ComEd 2013 Annual Report Download - page 108

ComEd’s counterpartycreditrisk is mitigatedbyitsabilityto recover realizedenergy coststhrough customer rates. Asof
December 31,2013,ComEd’s creditexposure to energy supplierswas immaterial.
PECO
Creditrisk for PECO is managedbycreditandcollection policies, which are consistent withstate regulatoryrequirements. PECO is
currentlyobligatedto provideservice to all retail electric customerswithinitsfranchisedterritory. PECO records a provision for
uncollectible accountsto providefor the potential loss fromnonpayment by thesecustomers. See Note 1 oftheCombinedNotesto
ConsolidatedFinancial Statementsfor the allowancefor uncollectible accountspolicy. InaccordancewithPAPUC regulations, after
November 30 andbefore April1,an electric distribution utilityor natural gas distribution utilityshall not terminate serviceto
customerswithhouseholdincomesat or below250%oftheFederal povertylevel. PECO’s provision for uncollectible accountswill
continue to beaffectedbychangesinpricesaswell aschangesinPAPUC regulations. PECO did not haveanycustomers
representingover 10%ofitsrevenuesasofDecember 31,2013.
PECO’s supplier master agreementsthat govern the terms ofits DSP Programcontracts, which define a supplier’s performance
assurancerequirements, allowasupplier to meet itscreditrequirementswithacertainamount ofunsecuredcredit.Theamount of
unsecuredcreditis determinedbasedon thesupplier’s lowestcredit ratingfromthemajor credit ratingagenciesandthesupplier’s
tangible net worth. Thecreditposition is basedon theinitial market price, which is theforwardpriceofenergy on thedaya
transaction is executed, comparedto thecurrent forwardpricecurvefor energy. Totheextent that theforwardpricecurvefor energy
exceeds theinitial market price,thesupplier is requiredto postcollateral to theextent thecreditexposure is greater than the
supplier’s unsecuredcreditlimit.AsofDecember 31,2013, PECO hadno net creditexposure withsuppliers.
PECO doesnot obtaincash collateral fromsuppliersunder itsnatural gassupplyandasset management agreements. Asof
December 31,2013, PECO hadcreditexposure of$9million under itsnatural gassupplyandasset management agreementswith
investment gradesuppliers.
BGE
Creditrisk for BGE is managedbycreditandcollection policies, which are consistent withstate regulatoryrequirements. BGE is
currentlyobligatedto provideservice to all electric customerswithinitsfranchisedterritory. BGE records a provision for uncollectible
accountsto providefor the potential loss fromnonpayment by thesecustomers. BGE will monitor nonpayment fromcustomersand
will makeanynecessaryadjustmentsto the provision for uncollectible accounts. See Note 1 oftheCombinedNotesto Consolidated
Financial Statementsfor uncollectible accountspolicy. MDPSC regulationsprohibitBGE fromterminatingservicetoresidential
customersdue to nonpayment fromNovember 1 through March 31 if theforecastedtemperature is 32 degreesor belowfor the
subsequent 72hour period. BGE is also prohibitedbytheMarylandPublic UtilitiesArticle and MDPSC regulationsfromterminating
servicetoresidential customersdue to nonpayment if theforecastedtemperature is 95 degreesor abovefor thesubsequent 72hour
period. BGE did not haveanycustomersrepresentingover 10%ofitsrevenuesasofDecember 31,2013.
BGE’s full requirement wholesale electric power agreementsthat govern the terms ofitselectric supplyprocurement contracts,
which define a supplier’s performanceassurancerequirements, allowasupplier,or itsguarantor,to meet itscreditrequirementswith
acertainamount ofunsecuredcredit.Theamount ofunsecuredcreditis determinedbasedon thesupplier’s lowestcredit ratingfrom
themajor credit ratingagenciesandthesupplier’s tangible net worth, subjecttoanunsecuredcreditcap.Thecreditposition is
basedon theinitial market price, which is theforwardpriceofenergy on thedaya transaction is executed, comparedto thecurrent
forwardpricecurvefor energy. Totheextent that theforwardpricecurvefor energy exceeds theinitial market price,thesupplier is
requiredto postcollateral to theextent thecreditexposure is greater than thesupplier’s unsecuredcreditlimit.Theseller’s credit
exposure is calculatedeach business day. AsofDecember 31,2013, BGE hadno net creditexposure withsuppliers.
BGE’s regulatedgasbusiness is exposedto market-pricerisk. This market-pricerisk is mitigated by BGE’s recoveryofitscoststo
procure natural gasthrough agascostadjustment clause approvedbytheMDPSC. BGE doesmakeoff-systemsalesafter BGE has
satisfieditscustomers’ demands, which are not coveredbythegascostadjustment clause.At December 31,2013, BGE hadcredit
exposure of$14million relatedto off-systemsales which is mitigatedbyparental guarantees, lettersofcredit,or righttooffset
clauseswithinother contractswiththosethird-partysuppliers.
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