Governmental and External Affairs, ComEd

2019 -2019

Vice President, External Affairs and Large Customer Services, ComEd

2016 - 2019

Perez, David

Senior Vice President, Distribution Operations, ComEd

2019 - Present

Vice President, Transmission and Substation, ComEd

2016 - 2019

Blaise, M. Michelle

Senior Vice President, Technical Services, ComEd

2014 - Present

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PECO

Name

Age

Position

Period

Innocenzo, Michael A.

President and Chief Executive Officer, PECO

2018 - Present

Senior Vice President and Chief Operations Officer, PECO

2012 - 2018

McDonald, John

Senior Vice President and Chief Operations Officer, PECO

2018 - Present

Vice President, Integration, PHI

2016 - 2018

Stefani, Robert J.

Senior Vice President, Chief Financial Officer and Treasurer, PECO

2018 - Present

Vice President, Corporate Development, Exelon

2015 - 2018

Murphy, Elizabeth A.

Senior Vice President, Governmental and External Affairs, PECO

2016 - Present

Webster Jr., Richard G.

Vice President, Regulatory Policy and Strategy, PECO

2012 - Present

Williamson, Olufunmilayo

Senior Vice President, Customer Operations, PECO

2020 - Present

Senior Vice President, Chief Commercial Risk Officer, Exelon

2017 - 2020

Vice President, Commercial Risk Management, Exelon

2015 - 2017

Gay, Anthony

Vice President and General Counsel, PECO

2019 - Present

Vice President, Governmental and External Affairs, PECO

2016 - 2019

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BGE

Name

Age

Position

Period

Khouzami, Carim V.

Chief Executive Officer, BGE

2019 - Present

Senior Vice President, Chief Operating Officer, Exelon Utilities

2018 - 2019

Senior Vice President, Chief Financial Officer, Exelon Utilities

2016 - 2018

Dickens, Derrick

Senior Vice President and Chief Operating Officer, BGE

2021 - Present

Senior Vice President, Customer Operations, PHI

2020 - 2021

Vice President, Technical Services, BGE

2016 - 2020

Vahos, David M.

Senior Vice President, Chief Financial Officer and Treasurer, BGE

2016 - Present

Núñez, Alexander G.

Senior Vice President, Governmental, External and Regulatory Affairs, BGE

2021 - Present

Senior Vice President, Regulatory Affairs and Strategy, BGE

2020 - 2021

Senior Vice President, Regulatory and External Affairs, BGE

2016 - 2020

Case, Mark D.

Vice President, Strategy and Regulatory Affairs, BGE

2012 - Present

Galambos, Denise

Senior Vice President, Customer Operations, BGE

2021 - Present

Vice President, Utility Oversight, Exelon Utilities

2020 - 2021

VP, Human Resources, BGE

2018 - 2020

Associate General Counsel, Exelon

2012 - 2017

Ralph, David

Vice President and General Counsel, BGE

2021 - Present

Associate General Counsel, BGE

2019 - 2021

Assistant General Counsel, Exelon

2017 - 2019

City Attorney, City of Baltimore

2016 - 2017

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PHI, Pepco, DPL, and ACE

Name

Age

Position

Period

Anthony, J. Tyler

President and Chief Executive Officer, PHI

2021 - Present

Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE

2016 - 2021

Olivier, Tamla

Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE

2021 - Present

Senior Vice President, Customer Operations, BGE

2020 - 2021

Senior Vice President, Constellation NewEnergy, Inc.

2016 - 2020

Barnett, Phillip S.

Senior Vice President, Chief Financial Officer and Treasurer, PHI, Pepco, DPL, and ACE

2018 - Present

Senior Vice President and Chief Financial Officer, PECO

2007 - 2018

Treasurer, PECO

2012 - 2018

Oddoye, Rodney

Senior Vice President, Governmental & External Affairs, PHI, Pepco, DPL, and ACE

2021 - Present

Senior Vice President, Governmental and External Affairs, BGE

2020 - 2021

Vice President, Customer Operations, BGE

2018 - 2020

Director, Northeast Regional Electric Operations, BGE

2016 - 2018

Bancroft, Anne

Vice President and General Counsel, PHI

2021 - Present

Associate General Counsel, Exelon

2017 - 2021

Assistant General Counsel, Exelon

2010 - 2017

Bell-Izzard, Morlon

Senior Vice President, Customer Operations & Chief Customer Officer, PHI

2021 - Present

Vice President, Customer Operations, PHI

2019 - 2021

Director, Utility Performance Assessment, Exelon

2016 - 2019

O'Donnell, Morgan

Vice President, Regulatory Policy and Strategy, DC/MD

2021 - Present

Director, Financial Planning and Analysis, PHI

2020 - 2021

Director, Regulatory Strategy & Revenue Policy, PHI

2019 - 2020

Manager, Regulatory Analysis, PHI

2016 - 2019

Humphrey, Marissa

Vice President, Regulatory Policy and Strategy, PHI, DPL, and ACE

2021 - Present

Vice President Finance, Exelon Utilities

2019 - 2020

Vice President, Finance, PHI

2016 - 2019


ITEM 1A.			RISK FACTORS

On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. The separation was completed on February 1, 2022. See Note 26 — Separation of the Combined Notes to Consolidated Financial Statements for additional information. As such, the risk factors discussed below do not include those associated with Generation.

Each of the Registrants operates in a complex market and regulatory environment that involves significant risks, many of which are beyond that Registrant’s direct control. Such risks, which could negatively affect one or more of the Registrants’ consolidated financial statements, fall primarily under the categories below:

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Risks related to market and financial factors primarily include:

•the demand for electricity, reliability of service, and affordability in the markets where the Utility Registrants conduct their business,

•the ability of the Utility Registrants to operate their respective transmission and distribution assets, their ability to access capital markets, and the impacts on their results of operations due to the global outbreak (pandemic) of the 2019 novel coronavirus (COVID-19), and

•emerging technologies and business models, including those related to climate change mitigation and transition to a low carbon economy.

Risks related to legislative, regulatory, and legal factors primarily include changes to, and compliance with, the laws and regulations that govern:

•utility regulatory business models,

•environmental and climate policy, and

•tax policy.

Risks related to operational factors primarily include:

•changes in the global climate could produce extreme weather events, which could put the Registrant’s facilities at risk, and such changes could also affect the levels and patterns of demand for energy and related services,

•the ability of the Utility Registrants to maintain the reliability, resiliency, and safety of their energy delivery systems, which could affect their ability to deliver energy to their customers and affect their operating costs, and

•physical and cyber security risks for the Utility Registrants as the owner-operators of transmission and distribution facilities.

Risks related to the separation primarily include:

•challenges to achieving the benefits of separation and

•performance by Exelon and Generation under the transaction agreements, including indemnification responsibilities.

There may be further risks and uncertainties that are not presently known or that are not currently believed to be material that could negatively affect the Registrants' consolidated financial statements in the future.

Risks Related to Market and Financial Factors

The Registrants are potentially affected by emerging technologies that could over time affect or transform the energy industry (All Registrants).

Advancements in power generation technology, including commercial and residential solar generation installations and commercial micro turbine installations, are improving the cost-effectiveness of customer self-supply of electricity. Improvements in energy storage technology, including batteries and fuel cells, could also better position customers to meet their around-the-clock electricity requirements. Improvements in energy efficiency of lighting, appliances, equipment and building materials will also affect energy consumption by customers. Changes in power generation, storage, and use technologies could have significant effects on customer behaviors and their energy consumption.

These developments could affect levels of customer-owned generation, customer expectations, and current business models and make portions of the Utility Registrants' transmission and/or distribution facilities uneconomic prior to the end of their useful lives. These factors could affect the Registrants’ consolidated financial statements through, among other things, increased operating and maintenance expenses, increased capital

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expenditures, and potential asset impairment charges or accelerated depreciation over shortened remaining asset useful lives.

Market performance and other factors could decrease the value of employee benefit plan assets and could increase the related employee benefit plan obligations, which then could require significant additional funding (All Registrants).

Disruptions in the capital markets and their actual or perceived effects on particular businesses and the greater economy could adversely affect the value of the investments held within Exelon’s employee benefit plan trusts. The asset values are subject to market fluctuations and will yield uncertain returns, which could fall below Exelon's projected return rates. A decline in the market value of the pension and OPEB plan assets would increase the funding requirements associated with Exelon’s pension and OPEB plan obligations. Additionally, Exelon’s pension and OPEB plan liabilities are sensitive to changes in interest rates. As interest rates decrease, the liabilities increase, potentially increasing benefit costs and funding requirements. Changes in demographics, including increased numbers of retirements or changes in life expectancy assumptions or changes to Social Security or Medicare eligibility requirements could also increase the costs and funding requirements of the obligations related to the pension and OPEB plans. See Note 15 — Retirement Benefits of the Combined Notes to Consolidated Financial Statements for additional information.

The Registrants could be negatively affected by unstable capital and credit markets (All Registrants).

The Registrants rely on the capital markets, particularly for publicly offered debt, as well as the banking and commercial paper markets, to meet their financial commitments and short-term liquidity needs. Disruptions in the capital and credit markets in the United States or abroad could negatively affect the Registrants’ ability to access the capital markets or draw on their respective bank revolving credit facilities. The banks may not be able to meet their funding commitments to the Registrants if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. The inability to access capital markets or credit facilities, and longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could result in the deferral of discretionary capital expenditures, or require a reduction in dividend payments or other discretionary uses of cash. In addition, the Registrants have exposure to worldwide financial markets, including Europe, Canada, and Asia. Disruptions in these markets could reduce or restrict the Registrants’ ability to secure sufficient liquidity or secure liquidity at reasonable terms. As of December 31, 2021, approximately 20%, 17%, and 16% of the Registrants’ available credit facilities (not including Generation's credit facilities) were with European, Canadian, and Asian banks, respectively. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the credit facilities.

If any of the Registrants were to experience a downgrade in its credit ratings to below investment grade or otherwise fail to satisfy the credit standards in its agreements with its counterparties or regulatory financial requirements, it would be required to provide significant amounts of collateral that could affect its liquidity and could experience higher borrowing costs (All Registrants).

The Utility Registrants' operating agreements with PJM and PECO's, BGE's, and DPL's natural gas procurement contracts contain collateral provisions that are affected by their credit rating and market prices. If certain wholesale market conditions were to exist and the Utility Registrants were to lose their investment grade credit ratings (based on their senior unsecured debt ratings), they would be required to provide collateral in the forms of letters of credit or cash, which could have a material adverse effect upon their remaining sources of liquidity. PJM collateral posting requirements will generally increase as market prices rise and decrease as market prices fall. Collateral posting requirements for PECO, BGE, and DPL, with respect to their natural gas supply contracts, will generally increase as forward market prices fall and decrease as forward market prices rise. If the Utility Registrants were downgraded, they could experience higher borrowing costs as a result of the downgrade. In addition, changes in ratings methodologies by the agencies could also have an adverse negative impact on the ratings of the Utility Registrants.

The Utility Registrants conduct their respective businesses and operate under governance models and other arrangements and procedures intended to assure that the Utility Registrants are treated as separate,

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independent companies, distinct from Exelon and other Exelon subsidiaries in order to isolate the Utility Registrants from Exelon and other Exelon subsidiaries in the event of financial difficulty at Exelon or another Exelon subsidiary. These measures (commonly referred to as “ring-fencing”) could help avoid or limit a downgrade in the credit ratings of the Utility Registrants in the event of a reduction in the credit rating of Exelon. Despite these ring-fencing measures, the credit ratings of the Utility Registrants could remain linked, to some degree, to the credit ratings of Exelon. Consequently, a reduction in the credit rating of Exelon could result in a reduction of the credit rating of some or all of the Utility Registrants. A reduction in the credit rating of a Utility Registrant could have a material adverse effect on the Utility Registrant.

See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources — Credit Matters — Market Conditions and Security Ratings for additional information regarding the potential impacts of credit downgrades on the Registrants’ cash flows.

The impacts of significant economic downturns or increases in customer rates, could lead to decreased volumes delivered and increased expense for uncollectible customer balances (All Registrants).

The impacts of significant economic downturns on the Utility Registrants' customers and the related regulatory limitations on residential service terminations for the Utility Registrants, could result in an increase in the number of uncollectible customer balances and related expense. Further, increases in customer rates, including those related to increases in purchased power and natural gas prices, could result in declines in customer usage and lower revenues for the Utility Registrants that do not have decoupling mechanisms.

See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for additional information on the Registrants’ credit risk.

The Registrants' results were negatively affected by the impacts of COVID-19 (All Registrants).

COVID-19 has disrupted economic activity in the Registrants’ respective markets and negatively affected the Registrants’ results of operations. The estimated impact of COVID-19 to the Utility Registrants’ Net income was approximately $75 million for the year ended December 31, 2020 and was not material for the year ended December 31, 2021. The Registrants cannot predict the full extent of the impacts of COVID-19, which will depend on, among other things, the rate, and public perceptions of the effectiveness, of vaccinations and rate of resumption of business activity. In addition, any future widespread pandemic or other local or global health issue could adversely affect customer demand and the Registrants’ ability to operate their transmission and distribution assets. See Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Executive Overview for additional information.

The Registrants could be negatively affected by the impacts of weather (All Registrants).

Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities. Temperatures above normal levels in the summer tend to increase summer cooling electricity demand and revenues, and temperatures below normal levels in the winter tend to increase winter heating electricity and gas demand and revenues. Moderate temperatures adversely affect the usage of energy and resulting operating revenues at PECO and DPL Delaware. Due to revenue decoupling, operating revenues from electric distribution at ComEd, BGE, Pepco, DPL Maryland, and ACE are not affected by abnormal weather.

Extreme weather conditions or damage resulting from storms could stress the Utility Registrants' transmission and distribution systems, communication systems, and technology, resulting in increased maintenance and capital costs and limiting each company’s ability to meet peak customer demand. First and third quarter financial results, in particular, are substantially dependent on weather conditions, and could make period comparisons less relevant.

Climate change projections suggest increases to summer temperature and humidity trends, as well as more erratic precipitation and storm patterns over the long-term in the areas where the Utility Registrants have transmission and distribution assets. The frequency in which weather conditions emerge outside the current expected climate norms could contribute to weather-related impacts discussed above.

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Long-lived assets, goodwill, and other assets could become impaired (All Registrants).

Long-lived assets represent the single largest asset class on the Registrants’ statements of financial position. In addition, Exelon, ComEd, and PHI have material goodwill balances.

The Registrants evaluate the recoverability of the carrying value of long-lived assets to be held and used whenever events or circumstances indicating a potential impairment exist. Factors such as, but not limited to, the business climate, including current and future energy and market conditions, environmental regulation, and the condition of assets are considered.

ComEd and PHI perform an assessment for possible impairment of their goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting units below their carrying amount. Regulatory actions or changes in significant assumptions, including discount and growth rates, utility sector market performance and transactions, projected operating and capital cash flows for ComEd’s, Pepco’s, DPL’s, and ACE’s business, and the fair value of debt, could potentially result in future impairments of Exelon’s, ComEd's, and PHI’s goodwill.

An impairment would require the Registrants to reduce the carrying value of the long-lived asset or goodwill to fair value through a non-cash charge to expense by the amount of the impairment. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Critical Accounting Policies and Estimates, Note 8 — Property, Plant, and Equipment, Note 12 — Asset Impairments and Note 13 — Intangible Assets of the Combined Notes to the Consolidated Financial Statements for additional information on long-lived asset impairments and goodwill impairments.

The Registrants could incur substantial costs in the event of non-performance by third-parties under indemnification agreements, or when the Registrants have guaranteed their performance (All Registrants).

The Registrants have entered into various agreements with counterparties that require those counterparties to reimburse a Registrant and hold it harmless against specified obligations and claims. To the extent that any of these counterparties are affected by deterioration in their creditworthiness or the agreements are otherwise determined to be unenforceable, the affected Registrant could be held responsible for the obligations. Each of the Utility Registrants has transferred its former generation business to a third party and in each case the transferee has agreed to assume certain obligations and to indemnify the applicable Utility Registrant for such obligations. In connection with the restructurings under which ComEd, PECO, and BGE transferred their generating assets to Generation, Generation assumed certain of ComEd’s, PECO’s, and BGE's rights and obligations with respect to their former generation businesses. Further, ComEd, PECO, and BGE have entered into agreements with third parties under which the third-party agreed to indemnify ComEd, PECO, or BGE for certain obligations related to their respective former generation businesses that have been assumed by Generation as part of the restructuring. If the third-party, Generation, or the transferee of Pepco's, DPL's, or ACE’s generation facilities experienced events that reduced its creditworthiness or the indemnity arrangement became unenforceable, the applicable Utility Registrant could be liable for any existing or future claims. In addition, the Utility Registrants have residual liability under certain laws in connection with their former generation facilities.

The Registrants have issued indemnities to third parties regarding environmental or other matters in connection with purchases and sales of assets, including several of the Utility Registrants in connection with Generation's absorption of their former generating assets. The Registrants could incur substantial costs to fulfill their obligations under these indemnities.

The Registrants have issued guarantees of the performance of third parties, which obligate the Registrants to perform in the event that the third parties do not perform. In the event of non-performance by those third parties, the Registrants could incur substantial cost to fulfill their obligations under these guarantees.

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Risks Related to Legislative, Regulatory, and Legal Factors

The Registrants' businesses are highly regulated and could be negatively affected by legislative and/or regulatory actions (All Registrants).

Substantial aspects of the Registrants' businesses are subject to comprehensive Federal or state legislation and/or regulation.

The Utility Registrants' consolidated financial statements are heavily dependent on the ability of the Utility Registrants to recover their costs for the retail purchase and distribution of power and natural gas to their customers.

Fundamental changes in regulations or adverse legislative actions affecting the Registrants’ businesses would require changes in their business planning models and operations. The Registrants cannot predict when or whether legislative or regulatory proposals could become law or what their effect would be on the Registrants.

Changes in the Utility Registrants' respective terms and conditions of service, including their respective rates, are subject to regulatory approval proceedings and/or negotiated settlements that are at times contentious, lengthy, and subject to appeal, which lead to uncertainty as to the ultimate result and which could introduce time delays in effectuating rate changes (All Registrants).

The Utility Registrants are required to engage in regulatory approval proceedings as a part of the process of establishing the terms and rates for their respective services. These proceedings typically involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, who have differing concerns but who have the common objective of limiting rate increases or even reducing rates. Decisions are subject to appeal, potentially leading to additional uncertainty associated with the approval proceedings. The potential duration of such proceedings creates a risk that rates ultimately approved by the applicable regulatory body may not be sufficient for a Utility Registrant to recover its costs by the time the rates become effective. Established rates are also subject to subsequent prudency reviews by state regulators, whereby various portions of rates could be adjusted, subject to refund or disallowed, including recovery mechanisms for costs associated with the procurement of electricity or gas, credit losses, MGP remediation, smart grid infrastructure, and energy efficiency and demand response programs. In certain instances, the Utility Registrants could agree to negotiated settlements related to various rate matters, customer initiatives, or franchise agreements. These settlements are subject to regulatory approval. The ultimate outcome and timing of regulatory rate proceedings have a significant effect on the ability of the Utility Registrants to recover their costs or earn an adequate return. See Note 3 — Regulatory Matters of the Combined Notes to the Consolidated Financial Statements for additional information.

The Registrants could be subject to higher costs and/or penalties related to mandatory reliability standards, including the likely exposure of the Utility Registrants to the results of PJM’s RTEP and NERC compliance requirements (All Registrants).

The Utility Registrants as users, owners, and operators of the bulk power transmission system are subject to mandatory reliability standards promulgated by NERC and enforced by FERC. PECO, BGE, and DPL, as operators of natural gas distribution systems, are also subject to mandatory reliability standards of the U.S. Department of Transportation. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and are guided by reliability and market interface principles. Compliance with or changes in the reliability standards could subject the Registrants to higher operating costs and/or increased capital expenditures. In addition, the ICC, PAPUC, MDPSC, DCPSC, DEPSC, and NJBPU impose certain distribution reliability standards on the Utility Registrants. If the Utility Registrants were found in non-compliance with the Federal and state mandatory reliability standards, they could be subject to remediation costs as well as sanctions, which could include substantial monetary penalties.

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The Registrants could incur substantial costs to fulfill their obligations related to environmental and other matters (All Registrants).

The Registrants are subject to extensive environmental regulation and legislation by local, state, and Federal authorities. These laws and regulations affect the manner in which the Registrants conduct their operations and make capital expenditures including how they handle air and water emissions, hazardous and solid waste, and activities affecting surface waters, groundwater, and aquatic and other species. Violations of these requirements could subject the Registrants to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs for remediation and clean-up costs, civil penalties and exposure to third parties’ claims for alleged health or property damages, or operating restrictions to achieve compliance. In addition, the Registrants are subject to liability under these laws for the remediation costs for environmental contamination of property now or formerly owned by the Registrants and of property contaminated by hazardous substances they generated or released. Remediation activities associated with MGP operations conducted by predecessor companies are one component of such costs. Also, the Registrants are currently involved in a number of proceedings relating to sites where hazardous substances have been deposited and could be subject to additional proceedings in the future. See ITEM 1. BUSINESS — Environmental Matters and Regulation for additional information.

The Registrants could be negatively affected by federal and state RPS and/or energy conservation legislation, along with energy conservation by customers (All Registrants).

Changes to current state legislation or the development of Federal legislation that requires the use of clean, renewable, and alternate fuel sources could significantly impact the Utility Registrants, especially if timely cost recovery is not allowed.

Federal and state legislation mandating the implementation of energy conservation programs that require the implementation of new technologies, such as smart meters and smart grid, could increase capital expenditures and could significantly impact the Utility Registrants consolidated financial statements if timely cost recovery is not allowed. These energy conservation programs, regulated energy consumption reduction targets, and new energy consumption technologies could cause declines in customer energy consumption and lead to a decline in the Registrants' revenues. See ITEM 1. BUSINESS — Environmental Matters and Regulation — Renewable and Clean Energy Standards and "The Registrants are potentially affected by emerging technologies that could over time affect or transform the energy industry" above for additional information.

The Registrants could be negatively affected by challenges to tax positions taken, tax law changes, and the inherent difficulty in quantifying potential tax effects of business decisions. (All Registrants).

The Registrants are required to make judgments in order to estimate their obligations to taxing authorities. These tax obligations include income, real estate, sales and use, and employment-related taxes and ongoing appeal issues related to these tax matters. These judgments include reserves established for potential adverse outcomes regarding tax positions that have been taken that could be subject to challenge by the tax authorities. See Note 1 — Significant Accounting Policies and Note 14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information.

Legal proceedings could result in a negative outcome, which the Registrants cannot predict (All Registrants).

The Registrants are involved in legal proceedings, claims, and litigation arising out of their business operations. The material ones are summarized in Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements. Adverse outcomes in these proceedings could require significant expenditures, result in lost revenue, or restrict existing business activities.

The Registrants could be subject to adverse publicity and reputational risks, which make them vulnerable to negative customer perception and could lead to increased regulatory oversight or other consequences (All Registrants).

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The Registrants could be the subject of public criticism. Adverse publicity of this nature could render public service commissions and other regulatory and legislative authorities less likely to view energy companies in a favorable light, and could cause those companies, including the Registrants, to be susceptible to less favorable legislative and regulatory outcomes, as well as increased regulatory oversight and more stringent legislative or regulatory requirements.

Exelon and ComEd have received requests for information related to an SEC investigation into their lobbying activities. The outcome of the investigations could have a material adverse effect on their reputation and consolidated financial statements (Exelon and ComEd).

On October 22, 2019, the SEC notified Exelon and ComEd that it had opened an investigation into their lobbying activities in the state of Illinois. Exelon and ComEd have cooperated fully, including by providing all information requested by the SEC, and intend to continue to cooperate fully and expeditiously with the SEC. The outcome of the SEC’s investigation cannot be predicted and could subject Exelon and ComEd to civil penalties, sanctions, or other remedial measures. Any of the foregoing, as well as the appearance of non-compliance with anti-corruption and anti-bribery laws, could have an adverse impact on Exelon’s and ComEd’s reputations or relationships with regulatory and legislative authorities, customers, and other stakeholders, as well as their consolidated financial statements. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.

If ComEd violates its Deferred Prosecution Agreement announced on July 17, 2020, it could have an adverse effect on the reputation and consolidated financial statements of Exelon and ComEd (Exelon and ComEd).

On July 17, 2020, ComEd entered into a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Northern District of Illinois (USAO) to resolve the USAO’s investigation into Exelon’s and ComEd’s lobbying activities in the State of Illinois. Exelon was not made a party to the DPA and the investigation by the USAO into Exelon’s activities ended with no charges being brought against Exelon. Under the DPA, the USAO filed a single charge alleging that ComEd improperly gave and offered to give jobs, vendor subcontracts, and payments associated with those jobs and subcontracts for the benefit of the Speaker of the Illinois House of Representatives and the Speaker’s associates, with the intent to influence the Speaker’s action regarding legislation affecting ComEd’s interests. The DPA provides that the USAO will defer any prosecution of such charge and any other criminal or civil case against ComEd in connection with the matters identified therein for a three-year period subject to certain obligations of ComEd, including, but not limited to, the following: (i) payment to the United States Treasury of $200 million; (ii) continued full cooperation with the government’s investigation; and (iii) ComEd’s adoption and maintenance of remedial measures involving compliance and reporting undertakings as specified in the DPA. If ComEd is found to have breached the terms of the DPA, the USAO may elect to prosecute, or bring a civil action against, ComEd for conduct alleged in the DPA or known to the government, which could result in fines or penalties and could have an adverse impact on Exelon’s and ComEd’s reputation or relationships with regulatory and legislative authorities, customers and other stakeholders, as well as their consolidated financial statements. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.

Risks Related to Operational Factors

The Registrants are subject to risks associated with climate change (All Registrants).

Climate adaptation risk refers to risks to the Registrants' facilities or operations that may result from changes in the physical climate, such as changes to temperature, weather patterns and sea level.

The Registrants periodically perform analyses to better understand how climate change could affect their facilities and operations. The Registrants primarily operate in the Midwest and East Coast of the United States, areas that historically have been prone to various types of severe weather events, and as such the Registrants have well-developed response and recovery programs based on these historical events. However, the Registrants’ physical facilities could be placed at greater risk of damage should changes in the global climate impact temperature and weather patterns, and result in more intense, frequent and extreme weather events, unprecedented levels of precipitation, sea level rise, increased surface water temperatures, and/or other effects.

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Over time, the Registrants may need to make additional investments to protect their facilities from physical climate-related risks.

In addition, changes to the climate may impact levels and patterns of demand for energy and related services, which could affect Registrants’ operations. Over time, the Registrants may need to make additional investments to adapt to changes in operational requirements as a result of climate change.

Climate mitigation and transition risks include changes to the energy systems as a result of new technologies, changing customer expectations and/or voluntary GHG goals, as well as local, state or federal regulatory requirements intended to reduce GHG emissions.

The Registrants also periodically perform analyses of potential pathways to reduce power sector and economy-wide GHG emissions to mitigate climate change. To the extent additional GHG reduction legislation and/or regulation becomes effective at the Federal and/or state levels, the Registrants could incur costs to further limit the GHG emissions from their operations or otherwise comply with applicable requirements. See ITEM 1. BUSINESS — Environmental Matters and Regulation — Climate Change and "The Registrants are potentially affected by emerging technologies that could over time affect or transform the energy industry" above for additional information.

The Utility Registrants' operating costs are affected by their ability to maintain the availability and reliability of their delivery and operational systems (All Registrants).

Failures of the equipment or facilities used in the Utility Registrants' delivery systems could interrupt the electric transmission and electric and natural gas delivery, which could result in a loss of revenues and an increase in maintenance and capital expenditures. Equipment or facilities failures can be due to a number of factors, including natural causes such as weather or information systems failure. Specifically, if the implementation of AMI, smart grid, or other technologies in the Utility Registrants' service territory fail to perform as intended or are not successfully integrated with billing and other information systems, or if any of the financial, accounting, or other data processing systems fail or have other significant shortcomings, the Utility Registrants' financial results could be negatively impacted. In addition, dependence upon automated systems could further increase the risk that operational system flaws or internal and/or external tampering or manipulation of those systems will result in losses that are difficult to detect.

Regulated utilities, which are required to provide service to all customers within their service territory, have generally been afforded liability protections against claims by customers relating to failure of service. Under Illinois law, however, ComEd could be required to pay damages to its customers in some circumstances involving extended outages affecting large numbers of its customers, which could be material.

The Registrants are subject to physical security and cybersecurity risks (All Registrants).

The Registrants face physical security and cybersecurity risks. Threat sources continue to seek to exploit potential vulnerabilities in the electric and natural gas utility industry, grid infrastructure, and other energy infrastructures, and these attacks and disruptions, both physical and cyber, are becoming increasingly sophisticated and dynamic. Continued implementation of advanced digital technologies increases the potentially unfavorable impacts of such attacks.

A security breach of the Registrants' physical assets or information systems or those of the Registrants competitors, vendors, business partners and interconnected entities in RTOs and ISOs, or regulators could impact the operation of the generation fleet and/or reliability of the transmission and distribution system or result in the theft or inappropriate release of certain types of information, including critical infrastructure information, sensitive customer, vendor, and employee data, trading or other confidential data. The risk of these system-related events and security breaches occurring continues to intensify, and while the Registrants have been, and will likely continue to be, subjected to physical and cyber-attacks, to date none have directly experienced a material breach or disruption to its network or information systems or our operations. However, as such attacks continue to increase in sophistication and frequency, the Registrants may be unable to prevent all such attacks in the future.

If a significant breach were to occur, the Registrants' reputation could be negatively affected, customer confidence in the Registrants or others in the industry could be diminished, or the Registrants could be subject to

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legal claims, loss of revenues, increased costs, or operations shutdown. Moreover, the amount and scope of insurance maintained against losses resulting from any such events or security breaches may not be sufficient to cover losses or otherwise adequately compensate for any disruptions to business that could result.

The Utility Registrants' deployment of smart meters throughout their service territories could increase the risk of damage from an intentional disruption of the system by third parties.

In addition, new or updated security regulations or unforeseen threat sources could require changes in current measures taken by the Registrants or their business operations and could adversely affect their consolidated financial statements.

The Registrants’ employees, contractors, customers, and the general public could be exposed to a risk of injury due to the nature of the energy industry (All Registrants).

Employees and contractors throughout the organization work in, and customers and the general public could be exposed to, potentially dangerous environments near the Registrants’ operations. As a result, employees, contractors, customers, and the general public are at some risk for serious injury, including loss of life. These risks include gas explosions, pole strikes, and electric contact cases.

Natural disasters, war, acts and threats of terrorism, pandemic, and other significant events could negatively impact the Registrants' results of operations, ability to raise capital and future growth (All Registrants).

The Utility Registrants' distribution and transmission infrastructures could be affected by natural disasters and extreme weather events, which could result in increased costs, including supply chain costs. An extreme weather event within the Utility Registrants’ service areas can also directly affect their capital assets, causing disruption in service to customers due to downed wires and poles or damage to other operating equipment.

The impact that potential terrorist attacks could have on the industry and the Registrants is uncertain. The Registrants face a risk that their operations would be direct targets or indirect casualties of an act of terror. Any retaliatory military strikes or sustained military campaign could affect their operations in unpredictable ways, such as changes in insurance markets and disruptions of fuel supplies and markets, particularly oil. Furthermore, these catastrophic events could compromise the physical or cybersecurity of the Registrants' facilities, which could adversely affect the Registrants' ability to manage their businesses effectively. Instability in the financial markets as a result of terrorism, war, natural disasters, pandemic, credit crises, recession, or other factors also could result in a decline in energy consumption or interruption of fuel or the supply chain. In addition, the implementation of security guidelines and measures has resulted in and is expected to continue to result in increased costs.

The Registrants could be significantly affected by the outbreak of a pandemic. Exelon has plans in place to respond to a pandemic. However, depending on the severity of a pandemic and the resulting impacts to workforce and other resource availability, the ability to operate Exelon's transmission and distribution assets could be adversely affected. See "The Registrants' results were negatively affected by the impacts of COVID-19" above for additional information.

In addition, Exelon maintains a level of insurance coverage consistent with industry practices against property, casualty and cybersecurity losses subject to unforeseen occurrences or catastrophic events that could damage or destroy assets or interrupt operations. However, there can be no assurance that the amount of insurance will be adequate to address such property and casualty losses.

The Registrants’ businesses are capital intensive, and their assets could require significant expenditures to maintain and are subject to operational failure, which could result in potential liability (All Registrants).

The Utility Registrants’ businesses are capital intensive and require significant investments in transmission and distribution infrastructure projects. Equipment, even if maintained in accordance with good utility practices, is subject to operational failure, including events that are beyond the Utility Registrants’ control, and could require significant expenditures to operate efficiently. The Registrants consolidated financial statements could be negatively affected if they were unable to effectively manage their capital projects or raise the necessary capital.

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See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources for additional information regarding the Registrants’ potential future capital expenditures.

The Utility Registrants' respective ability to deliver electricity, their operating costs, and their capital expenditures could be negatively impacted by transmission congestion and failures of neighboring transmission systems (All Registrants).

Demand for electricity within the Utility Registrants' service areas could stress available transmission capacity requiring alternative routing or curtailment of electricity usage. Also, insufficient availability of electric supply to meet customer demand could jeopardize the Utility Registrants' ability to comply with reliability standards and strain customer and regulatory agency relationships. As with all utilities, potential concerns over transmission capacity or generation facility retirements could result in PJM or FERC requiring the Utility Registrants to upgrade or expand their respective transmission systems through additional capital expenditures.

PJM’s systems and operations are designed to ensure the reliable operation of the transmission grid and prevent the operations of one utility from having an adverse impact on the operations of the other utilities. However, service interruptions at other utilities may cause interruptions in the Utility Registrants’ service areas.

The Registrants' performance could be negatively affected if they fail to attract and retain an appropriately qualified workforce (All Registrants).

Certain events, such as the separation transaction, an employee strike, loss of employees, loss of contract resources due to a major event, and an aging workforce without appropriate replacements, could lead to operating challenges and increased costs for the Registrants. The challenges include lack of resources, loss of knowledge and a lengthy time period associated with skill development. In this case, costs, including costs for contractors to replace employees, productivity costs, and safety costs, could arise. The Registrants are particularly affected due to the specialized knowledge required of the technical and support employees for their transmission and distribution operations.

The Registrants could make acquisitions or investments in new business initiatives and new markets, which may not be successful or achieve the intended financial results (All Registrants).

The Utility Registrants face risks associated with their regulatory-mandated initiatives, such as smart grids and utility of the future. These risks include, but are not limited to, cost recovery, regulatory concerns, cybersecurity, and obsolescence of technology. Such initiatives may not be successful.

Risks Related to the Separation (Exelon)

The separation may not achieve some or all of the benefits anticipated by Exelon and, following the separation, Exelon's common stock price may underperform relative to Exelon's expectations.

By separating the Utility Registrants and Generation, Exelon created two publicly traded companies with the resources necessary to best serve customers and sustain long-term investment and operating excellence. The separate companies are expected to create value by having the strategic flexibility to focus on their unique customer, market and community priorities. However, the separation may not provide such results on the scope or scale that Exelon anticipates, and Exelon may not realize the anticipated benefits of the separation. Failure to do so could have a material adverse effect on Exelon's financial statements and its common stock price.

In connection with the separation into two public companies, Exelon and Generation will indemnify each other for certain liabilities. If Exelon is required to pay under these indemnities to Generation, Exelon's financial results could be negatively impacted. The Generation indemnities may not be sufficient to hold Exelon harmless from the full amount of liabilities for which Generation will be allocated responsibility, and Generation may not be able to satisfy its indemnification obligations in the future.

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Pursuant to the separation agreement and certain other agreements between Exelon and Generation, each party will agree to indemnify the other for certain liabilities, in each case for uncapped amounts. Indemnities that Exelon may be required to provide Generation are not subject to any cap, may be significant and could negatively impact its business. Third parties could also seek to hold Exelon responsible for any of the liabilities that Generation has agreed to retain. Any amounts Exelon is required to pay pursuant to these indemnification obligations and other liabilities could require Exelon to divert cash that would otherwise have been used in furtherance of its operating business. Further, the indemnities from Generation for Exelon's benefit may not be sufficient to protect Exelon against the full amount of such liabilities, and Generation may not be able to fully satisfy its indemnification obligations.

Moreover, even if Exelon ultimately succeeds in recovering from Generation any amounts for which Exelon is held liable, Exelon may be temporarily required to bear these losses. Each of these risks could negatively affect Exelon's business, results of operations and financial condition.


ITEM 1B.			UNRESOLVED STAFF COMMENTS

All Registrants

None.

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ITEM 2.			PROPERTIES

Generation

The following table presents Generation’s interests in net electric generating capacity by station at December 31, 2021:

Station(a)

Location

No. of
Units

Percent

Owned(b)

Primary
Fuel Type

Primary

Dispatch

Type(c)

Net Generation

Capacity (MW)(d)

Midwest

Braidwood

Braidwood, IL

Uranium

Base-load

2,386

Byron

Byron, IL

Uranium

Base-load

2,347

(e)

LaSalle

Seneca, IL

Uranium

Base-load

2,320

Dresden

Morris, IL

Uranium

Base-load

1,845

(e)

Quad Cities

Cordova, IL

Uranium

Base-load

1,403

(f)

Clinton

Clinton, IL

Uranium

Base-load

1,080

Michigan Wind 2

Sanilac Co., MI

(g)

Wind

Intermittent

(f)

Beebe

Gratiot Co., MI

(g)

Wind

Intermittent

(f)

Michigan Wind 1

Huron Co., MI

(g)

Wind

Intermittent

(f)

Harvest 2

Huron Co., MI

(g)

Wind

Intermittent

(f)

Harvest

Huron Co., MI

(g)

Wind

Intermittent

(f)

Beebe 1B

Gratiot Co., MI

(g)

Wind

Intermittent

(f)

Blue Breezes

Faribault Co., MN

Wind

Intermittent

CP Windfarm

Faribault Co., MN

(g)

Wind

Intermittent

(f)

Southeast Chicago

Chicago, IL

Gas

Peaking

296

(h)

Clinton Battery Storage

Blanchester, OH

Energy Storage

Peaking

Total Midwest

11,898

Mid-Atlantic

Limerick

Sanatoga, PA

Uranium

Base-load

2,317

Calvert Cliffs

Lusby, MD

Uranium

Base-load

1,789

Peach Bottom

Delta, PA

Uranium

Base-load

1,324

(f)

Salem

Lower Alloways
Creek Township, NJ

42.59

Uranium

Base-load

995

(f)

Conowingo

Darlington, MD

Hydroelectric

Base-load

572

Criterion

Oakland, MD

(g)

Wind

Intermittent

(f)

Fair Wind

Garrett County, MD

Wind

Intermittent

Fourmile Ridge

Garrett County, MD

(g)

Wind

Intermittent

(f)

Solar Horizons

Emmitsburg, MD

(g)

Solar

Intermittent

(f)

Solar New Jersey 3

Middle Township, NJ

(g)

Solar

Intermittent

(f)

Muddy Run

Drumore, PA

Hydroelectric

Intermediate

1,070

Eddystone 3, 4

Eddystone, PA

Oil/Gas

Peaking

760

Perryman

Aberdeen, MD

Oil/Gas

Peaking

404

Croydon

West Bristol, PA

Oil

Peaking

391

Handsome Lake

Kennerdell, PA

Gas

Peaking

268

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Station(a)

Location

No. of
Units

Percent

Owned(b)

Primary
Fuel Type

Primary

Dispatch

Type(c)

Net Generation

Capacity (MW)(d)

Richmond

Philadelphia, PA

Oil

Peaking

Philadelphia Road

Baltimore, MD

Oil

Peaking

Eddystone

Eddystone, PA

Oil

Peaking

Delaware

Philadelphia, PA

Oil

Peaking

Southwark

Philadelphia, PA

Oil

Peaking

Falls

Morrisville, PA

Oil

Peaking

Moser

Lower Pottsgrove Twp., PA

Oil

Peaking

Chester

Chester, PA

Oil

Peaking

Schuylkill

Philadelphia, PA

Oil

Peaking

Salem

Lower Alloways
Creek Township, NJ

42.59

Oil

Peaking

(f)

Total Mid-Atlantic

10,508

ERCOT

Whitetail

Webb County, TX

(g)

Wind

Intermittent

(f)

Sendero

Jim Hogg and Zapata County, TX

(g)

Wind

Intermittent

(f)

Colorado Bend II

Wharton, TX

Gas

Intermediate

1,143

Wolf Hollow II

Granbury, TX

Gas

Intermediate

1,115

Handley 3

Fort Worth, TX

Gas

Intermediate

395

Handley 4, 5

Fort Worth, TX

Gas

Peaking

870

Total ERCOT

3,610

New York

Nine Mile Point

Scriba, NY

(i)

Uranium

Base-load

1,675

(f)

FitzPatrick

Scriba, NY

Uranium

Base-load

842

Ginna

Ontario, NY

Uranium

Base-load

576

Total New York

3,093

Other

Antelope Valley

Lancaster, CA

Solar

Intermittent

242

Bluestem

Beaver County, OK

(g)(j)

Wind

Intermittent

101

(f)

Shooting Star

Kiowa County, KS

(g)

Wind

Intermittent

(f)

Sacramento PV Energy

Sacramento, CA

(g)

Solar

Intermittent

(f)

Bluegrass Ridge

King City, MO

(g)

Wind

Intermittent

(f)

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Station(a)

Location

No. of
Units

Percent

Owned(b)

Primary
Fuel Type

Primary

Dispatch

Type(c)

Net Generation

Capacity (MW)(d)

Conception

Barnard, MO

(g)

Wind

Intermittent

(f)

Cow Branch

Rock Port, MO

(g)

Wind

Intermittent

(f)

Mountain Home

Glenns Ferry, ID

(g)

Wind

Intermittent

(f)

High Mesa

Elmore Co., ID

(g)

Wind

Intermittent

(f)

Echo 1

Echo, OR

50.49

(g)

Wind

Intermittent

(f)

Cassia

Buhl, ID

(g)

Wind

Intermittent

(f)

Wildcat

Lovington, NM

(g)

Wind

Intermittent

(f)

Echo 2

Echo, OR

(g)

Wind

Intermittent

(f)

Tuana Springs

Hagerman, ID

(g)

Wind

Intermittent

(f)

Greensburg

Greensburg, KS

(g)

Wind

Intermittent

(f)

Echo 3

Echo, OR

50.49

(g)

Wind

Intermittent

(f)

Three Mile Canyon

Boardman, OR

(g)

Wind

Intermittent

(f)

Loess Hills

Rock Port, MO

Wind

Intermittent

Denver Airport Solar

Denver, CO

(g)

Solar

Intermittent

(f)

Mystic 8, 9

Charlestown, MA

Gas

Intermediate

1,417

(e)

Hillabee

Alexander City,
AL

Gas

Intermediate

753

Wyman 4

Yarmouth, ME

5.9

Oil

Intermediate

(f)

West Medway II

West Medway, MA

Oil/Gas

Peaking

189

West Medway

West Medway, MA

Oil

Peaking

124

Grand Prairie

Alberta, Canada

Gas

Peaking

105

Framingham

Framingham, MA

Oil

Peaking

Total Other

3,291

Total

32,400

__________

(a)All nuclear stations are boiling water reactors except Braidwood, Byron, Calvert Cliffs, Ginna, and Salem, which are pressurized water reactors.

(b)100%, unless otherwise indicated.

(c)Base-load units are plants that normally operate to take all or part of the minimum continuous load of a system and, consequently, produce electricity at an essentially constant rate. Intermittent units are plants with output controlled by the natural variability of the energy resource rather than dispatched based on system requirements. Intermediate units are plants that normally operate to take load of a system during the daytime higher load hours and, consequently, produce electricity by cycling on and off daily. Peaking units consist of lower-efficiency, quick response steam units, gas turbines and diesels normally used during the maximum load periods.

(d)For nuclear stations, capacity reflects the annual mean rating. Fossil stations and wind and solar facilities reflect a summer rating.

(e)On August 9, 2020, Generation announced it would permanently cease generation operations at Byron and Dresden nuclear facilities in 2021 and Mystic Unit 8 and 9 in 2024. On September 15, 2021, Generation reversed its previous decision to retire Byron and Dresden. See Note 7 — Early Plant Retirements of the Combined Notes to the Consolidated Financial Statements for additional information.

(f)Net generation capacity is stated at proportionate ownership share.

(g)Reflects the prior sale of 49% of CRP to a third party. See Note 23 — Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information.

(h)Generation has deactivated the site and is evaluating for potential return of service or retirement beyond 2023.

(i)Generation wholly owns Nine Mile Point Unit 1 and has an 82% undivided ownership interest in Nine Mile Point Unit 2.

(j)CRP owns 100% of the Class A membership interests and a tax equity investor owns 100% of the Class B membership interests of the entity that owns the Bluestem generating assets.

The net generation capability available for operation at any time may be less due to regulatory restrictions, transmission congestion, fuel restrictions, efficiency of cooling facilities, level of water supplies, or generating

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units being temporarily out of service for inspection, maintenance, refueling, repairs, or modifications required by regulatory authorities.

Generation maintains property insurance against loss or damage to its principal plants and properties by fire or other perils, subject to certain exceptions. For additional information regarding nuclear insurance of generating facilities, see ITEM 1. BUSINESS — Generation. For its insured losses, Generation is self-insured to the extent that any losses are within the policy deductible or exceed the amount of insurance maintained. Any such losses could have a material adverse effect on Generation’s consolidated financial condition or results of operations.

The Utility Registrants

The Utility Registrants' electric substations and a portion of their transmission rights are located on property that they own. A significant portion of their electric transmission and distribution facilities are located above or underneath highways, streets, other public places, or property that others own. The Utility Registrants believe that they have satisfactory rights to use those places or property in the form of permits, grants, easements, licenses, and franchise rights; however, they have not necessarily undertaken to examine the underlying title to the land upon which the rights rest.

Transmission and Distribution

The Utility Registrants’ high voltage electric transmission lines owned and in service at December 31, 2021 were as follows:


Voltage	Circuit Miles
(Volts)	ComEd	PECO	BGE	Pepco	DPL	ACE
765,000	90	—	—	—	—	—
500,000(a)	—	188	216	109	16	—
345,000	2,676	—	—	—	—	—
230,000	—	550	358	770	472	274
138,000	2,246	135	55	61	586	214
115,000	—	—	700	25	—	—
69,000	—	177	—	—	567	667

___________

(a) In addition, PECO, DPL, and ACE have an ownership interest located in Delaware and New Jersey. See Note 9 - Jointly Owned Electric Utility Plant of the Combined Notes to the Consolidated Financial Statements for additional information.

The Utility Registrants' electric distribution system includes the following number of circuit miles of overhead and underground lines:


Circuit Miles	ComEd	PECO	BGE	Pepco	DPL	ACE
Overhead	35,387	12,981	9,164	4,127	6,006	7,364
Underground	32,498	9,555	17,796	7,162	6,427	2,951

Gas

The following table presents PECO’s, BGE’s, and DPL’s natural gas pipeline miles at December 31, 2021:


	PECO	BGE	DPL
Transmission(a)	9	152	8
Distribution	6,956	7,482	2,166
Service piping	6,479	6,407	1,473
Total	13,444	14,041	3,647

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___________

(a) DPL has a 10% undivided interest in approximately 8 miles of natural gas transmission mains located in Delaware which are used by DPL for its natural gas operations and by 90% owner for distribution of natural gas to its electric generating facilities.

The following table presents PECO’s, BGE’s, and DPL’s natural gas facilities:

Registrant

Facility

Location

Storage Capacity
(mmcf)

Send-out or Peaking Capacity
(mmcf/day)

PECO

LNG Facility

West Conshohocken, PA

1,200

160

PECO

Propane Air Plant

Chester, PA

105

BGE

LNG Facility

Baltimore, MD

1,056

332

BGE

Propane Air Plant

Baltimore, MD

550

DPL

LNG Facility

Wilmington, DE

250

PECO, BGE, and DPL also own 30, 30, and 10 natural gas city gate stations and direct pipeline customer delivery points at various locations throughout their gas service territory, respectively.

First Mortgage and Insurance

The principal properties of ComEd, PECO, PEPCO, DPL, and ACE are subject to the lien of their respective Mortgages under which their respective First Mortgage Bonds are issued. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information.

The Utility Registrants maintain property insurance against loss or damage to their properties by fire or other perils, subject to certain exceptions. For their insured losses, the Utility Registrants are self-insured to the extent that any losses are within the policy deductible or exceed the amount of insurance maintained. Any such losses could have a material adverse effect in the consolidated financial condition or results of operations of the Utility Registrants.

Exelon

Security Measures

The Registrants have initiated and work to maintain security measures. On a continuing basis, the Registrants evaluate enhanced security measures at certain critical locations, enhanced response and recovery plans, long-term design changes, and redundancy measures. Additionally, the energy industry has strategic relationships with governmental authorities to ensure that emergency plans are in place and critical infrastructure vulnerabilities are addressed in order to maintain the reliability of the country’s energy systems.


ITEM 3.			LEGAL PROCEEDINGS

All Registrants

The Registrants are parties to various lawsuits and regulatory proceedings in the ordinary course of their respective businesses. For information regarding material lawsuits and proceedings, see Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements. Such descriptions are incorporated herein by these references.

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ITEM 4.			MINE SAFETY DISCLOSURES

Not Applicable

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PART II

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


ITEM 5.			MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Exelon

Exelon’s common stock is listed on the Nasdaq (trading symbol: EXC). As of January 31, 2022, there were 980,136,968 shares of common stock outstanding and approximately 85,423 record holders of common stock.

Stock Performance Graph

The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in Exelon common stock, as compared with the S&P 500 Stock Index and the S&P Utility Index, for the period 2017 through 2021.

This performance chart assumes:

•$100 invested on December 31, 2016 in Exelon common stock, the S&P 500 Stock Index, and the S&P Utility Index; and

•All dividends are reinvested.

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Value of Investment at December 31,
	2016	2017	2018	2019	2020	2021
Exelon Corporation	$100	$115.05	$136.13	$141.96	$136.44	$192.94
S&P 500	$100	$121.83	$116.49	$153.17	$181.35	$233.41
S&P Utilities	$100	$112.11	$116.71	$147.46	$148.18	$174.36

ComEd

As of January 31, 2022, there were 127,021,391 outstanding shares of common stock, $12.50 par value, of ComEd, of which 127,002,904 shares were indirectly held by Exelon. At January 31, 2022, in addition to Exelon, there were 285 record holders of ComEd common stock. There is no established market for shares of the common stock of ComEd.

PECO

As of January 31, 2022, there were 170,478,507 outstanding shares of common stock, without par value, of PECO, all of which were indirectly held by Exelon.

BGE

As of January 31, 2022, there were 1,000 outstanding shares of common stock, without par value, of BGE, all of which were indirectly held by Exelon.

PHI

As of January 31, 2022, Exelon indirectly held the entire membership interest in PHI.

Pepco

As of January 31, 2022, there were 100 outstanding shares of common stock, $0.01 par value, of Pepco, all of which were indirectly held by Exelon.

DPL

As of January 31, 2022, there were 1,000 outstanding shares of common stock, $2.25 par value, of DPL, all of which were indirectly held by Exelon.

ACE

As of January 31, 2022, there were 8,546,017 outstanding shares of common stock, $3.00 par value, of ACE, all of which were indirectly held by Exelon.

All Registrants

Dividends

Under applicable Federal law, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE can pay dividends only from retained, undistributed or current earnings. A significant loss recorded at, ComEd, PECO, BGE, PHI, Pepco, DPL, or ACE may limit the dividends that these companies can distribute to Exelon.

ComEd has agreed in connection with a financing arranged through ComEd Financing III that ComEd will not declare dividends on any shares of its capital stock in the event that: (1) it exercises its right to extend the interest payment periods on the subordinated debt securities issued to ComEd Financing III; (2) it defaults on its guarantee of the payment of distributions on the preferred trust securities of ComEd Financing III; or (3) an event of default occurs under the Indenture under which the subordinated debt securities are issued. No such event has occurred.

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PECO has agreed in connection with financings arranged through PEC L.P. and PECO Trust IV that PECO will not declare dividends on any shares of its capital stock in the event that: (1) it exercises its right to extend the interest payment periods on the subordinated debentures which were issued to PEC L.P. or PECO Trust IV; (2) it defaults on its guarantee of the payment of distributions on the Series D Preferred Securities of PEC L.P. or the preferred trust securities of PECO Trust IV; or (3) an event of default occurs under the Indenture under which the subordinated debentures are issued. No such event has occurred.

BGE is subject to restrictions established by the MDPSC that prohibit BGE from paying a dividend on its common shares if (a) after the dividend payment, BGE’s equity ratio would be below 48% as calculated pursuant to the MDPSC’s ratemaking precedents or (b) BGE’s senior unsecured credit rating is rated by two of the three major credit rating agencies below investment grade. No such event has occurred.

Pepco is subject to certain dividend restrictions established by settlements approved in Maryland and the District of Columbia. Pepco is prohibited from paying a dividend on its common shares if (a) after the dividend payment, Pepco's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the MDPSC and DCPSC or (b) Pepco’s senior unsecured credit rating is rated by one of the three major credit rating agencies below investment grade. No such event has occurred.

DPL is subject to certain dividend restrictions established by settlements approved in Delaware and Maryland. DPL is prohibited from paying a dividend on its common shares if (a) after the dividend payment, DPL's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the DEPSC and MDPSC or (b) DPL’s senior unsecured credit rating is rated by one of the three major credit rating agencies below investment grade. No such event has occurred.

ACE is subject to certain dividend restrictions established by settlements approved in New Jersey. ACE is prohibited from paying a dividend on its common shares if (a) after the dividend payment, ACE's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the NJBPU or (b) ACE's senior unsecured credit rating is rated by one of the three major credit rating agencies below investment grade. ACE is also subject to a dividend restriction which requires ACE to obtain the prior approval of the NJBPU before dividends can be paid if its equity as a percent of its total capitalization, excluding securitization debt, falls below 30%. No such events have occurred.

Exelon’s Board of Directors approved an updated dividend policy for 2022. The 2022 quarterly dividend will be $0.3375 per share.

At December 31, 2021, Exelon had retained earnings of $16,942 million, ComEd’s retained earnings of $1,691 million consisting of retained earnings appropriated for future dividends of $3,330 million, partially offset by $1,639 million of unappropriated accumulated deficits, PECO’s retained earnings of $1,684 million, BGE’s retained earnings of $1,995 million, and PHI's undistributed losses of $210 million.

The following table sets forth Exelon’s quarterly cash dividends per share paid during 2021 and 2020:


	2021								2020
(per share)	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter		Third Quarter		Second Quarter		First Quarter



Exelon	$	0.3825	$	0.3825	$	0.3825	$	0.3825	$	0.3825	$	0.3825	$	0.3825	$	0.3825

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The following table sets forth PHI's quarterly distributions and ComEd’s, PECO’s, BGE's, Pepco's, DPL's, and ACE's quarterly common dividend payments:


	2021				2020
(in millions)	4th Quarter	3rd Quarter	2nd Quarter	1st Quarter	4th Quarter	3rd Quarter	2nd Quarter	1st Quarter

ComEd	127	127	126	127	126	124	124	125
PECO	85	85	84	85	85	85	85	85
BGE	73	73	72	74	60	62	62	62
PHI	98	191	333	81	102	183	134	134
Pepco	47	98	95	28	58	73	73	28
DPL	41	43	23	40	42	33	14	52
ACE	8	51	215	14	3	76	12	23

First Quarter 2022 Dividend

On February 8, 2022, Exelon's Board of Directors declared a regular quarterly dividend of $0.3375 per share on Exelon’s common stock for the first quarter of 2022. The dividend is payable on Monday, March 10, 2022, to shareholders of record of Exelon as of 5 p.m. Eastern time on Friday, February 25, 2022.

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ITEM 6.			SELECTED FINANCIAL DATA

Not Applicable

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Item 7.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Exelon

Executive Overview

Exelon has eleven reportable segments consisting of Generation’s five reportable segments (Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions), ComEd, PECO, BGE, Pepco, DPL, and ACE. See Note 1 — Significant Accounting Policies and Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for additional information regarding Exelon's principal subsidiaries and reportable segments.

Exelon’s consolidated financial information includes the results of its seven separate operating subsidiary registrants, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE and its subsidiary Generation. The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations summarizes results for the year ended December 31, 2021 compared to the year ended December 31, 2020, and is separately filed by Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE. However, none of the Registrants makes any representation as to information related solely to any of the other Registrants. For discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019, refer to ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the 2020 Form 10-K, which was filed with the SEC on February 24, 2021.

COVID-19. The Registrants have taken steps to mitigate the potential risks posed by the global outbreak (pandemic) of COVID-19. The Registrants provide a critical service to our customers which means that it is paramount that we keep our employees who operate our businesses safe and minimize unnecessary risk of exposure to the virus by taking extra precautions for employees who work in the field and in our facilities. The Registrants have implemented work from home policies where appropriate, and imposed travel limitations on employees.

The Registrants continue to implement strong physical and cyber-security measures to ensure that our systems remain functional in order to both serve our operational needs with a remote workforce and keep them running to ensure uninterrupted service to our customers.

There were no changes in internal control over financial reporting as a result of COVID-19 that materially affected, or are reasonably likely to materially affect, any of the Registrants’ internal control over financial reporting. See ITEM 9A. CONTROLS AND PROCEDURES for additional information.

Unfavorable economic conditions due to COVID-19 resulted in an estimated reduction to Exelon’s Net income of approximately $245 million for the year ended December 31, 2020. The impact was not material for the year ended December 31, 2021. To offset the unfavorable impacts from COVID-19, Exelon identified approximately $250 million in cost savings in 2020. The cost savings achieved in 2020 were higher than originally anticipated.

The Registrants assessed long-lived assets, goodwill, and investments for recoverability and there were no material impairment charges recorded in 2020 or 2021 as a result of COVID-19. See Note 12 — Asset Impairments of the Combined Notes to Consolidated Financial Statements for additional information related to other impairment assessments.

The Registrants will continue to monitor developments affecting their workforce, customers, and suppliers and will take additional precautions that they determine to be necessary in order to mitigate the impacts. The Registrants cannot predict the full extent of the impacts of COVID-19, which will depend on, among other things, the rate, and public perceptions of the effectiveness, of vaccinations and rate of resumption of business activity.

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Financial Results of Operations

GAAP Results of Operations. The following table sets forth Exelon's GAAP consolidated Net Income attributable to common shareholders by Registrant or subsidiary for the year ended December 31, 2021 compared to the same period in 2020. For additional information regarding the financial results for the years ended December 31, 2021 and 2020 see the discussions of Results of Operations by Registrant or subsidiary.


	2021		2020		(Unfavorable) Favorable Variance
Exelon	$	1,706	$	1,963	$	(257)

ComEd	742		438		304
PECO	504		447		57
BGE	408		349		59
PHI	561		495		66
Pepco	296		266		30
DPL	128		125		3
ACE	146		112		34
Generation	(205)		589		(794)
Other(a)	(304)		(355)		51

__________

(a)Primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities, and other financing and investing activities.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income attributable to common shareholders decreased by $257 million and diluted earnings per average common share decreased to $1.74 in 2021 from $2.01 in 2020 primarily due to:

•Impacts of the February 2021 extreme cold weather event;

•Accelerated depreciation and amortization associated with Generation's previous decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021, a decision which was reversed on September 15, 2021, and Generation's decision in the third quarter of 2020 to early retire Mystic Units 8 and 9 in 2024;

•Decommissioning-related activities that were not offset for the Byron units beginning in the second quarter of 2021 through September 15, 2021. With Generation's September 15, 2021 reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of that date;

•Impairments at Generation of the New England asset group, the Albany Green Energy biomass facility, and a wind project, partially offset by the absence of an impairment of the New England asset group in the third quarter of 2020;

•Higher net unrealized and realized losses on equity investments; and

•The absence of prior year one-time tax settlements.

The decreases were partially offset by;

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•Higher electric distribution earnings from higher rate base and higher allowed ROE due to an increase in treasury rates at ComEd;

•The favorable impacts of the multi-year plan at BGE and Pepco and regulatory rate increases at DPL and ACE;

•Favorable weather conditions at PECO and DPL's Delaware service territory;

•Favorable volume at PECO and ACE;

•Lower storm costs at PECO and DPL due to the absence of the June 2020 and August 2020 storms, respectively;

•Lower operating and maintenance expense at ComEd due to the payments that ComEd made in 2020 under the Deferred Prosecution Agreement;

•Higher mark-to-market gains;

•Higher net unrealized and realized gains on NDT funds;

•Absence of one time charges recorded in the third quarter of 2020 associated with Generation's decision to early retire the Byron and Dresden nuclear facilities and Mystic Units 8 and 9, and the reversal of one-time charges resulting from the reversal of the previous decision to early retire Byron and Dresden on September 15, 2021;

•Favorable sales and hedges of excess emission credits;

•Favorable commodity prices on fuel hedges;

•Lower nuclear fuel costs due to accelerated amortization of nuclear fuel and lower prices; and

•Higher New York ZEC revenues due to higher generation and an increase in ZEC prices.

Adjusted (non-GAAP) Operating Earnings. In addition to net income, Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) operating earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) operating earnings exclude certain costs, expenses, gains and losses, and other specified items. This information is intended to enhance an investor’s overall understanding of year-to-year operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. Adjusted (non-GAAP) operating earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.

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The following table provides a reconciliation between Net income attributable to common shareholders as determined in accordance with GAAP and Adjusted (non-GAAP) operating earnings for the year ended December 31, 2021 as compared to 2020:


	For the Years Ended December 31,
	2021				2020
(In millions, except per share data)			Earnings per Diluted Share				Earnings per Diluted Share
Net Income Attributable to Common Shareholders	$	1,706	$	1.74	$	1,963	$	2.01
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $145 and $73, respectively)	(421)		(0.43)		(213)		(0.22)
Unrealized Gains Related to NDT Fund Investments (net of taxes of $141 and $278, respectively)(a)	(139)		(0.14)		(256)		(0.26)

Asset Impairments (net of taxes of $136 and $135, respectively)(b)	405		0.41		396		0.41
Plant Retirements and Divestitures (net of taxes of $290 and $244, respectively)(c)	865		0.88		718		0.74
Cost Management Program (net of taxes of $2 and $14, respectively)(d)	9		0.01		45		0.05

Asset Retirement Obligation (net of taxes of $12 and $16, respectively)(e)	(35)		(0.04)		48		0.05
Change in Environmental Liabilities (net of taxes of $3 and $6, respectively)	9		0.01		18		0.02
COVID-19 Direct Costs (net of taxes of $13 and $19, respectively)(f)	36		0.04		50		0.05
Deferred Prosecution Agreement Payments (net of taxes of $0)(g)	—		—		200		0.20
Acquisition Related Costs (net of taxes of $5 and $1, respectively)(h)	15		0.02		4		—
ERP System Implementation Costs (net of taxes of $4 and $1, respectively)(i)	13		0.01		3		—
Separation Costs (net of taxes of $31)(j)	90		0.09		—		—
Costs Related to Suspension of Contractual Offset (net of taxes of $45)(k)	148		0.15		—		—
Income Tax-Related Adjustments (entire amount represents tax expense)(l)	47		0.05		71		0.07
Noncontrolling Interests (net of taxes of $2 and $19, respectively)(m)	16		0.02		103		0.11
Adjusted (non-GAAP) Operating Earnings