Exelon Annual Report 2021

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Form 10-K (NASDAQ:EXC)

Published: February 24th, 2021

PDF generated by stocklight.com 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, 2020 or

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

Commission Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and IRS Employer Identification File Number Telephone Number 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 333-85496 EXELON GENERATION COMPANY, LLC 23-3064219 (a Pennsylvania limited liability company) 300 Exelon Way Kennett Square, Pennsylvania 19348-2473 (610) 765-5959 001-01839 COMMONWEALTH EDISON COMPANY 36-0938600 (an Illinois corporation) 440 South LaSalle Street Chicago, Illinois 60605-1028 (312) 394-4321 000-16844 PECO ENERGY COMPANY 23-0970240 (a Pennsylvania corporation) P.O. Box 8699 2301 Market Street Philadelphia, Pennsylvania 19101-8699 (215) 841-4000 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 (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 (202) 872-2000 001-01405 DELMARVA POWER & LIGHT COMPANY 51-0084283 (a Delaware and Virginia corporation) 500 North Wakefield Drive Newark, Delaware 19702 (202) 872-2000 001-03559 ATLANTIC CITY ELECTRIC COMPANY 21-0398280 (a New Jersey corporation) 500 North Wakefield Drive Newark, Delaware 19702 (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 EXC/28 New York Stock Exchange Energy Capital, L.P. and unconditionally guaranteed by PECO Energy Company

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 x No ☐ Exelon Generation Company, LLC Yes ☐ No x Commonwealth Edison Company Yes ☐ No x PECO Energy Company Yes ☐ No x Baltimore Gas and Electric Company Yes ☐ No x Pepco Holdings LLC Yes ☐ No x Potomac Electric Power Company Yes ☐ No x Delmarva Power & Light Company Yes ☐ No x Atlantic City Electric Company Yes ☐ No x

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 ☐ No x Exelon Generation Company, LLC Yes ☐ No x Commonwealth Edison Company Yes ☐ No x PECO Energy Company Yes ☐ No x Baltimore Gas and Electric Company Yes ☐ No x Pepco Holdings LLC Yes ☐ No x Potomac Electric Power Company Yes ☐ No x Delmarva Power & Light Company Yes ☐ No x Atlantic City Electric Company Yes ☐ No x

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 Smaller Reporting Emerging Growth Large Accelerated Filer x Accelerated Filer ☐ Non-accelerated Filer ☐ Company ☐ Company ☐ Exelon Generation Smaller Reporting Emerging Growth Company, LLC Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Commonwealth Edison Smaller Reporting Emerging Growth Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ PECO Energy Company Smaller Reporting Emerging Growth Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Baltimore Gas and Electric Smaller Reporting Emerging Growth Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Pepco Holdings LLC Smaller Reporting Emerging Growth Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Potomac Electric Power Smaller Reporting Emerging Growth Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Delmarva Power & Light Smaller Reporting Emerging Growth Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ Company ☐ Atlantic City Electric Smaller Reporting Emerging Growth Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer x Company ☐ 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, 2020 was as follows:

Exelon Corporation Common Stock, without par value $35,402,501,369 Exelon Generation Company, LLC Not applicable 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, 2021 was as follows:

Exelon Corporation Common Stock, without par value 976,337,799 Exelon Generation Company, LLC Not applicable Commonwealth Edison Company Common Stock, $12.50 par value 127,021,370 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 2020 Annual Meeting of Shareholders and the Commonwealth Edison Company 2020 Information Statement are incorporated by reference in Part III.

Exelon Generation Company, LLC, 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 Exelon Generation Company, LLC 8 Utility Operations 15 Employees 19 Environmental Regulation 20 Executive Officers of the Registrants 25 ITEM 1A. RISK FACTORS 30 ITEM 1B. UNRESOLVED STAFF COMMENTS 46 ITEM 2. PROPERTIES 47 Exelon Generation Company, LLC 47 The Utility Registrants 51 ITEM 3. LEGAL PROCEEDINGS 52 ITEM 4. MINE SAFETY DISCLOSURES 53 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 54 Page No. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 58 Exelon Corporation 58 Executive Overview 58 Financial Results of Operations 60 Significant 2020 Transactions and Recent Developments 63 Exelon's Strategy and Outlook 66 Other Key Business Drivers and Management Strategies 67 Critical Accounting Policies and Estimates 69 Results of Operations 80 Exelon Generation Company, LLC 81 Commonwealth Edison Company 88 PECO Energy Company 91 Baltimore Gas and Electric Company 95 Pepco Holdings LLC 98 Potomac Electric Power Company 99 Delmarva Power & Light Company 102 Atlantic City Electric Company 106 Liquidity and Capital Resources 108 Contractual Obligations and Off-Balance Sheet Arrangements 122 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 127 Exelon Corporation 127 Exelon Generation Company, LLC 135 Commonwealth Edison Company 137 PECO Energy Company 139 Baltimore Gas and Electric Company 141 Pepco Holdings LLC 143 Potomac Electric Power Company 145 Delmarva Power & Light Company 147 Atlantic City Electric Company 149 Page No. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 151 Exelon Corporation 179 Exelon Generation Company, LLC 184 Commonwealth Edison Company 189 PECO Energy Company 194 Baltimore Gas and Electric Company 199 Pepco Holdings LLC 204 Potomac Electric Power Company 209 Delmarva Power & Light Company 214 Atlantic City Electric Company 219 Combined Notes to Consolidated Financial Statements 224 1. Significant Accounting Policies 224 2. Mergers, Acquisitions, and Dispositions 233 3. Regulatory Matters 235 4. Revenue from Contracts with Customers 252 5. Segment Information 256 6. Accounts Receivable 267 7. Early Plant Retirements 269 8. Property, Plant, and Equipment 272 9. Jointly Owned Electric Utility Plant 274 10. Asset Retirement Obligations 275 11. Leases 280 12. Asset Impairments 285 13. Intangible Assets 286 14. Income Taxes 288 15. Retirement Benefits 296 16. Derivative Financial Instruments 308 17. Debt and Credit Agreements 313 18. Fair Value of Financial Assets and Liabilities 323 19. Commitments and Contingencies 338 20. Shareholders' Equity 348 21. Stock-Based Compensation Plans 349 22. Changes in Accumulated Other Comprehensive Income 353 23. Variable Interest Entities 353 24. Supplemental Financial Information 358 25. Related Party Transactions 365 26. Subsequent Events 368 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 368 ITEM 9A. CONTROLS AND PROCEDURES 368 Page No. ITEM 9B. OTHER INFORMATION 369 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 370 ITEM 11. EXECUTIVE COMPENSATION 371 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 372 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 373 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 374 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 375 ITEM 16. FORM 10-K SUMMARY 423 SIGNATURES 424 Exelon Corporation 424 Exelon Generation Company, LLC 425 Commonwealth Edison Company 426 PECO Energy Company 427 Baltimore Gas and Electric Company 428 Pepco Holdings LLC 429 Potomac Electric Power Company 430 Delmarva Power & Light Company 431 Atlantic City Electric Company 432 GLOSSARY OF TERMS AND ABBREVIATIONS Exelon Corporation and Related Entities Exelon Exelon Corporation Generation Exelon Generation Company, LLC ComEd Commonwealth Edison Company PECO PECO Energy Company BGE Baltimore Gas and Electric Company 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, Generation, 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. EEDC Exelon Energy Delivery Company, LLC EGR IV ExGen Renewables IV, LLC EGRP ExGen Renewables Partners, 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 SolGen SolGen, LLC TMI Three Mile Island nuclear facility UII Unicom Investments, Inc. 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. CAISO California ISO CBAs Collective Bargaining Agreements CERCLA Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended CES Clean Energy Standard Clean Air Act Clean Air Act of 1963, as amended Clean Water Act Federal Water Pollution Control Amendments of 1972, as amended 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 DOE United States Department of Energy DOEE Department of Energy & Environment DOJ United States Department of Justice DPP Deferred Purchase Price DPSC Delaware Public Service Commission 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 FASB Financial Accounting Standards Board 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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