EXC

Exelon Corp. 10-Q Summary: Period Ended June 30, 2026

Business Context and Reporting Period

This is a combined Form 10-Q for Exelon Corporation and its utility subsidiaries (ComEd, PECO, BGE, Pepco Holdings, Pepco, DPL, and ACE) for the quarterly period ended June 30, 2026. Exelon operates as a utility services holding company engaged in energy transmission and distribution across Illinois, Pennsylvania, Maryland, the District of Columbia, Delaware, and New Jersey. The filing includes unaudited consolidated financial statements for the three and six months ended June 30, 2026, compared to the same periods in 2025.

Key Financial Metrics (Six Months Ended June 30, 2026)

Material Changes vs. Prior Period

• Revenue Growth: Total operating revenues increased by 8.8% year-over-year, driven primarily by approved rate increases at ComEd, BGE, and PHI, and favorable weather conditions at PECO.
• Profitability: Net income increased slightly by $15 million despite higher interest and depreciation expenses. The increase was offset by the absence of Customer Relief Fund contributions and Customer Surcharge Credits recorded in the prior year.
• Cost Pressures: Operating expenses rose due to higher purchased power costs (partially offset by regulatory recovery), increased depreciation from capital investments, and severance costs related to a cost management program.
• Segment Performance:
  • ComEd: Net income increased $29 million due to higher rate base and AFUDC.
  • BGE: Net income increased $38 million driven by approved distribution rates.
  • PECO: Net income decreased $5 million due to higher depreciation and interest, partially offset by favorable weather.
  • PHI (Pepco/DPL/ACE): Net income decreased $59 million, impacted by the Pepco Maryland multi-year plan reconciliation and higher operating expenses.

Guidance, Outlook, and Risks

• Regulatory Developments: Several rate cases were completed in 2026 (ComEd, PECO, BGE, Pepco DC, DPL, ACE). Pending cases include Pepco Maryland (expected approval Q3 2026) and BGE Maryland (expected Q1 2027). New legislation in Maryland and New Jersey mandates RTO participation, potentially impacting transmission rate incentives.
• Capital Strategy: Exelon announced a cost-saving strategy targeting $350 million in operating savings for 2027. Projected 2026 capital expenditures are estimated at $9.9 billion.
• Tax Matters: New Treasury guidance on the Corporate Alternative Minimum Tax (CAMT) allowed Exelon to reduce its liability by $80 million for 2023 and 2024, resulting in a $235 million reimbursement from Constellation.
• Risks: Key risks include regulatory outcomes, environmental remediation costs (MGP sites, Anacostia River), PJM cost allocation changes, and potential credit rating downgrades affecting collateral requirements.

Investor Verification Checklist

• Regulatory Asset/Liability Timing: Verify the impact of the $670 million reduction in ComEd's Carbon Mitigation Credit (CMC) regulatory liability and the timing of cash flows associated with CMC payments.
• Cost Management Program: Assess the long-term impact of the $350 million cost-saving initiative and the immediate severance costs recorded in Q2 2026.
• Debt Issuances: Review the terms of the $1 billion Convertible Senior Notes issued in December 2025 and the impact on future dilution.
• Rate Case Outcomes: Monitor the resolution of the Pepco Maryland multi-year plan reconciliation and the pending BGE Maryland rate case for potential revenue adjustments.
• Environmental Liabilities: Track the status of the Anacostia River Consent Decree payments and the Benning Road site remediation costs.