ATLANTIC CITY ELECTRIC CO
For the period ended Dec 31, 2025. Filed Feb 12, 2026.
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FY2025 · Filed Feb 12, 2026
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15. Fair Value of Financial Assets and Liabilities
- Fair Value of Financial Assets and Liabilities (All Registrants)
Exelon measures and classifies fair value measurements in accordance with the hierarchy as defined by GAAP. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Registrants have the ability to liquidate as of the reporting date.
Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 — unobservable inputs, such as internally developed pricing models or third-party valuations for the asset or liability due to little or no market activity for the asset or liability.
Fair Value of Financial Liabilities Recorded at Amortized Cost
The following tables present the carrying amounts and fair values of the Registrants’ short-term liabilities, long-term debt, and trust preferred securities (long-term debt to financing trusts or junior subordinated debentures) at December 31, 2025 and 2024. The Registrants haveno financial liabilities measured using the NAV practical expedient.
The carrying amounts of the Registrants’ short-term liabilities as presented in their Consolidated Balance Sheets are representative of their fair value (Level 2) because of the short-term nature of these instruments.
| December 31, 2025 · December 31, 2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Carrying Amount · Fair Value · Carrying Amount · Fair Value | ||||||||||
| Level 1 · Level 2 · Level 3 · Total · Level 1 · Level 2 · Level 3 · Total | ||||||||||
| Long-Term Debt, including amounts due within one year(a) | ||||||||||
| Exelon (b) | $49,078 | $— | $40,637 | $4,318 | $44,955 | $44,400 | $— | $35,337 | $3,720 | $39,057 |
| ComEd | 12,753 | — | 11,291 | — | 11,291 | 12,030 | — | 10,260 | — | 10,260 |
| PECO | 6,396 | — | 5,593 | — | 5,593 | 5,704 | — | 4,816 | — | 4,816 |
| BGE | 6,041 | — | 5,510 | — | 5,510 | 5,395 | — | 4,702 | — | 4,702 |
| PHI | 9,590 | — | 4,236 | 4,318 | 8,554 | 9,124 | — | 4,093 | 3,720 | 7,813 |
| Pepco | 4,632 | — | 2,546 | 1,861 | 4,407 | 4,362 | — | 2,475 | 1,544 | 4,019 |
| DPL | 2,344 | — | 657 | 1,410 | 2,067 | 2,220 | — | 623 | 1,250 | 1,873 |
| ACE | 2,033 | — | 819 | 1,047 | 1,866 | 1,933 | — | 787 | 925 | 1,712 |
| Long-Term Debt to Financing Trusts | ||||||||||
| Exelon | $390 | $— | $— | $403 | $403 | $390 | $— | $— | $396 | $396 |
| ComEd | 206 | — | — | 216 | 216 | 206 | — | — | 208 | 208 |
| PECO | 184 | — | — | 187 | 187 | 184 | — | — | 188 | 188 |
(a)Includes unamortized debt issuance costs, unamortized debt discount and premium, net, purchase accounting fair value adjustments, and finance lease liabilities which are not fair valued. Refer to Note 14 — Debt and Credit Agreements for unamortized debt issuance costs, unamortized debt discount and premium, net, and purchase accounting fair value adjustments and Note 9 — Leases for finance lease liabilities.
(b)Includes the net carrying amount and the estimated fair value (Level 2) of the Convertible Senior Notes of $988 million and $1 billion for the year ended December 31, 2025, respectively.
Exelon uses the following methods and assumptions to estimate fair value of financial liabilities recorded at carrying cost:
| Type | Level | Registrants | Valuation |
|---|---|---|---|
| Long-Term Debt, including amounts due within one year | |||
| Taxable Debt Securities | 2 | All | The fair value is determined by a valuation model that is based on a conventional discounted cash flow methodology and utilizes assumptions of current market pricing curves. Exelon obtains credit spreads based on trades of existing Exelon debt securities as well as other issuers in the utility sector with similar credit ratings. The yields are then converted into discount rates of various tenors that are used for discounting the respective cash flows of the same tenor for each bond or note. |
| Variable Rate Financing Debt | 2 | Exelon, DPL | Debt rates are reset on a regular basis and the carrying value approximates fair value. |
| Non-Government Backed Fixed Rate Nonrecourse Debt | 2 | Exelon | Fair value is based on market and quoted prices for its own and other nonrecourse debt with similar risk profiles. Given the low trading volume in the nonrecourse debt market, the price quotes used to determine fair value will reflect certain qualitative factors, such as market conditions, investor demand, new developments that might significantly impact the project cash flows or off-taker credit, and other circumstances related to the project. |
| Taxable Private Placement Debt Securities | 3 | Exelon, Pepco, DPL, ACE | Rates are obtained similar to the process for taxable debt securities. Due to low trading volume and qualitative factors such as market conditions, low volume of investors, and investor demand, these debt securities are Level 3. |
| Long-Term Debt to Financing Trusts | |||
| Long Term Debt to Financing Trusts | 3 | Exelon, ComEd, PECO | Fair value is based on publicly traded securities issued by the financing trusts. Due to low trading volume of these securities and qualitative factors, such as market conditions, investor demand, and circumstances related to each issue, this debt is classified as Level 3. |
Recurring Fair Value Measurements
The following tables present assets and liabilities measured and recorded at fair value in the Registrants' Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy at December 31, 2025 and 2024. Exelon and the Utility Registrants have immaterial andno financial assets or liabilities measured using the NAV practical expedient, respectively.
Exelon
| At December 31, 2025 | At December 31, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Assets | ||||||||
| Cash equivalents(a) | $825 | $— | $— | $825 | $544 | $— | $— | $544 |
| Rabbi trust investments | ||||||||
| Cash equivalents | 101 | — | — | 101 | 94 | — | — | 94 |
| Mutual funds | 71 | — | — | 71 | 65 | — | — | 65 |
| Fixed income | — | 6 | — | 6 | — | 6 | — | 6 |
| Life insurance contracts | — | 79 | 21 | 100 | — | 73 | 22 | 95 |
| Rabbi trust investments subtotal | 172 | 85 | 21 | 278 | 159 | 79 | 22 | 260 |
| Interest rate derivative assets | ||||||||
| Derivatives designated as hedging instruments | — | 3 | — | 3 | — | 26 | — | 26 |
| Interest rate derivative assets subtotal | — | 3 | — | 3 | — | 26 | — | 26 |
| Total assets | 997 | 88 | 21 | 1,106 | 703 | 105 | 22 | 830 |
| Liabilities | ||||||||
| Commodity derivative liabilities | — | — | (131) | (131) | — | — | (132) | (132) |
| Interest rate derivative liabilities | ||||||||
| Derivatives designated as hedging instruments | — | (4) | — | (4) | — | (1) | — | (1) |
| Interest rate derivative liabilities subtotal | — | (4) | — | (4) | — | (1) | — | (1) |
| Deferred compensation obligation | — | (71) | — | (71) | — | (74) | — | (74) |
| Total liabilities | — | (75) | (131) | (206) | — | (75) | (132) | (207) |
| Total net assets (liabilities) | $997 | $13 | $(110) | $900 | $703 | $30 | $(110) | $623 |
(a)Excludes cash of $180 million and $219 million at December 31, 2025 and 2024, respectively, and restricted cash of $196 million and $176 million at December 31, 2025 and 2024, respectively, and includes long-term restricted cash of $50 million and $41 million at December 31, 2025 and 2024, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets.
ComEd, PECO, and BGE
| ComEd | PECO | BGE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||||||||||
| Cash equivalents(a) | $393 | $— | $— | $393 | $93 | $— | $— | $93 | $205 | $— | $— | $205 |
| Rabbi trust investments | ||||||||||||
| Mutual funds | — | — | — | — | 13 | — | — | 13 | 10 | — | — | 10 |
| Life insurance contracts | — | — | — | — | — | 25 | — | 25 | — | — | — | — |
| Rabbi trust investments subtotal | — | — | — | — | 13 | 25 | — | 38 | 10 | — | — | 10 |
| Total assets | 393 | — | — | 393 | 106 | 25 | — | 131 | 215 | — | — | 215 |
| Liabilities | ||||||||||||
| Commodity derivative liabilities(b) | — | — | (131) | (131) | — | — | — | — | — | — | — | — |
| Deferred compensation obligation | — | (9) | — | (9) | — | (8) | — | (8) | — | (4) | — | (4) |
| Total liabilities | — | (9) | (131) | (140) | — | (8) | — | (8) | — | (4) | — | (4) |
| Total net assets (liabilities) | $393 | $(9) | $(131) | $253 | $106 | $17 | $— | $123 | $215 | $(4) | $— | $211 |
| ComEd | PECO | BGE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||||||||||
| Cash equivalents(a) | $390 | $— | $— | $390 | $29 | $— | $— | $29 | $1 | $— | $— | $1 |
| Rabbi trust investments | ||||||||||||
| Mutual funds | — | — | — | — | 12 | — | — | 12 | 10 | — | — | 10 |
| Life insurance contracts | — | — | — | — | — | 22 | — | 22 | — | — | — | — |
| Rabbi trust investments subtotal | — | — | — | — | 12 | 22 | — | 34 | 10 | — | — | 10 |
| Total assets | 390 | — | — | 390 | 41 | 22 | — | 63 | 11 | — | — | 11 |
| Liabilities | ||||||||||||
| Commodity derivative liabilities(b) | — | — | (132) | (132) | — | — | — | — | — | — | — | — |
| Deferred compensation obligation | — | (8) | — | (8) | — | (7) | — | (7) | — | (4) | — | (4) |
| Total liabilities | — | (8) | (132) | (140) | — | (7) | — | (7) | — | (4) | — | (4) |
| Total net assets (liabilities) | $390 | $(8) | $(132) | $250 | $41 | $15 | $— | $56 | $11 | $(4) | $— | $7 |
(a)ComEd excludes cash of $77 million and $66 million at December 31, 2025 and 2024, respectively, and restricted cash of $193 million and $176 million at December 31, 2025 and 2024, respectively, and includes long-term restricted cash of $50 million and $41 million at December 31, 2025 and 2024, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets. PECO excludes cash of $23 million and $19 million at December 31, 2025 and 2024, respectively. BGE excludes cash of $15 million and $33 million at December 31, 2025 and 2024, respectively.
(b)The Level 3 balance consists of the current and noncurrent liability of $25 million and $106 million, respectively, at December 31, 2025, and $29 million and $103 million, respectively, at December 31, 2024 related to floating-to-fixed energy swap contracts with unaffiliated suppliers.
PHI, Pepco, DPL, and ACE
| At December 31, 2025 | At December 31, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| PHI | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||||||
| Cash equivalents(a) | $83 | $— | $— | $83 | $93 | $— | $— | $93 |
| Rabbi trust investments | ||||||||
| Cash equivalents | 99 | — | — | 99 | 92 | — | — | 92 |
| Mutual funds | 9 | — | — | 9 | 9 | — | — | 9 |
| Fixed income | — | 6 | — | 6 | — | 6 | — | 6 |
| Life insurance contracts | — | 23 | 20 | 43 | — | 23 | 21 | 44 |
| Rabbi trust investments subtotal | 108 | 29 | 20 | 157 | 101 | 29 | 21 | 151 |
| Total assets | 191 | 29 | 20 | 240 | 194 | 29 | 21 | 244 |
| Liabilities | ||||||||
| Deferred compensation obligation | — | (9) | — | (9) | — | (12) | — | (12) |
| Total liabilities | — | (9) | — | (9) | — | (12) | — | (12) |
| Total net assets | $191 | $20 | $20 | $231 | $194 | $17 | $21 | $232 |
| Pepco | DPL | ACE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||||||||||
| Cash equivalents(a) | $33 | $— | $— | $33 | $3 | $— | $— | $3 | $— | $— | $— | $— |
| Rabbi trust investments | ||||||||||||
| Cash equivalents | 98 | — | — | 98 | — | — | — | — | — | — | — | — |
| Life insurance contracts | — | 23 | 20 | 43 | — | — | — | — | — | — | — | — |
| Rabbi trust investments subtotal | 98 | 23 | 20 | 141 | — | — | — | — | — | — | — | — |
| Total assets | 131 | 23 | 20 | 174 | 3 | — | — | 3 | — | — | — | — |
| Liabilities | ||||||||||||
| Deferred compensation obligation | — | (1) | — | (1) | — | — | — | — | — | — | — | — |
| Total liabilities | — | (1) | — | (1) | — | — | — | — | — | — | — | — |
| Total net assets | $131 | $22 | $20 | $173 | $3 | $— | $— | $3 | $— | $— | $— | $— |
| Pepco | DPL | ACE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Assets | ||||||||||||
| Cash equivalents(a) | $21 | $— | $— | $21 | $3 | $— | $— | $3 | $— | $— | $— | $— |
| Rabbi trust investments | ||||||||||||
| Cash equivalents | 91 | — | — | 91 | — | — | — | — | — | — | — | — |
| Life insurance contracts | — | 23 | 21 | 44 | — | — | — | — | — | — | — | — |
| Rabbi trust investments subtotal | 91 | 23 | 21 | 135 | — | — | — | — | — | — | — | — |
| Total assets | 112 | 23 | 21 | 156 | 3 | — | — | 3 | — | — | — | — |
| Liabilities | ||||||||||||
| Deferred compensation obligation | — | (1) | — | (1) | — | — | — | — | — | — | — | — |
| Total liabilities | — | (1) | — | (1) | — | — | — | — | — | — | — | — |
| Total net assets | $112 | $22 | $21 | $155 | $3 | $— | $— | $3 | $— | $— | $— | $— |
(a)PHI excludes cash of $56 million and $70 million at December 31, 2025 and 2024, respectively, and restricted cash of $2 million andzero at December 31, 2025 and 2024, respectively. Pepco excludes cash of $22 million and $30 million at December 31, 2025 and 2024, respectively. DPL excludes cash of $9 million and $20 million at December 31, 2025 and 2024, respectively. ACE excludes cash of $22 million and $14 million at December 31, 2025 and 2024, respectively, and restricted cash of $2 million andzero at December 31, 2025 and 2024, respectively.
Reconciliation of Level 3 Assets and Liabilities
The following tables present the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis during the years ended December 31, 2025 and 2024:
| Exelon | ComEd | PHI and Pepco | |
|---|---|---|---|
| For the year ended December 31, 2025 | Total | CommodityDerivatives | Life Insurance Contracts |
| Balance at December 31, 2024 | $(110) | $(132) | $21 |
| Total realized / unrealized gains (losses) | |||
| Included in net income(a) | 1 | — | 1 |
| Included in regulatory assets/liabilities(b) | 1 | 1 | — |
| Settlements | (2) | — | (2) |
| Balance at December 31, 2025(c) | $(110) | $(131) | $20 |
| The amount of total gains included in income attributed to the change in unrealized gains (losses) related to assets and liabilities as of December 31, 2025 | $1 | $— | $1 |
| Exelon | ComEd | PHI and Pepco | |
|---|---|---|---|
| For the year ended December 31, 2024 | Total | CommodityDerivatives | Life Insurance Contracts |
| Balance at December 31, 2023 | $(90) | $(133) | $41 |
| Total realized / unrealized gains (losses) | |||
| Included in net income(a) | 1 | — | 2 |
| Included in regulatory assets/liabilities (b) | 1 | 1 | — |
| Settlements | (22) | — | (22) |
| Balance at December 31, 2024(c) | $(110) | $(132) | $21 |
| The amount of total gains included in income attributed to the change in unrealized gains (losses) related to assets and liabilities as of December 31, 2024 | $1 | $— | $2 |
(a)Classified in Operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income.
(b)For ComEd, this includes $45 million of decreases in fair value and an increase for realized gains due to settlements of $46 million recorded in Purchased power expense associated with floating-to-fixed energy swap contracts with unaffiliated suppliers for the year ended December 31, 2025. Includes $40 million of decreases in fair value and an increase for realized gains due to settlements of $40 million recorded in Purchased power expense associated with floating-to-fixed energy swap contracts with unaffiliated suppliers for the year ended December 31, 2024.
(c)For ComEd, the balance of the current and noncurrent asset waszero as of December 31, 2025. The balance consists of a current and noncurrent liability of $25 million and $106 million, respectively, as of December 31, 2025.
Valuation Techniques Used to Determine Fair Value
Cash Equivalents (All Registrants). Investments with original maturities of three months or less when purchased, including mutual and money market funds, are considered cash equivalents. The fair values are based on observable market prices and, therefore, are included in the recurring fair value measurements hierarchy as Level 1.
Rabbi Trust Investments (Exelon, PECO, BGE, PHI, and Pepco). The Rabbi trusts were established to hold assets related to deferred compensation plans existing for certain active and retired members of Exelon’s executive management and directors. The Rabbi trusts' assets are included in Investments in the Registrants’ Consolidated Balance Sheets and consist primarily of money market funds, mutual funds, fixed income securities, and life insurance policies. Money market funds and mutual funds are publicly quoted and have been categorized as Level 1 given the clear observability of the prices. The fair values of fixed income securities are based on evaluated prices that reflect observable market information, such as actual trade information or similar securities, adjusted for observable differences and are categorized in Level 2. The life insurance policies are valued using the cash surrender value of the policies, net of loans against those policies, which is provided by a third-party. Certain life insurance policies, which consist primarily of mutual funds that are priced based on observable market data, have been categorized as Level 2 because the life insurance policies can be liquidated at the reporting date for the value of the underlying assets. Life insurance policies that are valued using unobservable inputs have been categorized as Level 3, where the fair value is determined based on the cash surrender value of the policy, which contains unobservable inputs and assumptions. Because Exelon relies on its third-party insurance provider to develop the inputs without adjustment for the valuations of its Level 3 investments, quantitative information about significant unobservable inputs used in valuing these investments is not reasonably available to Exelon. Therefore, Exelon has not disclosed such inputs.
Interest Rate Derivatives (Exelon). Exelon may utilize fixed-to-floating or floating-to-fixed interest rate swaps as a means to manage interest rate risk and to lock in interest levels in anticipation of future financings. These interest rate derivatives are typically designated as cash flow hedges. Exelon determines the current fair value by calculating the net present value of expected payments and receipts under the swap agreement, based on and discounted by the market's expectation of future interest rates. Additional inputs to the net present value calculation may include the contract terms, counterparty credit risk and other market parameters. As these inputs are based on observable data and valuations of similar instruments, the interest rate swaps are categorized as Level 2 in the fair value hierarchy. See Note 13 — Derivative Financial Instruments for additional information on mark-to-market derivatives.
Deferred Compensation Obligations (All Registrants). The Registrants’ deferred compensation plans allow participants to defer certain cash compensation into a notional investment account. The Registrants include such plans in other current and noncurrent liabilities in their Consolidated Balance Sheets. The value of the Registrants’ deferred compensation obligations is based on the market value of the participants’ notional investment accounts. The underlying notional investments are comprised primarily of equities, mutual funds, commingled funds, and fixed income securities which are based on directly and indirectly observable market prices. Since the deferred compensation obligations themselves are not exchanged in an active market, they are categorized as Level 2 in the fair value hierarchy.
The value of certain employment agreement obligations (which are included with the Deferred Compensation Obligation in the tables above) are based on a known and certain stream of payments to be made over time and are categorized as Level 2 within the fair value hierarchy.
Commodity Derivatives (Exelon and ComEd). On December 17, 2010, ComEd entered into several 20-year floating to fixed energy swap contracts with unaffiliated suppliers for the procurement of long-term renewable energy and associated RECs. Delivery under the contracts began in June 2012. The fair value of these swaps has been designated as a Level 3 valuation due to the long tenure of the positions and the internal modeling assumptions. The modeling assumptions include using forward power prices. See Note 13 — Derivative Financial Instruments for additional information on mark-to-market derivatives.
The following table discloses the significant unobservable inputs to the forward curve used to value mark-to-market derivatives:
| Type of trade · Fair Value as of December 31, 2025 · Fair Value as of December 31, 2024 · ValuationTechnique · UnobservableInput · 2025 Range & Arithmetic Average · 2024 Range & Arithmetic Average | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commodity derivatives | $(131) | $(132) | Discounted Cash Flow | Forward power price(a) | $29.75 | - | $61.84 | $41.95 | $30.31 | - | $59.88 | $42.08 |
(a)An increase to the forward power price would increase the fair value.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.