ATLANTIC CITY ELECTRIC CO
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 30, 2026
EXC$45.62-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001109357-26-000080
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSExecutive OverviewFinancial Results of OperationsSignificant 2026 Transactions and DevelopmentsOther Key Business Drivers and Management StrategiesCritical Accounting Policies and EstimatesResults of Operations By RegistrantLiquidity and Capital ResourcesCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-30.
0001109357-26-000095
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSExecutive OverviewFinancial Results of OperationsSignificant 2026 Transactions and DevelopmentsOther Key Business Drivers and Management StrategiesCritical Accounting Policies and EstimatesResults of Operations By RegistrantLiquidity and Capital ResourcesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 277 previous paragraphs and 303 current paragraphs.
174 unchanged; 71 reworded; 56 added; 27 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 59 previous and 59 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (56)
Current report
•Higher write-offs associated with Pepco's Maryland Base Rate Case at PHI;
Current report
•Higher storm costs at PECO due to the absence of extraordinary February and June storm cost deferrals recognized in 2025 and increased storm costs;
Current report
•Lower income taxes at Exelon Corporate.
Current report
•Higher write-offs associated with Pepco's Maryland Base Rate Case at PHI;
Current report
•Higher storm costs at PECO due to the absence of extraordinary February and June storm cost deferrals recognized in 2025;
Current report
•Lower income taxes at Exelon Corporate.
Current report
(b)Represents costs related to capital project impairments.
Current report
On October 7, 2026, FERC issued an order providing additional direction on its March 6, 2026 order. The March 6, 2026, order required PJM to eliminate the de minimis threshold exemption used to allocate certain transmission reliability upgrade costs to the rate zones of PJM Transmission Owners, including the Utility Registrants. FERC also directed PJM to recalculate historical cost allocations beginning June 18, 2015, and, as applicable, pass through additional charges or payments to PJM customers, including the Utility Registrants, as applicable, with interest. The October 6th order also directed that hearing and settlement proceedings be held to determine how PJM should reflect changes in market participants during the 15-year refund and surcharge period. An appeal of FERC's March 6th order remains pending before the United States Court of Appeals for the D.C. Circuit.
Current report
Taxes other than income taxes increased by $26 million and $42 million for the three and nine months ended September 30, 2026, respectively, compared to the same period in 2025, primarily due to increased Assistance Charges for Electricity Distributors and increased utility property taxes.
Current report
Interest expense, netincreased by $14 million and $33 million for the three and nine months ended September 30, 2026, respectively, compared to the same period in 2025, primarily due to an increase in outstanding debt.
Current report
Effective income tax rates were 25.6% and 18.2% for the three months ended September 30, 2026 and 2025, respectively, and 25.1% and 18.2% for the nine months ended September 30, 2026 and 2025, respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Current report
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net Income decreased by $85 million due to higher storm costs, tax repairs, some of which is timing, contracting, depreciation, and interest expense. The higher storm costs reflect the absence of extraordinary February and June storm cost deferrals recognized in the third quarter of 2025 and increased storm costs in the third quarter of 2026. These unfavorable impacts were partially offset by higher revenues, primarily due to the absence of surcharge credits to customers and favorable weather.
Current report
Pricingfor the three and nine months ended September 30, 2026, compared to the same period in 2025, remained relatively consistent.
Current report
The increase of $48 million and $207 million for the three and nine months ended September 30, 2026, compared to the same period in 2025, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
Current report
(b)Increase primarily due to the absence of $53 million deferral for extraordinary February and June storm costs recognized in the third quarter of 2025.
Current report
Effective income tax rates were 4.6% and 2.0% for the three months ended September 30, 2026 and 2025, respectively, and 5.2% and 3.4% for the nine months ended September 30, 2026 and 2025, respectively. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Current report
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net income increased $8 million primarily due to approved distribution and transmission rates and a decrease in contracting and various operating expenses, partially offset by project impairments.
Current report
Transmission Revenue Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily due to increases in underlying costs and capital investments.
Current report
The increase of $82 million and $418 million for the three and nine months ended September 30, 2026, compared to the same period in 2025, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
Current report
(a)See Note 6 — Property, Plant, and Equipment for additional information.
Current report
(d)Reflects the cost recovery associated with EmPOWER Maryland. Please refer to 2025 10-K Note 2 — Regulatory Matters for additional information.
Current report
Interest expense, net increased $9 million and $19 million for the three and nine months ended September 30, 2026, respectively, compared to the same period in 2025, primarily due to the issuance of debt in the second quarter of 2026.
Current report
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net Income decreased by $104 million primarily due to write-offs associated with Pepco's Maryland Base Rate Case and increases in storm costs, depreciation and interest expense, partially offset by an increase in approved distribution rates and favorable weather conditions at DPL.
Current report
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net Income decreased by $163 million primarily due to write-offs associated with Pepco's Maryland Base Rate Case and multi-year rate plan reconciliation, increases in storm costs, depreciation and interest expense, severance costs related to the cost management program, and various operating expenses, partially offset by an increase in approved distribution rates.
Current report
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net Income decreased by $116 million primarily due to write-offs associated with Pepco's Maryland Base Rate Case, and increases in depreciation and interest expense, partially offset by an increase in approved distribution rates.
Current report
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net Income decreased by $164 million primarily due to write-offs associated with Pepco's Maryland Base Rate Case and multi-year rate plan reconciliation, increases in depreciation and interest expense, severance costs related to the cost management program, and various operating expenses, partially offset by an increase in approved distribution rates.
Current report
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three and nine months ended September 30, 2026, compared to the same periods in 2025, primarily due to increases in underlying costs and capital investments.
Showing the first 40 of 56 passages. Open the source sections for the rest.
Removed paragraphs (27)
Previous report
On March 6, 2026, FERC issued an order requiring the removal of the de minimis threshold exemption in the calculation of the cost responsibility of certain transmission reliability upgrade costs allocated to the rate zones of PJM Transmission Owners, including the Utility Registrants. FERC further ordered PJM to recalculate historical cost allocations for the period beginning June 18, 2015, and to pass through additional charges or payments to PJM customers, including Utility Registrants, as applicable, with interest within 90 days. On April 29, 2026, the time for those calculations was extended until further order from FERC. The Utility Registrants expect to recover any incremental charges incurred or reimburse any payments received through prospective electric customer rates. On April 6, 2026, a number of parties filed requests for rehearing or clarification, which were denied by operation of law on May 7, 2026. On May 12, 2026, PJM Transmission Owners, including Exelon, on behalf of the Utility Registrants, filed a petition for review at the United States Court of Appeals for the D.C. Circuit.
Previous report
The increase of $29 million for the three months ended June 30, 2026 and the decrease of $208 million for the six months ended June 30, 2026, compared to the same periods in 2025, in Purchased power expenseis offset in Operating revenues as part of regulatory required programs.
Previous report
Effective income tax rates were 25.0% and 18.6% for the three months ended June 30, 2026 and 2025, respectively, and 24.8% and 18.1% for the six months ended June 30, 2026 and 2025, respectively. See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net income decreased by $5 million due to an increase in depreciation, interest expense, and severance costs related to the cost management program, partially offset by higher revenues resulting from the absence of surcharge credits to customers, and favorable weather.
Previous report
Pricingfor the three and six months ended June 30, 2026, compared to the same period in 2025, remained relatively consistent.
Previous report
The increase of $50 million and $160 million for the three and six months ended June 30, 2026, compared to the same period in 2025, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
Previous report
Effective income tax rates were 6.3% and 2.9% for the three months ended June 30, 2026 and 2025, respectively, and 5.5% and 4.1% for the six months ended June 30, 2026 and 2025, respectively. See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Previous report
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net income remained consistent primarily due to approved distribution rates, the absence of the derecognition of regulatory assets for multi-year plan reconciliations that occurred during the second quarter of 2025, and a decrease in various operating expenses, offset by an increase in credit loss expense and severance costs related to the cost management program.
Previous report
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue for the three and six months ended June 30, 2026, compared to the same period in 2025 remained relatively consistent.
Previous report
The increase of $139 million and $337 million for the three and six months ended June 30, 2026, compared to the same period in 2025, in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
Previous report
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net Income decreased by $34 million primarily due to an increase in severance costs related to the cost management program, depreciation expense, property taxes at DPL, and various operating expenses, partially offset by approved Delaware electric DSIC and natural gas rates.
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net Income decreased by $59 million primarily due to an increase in depreciation and interest expenses, property taxes at DPL, unfavorable impacts of the Pepco Maryland multi-year plan reconciliation and related disallowance of capitalized costs, severance costs related to the cost management program, storm costs, and various operating expenses, partially offset by approved Delaware electric DSIC and natural gas rates, approved distribution and transmission rates, and favorable weather conditions at DPL.
Previous report
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net Income decreased by $19 million primarily due to increases in severance costs related to the cost management program, depreciation, and various operating expenses.
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net Income decreased by $48 million primarily due to unfavorable impacts of the Pepco Maryland multi-year plan reconciliation and related disallowance of capitalized costs, increases in depreciation expense, severance costs related to the cost management program, interest, and various operating expenses.
Previous report
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue increased for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to increases in underlying costs and capital investments.
Previous report
The increase of $60 million and $153 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, in Purchased power expense is fully offset in Operating revenues as part of regulatory required programs.
Previous report
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net income decreased by $13 million primarily due to an increase in depreciation expense, severance costs related to the cost management program, and property taxes, partially offset by approved Delaware electric DSIC and natural gas rates.
Previous report
Effective income tax rates were 23.5% and 22.0% for the three months ended June 30, 2026 and 2025, respectively, and 23.1% and 22.9% for the six months ended June 30, 2026 and 2025, respectively. See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Previous report
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net income decreased by $2 million primarily due to an increase in severance costs related to the cost management program, partially offset by an increase in approved distribution and transmission rates.
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net income decreased by $7 million primarily due to an increase in depreciation and interest expense, storm costs, and severance costs related to the cost management program, partially offset by an increase in approved distribution and transmission rates.
Previous report
The increase of $14 million and $63 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 in Purchased power expense is fully offset in Operating revenues as part of regulatory required programs.
Previous report
Effective income tax rates were 26.7% and 27.3% for the three months ended June 30, 2026 and 2025, respectively, and 25.8% and 26.3% for the six months ended June 30, 2026 and 2025, respectively. See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Previous report
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:
Previous report
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:
Previous report
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:
Reworded paragraphs (71)
Previous wording
GAAP Results of Operations. The following table sets forth Exelon's GAAP consolidated Net income attributable to common shareholders by Registrant for the three and six months ended June 30, 2026 compared to the same period in 2025. For additional information regarding the financial results for the three and six months ended June 30, 2026 and 2025, see the discussions of Results of Operations by Registrant.
Current wording
GAAP Results of Operations. The following table sets forth Exelon's GAAP consolidated Net income attributable to common shareholders by Registrant for the three and nine months ended September 30, 2026 compared to the same period in 2025. For additional information regarding the financial results for the three and nine months ended September 30, 2026 and 2025, see the discussions of Results of Operations by Registrant.
Previous wording
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net income attributable to common shareholders increased by $15 million and diluted earnings per average common share decreased to $1.28 in 2026 from $1.29 in 2025 primarily due to:
Current wording
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net income attributable to common shareholders decreased by $146 million and diluted earnings per average common share decreased to $0.70 in 2026 from $0.86 in 2025 primarily due to:
Previous wording
Note that rate increases are associated with updated recovery rates for costs and investments to serve customers. The increases were partially offset by:
Current wording
Note that rate increases are associated with updated recovery rates for costs and investments to serve customers. The decreases were partially offset by:
Previous wording
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net income attributable to common shareholders increased by $5 million and diluted earnings per average common share remained relatively consistent to the prior year at $0.39 primarily due to:
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net income attributable to common shareholders decreased by $130 million and diluted earnings per average common share decreased to $1.98 in 2026 from $2.15 in 2025 primarily due to:
Previous wording
•Higher interest expense at PECO and Exelon Corporate; and
Current wording
•Higher interest expense at PECO, PHI, and Exelon Corporate;
Previous wording
Note that rate increases are associated with updated recovery rates for costs and investments to serve customers, driving top quartile reliability and avoiding outage costs. The increases were partially offset by:
Current wording
Note that rate increases are associated with updated recovery rates for costs and investments to serve customers, driving top quartile reliability and avoiding outage costs. The decreases were partially offset by:
Previous wording
The following table provides a reconciliation between GAAP Net income attributable to common shareholders and Adjusted (non-GAAP) operating earnings for the three and six months ended June 30, 2026 compared to the same period in 2025:
Current wording
The following table provides a reconciliation between GAAP Net income attributable to common shareholders and Adjusted (non-GAAP) operating earnings for the three and nine months ended September 30, 2026 compared to the same period in 2025:
Previous wording
(a)Primarily represents severance costs related to cost management program.
Current wording
(a)In 2025, primarily represents severance costs related to a cost management program. In 2026, represents third-party consulting and severance costs related to a cost management program.
Previous wording
(b)Reflects the adjustment to state deferred income taxes due to changes in forecasted apportionment.
Current wording
(d)Reflects the adjustment to state deferred income taxes due to changes in forecasted apportionment.
Previous wording
In the second quarter of 2026, Exelon issued approximately 8.7 million shares of Common stock at a weighted-average net price of $44.03 per share. The net proceeds from the issuance were $382 million, which were used for general corporate purposes. See Note 12 — Shareholders' Equity of the Combined Notes to Consolidated Financial Statements for additional information.
Current wording
In the third quarter of 2026, 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 were used for general corporate purposes. See Note 13 — Shareholders' Equity of the Combined Notes to Consolidated Financial Statements for additional information.
Previous wording
The final impacts of the decision cannot be predicted and the results, while not reasonably estimable at this time, could be material to the financial statements.
Current wording
The final impact of these proceedings cannot be predicted or reasonably estimated at this time, but could be material to the financial statements.
Previous wording
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net Income increased by $21 million as compared to the same period in 2025, primarily due to higher distribution and transmission rate base driven by incremental investments to serve customers and higher AFUDC.
Current wording
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025. Net Income increased by $33 million as compared to the same period in 2025, primarily due to higher distribution and transmission rate base driven by incremental investments to serve customers and higher AFUDC.
Previous wording
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net income increased by $29 million as compared to the same period in 2025, primarily due to higher distribution and transmission rate base driven by incremental investments to serve customers and higher AFUDC, offset by the timing of distribution earnings.
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net income increased by $62 million as compared to the same period in 2025, primarily due to higher distribution and transmission rate base driven by incremental investments to serve customers and higher AFUDC, offset by the timing of distribution earnings.
Previous wording
Distribution Revenue. Starting in 2024, distribution revenues are under a MRP. The MRP requires an annual reconciliation of the revenue requirement in effect to the actual costs the ICC determines are prudently and reasonably incurred. Electric distribution revenue varies from year to year based upon fluctuations in the underlying costs (e.g., severe weather and storm restoration), investments being recovered, and allowed ROE. Electric distribution revenues increased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to higher rate base and higher fully recoverable costs.
Current wording
Distribution Revenue. Starting in 2024, distribution revenues are under a MRP. The MRP requires an annual reconciliation of the revenue requirement in effect to the actual costs the ICC determines are prudently and reasonably incurred. Electric distribution revenue varies from year to year based upon fluctuations in the underlying costs (e.g., severe weather and storm restoration), investments being recovered, and allowed ROE. Electric distribution revenues increased for the three and nine months ended September 30, 2026 as compared to the same periods in 2025, primarily due to higher rate base and higher fully recoverable costs.
Previous wording
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenues increased for the three and six months ended June 30, 2026 compared to the same periods in 2025, primarily due to higher rate base and higher fully recoverable costs.
Current wording
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenues increased for the three and nine months ended September 30, 2026 compared to the same periods in 2025, primarily due to higher rate base and higher fully recoverable costs.
Previous wording
Energy Efficiency Revenue. Energy efficiency revenues are under a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs the ICC determines are prudently and reasonably incurred in a given year. Energy efficiency revenue varies from year to year based upon fluctuations in the underlying costs, investments being recovered, and allowed ROE. Energy efficiency revenues increased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to higher fully recoverable costs.
Current wording
Energy Efficiency Revenue. Energy efficiency revenues are under a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs the ICC determines are prudently and reasonably incurred in a given year. Energy efficiency revenue varies from year to year based upon fluctuations in the underlying costs, investments being recovered, and allowed ROE. Energy efficiency revenues increased for the three and nine months ended September 30, 2026 as compared to the same periods in 2025, primarily due to higher fully recoverable costs.
Previous wording
Other Revenue primarily includes assistance provided to other utilities through mutual assistance programs. Other revenues decreased for the three and six months ended June 30, 2026 as compared to the same periods in 2025, which primarily reflects decreased mutual assistance revenues associated with storm restoration efforts.
Current wording
Other Revenue primarily includes assistance provided to other utilities through mutual assistance programs. Other revenues increased for the three and nine months ended September 30, 2026 as compared to the same periods in 2025, which primarily reflects increased mutual assistance revenues associated with storm restoration efforts.
Previous wording
Regulatory Required Programs represents revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery. The costs of these programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries as ComEd remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, this is treated as a pass through for ComEd and therefore, financial results are not impacted if customers purchase electricity supply from these alternative suppliers. For customers that choose to purchase electric generation from ComEd, ComEd is permitted to recover costs from customers.
Current wording
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. One of our larger regulatory required programs is our customer choice program where customers have the choice to purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries as ComEd remains the distribution service provider for all customers and charges a regulated rate for distribution service. For customers that choose to purchase electric generation from competitive suppliers, this is treated as a pass through for ComEd and therefore, financial results are not impacted if customers purchase electricity supply from these alternative suppliers. For customers that choose to purchase electric generation from ComEd, ComEd is permitted to recover costs from customers.
Previous wording
The decrease of $23 million and $64 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 in Purchased power and fuel expense is fully offset in Operating revenues as part of regulatory required programs.
Current wording
The decrease of $23 million and $230 million for the three and nine months ended September 30, 2026, compared to the same periods in 2025, in Purchased Power Expenseis offset in Operating revenues as part of regulatory required programs.
Previous wording
Other, net increased $10 million and $20 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to higher AFUDC equity.
Current wording
Other, net increased $10 million and $30 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025, primarily due to higher AFUDC equity.
Previous wording
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025. Net Income decreased by $17 million due to an increase in depreciation, interest expense, tax repairs, a portion of which is timing, and severance costs related to the cost management program, partially offset by higher revenues resulting from the absence of surcharge credits to customers, and favorable weather.
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net income decreased by $90 million due to higher storm costs, tax repairs, some of which is timing, contracting, depreciation, interest, and severance costs related to the cost management program. The higher storm costs reflect the absence of extraordinary storm cost deferrals recognized in the third quarter of 2025, partially offset by lower storm costs in 2026. These unfavorable impacts were partially offset by higher revenues, primarily due to the absence of surcharge credits to customers and favorable weather.
Previous wording
(a)Other revenues increased primarily due to the absence of electric surcharge credits to customers recognized in 2025.
Current wording
(a)Other revenues for the three and nine months ended September 30, 2026 increased primarily due to the absence of electric surcharge credits to customers recognized in 2025.
Previous wording
Weather. The demand for electricity and natural gas is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the electric and natural gas businesses, very cold weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity and natural gas. Conversely, mild weather reduces demand. During the three and six months ended June 30, 2026, compared to the same period in 2025, Operating revenues related to weather increased due to favorable weather conditions in PECO's service territory.
Current wording
Weather. The demand for electricity and natural gas is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the electric and natural gas businesses, very cold weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity and natural gas. Conversely, mild weather reduces demand. During the three and nine months ended September 30, 2026, compared to the same period in 2025, Operating revenues related to weather increased due to favorable weather conditions in PECO's service territory.
Previous wording
Heating and cooling degree-days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average heating and cooling degree-days for a 30-year period in PECO's service territory. The changes in heating and cooling degree-days in PECO’s service territory for the three and six months ended June 30, 2026, compared to the same period in 2025, and normal weather consisted of the following:
Current wording
Heating and cooling degree-days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average heating and cooling degree-days for a 30-year period in PECO's service territory. The changes in heating and cooling degree-days in PECO’s service territory for the three and nine months ended September 30, 2026, compared to the same period in 2025, and normal weather consisted of the following:
Previous wording
Volume. Electric volume, exclusive of the effects of weather, for the three and six months ended June 30, 2026 compared to the same period in 2025, decreased due to customer load. Natural gas volume for the three and six months ended June 30, 2026, compared to the same period in 2025, remained relatively consistent.
Current wording
Volume. Electric volume, exclusive of the effects of weather, for the three and nine months ended September 30, 2026 compared to the same period in 2025, decreased due to customer load. Natural gas volume for the three and nine months ended September 30, 2026, compared to the same period in 2025, remained relatively consistent.
Previous wording
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue for the three and six months ended June 30, 2026, compared to the same period in 2025, increased primarily due to increases in the underlying costs and capital investments.
Current wording
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered. Transmission revenue for the three and nine months ended September 30, 2026, compared to the same period in 2025, increased primarily due to increases in the underlying costs and capital investments.
Previous wording
Other Revenue primarily includes revenue related to late payment charges. Other revenue for the three and six months ended June 30, 2026, compared to the same period in 2025, increased primarily due to the absence of electric surcharge credits to customers recognized in 2025.
Current wording
Other Revenue primarily includes revenue related to late payment charges. Other revenue for the three and nine months ended September 30, 2026, compared to the same period in 2025, increased primarily due to the absence of electric surcharge credits to customers recognized in 2025.
Previous wording
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Income taxes. Customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as PECO remains the distribution service provider for all customers and charges a regulated rate for distribution service. For customers that choose to purchase electric generation or natural gas from competitive suppliers, this is treated as a pass through for PECO and therefore, financial results are not impacted if customers purchase electricity or natural gas supply from these alternative suppliers. For customers that choose to purchase electric generation or natural gas from PECO, PECO is permitted to recover costs from customers.
Current wording
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Income taxes. One of our larger regulatory required programs is our customer choice program where customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as PECO remains the distribution service provider for all customers and charges a regulated rate for distribution service. For customers that choose to purchase electric generation or natural gas from competitive suppliers, this is treated as a pass through for PECO and therefore, financial results are not impacted if customers purchase electricity or natural gas supply from these alternative suppliers. For customers that choose to purchase electric generation or natural gas from PECO, PECO is permitted to recover costs from customers.
Previous wording
Taxes other than income taxes increased by $8 million and $16 million for the three and six months ended June 30, 2026, respectively, compared to the same period in 2025, primarily due to higher Pennsylvania gross receipts tax.
Current wording
Taxes other than income taxes increased by $4 million and $21 million for the three and nine months ended September 30, 2026, respectively, compared to the same period in 2025, primarily due to higher Pennsylvania gross receipts tax.
Previous wording
Interest expense, netincreased by $12 million and $20 million for the three and six months ended June 30, 2026, respectively, compared to the same period in 2025, primarily due to an increase in interest rates and higher outstanding debt.
Current wording
Interest expense, netincreased by $11 million and $31 million for the three and nine months ended September 30, 2026, respectively, compared to the same period in 2025, primarily due to an increase in interest rates and higher outstanding debt.
Previous wording
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025. Net income increased $38 million primarily due to approved distribution rates, the absence of the derecognition of regulatory assets for multi-year plan reconciliations that occurred during the second quarter of 2025, and a decrease in various operating expenses, partially offset by an increase in credit loss expense and severance costs related to the cost management program.
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025. Net income increased $45 million primarily due to approved distribution and transmission rates, the absence of the derecognition of regulatory assets for multi-year plan reconciliations that occurred during the second quarter of 2025, and a decrease in contracting and various operating expenses, partially offset by project impairments, an increase in credit loss expense, and severance costs related to the cost management program.
Previous wording
Distribution Revenue increased for the three and six months ended June 30, 2026, compared to the same period in 2025, due to favorable impacts of the multi-year plans.
Current wording
Distribution Revenue increased for the three and nine months ended September 30, 2026, compared to the same period in 2025, due to favorable impacts of the multi-year plans.
Previous wording
Other Revenue includes revenue related to late payment charges, mutual assistance, off-system sales, and service application fees. Other Revenue increased for the three and six months ended June 30, 2026 as compared to the same period in 2025, primarily driven by increases in late payment charges.
Current wording
Other Revenue includes revenue related to late payment charges, mutual assistance, off-system sales, and service application fees. Other Revenue increased for the three and nine months ended September 30, 2026 as compared to the same period in 2025, primarily driven by increases in late payment charges.
Previous wording
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as BGE remains the distribution service provider for all customers and charges a regulated rate for distribution service. For customers that choose to purchase electric generation or natural gas from competitive suppliers, this is treated as a pass through for BGE and therefore, financial results are not impacted if customers purchase electricity or natural gas supply from these alternative suppliers. For customers that choose to purchase electric generation or natural gas from BGE, BGE is permitted to recover costs from customers.
Current wording
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. One of our larger regulatory required programs is our customer choice program where customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as BGE remains the distribution service provider for all customers and charges a regulated rate for distribution service. For customers that choose to purchase electric generation or natural gas from competitive suppliers, this is treated as a pass through for BGE and therefore, financial results are not impacted if customers purchase electricity or natural gas supply from these alternative suppliers. For customers that choose to purchase electric generation or natural gas from BGE, BGE is permitted to recover costs from customers.
Previous wording
(b)Reflects the absence of the derecognition of regulatory assets for multi-year plan reconciliations that occurred during the second quarter of 2025. Please refer to 2025 10-K Note 2 — Regulatory Matters for additional information.
Current wording
(c)Reflects the absence of the derecognition of regulatory assets for multi-year plan reconciliations that occurred during the second quarter of 2025. Please refer to 2025 10-K Note 2 — Regulatory Matters for additional information.
Previous wording
Taxes other than income taxes increased by $11 million and $19 million for the three and six months ended June 30, 2026, compared to the same period in 2025, primarily due to increased property taxes.
Current wording
Taxes other than income taxes increased by $7 million and $28 million for the three and nine months ended September 30, 2026, compared to the same period in 2025, primarily due to increased property taxes.
Previous wording
Other, netincreased by $11 million and $18 million for the three and six months ended June 30, 2026 compared to the same period in 2025, primarily due to higher AFUDC equity.
Current wording
Other, netincreased by $11 million and $29 million for the three and nine months ended September 30, 2026 compared to the same period in 2025, primarily due to increased interest income and higher AFUDC equity.
Previous wording
Effective income tax rates were 23.6% and 21.4% for the three months ended June 30, 2026 and 2025, and 21.4% and 21.3% for the six months ended June 30, 2026 and 2025. See Note 6 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Current wording
Effective income tax rates were 20.4% and 21.9% for the three months ended September 30, 2026 and 2025, and 21.2% and 21.3% for the nine months ended September 30, 2026 and 2025. See Note 7 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
Previous wording
PHI’s Results of Operations include the results of its three reportable segments, Pepco, DPL, and ACE. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services, and the costs are directly charged or allocated to the applicable subsidiaries. Additionally, the results of PHI’s corporate operations include interest costs from various financing activities. All material intercompany accounts and transactions have been eliminated in consolidation. The following table sets forth PHI's GAAP consolidated Net income, by Registrant, for the three and six months ended June 30, 2026 compared to the same periods in 2025. See the Results of Operations for Pepco, DPL, and ACE for additional information.
Current wording
PHI’s Results of Operations include the results of its three reportable segments, Pepco, DPL, and ACE. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services, and the costs are directly charged or allocated to the applicable subsidiaries. Additionally, the results of PHI’s corporate operations include interest costs from various financing activities. All material intercompany accounts and transactions have been eliminated in consolidation. The following table sets forth PHI's GAAP consolidated Net income, by Registrant, for the three and nine months ended September 30, 2026 compared to the same periods in 2025. See the Results of Operations for Pepco, DPL, and ACE for additional information.
Previous wording
Distribution Revenue increased for the three and six months ended June 30, 2026 compared to the same periods in 2025 primarily due to favorable impacts of the District of Columbia multi-year plans and customer growth in Maryland.
Current wording
Distribution Revenue increased for the three and nine months ended September 30, 2026 compared to the same periods in 2025 primarily due to favorable impacts of the District of Columbia multi-year plans and customer growth in Maryland.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(b)Reflects severance related to cost management program.
Current report — wording carried from elsewhere
weather conditions result in increased deliveries of electricity and natural gas. Conversely, mild weather reduces demand. During the three and nine months ended September 30, 2026 compared to the same period in 2025, Operating revenues related to weather increased due to favorable weather conditions in DPL's Delaware electric and natural gas service territories.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
•Absence of Customer Relief Fund contribution at Exelon Corporate;
Previous report — wording carried elsewhere
•Higher credit loss expense at BGE; and
Previous report — wording carried elsewhere
(c)Reflects the cost recovery associated with EmPOWER Maryland. Please refer to 2025 10-K Note 2 — Regulatory Matters for additional information.
Previous report — wording carried elsewhere
(a)Reflects severance related to cost management program.
Previous report — wording carried elsewhere
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.