ComEd 2013 Annual Report Download - page 168

are basedupon certain unobservable inputs, which are consideredLevel 3 inputs, pursuant to applicable accountingguidance.The
intangible assetsare amortizedasadecreasein operatingrevenue withinExelon’s andGeneration’s ConsolidatedStatementsof
OperationsandComprehensiveIncomeover the termoftheunderlyingPPAs.
Exelon Wind. The output oftheacquiredwindturbineshasbeen soldunder PPAcontracts. Theexcess ofthecontractpriceofthe
PPAsover market priceswasrecognizedasintangible assetsat theacquisition date.Generation determinedthat theestimated
acquisition-date fairvalue oftheintangible assetswasapproximately$224million, which is recordedin unamortizedenergy contract
assetswithinExelon’s andGeneration’s ConsolidatedBalanceSheets. Theintangible assetsare amortizedon a straight-line basis
over the periodinwhich theassociatedcontractrevenuesare recognized.
Antelope Valley. Upon completion ofthedevelopment project,all ofthe output will besoldunder a PPAwithPacific Gas&Electric
Company. Theexcess ofthecontractpriceofthePPAover forecastedMPR-basedmarket priceswasrecognizedasan intangible
asset at theacquisition date.Generation determinedthat theestimatedacquisition-date fairvalue oftheintangible asset was
approximately$190million, which is recordedin unamortizedenergy contractassetswithinExelon’s andGeneration’s Consolidated
BalanceSheets. Thefairvalue is amortizedover thelifeofthecontractin relation to the present value oftheunderlyingcash flows
asoftheacquisition date.
Renewable Energy Credits and Alternative Energy Credits
Exelon’s, Generation’s, ComEd’s and PECO’s other intangible assets, includedinother current assetsandother deferreddebitsand
other assetson theConsolidatedBalanceSheets, includeRECs andAECs. Revenue for RECs that are part ofabundledpower sale
is recognizedwhen thepower is producedanddeliveredto thecustomer.AsofDecember 31,2013,and2012, PECO hadcurrent
AECs of$19million and$17million,respectively, andnoncurrent AECs of$5million and$9million,respectively. AsofDecember 31,
2013,and2012,Generation hadcurrent RECs of$158 million and$61million,respectively, andnoncurrent RECs of$0million and
$45 million,respectively. AsofDecember 31,2013,and2012,ComEd, hadcurrent RECs of$3million and$4million,respectively.
See Note 3—RegulatoryMattersandNote 22—CommitmentsandContingenciesfor additional information on RECs andAECs.
11. Fair Value of Financial Assets and Liabilities
Fair Value of Financial Liabilities Recorded at the Carrying Amount
Thefollowingtablespresent thecarryingamountsandfairvaluesofExelon’s short-termliabilities, long-termdebt, SNF obligation,
trust preferredsecurities(long-termdebttofinancingtrustsor junior subordinateddebentures), andpreferredsecuritiesasof
December 31,2013,and2012:
December 31, 2013 December 31, 2012
Carrying
Amount
Fair Value Carrying
Amount
Fair
ValueLevel 1 Level 2 Level 3
Short-termliabilities .......................................... $ 344 $ 3$341$— $ 214$ 214
Long-termdebt(includingamountsdue within one year) ............ 19,132 —18,6721,079 18,745 20,520
Long-termdebttofinancingtrusts ............................... 648 — — 631 648 664
SNF obligation ............................................... 1,021 —79
0—1,020 763
Preferredsecuritiesofsubsidiary ............................... — — — — 87 82
Short-Term Liabilities. Theshort-termliabilitiesincludedinthetablesabove are comprisedofshort-termborrowings (Level 2), short-
termnotespayable relatedto PECO’s accountsreceivable agreement (Level 2), and dividends payable (Level 1). TheRegistrants’
carryingamountsoftheshort-termliabilitiesare representativeoffairvalue becauseoftheshort-termnature oftheseinstruments.
See Note 13—DebtandCreditAgreementsfor additional information on PECO’s accountsreceivable agreement.
Long-Term Debt. Thefairvalue amountsofExelon’s taxable debtsecurities(Level 2)are determinedbyavaluation model that is
basedon a conventional discountedcash flowmethodology andutilizesassumptionsofcurrent market pricingcurves. Inorder to
incorporate thecreditrisk oftheRegistrantsinto thediscount rates, Exelon obtainspricing (i.e., U.S. Treasuryrate pluscredit
spread) basedon tradesofexistingExelon debtsecuritiesaswell asdebtsecuritiesofother issuersinthe electric utilitysector with
similar credit ratings inboththeprimaryandsecondarymarket,across theRegistrants’ debtmaturityspectrum. Thecreditspreads
ofvarioustenorsobtainedfromthis information are addedto the appropriate benchmark U.S. Treasuryratesinorder to determine
thecurrent market yields for thevarioustenors. Theyields are then convertedinto discount ratesofvarioustenorsthat are usedfor
discountingtherespectivecash flows ofthesame tenor for each bondor note.
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