Exelon (EXC) Q3 2026 earnings review

Maryland Cut Pepco's Rate Request and Disallowed Spending

Exelon highlighted "final orders issued in the Pepco Maryland base rate case and Maryland Lessons Learned" as a sign of regulatory progress. Pepco, its utility serving the Washington, D.C. suburbs, had asked Maryland regulators for $120 million in higher annual rates and a 10.50% return on equity, the profit rate regulators allow on shareholder capital.

• Pepco Maryland rate order: "approved an increase in Pepco's annual electric distribution base rates of $51 million, reflecting an ROE of 9.40%", or 42.5% of the requested dollar amount by our math
• PHI regulatory charge: $133 million after tax ($0.13 per share) for the "disallowance of certain capitalized costs"
• BGE project write-off: $27 million after tax ($0.03 per share) for "costs related to capital project impairments"

Those charges cut Exelon's reported net income by 16.7% from a year ago to $729 million, or $0.70 per share, and drove operating and maintenance costs up 3.9 percentage points of revenue to 21.4%. Management excluded the $160 million of combined write-offs from its $0.87 operating profit figure, but disallowed capital earns nothing in future rates.

What to watch: the Maryland commission's ruling on BGE's $156 million rate request, due in the first quarter of 2027. An allowed return near 9.40% or further cost disallowances would show that Maryland is permanently lowering utility returns.

Storm Costs and Missing Deferrals Cut PECO Profit

PECO, Exelon's electric and gas utility in southeastern Pennsylvania, does not have revenue decoupling, so its profit moves with weather, storms and the timing of rate cases. While Exelon's other three utility groups grew profit this quarter, PECO's operating profit, excluding one-offs, fell 33.2% from a year ago to $167 million.

The company blamed the drop on higher storm and contracting expenses, tax repair timing, and the "absence of extraordinary February and June storm cost deferrals recognized in 2025". Across Exelon, operating and maintenance costs reduced operating profit by $0.07 per share from a year ago, with PECO accounting for $53 million of the $69 million drag. Four quarters after withdrawing its last Pennsylvania rate request, management still gave no date for a new filing.

What to watch: a new Pennsylvania distribution rate case filing date from PECO. Every quarter without a filing extends the wait before PECO can recover its rising storm, depreciation and interest costs in customer bills.

Unpaid Customer Bills Keep Climbing Ahead of Winter

Rising power supply costs in the Mid-Atlantic grid have pushed customer bills higher, testing household budgets across Exelon's service territories. Chief executive Calvin Butler said the company's strategy "kept customer rates below the national average", but the balance sheet shows more customers falling behind on payments.

Exelon's reserve for unpaid customer bills rose to $507 million on September 30, up 16.6% from $435 million at the end of 2025 by our math, even as gross customer accounts receivable dipped slightly to $3,669 million. Purchased power and fuel costs passed through to customers rose 8.4% from a year ago in the quarter to $2,917 million, keeping pressure on monthly bills.

What to watch: the third-quarter provision for credit losses in Note 5 of the upcoming Form 10-Q filing. A quarterly bad-debt expense above $50 million would challenge management's plan for bad-debt recovery in the fourth quarter.

Risks this quarter didn't answer

Four standing regulatory, demand and financing concerns were not updated in the third-quarter earnings release.

• Transmission return adders and PJM cost allocation: the federal complaint to strip 0.50 percentage points from transmission returns at BGE, Pepco and DPL, New Jersey's adder repeal at ACE, and the PJM historical cost-allocation order await Note 2 of the Form 10-Q.
• State spending caps: Delaware's $70 million cap on DPL non-mandatory capital spending and Maryland's freeze on forecast-test-year rate filings remain in place; the 2027-2030 capital plan in Q4 will show their effect.
• Data-center power pipeline: the release gave no update on the 36-gigawatt large-load pipeline or the 4 gigawatts backed by signed security agreements; the call slides or Q4 update will carry the next reading.
• Share dilution: common stock issuance stood at $483 million for the first nine months, unchanged since early July, with roughly $850 million a year still planned through 2029.