ComEd 2013 Annual Report Download - page 145

OnOctober 11,2012,thePJM Transmission OwnersfiledwithFERCacost allocation for newtransmission facilitiesaskingthat the
newcost allocation methodology applyto all transmission approvedbythePJM Boardon or after February1,2013.The proposed
methodology is ahybrid methodology that wouldsocialize50%ofthecostsofnewfacilitiesat 500kV andaboveanddouble-circuit
345kV lines, andallocate theremaining50%to directbeneficiaries. For all other facilities, thecostswouldbe allocatedto thedirect
beneficiaries. OnMarch 22,2013,FERC issuedan order acceptingthecost allocation withminor exceptionsandrequiringa
compliancefilingon thosefew issueswithin 120 days oftheorder.ThecompliancefilingwasmadeonJuly22,2013.
ComEd, PECO and BGE are committedto theconstruction oftransmission facilitiesunder their operatingagreementswith PJM to
maintainsystemreliability. ComEd, PECO and BGE will workwith PJM to continue to evaluate thescope andtimingofanyrequired
construction projects. ComEd, PECO and BGE’s estimatedcommitmentsare asfollows:
Total 2014 2015 2016 2017 2018
ComEd .................................................................. $486 $134$173$177 $ 2$—
PECO ................................................................... 133 32 2940248
BGE ..................................................................... 400 428395 87 93
PJM Minimum Offer Price Rule PJM’s capacitymarket rulesincludeaMinimum Offer Price Rule (MOPR)that is intendedto
precludesellersfromartificiallysuppressingthecompetitivepricesignalsfor generation capacity. The proceedings leadingto
FERC’s approval oftheMOPRwere extensive,andthere havebeen numerouschangesto theMOPRandlitigation relatedto it
sinceitwasoriginallyimplemented. For example,in 2011 the parties disputednumerouselementsoftheMOPRincluding: (i) the
default pricethat shouldapplyto bids foundsubjecttotheMOPR, (ii) theduration oftheMOPRand (iii) the application oftheMOPR
to self-supplyingcapacityandstate-sponsoredcapacity. TheFERCordersapprovingthat MOPRhavebeen appealedto theUnited
StatesCourt ofAppealsfor theThirdCircuit.Aresolution ofthat appeal is not expecteduntilsometimein 2014.
InMay2012 (basedon theMOPR provisionstheFERCapprovedin 2011), PJM announcedtheresultsofitscapacityauction
coveringthedeliveryyear endingMay31,2016. Several newunitswithstate-sanctionedsubsidy contractsclearedintheauction at
pricesbelowtheMOPR.Potentially, thesestatescouldexpandsuch state-sanctionedsubsidy programs or other statesmayseekto
establish similar programs. Generation believedthat further revisionsto that MOPRwere necessaryto ensure that the potential to
artificiallyreducecapacityauction pricesisappropriatelylimitedinPJM. In earlyDecember 2012, PJM filedanew MOPRfor
approval at theFERC, which Exelon believedwouldbemore effectivein preventingstate-sanctionedsubsidy contractsfrom
artificiallyreducingcapacityprices. Generation wasactivelyinvolvedinthe process through which thoseMOPRchangeswere
developedandsupportedthechanges. OnMay3,2013,theFERC issueditsorder. While theFERCorder acceptedcertainaspects
ofthe proposal that Exelon supported(such asapplyingtheMOPR to all of PJM andnot justcertainzoneswithinPJM), theFERC
required PJM to retainakeyelement ofitsprevious MOPRstructure,theunit-specific exemption,an element that Exelon had
supportedremoving. Several entities, includingtwocapacitysuppliersthat Exelon hasbeen workingwithsoughtrehearingofthat
order.
InMay2013 (basedon theMOPR provisionstheFERCapprovedearlier that month), PJM announcedtheresultsofitscapacity
auction coveringthedeliveryyear endingMay31,2017. Exelon is workingwith PJM stakeholderson several proposedchangesto
thePJM tariff aimedat ensuringthat capacityresources(includingthosewithstate-sanctionedsubsidy contracts, excessive
importedcapacityresourcesandcertainlimitedavailabilitydemandresponseresources) cannot inappropriatelyaffectcapacity
auction pricesinPJM.
Market-Based Rates Generation,ComEd, PECO and BGE are public utilitiesfor purposesoftheFederal Power Actandare
requiredto obtainFERC’s acceptanceofrate schedulesfor wholesale electricitysales. Currently, Generation,ComEd, PECO and
BGE have authorityto execute wholesale electricitysalesat market-basedrates. Asiscustomarywithmarket-basedrate schedules,
FERChasreservedtherighttosuspendmarket-basedrate authorityon a retroactivebasis if itsubsequentlydeterminesthat
Generation,ComEd, PECO or BGE hasviolatedthe terms andconditionsofitstariff or theFederal Power Act.FERCisalso
authorizedto order refunds incertaininstancesifitfinds that themarket-basedratesare not justandreasonable under theFederal
Power Act.
AsrequiredbyFERC’s regulations, aspromulgatedintheOrder No. 697 series, Generation,ComEd, PECO and BGE file market
power analysesusingthe prescribedmarket share screensto demonstrate that Generation,ComEd, PECO and BGE qualify for
market-basedratesintheregionswhere theyare sellingenergy, capacity, andancillaryservicesunder market-basedrate tariffs.
FERCacceptedthe 2008filings on September 16, 2008, January15, 2009andSeptember 2,2009andacceptedthe 2009filings on
July28, 2009, October 26, 2009, February23,2010 andApril30,2010,affirmingExelon’s affiliatescontinuedrighttomakesalesat
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