Item 8.01. Other Events.
On December 13, 2016 (and as amended on March 13, 2017), Baltimore Gas and Electric Company (BGE), a subsidiary of Exelon Corporation (Exelon), filed with the Federal Energy Regulatory Commission (FERC) to begin recovering certain existing and future transmission-related income tax regulatory assets through its transmission formula rate. On November 16, 2017, FERC issued an order rejecting BGE’s proposed revisions to its transmission formula rate to recover these transmission-related income tax regulatory assets, which were $42 million and $38 million as of September 30, 2017 and December 31, 2016, respectively. BGE is still evaluating how to respond to FERC's order.
Commonwealth Edison Company (ComEd), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL), and Atlantic City Electric Company (ACE) have similar transmission-related income tax regulatory assets also requiring FERC approval separate from their transmission formula rate, which are shown in the table below. ComEd, Pepco, DPL, and ACE have not yet filed with FERC seeking recovery of their existing and future transmission-related income tax regulatory assets. Similar regulatory assets at PECO Energy Company are not subject to the same FERC transmission rate recovery formula and, thus, are not impacted by the November 16, 2017 FERC order.
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(in millions)
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As of September 30, 2017
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As of December 31, 2016
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Exelon
(a)
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$
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193
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$
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130
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ComEd
(a)
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73
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22
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BGE
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42
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38
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PHI
(b)
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78
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70
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Pepco
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34
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31
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DPL
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23
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20
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ACE
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21
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19
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__________
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(a)
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Exelon's and ComEd's regulatory assets as of September 30, 2017 include the impacts of the Illinois statutory income tax rate change enacted on July 6, 2017.
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(b)
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PHI reflects the consolidated regulatory assets of Pepco, DPL, and ACE.
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ComEd, BGE, PHI, Pepco, DPL, and ACE are assessing the potential impacts of BGE’s order on the ultimate recovery of these existing regulatory assets. To the extent all or a portion of these regulatory assets are no longer probable of future recovery, Exelon, ComEd, BGE, PHI, Pepco, DPL and ACE would record an impairment charge to after-tax earnings, which could be up to approximately $115 million, $45 million, $25 million, $45 million, $20 million, $15 million and $10 million, respectively.
* * * * *
This Current Report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statements made by Exelon Corporation, Commonwealth Edison Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein as well as those discussed in (1) Exelon's 2016 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 24; (2) Exelon's Third Quarter 2017 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18 and (3) other factors discussed in filings with the Securities and Exchange Commission by the registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Current Report. None of the registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Current Report.