ComEd 2013 Annual Report Download - page 125

New Site Development Costs
Newsite development costsrepresent thecostsincurredintheassessment anddesignofnewpower generatingfacilities. Such
costsare capitalizedwhen management considersprojectcompletion to be probable,primarilybasedon management’s
determination that the projectis economicallyandoperationallyfeasible,management and/or theExelon boardofdirectorshas
approvedthe projectandhascommittedto a plan to develop it,andExelon andGeneration havereceivedtherequiredregulatory
approvalsor management believesthereceipt ofrequiredregulatoryapprovalsisprobable.Capitalizeddevelopment costsare
chargedto Operatingandmaintenanceexpensewhen projectcompletion is no longer probable.At December 31,2013 and2012,
there were no material capitalizeddevelopment costsfor projectsnot yet under construction includedinProperty, plant and
equipment,net on Exelon’s andGeneration’s ConsolidatedBalanceSheets. Approximately$10 million,$4million and$2million of
costswere expensedbyExelon andGeneration for theyearsendedDecember 31,2013,2012,and2011,respectively. Thesecosts
primarilyrelatedto thepossible development ofnewrenewable energy projects.
Capitalized Software Costs
Costsincurredduringthe application development stageofsoftware projectsthat are internallydevelopedor purchasedfor
operational use are capitalized. Such capitalizedamountsare amortizedratablyover theexpectedlivesofthe projectswhen they
become operational,generallynot to exceed fiveyears. Certainother capitalizedsoftware costsare beingamortizedover longer
livesbasedon theexpectedlife or pursuant to prescribedregulatoryrequirements. Thefollowingtable presentsnet unamortized
capitalizedsoftware costsandamortization ofcapitalizedsoftware costsbyyear:
Net unamortized software costs
December 31,2013 ........................................................................................ $479
December 31,2012 ........................................................................................ 499
Amortization of capitalized software costs (a)
2013 .................................................................................................... $198
2012 .................................................................................................... 208
2011 .................................................................................................... 122
(a)Exelon activityfor theyear endedDecember 31,2012 includestheresultsofConstellation and BGE for March 12,2012—December 31,2012.
Depreciation, Depletion and Amortization
Except for theamortization ofnuclear fuel,depreciation is generallyrecordedover theestimatedservicelivesofproperty, plant and
equipment on a straight-line basis usingthecomposite method. ComEd’s and BGE’s depreciation includesa provision for estimated
removal costsasauthorizedbytherespectiveregulators. Theestimatedservicelivesfor ComEd, PECO and BGE are primarily
basedon theaverageservicelivesfromthemostrecent depreciation study for each respectivecompany. Theestimatedservice
livesofthenuclear-fuel generatingfacilitiesare basedon theremaininguseful livesofthestations, which assumea20-year license
renewal extension ofthe operatinglicenses(to theextent that such renewal hasnot yet been granted) for all ofGeneration’s
operatingnuclear generatingstationsexcept for Oyster Creek. Theestimatedservicelivesofthehydroelectric generatingfacilities
are basedon theremaininguseful livesofthestations, which assumealicense renewal extension ofthe operatinglicenses. The
estimatedservicelivesofthefossilfuel andother renewable generatingfacilitiesare basedon theremaininguseful livesofthe
stations, which Generation periodicallyevaluatesbasedon feasibilityassessmentstakinginto account economic andcapital
requirement considerations.
Depletion ofoilandgasexploration andproduction activitiesisrecordedusingtheunits-of-production methodover theremaininglife
oftheestimatedprovedreservesat thefieldlevel for acquisition costsandover theremaininglifeofproveddevelopedreservesat
thefieldlevel for development costs. Theestimatesfor gasreservesare basedon internal calculations.
Amortization ofregulatoryassetsisrecordedover therecoveryperiodspecifiedinthe relatedlegislation or regulatoryagreement.
When therecoveryor refundperiodisless than one year,amortization is recordedto theline iteminwhich thedeferredcostwould
haveoriginallybeen recordedintheRegistrants’ ConsolidatedStatementsofOperationsandComprehensiveIncome.With
exception ofincometax-relatedregulatoryassets, when therecoveryperiodismore than one year,theamortization is recordedto
Depreciation andamortization intheRegistrants’ ConsolidatedStatementsofOperationsandComprehensiveIncome.For income
taxrelatedregulatoryassets, amortization is generallyrecordedto IncometaxexpenseintheRegistrants’ ConsolidatedStatements
119