PECO's Q3 Net Income Jumps 24% on Lower Operating Costs

TL;DR

**PECO's Q3 profit surge is a green light for investors, showing solid operational control and a reliable dividend stream.**

AI Summary

PECO Energy Company, a subsidiary of Exelon Corporation, reported a net income of $217 million for the three months ended September 30, 2025, an increase from $175 million in the same period of 2024. For the nine months ended September 30, 2025, net income rose to $650 million, up from $548 million in 2024. Operating revenues for the three months ended September 30, 2025, were $1,740 million, a slight decrease from $1,742 million in 2024, primarily due to a $10 million decrease in electric operating revenues. However, natural gas operating revenues increased by $8 million to $148 million. Total operating expenses for the three months decreased to $1,424 million from $1,490 million, driven by a $50 million reduction in purchased power costs and a $16 million decrease in operating and maintenance expenses. The company's total assets increased to $29,919 million as of September 30, 2025, from $28,799 million at December 31, 2024, reflecting continued capital investments. Long-term debt increased to $10,480 million from $9,860 million, indicating reliance on debt financing for operations and growth. The strategic outlook remains focused on regulated utility operations within Pennsylvania.

Why It Matters

PECO's strong net income growth of 24% for Q3 2025, driven by cost efficiencies, signals robust financial health for investors in the regulated utility sector. This performance, particularly the reduction in purchased power and O&M expenses, suggests effective management in a competitive energy market. For customers, stable or decreasing operating costs could translate to more predictable rates, while employees benefit from a financially sound company. The broader market sees a resilient utility player, reinforcing confidence in essential infrastructure investments and potentially influencing other regional utilities.

Risk Assessment

Risk Level: low — PECO Energy Company operates as a regulated utility, which inherently provides stable revenue streams and reduces market volatility. The filing shows consistent profitability with net income increasing from $175 million to $217 million for the three months ended September 30, 2025. Furthermore, the company's total assets grew to $29,919 million, indicating a strong asset base supporting its operations.

Analyst Insight

Investors should consider PECO Energy Company a stable, income-generating investment due to its regulated utility status and consistent profitability. The increase in net income and effective cost management suggest a well-run operation, making it suitable for long-term portfolios seeking steady returns.

Financial Highlights

debt To Equity

N/A

revenue

$6,705M

operating Margin

22.4%

total Assets

N/A

total Debt

N/A

net Income

$875M

eps

$0.86

gross Margin

N/A

cash Position

N/A

revenue Growth

+9.0%

Revenue Breakdown

Key Numbers

• $217M — PECO Net Income (Q3 2025) (Increased from $175M in Q3 2024, a 24% rise.)
• $650M — PECO Net Income (YTD 2025) (Increased from $548M in YTD 2024, an 18.6% rise.)
• $1,740M — PECO Total Operating Revenues (Q3 2025) (Slight decrease from $1,742M in Q3 2024.)
• $1,424M — PECO Total Operating Expenses (Q3 2025) (Decreased from $1,490M in Q3 2024, a 4.4% reduction.)
• $50M — Reduction in Purchased Power Costs (Q3 2025) (Key driver for decreased operating expenses.)
• $16M — Reduction in Operating & Maintenance Expenses (Q3 2025) (Contributed to lower operating expenses.)
• $29,919M — PECO Total Assets (Sept 30, 2025) (Increased from $28,799M at Dec 31, 2024.)
• $10,480M — PECO Long-Term Debt (Sept 30, 2025) (Increased from $9,860M at Dec 31, 2024.)
• 170,478,507 — PECO Common Stock Shares Outstanding (As of September 30, 2025.)
• 24% — Q3 Net Income Growth (Percentage increase in PECO's net income from Q3 2024 to Q3 2025.)

Key Players & Entities

• PECO Energy Company (company) — Registrant and subsidiary of Exelon Corporation
• Exelon Corporation (company) — Parent company of PECO Energy Company
• $217 million (dollar_amount) — PECO's net income for three months ended September 30, 2025
• $175 million (dollar_amount) — PECO's net income for three months ended September 30, 2024
• $650 million (dollar_amount) — PECO's net income for nine months ended September 30, 2025
• $548 million (dollar_amount) — PECO's net income for nine months ended September 30, 2024
• $1,740 million (dollar_amount) — PECO's total operating revenues for three months ended September 30, 2025
• $1,742 million (dollar_amount) — PECO's total operating revenues for three months ended September 30, 2024
• $10 million (dollar_amount) — Decrease in electric operating revenues for PECO
• $148 million (dollar_amount) — PECO's natural gas operating revenues for three months ended September 30, 2025

FAQ

Risk Factors

• Changes in Regulatory Environment [high — regulatory]: PECO operates in a regulated utility environment. Changes in regulations, rate structures, or environmental policies by state and federal agencies can significantly impact profitability and operational strategies. For instance, the company's ability to recover costs and earn a fair rate of return is subject to regulatory approval.
• Infrastructure Reliability and Maintenance [medium — operational]: Maintaining the reliability and integrity of its extensive electric and gas distribution networks is critical. Extreme weather events, aging infrastructure, or operational failures can lead to service disruptions, significant repair costs, and reputational damage. The company invests heavily in upgrades and maintenance to mitigate these risks.
• Interest Rate Fluctuations [medium — financial]: As of September 30, 2025, PECO's long-term debt stood at $10,480 million. Rising interest rates can increase the cost of servicing this debt, impacting net income. The company's ability to manage its debt obligations is crucial for financial stability.
• Energy Price Volatility [medium — market]: While PECO's revenues are largely regulated, fluctuations in the cost of purchased power and natural gas can affect operating expenses and margins if not fully recoverable through rates. The company's hedging strategies and regulatory mechanisms aim to mitigate this risk.
• Environmental Regulations and Litigation [medium — legal]: Increasingly stringent environmental regulations related to emissions, waste disposal, and climate change can lead to compliance costs and potential legal challenges. PECO must invest in cleaner technologies and adhere to evolving environmental standards.

Industry Context

PECO Energy Company operates within the highly regulated electric and natural gas utility sector in Pennsylvania. The industry is characterized by significant capital investment in infrastructure, a focus on reliability, and increasing pressure to transition towards cleaner energy sources. Competition is limited due to the nature of regulated monopolies, but regulatory changes and evolving customer demands for sustainability present key challenges and opportunities.

Regulatory Implications

PECO's operations are heavily influenced by the Pennsylvania Public Utility Commission (PUC). Decisions regarding rate cases, infrastructure investments, and environmental compliance directly impact financial performance. The company must navigate evolving regulations concerning grid modernization, renewable energy integration, and carbon emissions, which could necessitate substantial capital expenditures and affect cost recovery mechanisms.

What Investors Should Do

1. Monitor regulatory filings and rate case outcomes.
2. Analyze capital expenditure plans and their impact on debt levels.
3. Evaluate operational efficiency improvements.
4. Assess the company's strategy for energy transition and sustainability.

Key Dates

• 2025-09-30: Quarterly Financial Reporting (Q3 2025) — Reported net income of $217 million and total operating revenues of $1,740 million for the three months ended September 30, 2025, showing improved profitability despite a slight revenue dip.
• 2025-09-30: Year-to-Date Financial Reporting (YTD 2025) — Reported net income of $650 million for the nine months ended September 30, 2025, indicating strong year-over-year earnings growth.
• 2025-12-31: Previous Fiscal Year End — Provided a baseline for comparison, with total assets at $28,799 million and long-term debt at $9,860 million.

Glossary

Operating revenues

The total income generated from the company's primary business activities, such as selling electricity and natural gas. (Key indicator of the company's sales volume and market reach.)

Operating expenses

Costs incurred in the normal course of business operations, including purchased power, fuel, and maintenance. (Impacts profitability; reductions in these costs, like purchased power, directly boost net income.)

Purchased power

The cost incurred by the utility to buy electricity from wholesale generators to meet customer demand. (A significant operating expense; reductions here are a major driver of improved net income.)

Net income attributable to common shareholders

The portion of the company's profit available to its common stockholders after all expenses, taxes, and preferred dividends have been paid. (The bottom line measure of profitability for equity investors.)

Diluted earnings per share (EPS)

A measure of a company's profit allocated to each outstanding share of common stock, assuming all convertible securities and stock options were exercised. (Indicates profitability on a per-share basis, a key metric for investors.)

Regulatory Matters

Refers to the rules, regulations, and oversight applied by government bodies to utility companies, affecting pricing, operations, and investments. (Crucial for understanding PECO's operating environment and potential risks or opportunities.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, PECO Energy Company has demonstrated robust net income growth, with Q3 net income rising 24% to $217 million and year-to-date net income increasing 18.6% to $650 million. This improved profitability was achieved despite a slight decrease in total operating revenues, driven by significant reductions in operating expenses, notably a $50 million decrease in purchased power costs and a $16 million reduction in operating and maintenance expenses. Total assets have grown to $29,919 million, reflecting ongoing capital investments, while long-term debt has also increased to $10,480 million, indicating a continued reliance on debt financing.

Key Financial Figures

• $12.50 — mmonwealth Edison Company Common Stock, $12.50 par value 127,021,419 PECO Energy Comp
• $0.01 — ac Electric Power Company Common Stock, $0.01 par value 100 Delmarva Power & Light C
• $2.25 — rva Power & Light Company Common Stock, $2.25 par value 1,000 Atlantic City Electric
• $3.00 — tic City Electric Company Common Stock, $3.00 par value 8,546,017 TABLE OF CONTENTS

Filing Documents

• exc-20250930.htm (10-Q) — 9182KB
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FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 9 Exelon Corporation Consolidated Statements of Operations and Comprehensive Income 10 Consolidated Statements of Cash Flows 11 Consolidated Balance Sheets 12 Consolidated Statements of Changes in Shareholders' Equity 14 Commonwealth Edison Company Consolidated Statements of Operations and Comprehensive Income 16 Consolidated Statements of Cash Flows 17 Consolidated Balance Sheets 18 Consolidated Statements of Changes in Shareholders' Equity 20 PECO Energy Company Consolidated Statements of Operations and Comprehensive Income 21 Consolidated Statements of Cash Flows 22 Consolidated Balance Sheets 23 Consolidated Statements of Changes in Shareholder's Equity 25 Baltimore Gas and Electric Company 26 27 Balance Sheets 28 30 Pepco Holdings LLC Consolidated Statements of Operations and Comprehensive Income 31 Consolidated Statements of Cash Flows 32 Consolidated Balance Sheets 33 Consolidated Statements of Changes in Member's Equity 35 1 Page No. Potomac Electric Power Company 36 37 Balance Sheets 38 40 Delmarva Power & Light Company 41 42 Balance Sheets 43 45 Atlantic City Electric Company Consolidated Statements of Operations and Comprehensive Income 46 Consolidated Statements of Cash Flows 47 Consolidated Balance Sheets 48 Consolidated Statements of Changes in Shareholder's Equity 50 Combined Notes to Consolidated Financial Statements 1. Significant Accounting Policies 51 2. Regulatory Matters 52 3. Revenue from Contracts with Customers 60 4. Segment Information 6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 109 Exelon Corporation 109 Executive Overview 109 Financial Results of Operations 109 Significant 2025 Transactions and Developments 111 Other Key Business Drivers and Management Strategies 114 Critical Accounting Policies and Estimates 115 Results of Operations By Registrant 116 Commonwealth Edison Company 116 PECO Energy Company 119 Baltimore Gas and Electric Company 123 Pepco Holdings LLC 126 Potomac Electric Power Company 127 Delmarva Power & Light Company 130 Atlantic City Electric Company 135 Liquidity and Capital Resources 138 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 147 ITEM 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 148 PART II. OTHER INFORMATION 148 ITEM 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 148 ITEM 1A.

RISK FACTORS

RISK FACTORS 148 ITEM 5. OTHER INFORMATION 148 ITEM 6. EXHIBITS 149

SIGNATURES

SIGNATURES 152 Exelon Corporation 152 Commonwealth Edison Company 153 PECO Energy Company 154 Baltimore Gas and Electric Company 155 Pepco Holdings LLC 156 Potomac Electric Power Company 157 Delmarva Power & Light Company 158 Atlantic City Electric Company 159 3 Table of Contents GLOSSARY OF TERMS AND ABBREVIATIONS Exelon Corporation and Related Entities Exelon Exelon Corporation ComEd Commonwealth Edison Company PECO PECO Energy Company BGE Baltimore Gas and Electric Company Pepco Holdings or PHI Pepco Holdings LLC Pepco Potomac Electric Power Company DPL Delmarva Power & Light Company ACE Atlantic City Electric Company Registrants Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE, collectively Utility Registrants ComEd, PECO, BGE, Pepco, DPL, and ACE, collectively BSC Exelon Business Services Company, LLC Exelon Corporate Exelon in its corporate capacity as a holding company PCI Potomac Capital Investment Corporation and its subsidiaries PECO Trust III PECO Energy Capital Trust III PECO Trust IV PECO Energy Capital Trust IV PHI Corporate PHI in its corporate capacity as a holding company PHISCO PHI Service Company Former Related Entities Constellation Constellation Energy Corporation Generation Constellation Energy Generation, LLC (formerly Exelon Generation Company, LLC, a subsidiary of Exelon prior to separation on February 1, 2022) 4 Table of Contents GLOSSARY OF TERMS AND ABBREVIATIONS Other Terms and Abbreviations Note - of the 2024 Form 10-K Reference to specific Combined Note to Consolidated Financial Statements within Exelon's 2024 Annual Report on Form 10-K ABO Accumulated Benefit Obligation AFUDC Allowance for Funds Used During Construction AMI Advanced Metering Infrastructure AOCI Accumulated Other Comprehensive Income (Loss) ARO Asset Retirement Obligation ATM At the market BGS Basic Generation Service BSA Bill Stabilization Adjustment CEJA Climate and Equitable Jobs Act; Illinoi

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS 9 Table of Contents Exelon Corporation and Subsidiary Companies Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2025 2024 2025 2024 Operating revenues Electric operating revenues $ 6,690 $ 6,012 $ 17,872 $ 16,379 Natural gas operating revenues 235 196 1,595 1,207 Revenues from alternative revenue programs ( 220 ) ( 54 ) ( 621 ) ( 29 ) Total operating revenues 6,705 6,154 18,846 17,557 Operating expenses Purchased power 2,645 2,349 6,640 6,483 Purchased fuel 47 34 471 301 Operating and maintenance 1,172 1,275 3,840 3,756 Depreciation and amortization 912 908 2,717 2,681 Taxes other than income taxes 429 395 1,216 1,127 Total operating expenses 5,205 4,961 14,884 14,348 Gain on sale of assets — 3 1 12 Operating income 1,500 1,196 3,963 3,221 Other income and (deductions) Interest expense, net ( 531 ) ( 490 ) ( 1,560 ) ( 1,428 ) Interest expense to affiliates, net ( 7 ) ( 6 ) ( 18 ) ( 18 ) Other, net 68 57 185 196 Total other income and (deductions) ( 470 ) ( 439 ) ( 1,393 ) ( 1,250 ) Income before income taxes 1,030 757 2,570 1,971 Income taxes 155 50 396 158 Net income attributable to common shareholders $ 875 $ 707 $ 2,174 $ 1,813 Comprehensive income, net of income taxes Net income $ 875 $ 707 $ 2,174 $ 1,813 Other comprehensive income (loss), net of income taxes Pension and non-pension postretirement benefit plans: Actuarial losses reclassified to periodic benefit cost 5 5 16 15 Pension and non-pension postretirement benefit plans valuation adjustments — — 5 ( 26 ) Unrealized (loss) gain on cash flow hedges ( 2 ) ( 29 ) ( 16 ) 1 Other comprehensive income (loss) 3 ( 24 ) 5 ( 10 ) Comprehensive income attributable to common shareholders $ 878 $ 683 $ 2,179 $ 1,803 Average shares of common stock outstanding: Basic 1,011 1,003 1,010 1,002 Assumed exercise and

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