ComEd 2013 Annual Report Download - page 138

EIMA providesfor additional energy efficiency inIllinois. StartingintheJune 2013—May2014periodandoccurringannually
thereafter,aspart oftheIPA procurement plan,ComEd is to includecost-effectiveexpansion ofcurrent energy efficiency programs,
andadditional newcost-effective programand/or third-partyenergy efficiency programs that are identifiedthrough arequestfor
proposal process. All cost-effective energy efficiency programs are includedintheIPA procurement plan for consideration of
implementation. While these programs are monitoredseparatelyfromtheEnergy Efficiency PortfolioStandard (EEPS), funds for
boththeEEPS portfolioandIPA energy efficiency programs are collectedunder thesamerider.
SinceJune 1,2008, utilitieshavebeen requiredto procure cost-effective renewable energy resourcesinamountsthat equal or
exceed2%ofthe total electricitythat each electric utilitysuppliesto itseligible retailcustomers. ComEd is alsorequiredto acquire
amountsofrenewable energy resourcesthat will cumulativelyincreasethis percentagetoatleast10%byJune 1,2015, withan
ultimate target ofat least25% by June 1,2025. All goalsare subject to rate impactcriteriaset forthintheIllinois Settlement
Legislation.AsofDecember 31,2013,ComEd hadpurchasedsufficient renewable energy resourcesor equivalents, such asRECs,
to complywiththeIllinois Settlement Legislation.ComEd currentlyretiresall RECs upon transfer andacceptance.ComEd is
permittedto recover procurement costsofRECs fromretailcustomerswithout mark-up through rates. See Note 22—Commitments
andContingenciesfor information regardingComEd’s future commitmentsfor the procurement ofRECs.
Pennsylvania Regulatory Matters
2010 Pennsylvania Electric and Natural Gas Distribution Rate Cases OnDecember 16, 2010,thePAPUC approvedthe
settlement of PECO’s electric andnatural gas distribution rate cases, which were filedinMarch 2010,providingincreasesin annual
servicerevenue of$225million and$20 million,respectively. The electric settlement providesfor recoveryof PJM transmission
servicecostson a full andcurrent basis through arider.The approvedelectric andnatural gas distribution ratesbecameeffectiveon
January1,2011.
Inaddition,thesettlementsincludedastipulation regardinghowtaxbenefitsrelatedto the application ofanynewIRSguidanceon
repairsdeduction methodology are to behandledfroma rate-makingperspective.Thesettlementsrequire that theexpectedcash
benefitfromthe application ofanynewguidancetotaxyearsprior to 2011 berefundedto customersover a seven-year period. On
August19, 2011,theIRS issuedRevenue Procedure 2011-43 providingasafeharbor methodoftaxaccountingfor electric
transmission and distribution property. PECO adoptedthesafeharbor andelectedamethodchangefor the 2010 taxyear.The
expectedtotal refundto customersfor thetaxcash benefitfromthe application ofthesafeharbor to costsincurredprior to 2010 is
$171million.OnOctober 4, 2011, PECO filedasupplement to itselectric distribution tariff to execute therefundto customersofthe
taxcash benefit relatedto theIRCSection 481(a)“catch-up”adjustment claimedon the 2010 incometaxreturn, which is subjectto
adjustment basedon the outcomeofIRSexaminations. Creditshavebeen reflectedincustomer billssinceJanuary1,2012.
InSeptember 2012, PECO filedan application withtheIRSto changeitsmethodofaccountingfor gas distribution repairsfor the
2011 taxyear.Theexpectedtotal refundto customersfor thetaxcash benefitfromthe application ofthenewmethodto costs
incurredprior to 2011 is $54 million. This amount is subjecttoadjustment basedon the outcomeofIRSexaminations. Creditshave
been reflectedincustomer billssinceJanuary1,2013. PECO currentlyanticipatesthat theIRSwill issue guidancein early2014
providingasafeharbor methodofaccountingfor gastransmission and distribution property.
The prospectivetaxbenefitsclaimedasaresult ofthenewmethodology will bereflectedintaxexpenseintheyear inwhich theyare
claimedon thetaxreturn andwill bereflectedinthedetermination ofrevenue requirementsinthenext electric andnatural gas
distribution rate cases. See Note 14for additional information.
The 2010 electric andnatural gas distribution rate casesettlements did not specify the rate ofreturn upon which thesettlement rates
are based, but rather providedfor an increasein annual revenue. PECO hasnot fileda transmission rate casesince rateshave
been unbundled.
Pennsylvania Procurement Proceedings PECO’s firstPAPUC approved DSP Program, under which PECO wasprovidingdefault
electric service,hada29-monthtermthat endedMay31,2013.OnOctober 12,2012,thePAPUC issueditsOpinion andOrder
approving PECO’s second DSP Program, which wasfiledwiththePAPUC inJanuary2012.The program, which hasa24-month
termfromJune 1,2013 through May31,2015, complieswithelectric generation procurement guidelinesset forthinAct129. Under
theDSP Programs, PECO is permittedto recover itselectric procurement costsfromretaildefault servicecustomerswithout
mark-up through theGSA.TheGSA providesfor therecoveryofenergy, capacity, ancillarycostsandadministrativecostsandis
subjecttoadjustmentsat leastquarterlyfor anyover or under collections. Inaddition, PECO’s second DSP Programprovidesfor the
recoveryofAEPS compliancecoststhrough theGSA rather than a separate AEPS rider.
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