ComEd 2013 Annual Report Download - page 140

withtheoriginal vendor, which waspart ofthefinal agreement discussedbelow, under which PECO transferredtheoriginal
uninstalledmetersto thevendor andwill receive$12 million in return,of which $7 million hasbeen receivedasofDecember 31,
2013.OnJanuary23,2014, PECO enteredafinal agreement withthevendor pursuant to which PECO will bereimbursedfor
amountsincurredfor theoriginal metersandrelatedinstallation andremoval costs, viacash paymentsandrebateson future
purchasesoflicenses, goods andservicesprimarilythrough 2017. PECO previouslyhadintendedto seekregulatoryrate recoveryin
afuture filingwiththePAPUC ofamountsnot recoveredfromthevendor.As PECO believedsuch costswere probable ofrate
recoverybasedon applicable caselawandpast precedent on reasonablyandprudentlyincurredcosts, aregulatoryasset was
establishedat thetimeoftheremovals. AsofDecember 31,2013 and2012,$5million and$17million,respectively, wasrecorded
on Exelon’s and PECO’s ConsolidatedBalanceSheets. Pursuant to theJanuary23,2014, vendor agreement, PECO will reclassify
theregulatoryasset balanceasareceivable,withno gainorloss impactson future resultsofoperations.
Energy Efficiency Programs PECO’s PAPUC-approvedPhaseI EE&C Plan hadafour-year termthat began on June 1,2009and
concludedon May31,2013.ThePhaseIplan set forthhow PECO wouldmeet therequiredreduction targetsestablishedby
Act129’s EE&C provisions, which includeda3%reduction in electric consumption inPECO’s service territoryanda4.5% reduction
inPECO’s annual systempeakdemandinthe 100 hoursof highestdemandbyMay31,2013.
The peakdemandperiodendedon September 30,2012 and PECO communicateditscompliancewiththereduction targetsina
preliminaryfilingwiththePAPUC on March 1,2013.Thefinal compliance report for all PhaseItargets, wasfiledwiththePAPUC on
November 15, 2013.
OnMarch 29, 2013, PECO filedaPetition withthePAPUC to changetherecoveryperiodofcertainDirectLoadControl (DLC)
Programcostsnecessaryto implement thePhaseIPlan.ThePetition sought approval to allow PECO to recover $12 million in
equipment,installation andinformation technology costsfor itsResidential DLC programwiththeamountscollectedfor thePhaseI
Plan.AsthePhaseIPlan wasimplementedat a costless than originallybudgeted, PECO proposedto recover theseexpensesfrom
itsPhaseIEnergy Efficiency ProgramChargeover-collection consistent withPAPUC guidancetorecover all PhaseIcoststhrough
PhaseIfunding. ThePAPUC approved PECO’s Petition on May9,2013.Aregulatoryliabilitywasestablishedfor theDLC program
coststhat will beamortizedasacredittotheincomestatement to offset the relateddepreciation expenseduringthesame period.
ThePAPUC issueditsPhaseII EE&C implementation order on August2,2012,that providesenergy consumption reduction
requirementsfor thesecondphaseofAct129’s EE&C programs, which went into effectonJune 1,2013.Theorder tentatively
established PECO’s three-year cumulativeconsumption reduction target at 1,125,852MWh, which wasreaffirmedbythePAPUC on
December 5, 2012.
Pursuant to thePhaseII implementation order, PECO fileditsthree-year EE&C PhaseII plan withthePAPUC on November 1,
2012.The plan setsforthhow PECO will reduce electric consumption by at least1,125,852MWh initsservice territoryfor the period
June 1,2013 through May31,2016, adjustedfor weather andextraordinaryloads. Theimplementation order permits PECO to apply
anyexcess savings achievedduringPhaseIagainstitsPhaseII consumption reduction targets, withno reduction to itsPhaseII
budget.InaccordancewiththeAct129PhaseII implementation order,at least10%and 4.5% ofthe total consumption reductions
mustbethrough programs directedtoward PECO’s public andlowincomesectors, respectively. If PECO failsto achievethe
requiredreductionsinconsumption,itwill besubjecttocivil penaltiesofup to $20 million, which wouldnot berecoverable from
ratepayers. Act129mandatesthat the total costofthe plan maynot exceed2%ofthe electric company’s total annual revenue asof
December 31,2006.
OnMarch 15, 2013, PECO filedaPetition for Approval to amendits EE&C PhaseII Plan to continue its DLC demandreduction
programfor mass market customersfromJune 1,2013 to May31,2014. PECO proposedto fundtheestimated$10 million costsof
the one-year programbymodifyingincentivelevelsfor other PhaseII programs. OnMay9,2013,thePAPUC approved PECO’s
amended EE&C PhaseII plan.Thecostsof DLC programwill berecoveredthrough PECO’s Energy Efficiency ProgramCharge
alongwithall other PhaseII Plan costs.
OnNovember 14, 2013,thePAPUC issuedaTentativeOrder on Act129demandreduction programs which seeks commentson a
proposeddemandresponse programmethodology for future Act129demandreduction programs aswell asdemandresponse
potential andwholesale pricessuppression studies. Thecomment process is scheduledto becompletedinthefirstquarter of2014.
Anydecision reachedwouldaffectPECO’s EE&C Plan subsequent to itsPhaseII Plan.
Alternative Energy Portfolio Standards InNovember 2004, PennsylvaniaadoptedtheAEPS Act.TheAEPS Actmandatedthat
beginningin 2011,followingtheexpiration of PECO’s rate cap transition period, certain percentagesofelectric energy soldto
134