Exelon Reports Fourth Quarter and Full Year 2017 Results and Initiates 2018 Financial Outlook

• Exelon reported GAAP Net Income of $1.94 per share and $3.97 per share
  for the fourth quarter and full year 2017, respectively, and Adjusted
  (non-GAAP) Operating Earnings of $0.55 per share and $2.60 per share
  for the fourth quarter and full year 2017, respectively.
• Exelon introduces a 2018 Adjusted (non-GAAP) Operating Earnings
  guidance range of $2.90 – $3.20 per share, reflecting growth in
  Utilities, full year recognition of both Illinois and New York ZEC
  revenue and the impact of tax reform.
• Exelon's Board of Directors increased the annual dividend growth rate
  to 5 percent from 2.5 percent, effective in the first quarter of 2018.
• Exelon Utilities project capital expenditures of $21 billion over the
  next 4 years to improve service and benefit customers, supporting over
  7 percent annual rate base growth.
• Exelon Generation projects free cash flow before growth capex of $7.6
  billion over the next 4 years, supporting Exelon's priorities of
  Utility reinvestment and debt reduction.
• Quad Cities Units 1 & 2 and Clinton Unit 1 were winning bidders in
  Illinois ZEC procurement.

CHICAGO–(BUSINESS WIRE)–#earnings–Exelon Corporation (NYSE: EXC) today reported its financial results for
the fourth quarter and full year 2017.

"Exelon had a strong 2017, with our utilities turning in first-quartile
and in several cases best-ever performance in reliability and customer
service, and our nuclear generation fleet producing the most power on
record, all thanks to the great work of our people, who also set company
records for volunteerism and charitable giving,” said Christopher M.
Crane, Exelon’s president and CEO. “We will build on this momentum in
2018 with our new dividend growth rate of 5 percent annually over the
next three years, tax reform that will benefit utility customers and
reduce tax expenses at Generation, and movement on needed power price
formation changes in PJM and broader resiliency reviews at FERC.”

“In 2017, Exelon delivered solid financial performance with $2.60 of
Adjusted (non-GAAP) Operating Earnings, which is within our range,” said
Jonathan W. Thayer, Exelon’s Senior Executive Vice President and CFO.
“We are introducing 2018 operating earnings guidance of $2.90 – $3.20
per share which incorporates the benefits of U.S. tax reform, strong
utility growth, a full-year of ZEC programs in New York and Illinois,
and recognition of Illinois ZEC revenue from 2017.”

Fourth Quarter 2017

Exelon's GAAP Net Income for the fourth quarter 2017 increased to $1.94
per share from $0.22 per share in the fourth quarter of 2016; Adjusted
(non-GAAP) Operating Earnings increased to $0.55 per share in the fourth
quarter of 2017 from $0.44 per share in the fourth quarter of 2016. For
the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating
Earnings, refer to the tables beginning on page 9.

Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2017
reflect higher utility earnings due to regulatory rate increases and
weather, partially offset by a 2017 impairment of certain
transmission-related income tax regulatory assets; and, at Generation,
New York ZEC revenue and higher capacity prices, partially offset by
lower realized energy prices.

Full Year 2017

For the full year 2017, Exelon's GAAP Net Income increased to $3.97 per
share from $1.22 per share in 2016. Exelon's Adjusted (non-GAAP)
Operating Earnings for 2017 decreased to $2.60 per share from $2.68 per
share in 2016.

Adjusted (non-GAAP) Operating Earnings for the full year 2017 reflect
higher utility earnings due to regulatory rate increases, partially
offset by weather and a 2017 impairment of certain transmission-related
income tax regulatory assets; and, at Generation, lower realized energy
prices, the impacts of lower load volumes delivered due to mild weather
in the third quarter 2017, the conclusion of the Ginna RSSA and the
impact of declining natural gas prices on Generation's natural gas
portfolio, partially offset by New York ZEC revenue and higher capacity
prices.

Operating Company Results1

ComEd2

ComEd's fourth quarter 2017 GAAP Net Income was $120 million compared
with $80 million in the fourth quarter of 2016. ComEd’s Adjusted
(non-GAAP) Operating Earnings for the fourth quarter 2017 were $123
million compared with $81 million in the fourth quarter of 2016,
primarily reflecting higher electric distribution and transmission
formula rate revenues.

PECO

PECO’s fourth quarter 2017 GAAP Net Income was $107 million compared
with $92 million in the fourth quarter of 2016. PECO’s fourth quarter
2017 Adjusted (non-GAAP) Operating Earnings of $95 million remained
relatively consistent with fourth quarter 2016 Adjusted (non-GAAP)
Operating Earnings of $94 million.

Heating degree days were up 6.1 percent relative to the same period in
2016 and were 7.2 percent below normal. Total retail electric deliveries
were up 3.4 percent compared with the fourth quarter of 2016. Natural
gas deliveries (including both retail and transportation segments) in
the fourth quarter of 2017 were up 9.0 percent compared with the same
period in 2016.

BGE2

BGE’s fourth quarter 2017 GAAP Net Income was $76 million compared with
$103 million in the fourth quarter of 2016. BGE’s Adjusted (non-GAAP)
Operating Earnings for the fourth quarter 2017 were $82 million compared
with $105 million in the fourth quarter of 2016, primarily due to a
favorable 2016 settlement of a Baltimore City conduit fee dispute and a
2017 impairment of certain transmission-related income tax regulatory
assets.

PHI2

PHI’s fourth quarter 2017 GAAP Net Income was $4 million compared with
$30 million in the fourth quarter of 2016. PHI’s Adjusted (non-GAAP)
Operating Earnings for the fourth quarter 2017 were $48 million compared
with $42 million in the fourth quarter of 2016, primarily due to
regulatory rate increases, partially offset by a 2017 impairment of
certain transmission-related income tax regulatory assets.

Generation

Generation's fourth quarter 2017 GAAP Net Income was $2,215 million
compared with a GAAP Net Loss of $41 million in the fourth quarter of
2016. Generation’s Adjusted (non-GAAP) Operating Earnings for the fourth
quarter 2017 were $252 million compared with $162 million in the fourth
quarter of 2016, primarily reflecting New York ZEC revenue and higher
capacity prices, partially offset by lower realized energy prices.

The proportion of expected generation hedged as of Dec. 31, 2017, was
85.0 percent to 88.0 percent for 2018, 55.0 percent to 58.0 percent for
2019 and 26.0 percent to 29.0 percent for 2020.

Initiates Annual Guidance for 2018

Exelon introduced a guidance range for 2018 Adjusted (non-GAAP)
Operating Earnings of $2.90 to $3.20 per share. Adjusted (non-GAAP)
Operating Earnings guidance is based on the assumption of normal
weather, which is determined based on historical average heating and
cooling degree days for a 30-year period in the respective utilities'
service territories, except at PHI, where a 20-year period is used. The
outlook for 2018 Adjusted (non-GAAP) Operating Earnings for Exelon and
its subsidiaries excludes the following items:

• Mark-to-market adjustments from economic hedging activities;
• Unrealized gains and losses from NDT fund investments to the extent
  not offset by contractual accounting as described in the notes to the
  consolidated financial statements;
• Non-cash amortization of intangible assets, net related to commodity
  contracts recorded at the date of the acquisition of ConEdison
  Solutions in 2016 and FitzPatrick in 2017;
• Certain costs incurred related to the PHI and FitzPatrick acquisitions;
• Certain costs incurred related to plant retirements;
• Certain costs incurred to achieve cost management program savings;
• Other unusual items;
• Generation's noncontrolling interest related to CENG exclusion items;
  and
• One-time impacts of adopting new accounting standards.

Recent Developments

• Dividend Policy Update: On Jan. 30, 2018, the Board of
  Directors of Exelon announced an updated dividend policy targeting 5
  percent annual dividend growth for the period covering 2018 through
  2020. Since the last dividend policy of 2.5 percent annual growth was
  implemented in 2016, Exelon’s business position has continued to
  strengthen. The company has generated more earnings from regulated
  utilities following the PHI acquisition, recognized greater stability
  for its generation fleet with the Illinois and New York ZEC programs,
  and continued to focus on cost management and prudent balance sheet
  oversight. As a result of the strengthened outlook on earnings, Exelon
  is sharing the financial success with its shareholders through this
  updated dividend policy.
• Utility Capex and Rate Base Update: Exelon Utilities plan to
  invest nearly $21 billion of capital to ensure reliable, more
  resilient and more efficient transmission and distribution of
  electricity and gas for our customers. The increased capital
  investments and impacts of tax reform are expected to drive annual
  rate base growth of 7.4 percent through 2021, exceeding the 6.5
  percent growth expectations for 2017-2020 projected a year ago.
• Generation and Free Cash Flow Outlook: Cumulatively from
  2018 through 2021, Generation projects $7.6 billion of free cash flow
  before growth capex, which is $0.8 billion higher than the prior
  4-year outlook from 2017 through 2020. This financial outlook accounts
  for the latest power price forwards, updated gross margins at
  Constellation, continued efforts to reduce O&M cost and capital
  expenditures, the planned closure of Three Mile Island and Oyster
  Creek, and the impact of tax reform.
• Exelon Nuclear Plants Selected in Illinois ZEC Procurement Event: On
  Jan. 25, 2018, the ICC announced that Clinton Unit 1 and Quad Cities
  Units 1 & 2 were winning bidders through the Illinois Power Agency's
  ZEC procurement event, which entitles them to compensation for the
  sale of ZECs. Generation executed the ZEC procurement contracts with
  Illinois utilities, including ComEd, effective January 26, 2018, and
  will begin recognizing revenue. In addition to recognizing ZEC revenue
  generated in the first quarter of 2018, Generation will also recognize
  ZEC revenue retroactive to June 1, 2017, which will contribute
  approximately $0.11 to Adjusted (non-GAAP) Operating Earnings. The
  $0.11 contribution to Adjusted (non-GAAP) Operating Earnings is higher
  than the $0.09 originally expected in 2017 due to the lower tax rate
  in 2018 at Generation as a result of the Tax Cuts and Jobs Act (TCJA).
• Early Retirement of Oyster Creek Nuclear Facility: On Feb. 2,
  2018, Generation announced that it will permanently cease generation
  operations at Oyster Creek Generating Station (Oyster Creek) at the
  end of its current operating cycle in October 2018. In 2010,
  Generation announced that Oyster Creek would retire by the end of 2019
  as part of an agreement with the State of New Jersey to avoid
  significant costs associated with the construction of cooling towers
  to meet the State’s then new environmental regulations. Since then,
  like other nuclear sites, Oyster Creek has continued to face rising
  operating costs amid a historically low wholesale power price
  environment. The decision to retire Oyster Creek in 2018 at the end of
  its current operating cycle involved consideration of several factors,
  including economics and operating efficiencies, and avoids a refueling
  outage scheduled for the fall of 2018 that would have required
  advanced purchasing of fuel fabrication and materials beginning in
  late February 2018. Because of the decision to retire Oyster Creek in
  2018, Generation will recognize certain one-time charges in the first
  quarter of 2018 ranging from an estimated $25 million to $35 million
  (pre-tax) related to a materials and supplies inventory reserve
  adjustment, employee-related costs, and construction work-in-progress
  impairment, among other items. The aforementioned one-time charges
  will be excluded from GAAP Net Income to arrive at Adjusted (non-GAAP)
  Operating Earnings in the first quarter 2018.
• DOE Notice of Proposed Rulemaking: On Aug. 23, 2017, the United
  States Department of Energy (DOE) released its report on the
  reliability of the electric grid. One aspect of the wide-ranging
  report is the DOE’s recognition that the electricity markets do not
  currently value the resiliency provided by baseload generation, such
  as nuclear plants. On Sept. 28, 2017, the DOE issued a Notice of
  Proposed Rulemaking (NOPR) that would entitle certain eligible
  resilient generating units (i.e., those located in organized markets,
  with a 90-day supply of fuel on site, not already subject to state
  cost of service regulation and satisfying certain other requirements)
  to recover fully allocated costs and earn a fair return on equity on
  their investment. On Jan. 8, 2018, the FERC issued an order
  terminating the rulemaking docket that was initiated to address the
  proposed rule in the DOE NOPR, concluding the proposed rule did not
  sufficiently demonstrate there is a resiliency issue and that it
  proposed a remedy that did not appear to be just, reasonable and
  nondiscriminatory as required under the Federal Power Act. At the same
  time, the FERC initiated a new proceeding to consider resiliency
  challenges to the bulk power system and evaluate whether additional
  FERC action to address resiliency would be appropriate. Exelon has
  been and will continue to be an active participant in these
  proceedings, but cannot predict the final outcome or its potential
  impact, if any, on Exelon or Generation.

Fourth Quarter Highlights

• Corporate Tax Reform: On Dec. 22, 2017, President Trump signed
  into law the TCJA. The Registrants remeasured their existing deferred
  income tax balances as of Dec. 31, 2017, to reflect the decrease in
  the corporate income tax rate from 35 percent to 21 percent, which
  resulted in a material decrease to their net deferred income tax
  liability balances. At Generation, this reduction in net deferred
  income tax liabilities resulted in a one-time credit to income tax
  expense of approximately $1.9 billion. The Utility Registrants offset
  virtually all similar reductions, totaling $7.3 billion, with net
  regulatory liabilities (rather than through earnings), given that
  changes in income taxes are generally passed through customer rates.
  The amount and timing of potential refunds of the established net
  regulatory liabilities will be determined by the Utility Registrants’
  respective rate regulators, subject to certain IRS "normalization"
  rules.
  Pursuant to TCJA, beginning in 2018, Generation is
  expected to have higher operating cash flows over the next five years
  reflecting the reduction in the corporate federal income tax rate and
  full expensing of capital investments. The TCJA is generally expected
  to result in lower operating cash flows for the Utility Registrants as
  a result of the elimination of bonus depreciation and lower customer
  rates. Increased operating cash flows for the Utility Registrants from
  lower corporate federal income tax rates is expected to be more than
  offset over time by lower customer rates resulting from lower income
  tax expense and the settlement of deferred income tax net regulatory
  liabilities established pursuant to TCJA, partially offset by the
  impacts of higher rate base. The Utility Registrants expect to fund
  any required incremental operating cash outflows using third party
  debt financings and equity funding from Exelon in combinations
  generally consistent with existing capitalization ratio structures. To
  fund any additional equity contributions to the Utility Registrants,
  Exelon would have available to it its typical sources, including, but
  not limited to, the increased operating cash flows at Generation
  referenced above, which over time are expected to exceed the
  incremental equity needs at the Utility Registrants.
  The
  Utility Registrants continue to work with their state regulatory
  commissions to determine the amount and timing of the passing back of
  TCJA income tax savings benefits to customers; with filings either
  made, or expected to be made, at Pepco, DPL and ACE, and approved
  filings at ComEd and BGE. The amounts being passed back or proposed to
  be passed back to customers reflect the benefit of lower income tax
  expense beginning January 1, 2018 (Feb. 1, 2018 for DPL Delaware), and
  the settlement of a portion of deferred income tax regulatory
  liabilities established upon enactment of the TCJA. To date, neither
  the PAPUC nor FERC has yet issued guidance on how and when to reflect
  the impacts of the TCJA in customer rates.

• EGTP Bankruptcy: On Nov. 7, 2017, EGTP and all of its
  wholly-owned subsidiaries filed voluntary petitions for relief under
  Chapter 11 of Title 11 of the United States Code in the United States
  Bankruptcy Court for the District of Delaware. As a result, Exelon and
  Generation deconsolidated EGTP’s net liabilities, which included the
  previously impaired assets and related debt, from their consolidated
  financial statements, resulting in a $213 million pre-tax gain.
  Concurrently with the Chapter 11 filings, Generation entered into an
  asset purchase agreement to acquire one of EGTP’s generating plants,
  the Handley Generating Station, for approximately $60 million, subject
  to a potential adjustment for fuel oil and assumption of certain
  liabilities. The acquisition was approved by the Bankruptcy Court in
  January 2018 and the transaction is expected to be completed in the
  first half of 2018.
• Proposed Remedy for West Lake Landfill: On Feb. 1, 2018, the
  Environmental Protection Agency (EPA) announced a proposed remediation
  plan for the West Lake Landfill Superfund Site in Bridgeton, Missouri,
  for which Generation is one of the potentially responsible parties
  (PRPs). The proposed remediation plan includes a partial excavation of
  the site and an enhanced landfill cover and will be open for public
  comment through March 22, 2018, with the expectation that a Record of
  Decision will be issued during the third quarter of 2018. Thereafter,
  the EPA will seek to enter into a Consent Decree with the PRPs to
  effectuate the remedy, which Generation currently expects will occur
  in late 2018 or early 2019. The estimated total cost to fully execute
  the EPA’s proposed remedy is approximately $340 million, including
  cost escalation on an undiscounted basis, which will be allocated
  among the final group of PRPs. Generation increased its previous
  liability to reflect management’s best estimate of Generation’s
  allocable share of the cost of the proposed remedy among the PRPs,
  which could materially change in the future. The aforementioned 2017
  charge has been excluded from GAAP Net Income to arrive at Adjusted
  (non-GAAP) Operating Earnings.
• ComEd Electric Distribution Rate Case: On Dec. 6, 2017, the ICC
  issued its final order approving ComEd’s 2017 annual distribution
  formula rate update. The final order resulted in an increase to the
  revenue requirement of $96 million, reflecting an increase of $78
  million for the initial revenue requirement for 2017 and an increase
  of $18 million related to the annual reconciliation for 2016. The
  increase was set using an allowed return on rate base of 6.47 percent
  for the initial revenue requirement and 6.45 percent for the annual
  reconciliation (inclusive of an allowed ROE of 8.40 percent for 2017
  less a reliability performance metric penalty of 6 basis points for
  the 2016 reconciliation). The rates took effect in January 2018.
• Pepco District of Columbia Electric Distribution Rate Case: On
  Dec. 19, 2017, Pepco filed an application with the DCPSC to increase
  its annual electric distribution base rates by $66 million, reflecting
  a requested ROE of 10.1 percent. By mid-February, Pepco will update
  its current distribution rate case to reflect the TCJA impacts. Pepco
  expects a decision in the matter in the fourth quarter of 2018, but
  cannot predict how much of the requested increase the DCPSC will
  approve.
• Pepco Maryland Electric Distribution Rate Case: On Jan. 2,
  2018, Pepco filed an application with the MDPSC to increase its annual
  electric distribution base rates by $41 million, reflecting a
  requested ROE of 10.1 percent. On Feb. 5, 2018, Pepco filed with the
  MDPSC an update to its current distribution rate case to reflect
  approximately $31 million in TCJA tax savings, thereby reducing the
  requested annual base rate increase to $11 million. Pepco expects a
  decision in the matter in the third quarter of 2018, but cannot
  predict how much of the requested increase the MDPSC will approve.
• DPL Maryland Electric Distribution Rate Case: On July 14, 2017,
  DPL filed an application with the MDPSC to increase its annual
  electric distribution base rates by $27 million, which was updated to
  $19 million on Nov. 16, 2017, reflecting a requested ROE of 10.1
  percent. On Dec. 18, 2017, DPL, the MDPSC Staff and Maryland’s Office
  of People’s Counsel filed a settlement agreement with the MDPSC that
  would provide DPL a rate increase of $13 million, and a ROE of 9.5
  percent solely for purposes of calculating AFUDC and regulatory asset
  carrying costs. By mid-February, DPL is planning to file with the
  MDPSC seeking approval to pass back to customers beginning in 2018
  approximately $13 million in annual tax savings resulting from the
  enactment of the TCJA through a reduction in electric distribution
  rates. DPL expects a decision in the matter in the first quarter of
  2018, but cannot predict whether the MDPSC will approve the settlement
  agreement as filed or how much of the requested increase will be
  approved.
• FERC Transmission-Related Regulatory Asset Order: On Nov. 16,
  2017, FERC issued an order rejecting BGE’s proposed revisions to its
  transmission formula rate to recover certain transmission-related
  income tax regulatory assets. ComEd, Pepco, DPL and ACE have similar
  transmission-related income tax regulatory assets also requiring FERC
  approval separate from their transmission formula rate mechanisms.
  Pursuant to the FERC order, management of each company concluded that
  the portion of the total transmission-related income tax regulatory
  assets that would have been previously amortized and recovered through
  rates had the transmission formula rate provided for such recovery was
  no longer probable of recovery; and recorded impairment charges to
  Income tax expense of $35 million, $3 million, $5 million, $27
  million, $14 million, $6 million and $7 million at Exelon, ComEd, BGE,
  PHI, Pepco, DPL and ACE, respectively.

Contacts

Exelon Corporation
Dan Eggers
Investor Relations
312-394-2345
or
Paul
Adams
Corporate Communications
410-470-4167

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