Exelon Reports First Quarter 2018 Results

Earnings Release Highlights

• GAAP Net Income of $0.60 per share and Adjusted (non-GAAP) Operating Earnings of $0.96 per share for the first quarter of 2018.
• New Jersey zero emissions certificate (ZEC) legislation passed by both Houses of the legislature on April 12, 2018; bill awaiting Governor Phil Murphy's signature before becoming law.
• Pepco filed settlement agreements for distribution rate cases in Washington, D.C., and Maryland on April 17, 2018, and April 20, 2018, respectively.
• More than $500 million in ongoing annual savings will go to Exelon's electric and gas distribution customers as part of the Tax Cuts & Jobs Act (TCJA).
• Reiterating non-GAAP earnings per share (EPS) guidance of $2.90-$3.20 per share in 2018 and providing EPS guidance of $0.55-$0.65 per share for the second quarter of 2018.

Exelon Corporation EXC today reported its financial results for the first quarter 2018.

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"Exelon had a strong first-quarter, delivering significant financial, operational and policy results. New Jersey followed New York and Illinois to create a ZEC program that more properly values the clean energy attributes of nuclear power, preserves thousands of jobs, and provides customer and economic benefits that outweigh costs by a factor of 6 to 1," said Christopher M. Crane, Exelon's President and CEO. "Pepco also reached constructive distribution rate case settlements in Washington, D.C., and Maryland that will support continued investments to improve efficiency, reliability and customer service. The sharing of resources across our utilities platform resulted in faster and more efficient power restoration following the three nor'easters that struck the mid-Atlantic in March, as more than 1,200 ComEd employees and contractors were deployed to the region to aid recovery efforts. As part of our continuing commitment to protect the environment, we also launched a new goal to reduce greenhouse gas emissions from our internal operations by 15 percent by 2022."

"Exelon once again delivered strong financial performance with non-GAAP operating earnings of $0.96 per share, exceeding the mid-point of our guidance range and overcoming $0.06 per share of unplanned storm costs," said Jonathan W. Thayer, Exelon's Senior Executive Vice President and CFO. "Exelon remains on track to meet our full-year guidance range of $2.90-3.20 per share as well as our capital allocation priorities."

First Quarter 2018

Exelon's GAAP Net Income for the first quarter 2018 decreased to $0.60 per share from $1.06 per share in the first quarter of 2017; Adjusted (non-GAAP) Operating Earnings increased to $0.96 per share in the first quarter of 2018 from $0.64 per share in the first quarter of 2017. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 7.

Adjusted (non-GAAP) Operating Earnings in the first quarter of 2018 primarily reflect the favorable impacts of the New York Clean Energy and Illinois Zero Emission Standards, including the impact of zero emission credits generated in Illinois from June 1, 2017 through December 31, 2017, increased capacity prices, decreased nuclear outage days and tax savings related to the TCJA at Generation, favorable weather at PECO, DPL and ACE and higher utility earnings due to regulatory rate increases at BGE and PHI and higher electric distribution and transmission earnings at ComEd, partially offset by the conclusion of the Ginna Reliability Support Services Agreement and lower realized energy prices at Generation and increased storm costs at PECO and BGE.

Operating Company Results¹

ComEd

ComEd's first quarter 2018 GAAP Net Income increased to $165 million from $141 million in the first quarter of 2017. ComEd's Adjusted (non-GAAP) Operating Earnings increased to $165 million for the first quarter 2018 from $141 million in the first quarter 2017, primarily reflecting higher electric distribution and transmission earnings. Due to revenue decoupling, ComEd is not affected by actual weather or customer usage patterns.

PECO

PECO's first quarter 2018 GAAP Net Income decreased to $113 million from $127 million in the first quarter of 2017. PECO's Adjusted (non-GAAP) Operating Earnings for the first quarter 2018 decreased to $114 million from $129 million in the first quarter of 2017, primarily reflecting increased storm costs related to the March 2018 winter storms, partially offset by favorable weather.

Heating degree days were up 15.5 percent relative to the same period in 2017 and were 1.1 percent below normal. Total retail electric deliveries were up 3.8 percent compared with the first quarter of 2017. Natural gas deliveries (including both retail and transportation segments) in the first quarter of 2018 were up 10.6 percent compared with the same period in 2017.

___________

¹Exelon's five business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware; and Generation, which consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products and risk management services.

BGE

BGE's first quarter 2018 GAAP Net Income increased to $128 million from $125 million in the first quarter of 2017. BGE's Adjusted (non-GAAP) Operating Earnings for the first quarter 2018 increased to $129 million from $126 million in the first quarter of 2017, primarily reflecting transmission rate increases, partially offset by increased storm costs related to the March 2018 winter storms. Due to revenue decoupling, BGE is not affected by actual weather or customer usage patterns.

PHI

PHI's first quarter 2018 GAAP Net Income decreased to $65 million from $140 million in the first quarter of 2017. PHI's Adjusted (non-GAAP) Operating Earnings for the first quarter 2018 decreased to $65 million from $81 million in the first quarter of 2017, primarily reflecting increased uncollectible accounts expense and depreciation and amortization expense, partially offset by regulatory rate increases and favorable weather in the DPL and ACE service territories. Due to revenue decoupling, PHI's revenues related to Pepco and DPL Maryland are not affected by actual weather or customer usage patterns.

Generation

Generation's first quarter 2018 GAAP Net Income decreased to $136 million from $418 million in the first quarter of 2017. Generation's Adjusted (non-GAAP) Operating Earnings for the first quarter 2018 increased to $474 million from $167 million in the first quarter of 2017, primarily reflecting the impact of the New York Clean Energy and Illinois Zero Emission Standards, including the impact of zero emission credits generated in Illinois from June 1, 2017 through December 31, 2017, increased capacity prices, decreased nuclear outage days and tax savings related to the TCJA, partially offset by the conclusion of the Ginna Reliability Support Services Agreement and lower realized energy prices.

The proportion of expected generation hedged as of March 31, 2018 was 91.0 percent to 94.0 percent for 2018, 63.0 percent to 66.0 percent for 2019 and 33.0 percent to 36.0 percent for 2020.

First Quarter and Recent Highlights

• Tax Cuts and Jobs Act Tax Savings: The Utility Registrants have made filings with their respective State regulators to begin passing back to customers the ongoing annual tax savings resulting from the TCJA. The amounts being proposed to be passed back to customers reflect the annual benefit of lower income tax rates and the settlement of a portion of deferred income tax regulatory liabilities established upon enactment of the TCJA. The Utility Registrants have identified over $500 million in ongoing annual savings to be returned to customers related to TCJA from their distribution utility operations.
  
  
  
  ComEd and BGE have received orders approving the pass back of the ongoing annual tax savings of $201 million and $103 million, respectively, beginning February 1, 2018. DPL received an order from the MDPSC approving the pass back of $14 million of ongoing annual tax savings beginning April 20, 2018 and a one-time bill credit to customers of $2 million for TCJA tax savings from January 1, 2018 through March 31, 2018. As further discussed below, Pepco has entered into settlement agreements with parties in both Maryland and the District of Columbia providing for the pass back of the ongoing annual tax savings beginning June 1, 2018 and July 1, 2018, respectively, and one-time bill credits to customers for TCJA tax savings from January 1, 2018 through the effective date of the rate changes. PECO's, DPL Delaware's and ACE's filings are still pending and management cannot predict the amount or timing of the refunds their respective regulators will ultimately approve. For PECO, BGE, DPL Delaware and ACE, it is expected that the treatment of the TCJA tax savings through the effective date of any final customer rate adjustments will be addressed in future rate proceedings.
  
  
  
  In addition, ComEd, BGE, Pepco, DPL, and ACE each filed with FERC to revise their transmission formula rate mechanisms to facilitate passing back to customers ongoing annual TCJA tax savings and to permit recovery of transmission-related income tax regulatory assets. PECO is currently in settlement discussions regarding its transmission formula rate and expects to pass back TCJA benefits to customers through its annual formula rate update.
  
  
  
  PECO, BGE, Pepco, DPL and ACE recognized new regulatory liabilities in the first quarter 2018 reflecting the TCJA tax savings that are anticipated to be passed back to customers in the future.

• New Jersey Zero Emission Certificate Program: On April 12, 2018, a bill was passed by both Houses of the New Jersey legislature that would establish a ZEC program providing compensation for nuclear plants that demonstrate to the NJBPU that they meet certain requirements, including that they make a significant contribution to air quality in the state and that their revenues are insufficient to cover their costs and risks. The program provides transparency and includes robust customer protections. The New Jersey Governor has up to 45 days to sign the bill with the bill becoming effective immediately upon his signing. The NJBPU then has 180 days from the effective date to establish procedures for implementation of the ZEC program and 330 days from the effective date to determine which nuclear power plants are selected to receive ZECs under the program.
• Winter Storm-related Costs: During March 2018, a series of powerful nor'easter storms that brought a mix of heavy snow, ice and high sustained winds and gusts to the region that interrupted electric service delivery to customers in PECO's, BGE's, Pepco's, DPL's and ACE's service territories. Restoration efforts included significant costs associated with employee overtime, support from other utilities and incremental equipment, contracted tree trimming crews and supplies, which resulted in incremental operating and maintenance expense and capital expenditures in the first quarter of 2018 of $93 million and $93 million, respectively. In addition, PHI's utilities recognized regulatory assets of $22 million in the first quarter of 2018 for incremental storm costs that are probable of recovery through customer rates.
• Pepco Maryland Electric Distribution Base Rates Settlement: On April 20, 2018, Pepco entered into a settlement agreement with several parties to resolve all issues in the rate case and filed the settlement agreement with the MDPSC. The settlement agreement provides for a net decrease to annual electric distribution base rates of $15 million, which includes annual ongoing TCJA tax savings, and reflects a ROE of 9.5 percent. The parties to the settlement agreement have requested that Pepco's new rates be effective on June 1, 2018. In addition, the settlement agreement separately provides a one-time bill credit to customers of approximately $10 million representing the TCJA benefits for the period January 1, 2018 through the expected rate effective date of June 1, 2018. Pepco expects a decision in the matter in the second quarter of 2018.
• Pepco District of Columbia Electric Distribution Base Rates Settlement: On April 17, 2018, Pepco entered into a settlement agreement with several parties to resolve both the pending electric distribution base rate case and the TCJA proceeding and filed the settlement agreement with the DCPSC. The settlement agreement provides for a net decrease to annual electric distribution rates of $24 million, which includes annual ongoing TCJA tax savings, and reflects a ROE of 9.525 percent. The parties to the settlement agreement have requested that Pepco's new rates be effective on July 1, 2018. In addition, the settlement agreement separately provides a one-time bill credit to customers of approximately $19 million representing the TCJA benefits for the period January 1, 2018 through the expected rate effective date of July 1, 2018. Pepco expects a decision in the matter in the second quarter of 2018.
• PECO Pennsylvania Electric Distribution Rate Case: On March 29, 2018, PECO filed a request with the PAPUC seeking approval to increase its electric distribution base rates by $82 million, beginning January 1, 2019. This requested amount includes the effect of an approximately $71 million reduction as a result of the ongoing annual tax savings beginning January 1, 2019 associated with the TCJA. The requested ROE is 10.95 percent. In addition, PECO is seeking approval to pass back to electric distribution customers $68 million in 2018 TCJA tax savings, which would be an additional offset to the proposed increase to its electric distribution rates. PECO cannot predict what increase, if any, the PAPUC will approve.
• Mystic Generating Station Early Retirement: On March 29, 2018, based on ISO-NE capacity auction results for the 2021 - 2022 planning year in which Mystic Unit 9 did not clear, Generation announced it had formally notified grid operator ISO-NE of its plans to early retire its Mystic Generating Station assets on June 1, 2022 absent any interim and long-term solutions for reliability and regional fuel security. The ISO-NE recently announced that it would take a three-step approach to fuel security. First, ISO-NE will make a filing soon to obtain tariff waivers to allow it to retain Mystic 8 and 9 for fuel security for the 2022 - 2024 planning years. Second, ISO-NE will file tariff revisions to allow it to retain other resources for fuel security in the capacity market if necessary in the future. Third, ISO-NE will work with stakeholders to develop long-term market rule changes to address system resiliency considering significant reliability risks identified in ISO-NE's January 2018 fuel security report. Changes to market rules are necessary because critical units to the region, such as Mystic Units 8 and 9, cannot recover future operating costs including the cost of procuring fuel. As a result of these developments, Generation completed a comprehensive review of the estimated undiscounted future cash flows of the New England asset group during the first quarter of 2018 and no impairment charge was required. Further developments with Generation's intended use of the Mystic Generating Station assets or failure of ISO-NE to adopt interim and long-term solutions for reliability and fuel security could potentially result in future impairments of the New England asset group, which could be material.
• Nuclear Operations: Generation's nuclear fleet, including its owned output from the Salem Generating Station and 100 percent of the CENG units, produced 46,941 gigawatt-hours (GWhs) in the first quarter of 2018, compared with 43,504 GWhs in the first quarter of 2017. Excluding Salem, the Exelon-operated nuclear plants at ownership achieved a 96.5 percent capacity factor for the first quarter of 2018, compared with 94.0 percent for the first quarter of 2017. The number of planned refueling outage days in the first quarter of 2018 totaled 68, compared with 95 in the first quarter of 2017. There were 6 non-refueling outage days in the first quarter of 2018, compared with 8 days in the first quarter of 2017.
• Fossil and Renewables Operations: The Dispatch Match rate for Generation's gas and hydro fleet was 98.1 percent in the first quarter of 2018, compared with 99.1 percent in the first quarter of 2017. The lower performance in the quarter was primarily due to outages at gas units in Texas and Alabama. The first quarter of 2018 reported performance includes Wolf Hollow II and Colorado Bend II, the two new combined-cycle gas turbine units that went into full commercial operation in the second quarter of 2017.
• Financing Activities:
  • On February 20, 2018, ComEd issued $800 million aggregate principal amount of its First Mortgage Bonds, 4.000 percent Series 124, due March 1, 2048. ComEd used the proceeds from the Bonds to refinance maturing First Mortgage Bonds, to repay a portion of ComEd's outstanding commercial paper obligations and for general corporate purposes.
  • On February 23, 2018, PECO issued $325 million aggregate principal amount of its First and Refunding Mortgage Bonds, 3.900 percent Series due March 1, 2048. PECO used the proceeds from the Bonds to refinance a portion of PECO's First and Refunding Mortgage Bonds which were due March 1, 2018.

GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliation

Adjusted (non-GAAP) Operating Earnings for the first quarter of 2018 do not include the following items (after tax) that were included in reported GAAP Net Income:

		Exelon
		Earnings per
		Diluted
(in millions)		Share				Exelon				ComEd				PECO				BGE				PHI				Generation
2018 GAAP Net Income		$	0.60			$	585			$	165			$	113			$	128			$	65			$	136
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $69)		0.20				197				—				—				—				—				197
Unrealized Losses Related to Nuclear Decommissioning Trust (NDT) Fund Investments (net of taxes of $29)		0.07				66				—				—				—				—				66
Merger and Integration Costs (net of taxes of $1)		—				3				—				—				—				—				3
Cost Management Program (net of taxes of $1, $0, $0 and $1 respectively)		0.01				5				—				1				1				—				3
Plant Retirements and Divestitures (net of taxes of $32)		0.10				92				—				—				—				—				92
Noncontrolling Interests (net of taxes of $5)		(0.02		)		(23		)		—				—				—				—				(23		)
2018 Adjusted (non-GAAP) Operating Earnings		$	0.96			$	925			$	165			$	114			$	129			$	65			$	474

Adjusted (non-GAAP) Operating Earnings for the first quarter of 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:

		Exelon
		Earnings per
		Diluted
(in millions)		Share				Exelon				ComEd				PECO				BGE				PHI				Generation
2017 GAAP Net Income1		$	1.06			$	990			$	141			$	127			$	125			$	140			$	418
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $19)		0.03				30				—				—				—				—				30
Unrealized Gains Related to NDT Fund Investments (net of taxes of $67)		(0.10		)		(99		)		—				—				—				—				(99		)
Amortization of Commodity Contract Intangibles (net of taxes of $2)		—				3				—				—				—				—				3
Merger and Integrations Costs (net of taxes of $15, $0, $1, $2 and $16, respectively)		0.03				25				—				1				1				(3		)		26
Merger Commitments2 (net of taxes of $137, $55 and $18, respectively)		(0.15		)		(137		)		—				—				—				(56		)		(18		)
Reassessment of State Deferred Income Taxes (entire amount represents tax expense)		(0.02		)		(20		)		—				—				—				—				—
Cost Management Program (net of taxes of $3, $1 and $2, respectively)		—				4				—				1				—				—				3
Tax Settlements (net of taxes of $1)		(0.01		)		(5		)		—				—				—				—				(5		)
Bargain Purchase Gain (net of taxes of $0)		(0.24		)		(226		)		—				—				—				—				(226		)
Noncontrolling Interests (net of taxes of $7)		0.04				35				—				—				—				—				35
2017 Adjusted (non-GAAP) Operating Earnings		$	0.64			$	600			$	141			$	129			$	126			$	81			$	167

^{(1) Certain immaterial prior year amounts in the Registrants' Consolidated Statements of Operations and Comprehensive Income have been recasted to reflect new accounting standards issued by the FASB and adopted as of January 1, 2018.}

^{(2) Represents a decrease in reserves for uncertain tax positions related to the deductibility of certain merger commitments associated with the 2012 CEG and 2016 PHI acquisitions.}

Note:

Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT fund investments, the marginal statutory income tax rates for 2018 and 2017 ranged from 26.0 percent to 29.0 percent and 39.0 percent to 41.0 percent, respectively. Under IRS regulations, NDT fund investment returns are taxed at differing rates for investments if they are in qualified or non-qualified funds. The tax rates applied to unrealized gains and losses related to NDT fund investments were 40.3 percent and 52.6 percent for the three months ended March 31, 2018 and 2017, respectively.

Webcast Information

Exelon will discuss first quarter 2018 earnings in a one-hour conference call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time). The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.

About Exelon

Exelon Corporation EXC is a Fortune 100 energy company with the largest number of utility customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2017 revenue of $33.5 billion. Exelon's six utilities deliver electricity and natural gas to approximately 10 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 35,168 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation's cleanest and lowest-cost power generation fleets. The company's Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. Follow Exelon on Twitter @Exelon.

Non-GAAP Financial Measures

In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses and other specified items. This measure is intended to enhance an investor's overall understanding of period over period operating results and provide an indication of Exelon's baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies' presentation. The Company has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon's website: www.exeloncorp.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on May 2, 2018.

Cautionary Statements Regarding Forward-Looking Information

This press release contains certain 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 the forward-looking statements made by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy 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 the items discussed in (1) the Registrants' 2017 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 23, Commitments and Contingencies; (2) the Registrants' First Quarter 2018 Quarterly Report on Form 10-Q (to be filed on May 2, 2018) 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 17, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC 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 press release. 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 press release.

EXELON CORPORATION
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share data)
		Three Months Ended March 31, 2018										Three Months Ended March 31, 2017
						Non-GAAP										Non-GAAP
		GAAP (a)				Adjustments						GAAP (a) (b)				Adjustments
Operating revenues		$	9,693			$	97			(c)		$	8,747			$	(42	)		(c),(e)
Operating expenses
Purchased power and fuel		4,727				(183		)		(c),(h)		3,899				(93		)		(c)
Operating and maintenance		2,384				(36		)		(f),(h),(j)		2,438				(48		)		(f),(j)
Depreciation and amortization		1,091				(137		)		(h)		896				(2		)		(e)
Taxes other than income		446				—						436				—
Total operating expenses		8,648										7,669
Gain on sales of assets and businesses		56				(53		)		(h)		4				—
Bargain purchase gain		—				—						226				(226		)		(l)
Operating income		1,101										1,308
Other income and (deductions)
Interest expense, net		(371		)		—						(373		)		(4		)		(k)
Other, net		(28		)		111				(d)		257				(208		)		(d)
Total other income and (deductions)		(399		)								(116		)
Income before income taxes		702										1,192
Income taxes		59				148				(c),(d),(f),(h),(j)		211				88				(c),(d),(e),(f),(g),(i),(j),(k)
Equity in losses of unconsolidated affiliates		(7		)		—						(10		)		—
Net income		636										971
Net income (loss) attributable to noncontrolling interests		51				23				(m)		(19		)		(35		)		(m)
Net income attributable to common shareholders		$	585									$	990
Effective tax rate(p)		8.4		%								17.7		%
Earnings per average common share
Basic		$	0.61									$	1.07
Diluted		$	0.60									$	1.06
Average common shares outstanding
Basic		966										928
Diluted		968										930
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP:
Mark-to-market impact of economic hedging activities (c)						$	0.20									$	0.03
Unrealized gains related to NDT fund investments (d)						0.07										(0.10		)
Amortization of commodity contract intangibles (e)						—										—
Merger and integration costs (f)						—										0.03
Merger commitments (g)						—										(0.15		)
Plant retirements and divestitures (h)						0.10										—
Reassessment of state deferred income taxes (i)						—										(0.02		)
Cost management program (j)						0.01										—
Tax settlements (k)						—										(0.01		)
Bargain purchase gain (l)						—										(0.24		)
Noncontrolling interests (m)						(0.02		)								0.04
Total adjustments						$	0.36									$	(0.42	)

(a)		Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(b)		Certain immaterial prior year amounts in the Registrants' Consolidated Statements of Operations and Comprehensive Income have been recasted to reflect new accounting standards issued by the FASB and adopted as of January 1, 2018.
(c)		Adjustment to exclude the mark-to-market impact of Exelon's economic hedging activities, net of intercompany eliminations.
(d)		Adjustment to exclude the unrealized gains on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements.
(e)		Adjustment to exclude the non-cash amortization of intangible assets, net, primarily related to commodity contracts recorded at fair value related to the ConEdison Solutions acquisition.
(f)		Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses and integration activities. In 2017, reflects costs related to the PHI and FitzPatrick acquisitions, partially offset at PHI by the anticipated recovery of previously incurred PHI acquisition costs and in 2018, reflects costs related to the PHI acquisition.
(g)		Adjustment to exclude a decrease in reserves for uncertain tax positions related to the deductibility of certain merger commitments associated with the 2012 CEG and 2016 PHI acquisitions.
(h)		Adjustment to exclude accelerated depreciation and amortization expenses and increases to materials and supplies inventory reserves associated with Generation's 2018 decision to early retire the Oyster Creek nuclear facility, as well as the accelerated depreciation and amortization expense associated with Generation's 2017 decision to early retire the Three Mile Island nuclear facility, partially offset by a gain associated with Generation's sale of its electrical contracting business.
(i)		Adjustments to exclude the change in the District of Columbia statutory tax rate.
(j)		Adjustment to exclude severance and reorganization costs related to a cost management program.
(k)		Adjustment to exclude benefits related to the favorable settlement in 2017 of certain income tax positions related to PHI's unregulated business interests that were transferred to Generation.
(l)		Adjustment to exclude the excess of the fair value of assets and liabilities acquired over the purchase price for the FitzPatrick acquisition.
(m)		Adjustment to exclude from Generation's results the noncontrolling interests related to certain exclusion items, primarily related to the impact of unrealized gains and losses on NDT fund investments at CENG.
(n)		The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 17.1% and 35.0% for the three months ended March 31, 2018 and March 31, 2017, respectively.

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