ATLANTIC CITY ELECTRIC CO

Liquidity and Capital Resources (All Registrants)

All results included throughout the liquidity and capital resources section are presented on a GAAP basis.

The Registrants’ operating and capital expenditures requirements are provided by internally generated cash flows from operations, as well as funds from external sources in the capital markets and through bank borrowings. The Registrants’ businesses are capital intensive and require considerable capital resources. Each of the Registrants annually evaluates its financing plan, dividend practices, and credit line sizing, focusing on maintaining its investment grade ratings while meeting its cash needs to fund capital requirements, including construction expenditures, retire debt, pay dividends, and fund pension and OPEB obligations. The Registrants spend a significant amount of cash on capital improvements and construction projects that have a long-term return on investment. Additionally, the Utility Registrants operate in rate-regulated environments in which the amount of new investment recovery may be delayed or limited and where such recovery takes place over an extended period of time. Each Registrant’s access to external financing on reasonable terms depends on its credit ratings and current overall capital market business conditions, including that of the utility industry in general. If these conditions deteriorate to the extent that the Registrants no longer have access to the capital markets at reasonable terms, the Registrants have access to credit facilities with aggregate bank commitments of $4.0 billion. The Registrants utilize their credit facilities to support their commercial paper programs, provide for other short-term borrowings, and to issue letters of credit. See the “Credit Matters and Cash Requirements” section below for additional information. The Registrants expect cash flows to be sufficient to meet operating expenses, financing costs, and capital expenditure requirements. See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ debt and credit agreements.

Cash Flows from Operating Activities

The Utility Registrants' cash flows from operating activities primarily result from the transmission and distribution of electricity and, in the case of PECO, BGE, and DPL, gas distribution services. The Utility Registrants' distribution services are provided to an established and diverse base of retail customers. The Utility Registrants' future cash flows may be affected by the economy, weather conditions, future legislative initiatives, future regulatory proceedings with respect to their rates or operations, and their ability to achieve operating cost reductions. Additionally, ComEd is required to purchase CMCs from participating nuclear-powered generating facilities for a five-year period that began in June 2022, and all of its costs of doing so will be recovered through a rider. The price to be paid for each CMC is established through a competitive bidding process. ComEd will provide net payments to, or collect net payments from, customers for the difference between customer credits issued and the credit to be received from the participating nuclear-powered generating facilities. ComEd’s cash flows are affected by the establishment of CMC prices and the timing of recovering costs through the CMC regulatory asset.

See Note 2 — Regulatory Matters of the 2025 Form 10-K and Notes 2 — Regulatory Matters and 11 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information on regulatory and legal proceedings and proposed legislation.

The following table provides a summary of the change in cash flows from operating activities for the six months ended June 30, 2026 and 2025 by Registrant:

Changes in the Registrants' cash flows from operations were generally consistent with changes in each Registrant’s respective results of operations, as adjusted by changes in working capital in the normal course of business, except as discussed below.

Significant changes in cash flows from operating activities were primarily due to the following:

•See Note 14 — Supplemental Financial Information of the Combined Notes to Consolidated Financial Statements and the Registrants’ Consolidated Statements of Cash Flows for additional information onnon-cash operating activities.

•Changes incollateral depended upon whether the Registrant was in a net mark-to-market liability or asset position, and collateral may have been required to be posted with or collected from its counterparties. In addition, the collateral posting and collection requirements differed depending on whether the transactions were on an exchange or in the over-the-counter markets. Changes in collateral for the Registrants are dependent upon the credit exposure of procurement contracts that may require suppliers to post collateral. The amount of cash collateral received from external counterparties remained relatively consistent comparing the six months ended June 30, 2026 to the six months ended June 30, 2025. See Note 8 — Derivative Financial Instruments for additional information.

•See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements and the Registrants' Consolidated Statements of Cash Flows for additional information onincome taxes.

•Changes in Pension and non-pension postretirement benefit contributions relates to Exelon's increased contributions to the Qualified Plans during the six months ended June 30, 2026. See Note 12 — Retirement Benefits of the 2025 Form 10-K for additional information.

•Changes inregulatory assets and liabilities, net, are due to the timing of cash payments for costs recoverable, or cash receipts for costs recovered, under our regulatory mechanisms differing from the recovery period of those costs. ComEd recognized a reduction in regulatory liabilities of $670 million and an increase in regulatory assets of $150 million related to CMCs for the six months ended June 30, 2026 and a decrease in regulatory assets of $20 million related to CMCs for the six months ended June 30, 2025. Included within the change in 2026 are payments for CMC nuclear production tax credits, which relate to a decrease in Accounts Receivable. ComEd's energy efficiency program recognized changes of $206 million and $191 million for the six months ended June 30, 2026 and 2025, respectively. Additionally, ComEd recognized changes in the distributed generation rebates programs of $70 million and $35 million for the six months ended June 30, 2026 and 2025, respectively. Also included within the changes is energy efficiency and demand response programs spend for DPL and ACE of $2 million and $35 million for the six months ended June 30, 2026 and $7 million, and $16 million for the six months ended June 30, 2025, respectively. BGE and Pepco had no energy efficiency and demand response programs spend recorded to the regulatory asset for the six months ended June 30, 2026 and $41 million and $16 million for six months ended June 30, 2025. PECO had no energy efficiency and demand response programs spend recorded to the regulatory asset for the six months ended June 30, 2026 and 2025.

•Changes in working capital and other assets and liabilities for the Utility Registrants and Exelon Corporate totaled $1,360 million and $1,547 million, respectively. The change in working capital and other noncurrent assets and liabilities for Exelon Corporate and the Utility Registrants is dependent upon the normal course of operations for all Registrants. For ComEd, it is also dependent upon whether the participating nuclear-powered generating facilities are owed money from ComEd as a result of the established pricing for CMCs. For the six months ended June 30, 2026, the established pricing has resulted in ComEd receiving payments from nuclear-powered generating facilities, which is reported within the cash flows from operations as a change in Accounts receivable. This change corresponds to a change in the Carbon mitigation credit regulatory mechanism. See Note 2 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.

Cash Flows from Investing Activities

The following table provides a summary of the change in cash flows from investing activities for the six months ended June 30, 2026 and 2025 by Registrant:

Significant changes in cash flows from investing activities were primarily due to the following:

•Changes incapital expenditures are primarily due to the timing of cash expenditures for capital projects. See the "Credit Matters and Cash Requirements" section below for additional information on projected capital expenditure spending for the Utility Registrants.

•Changes inintercompany money pool are driven by short-term borrowing needs. Refer to more information regarding the intercompany money pool below.

Cash Flows from Financing Activities

The following table provides a summary of the change in cash flows from financing activities for the six months ended June 30, 2026 and 2025 by Registrant:

Significant changes in cash flows from financing activities were primarily due to the following:

•Changes in short-term borrowings, net, is driven by repayments on and issuances of notes due in less than 365 days. See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on short-term borrowings for the Registrants.

•Long-term debt, net, varies due to debt issuances and redemptions each year. See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on debt issuances. Refer to the "Debt" section below for additional information.

•Changes in intercompany money poolare driven by short-term borrowing needs. Refer below for more information regarding the intercompany money pool.

•Issuance of common stock relates to issuances of Exelon common stock during the second quarter of 2026. See Note 12 — Shareholders' Equity of the Combined Notes to Consolidated Financial Statements for additional information.

•Exelon’s ability to paydividends on its common stock depends on the receipt of dividends paid by its operating subsidiaries. The payments of dividends to Exelon by its subsidiaries in turn depend on their results of operations and cash flows and other items affecting retained earnings. See Note 16 — Commitments and Contingencies of the 2025 Form 10-K for additional information on dividend restrictions. See below for quarterly dividends declared.

Debt

See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ debt issuances.

During the six months ended June 30, 2026, the following long-term debt was retired and/or redeemed:

Dividends

Quarterly dividends declared by the Exelon Board of Directors during the six months ended June 30, 2026 and for the third quarter of 2026 were as follows:

(a)Exelon's Board of Directors approved an updated dividend policy for 2026. The 2026 quarterly dividend will be $0.42 per share.

Credit Matters and Cash Requirements

The Registrants fund liquidity needs for capital investment, working capital, energy hedging, and other financial commitments through cash flows from continuing operations, public debt offerings, commercial paper markets, and large, diversified credit facilities. The credit facilities include $4.0 billion in aggregate total commitments of which $3.2 billion was available to support additional commercial paper as of June 30, 2026, and of which no financial institution has more than 6.2% of the aggregate commitments for the Registrants. The Registrants had access to the commercial paper markets and had availability under their revolving credit facilities during the six months ended June 30, 2026 to fund their short-term liquidity needs, when necessary. Exelon Corporate and the Utility Registrants each have a 5-year revolving credit facility. See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information. The Registrants routinely review the sufficiency of their liquidity position, including appropriate sizing of credit facility commitments, by performing various stress test scenarios, such as commodity price movements, increases in margin-related transactions, changes in hedging levels, and the impacts of hypothetical credit downgrades. The Registrants have continued to closely monitor events in the financial markets and the financial institutions associated with the credit facilities, including monitoring credit ratings and outlooks, credit default swap levels, capital raising, and merger activity. See PART I. ITEM 1A. RISK FACTORS of the 2025 Form 10-K for additional information regarding the effects of uncertainty in the capital and credit markets.

The Registrants believe their cash flows from operating activities, access to credit markets, and their credit facilities provide sufficient liquidity to support the estimated future cash requirements.

On May 2, 2025, Exelon executed an equity distribution agreement ("2025 Equity Distribution Agreement"), with certain sales agents and forward sellers and certain forward purchasers, establishing an ATM equity distribution program which it may offer and sell shares of its Common stock, having an aggregate gross sales price of up to $2.5 billion through May 2, 2028. Exelon has no obligation to offer or sell any shares of Common stock under the 2025 Equity Distribution Agreement and may, at any time, suspend or terminate offers and sales under the 2025 Equity Distribution Agreement. Exelon issued the following shares of Common stock in the second quarter of 2026:

(a)Proceeds were used for general corporate purposes.

(b)In Q2 2026, Exelon settled all forward sale agreements with a November 16, 2026 maturity date and a portion of the forward sale agreements with December 15, 2026 and July 30, 2027 maturity dates that were entered into by various forward sellers under the ATM program as outlined below.

In the first quarter of 2026, Exelon entered into various forward sale agreements under the 2025 ATM program. The forward sale agreements require Exelon to, at its election prior to the maturity date, either (i) physically settle the transactions by issuing shares of its Common stock to the forward counterparties in exchange for net proceeds at the then-applicable forward sale price specified by the agreements or (ii) net settle the transactions in whole or in part through the delivery to the forward counterparties or receipt from the forward counterparties of cash or shares in accordance with the provisions of the agreements. The following forward sale agreements were entered into under Exelon’s ATM program in the first quarter of 2026:

Additionally, the following forward sale agreements were entered into during the twelve months ended 2025 under Exelon’s ATM program and were not settled as of December 31, 2025:

No amounts have been or will be recorded on Exelon's balance sheet with respect to the equity offerings until the equity forward sale agreements have been settled. Each initial forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the agreements. Until settlement of the equity forward, earnings per share dilution resulting from the agreement, if any, will be determined under the treasury stock method. For the three and six months ended June 30, 2026 June 30, 2026, approximately 18.4 million shares under the forward sale agreements were not included in the calculation of diluted earnings per share because their effect would have been antidilutive.

Inclusive of the impact of the forward sale agreements, $1.0 billion of Common stock remained available for sale pursuant to the ATM program as of June 30, 2026.

On July 6, 2026, Exelon settled an additional forward agreement that was entered into under the 2025 ATM program. Exelon issued approximately 2.3 million shares of Common stock at a weighted-average net price of $43.29 per share. The net proceeds from the issuance were $101 million, which will be used for general corporate purposes.

Incremental Collateral Requirements

The following table presents the incremental collateral that each Utility Registrant would have been required to provide in the event each Utility Registrant lost its investment grade credit rating at June 30, 2026 and available credit facility capacity prior to any incremental collateral at June 30, 2026:

(a)Represents incremental collateral related to natural gas procurement contracts.

Capital Expenditure Spending

As of June 30, 2026, the most recent estimates of capital expenditures for plant additions and improvements for 2026 are as follows:

(a)Numbers rounded to the nearest $25M and may not sum due to rounding.

Projected capital expenditures and other investments are subject to periodic review and revision to reflect changes in economic conditions and other factors.

Retirement Benefits

Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution requirements under ERISA, contributions required to avoid benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006 (the Act), management of the pension obligation, and regulatory implications. The Act requires the attainment of certain funding levels to avoid benefit restrictions (such as an inability to pay lump sums or to accrue benefits prospectively), and at-risk status (which triggers higher minimum contribution requirements and participant notification). The projected contributions reflect a funding strategy to make annual contributions with the objective of achieving 100% funded status on an ABO basis over time. This funding strategy helps minimize volatility of future period required pension contributions. Exelon’s estimated annual qualified pension contributions will be $325 million in 2026. Unlike the qualified pension plans, Exelon’s non-qualified pension plans are not funded, given that they are not subject to statutory minimum contribution requirements.

While OPEB plans are also not subject to statutory minimum contribution requirements, Exelon does fund certain of its plans. For Exelon's funded OPEB plans, contributions generally equal accounting costs, however, Exelon’s management has historically considered several factors in determining the level of contributions to its OPEB plans, including liabilities management, levels of benefit claims paid, and regulatory implications (amounts deemed prudent to meet regulatory expectations and best assure continued rate recovery).

To the extent interest rates decline significantly or the pension and OPEB plans earn less than the expected asset returns, annual pension contribution requirements in future years could increase. Conversely, to the extent interest rates increase significantly or the pension and OPEB plans earn greater than the expected asset returns, annual pension and OPEB contribution requirements in future years could decrease. Additionally, expected contributions could change if Exelon changes its pension or OPEB funding strategy.

See Note 12 — Retirement Benefits of the Combined Notes to Consolidated Financial Statements of the 2025 Form 10-K for additional information on pension and OPEB contributions.

Credit Facilities

Exelon Corporate, ComEd, and BGE meet their short-term liquidity needs primarily through commercial paper issuances. PECO also utilizes commercial paper, supplemented by borrowings from the Exelon intercompany money pool. Pepco, DPL, and ACE similarly rely on commercial paper, along with borrowings from the PHI intercompany money pool. PHI Corporate meets its short-term liquidity needs through borrowings from the Exelon intercompany money pool. The Registrants may use their respective credit facilities for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of credit.

See Note 9 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ credit facilities and short term borrowing activity.

Security Ratings

The Registrants’ access to the capital markets, including the commercial paper market, and their respective financing costs in those markets, may depend on the securities ratings of the entity that is accessing the capital markets.

The Registrants’ borrowings are not subject to default or prepayment as a result of a downgrading of securities, although such a downgrading of a Registrant’s securities could increase fees and interest charges under that Registrant’s credit agreements.

As part of the normal course of business, the Registrants enter into contracts that contain express provisions or otherwise permit the Registrants and their counterparties to demand adequate assurance of future performance when there are reasonable grounds for doing so. In accordance with the contracts and applicable contracts law, if the Registrants are downgraded by a credit rating agency, it is possible that a counterparty would attempt to rely on such a downgrade as a basis for making a demand for adequate assurance of future performance, which could include the posting of collateral. See Note 8 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on collateral provisions.

The credit ratings for Exelon, ComEd, PECO, PHI, Pepco, DPL, and ACE did not change for the six months ended June 30, 2026. On April 30, 2026, S&P lowered its long-term issuer credit rating and senior unsecured debt rating for BGE from 'A' to 'A-', and its short-term commercial paper rating for BGE from 'A-1' to 'A-2'. On July 15, 2026, Moody's lowered PECO's long-term issuer rating from 'A2' to 'A3', its senior secured debt rating from 'Aa3' to 'A1', and short-term commercial paper rating from 'P-1' to 'P-2'.

Intercompany Money Pool

To provide an additional short-term borrowing option that will generally be more favorable to the borrowing participants than the cost of external financing, both Exelon and PHI operate an intercompany money pool. Maximum amounts contributed to and borrowed from the money pool by participant and the net contribution or borrowing as of June 30, 2026, are presented in the following table:

Shelf Registration Statements

On February 13, 2025, Exelon and ComEd filed a combined shelf registration statement on Form S-3 registering $12.6 billion in aggregate amount of securities, which was declared effective by the SEC on April 8, 2025. The shelf registration statement may be used to issue Exelon debt and equity securities as well as ComEd debt securities through the expiration date of April 8, 2028. On February 21, 2024, PECO and BGE filed with the SEC a standalone automatically effective shelf registration statement, unlimited in amount, which can be used to issue PECO and BGE debt securities through the expiration date of February 20, 2027. The ability of Exelon, ComEd, PECO and BGE to sell securities off their corresponding registration statements will depend on a number of factors at the time of the proposed sale, including other required regulatory approvals, as applicable, the current financial condition of the Registrant, its securities ratings, and market conditions.

Pepco, DPL, and ACE periodically issue securities through the private placement markets. Pepco, DPL and ACE's ability to access the private placement markets will depend on a number of factors at the time of the proposed sale, including other required regulatory approvals, as applicable, current financial condition, securities ratings and market conditions.

Regulatory Authorizations

The Utility Registrants are required to obtain short-term and long-term financing authority from Federal and State Commissions as follows:

(a)The financing authority filed with MDPSC does not have an expiration date, while the financing authority filed with DCPSC and DEPSC have an expiration date of December 31, 2028.

(b)On June 4, 2026, ACE filed an application with the NJBPU to extend their long-term financing authority through December 31, 2028. ACE expects approval of their application by November 20, 2026.