ComEd 2013 Annual Report Download - page 186

Thetablesbelowprovidetheactivityofaccumulated OCI relatedto cash flowhedgesfor theyearsendedDecember 31,2013 and
2012,containinginformation about thechangesinthefairvalue ofcash flowhedgesandthereclassification fromaccumulated OCI
into resultsofoperations. Theamountsreclassifiedfromaccumulated OCI, when combinedwiththeimpactsoftheactual physical
power sales, result inthe ultimate recognition ofnet revenuesat thecontractedprice.
Income Statement
Location
Total Cash Flow Hedge OCI Activity,
Net of Income Tax
Generation Exelon
Energy-Related
Hedges
Total Cash Flow
Hedges
Accumulated OCI derivativegainatJanuary1,2012 ................ $925(a)(d) $ 488
Effective portion ofchangesinfairvalue ........................... 432(b) 330(e)
Reclassificationsfromaccumulated OCI to net income............... OperatingRevenues(828)(c) (453)
Ineffective portion recognizedinincome........................... OperatingRevenues33
Accumulated OCI derivativegainatDecember 31,2012 ............. 532(a)(d) 368
Effective portion ofchangesinfairvalue ........................... — 29(e)
Reclassificationsfromaccumulated OCI to net income............... OperatingRevenues(413)(c) (277)
Accumulated OCI derivativegainatDecember 31,2013 ............. $119(d) $120
(a)Includes$133 million and$420 million ofgains, net oftaxes, relatedto thefairvalue ofthefive-year financial swap contractwithComEd for theyearsended
December 31,2012 and2011 .
(b) Includes $88 million ofgains, net oftaxes, relatedto theeffective portion ofchangesinfairvalue ofthefive-year financial swap contractwithComEd for theyear
endedDecember 31,2012.Asofthemerger date,cash flowhedgeswere discontinued, assuch, this amount representschangesinfairvalue prior to themerger
date.
(c) Includes$133 million and$375 million oflosses, net oftaxes, reclassifiedfromaccumulated OCI to recognizegainsin net income relatedto settlementsofthefive-
year financial swap contractwithComEd for theyearsendedDecember 31,2013 and2012,respectively.
(d) Excludes$5million oflossesand$20 million oflosses, net oftaxes, relatedto interest rate swapsandtreasuryrate locks for theyearsendedDecember 31,2013
and2012,respectively.
(e)Includes$15million and$9million oflosses, net oftaxes, relatedto theeffective portion ofchangesinfairvalue ofinterest rate swapsandtreasuryrate locks at
Generation for theyear endedDecember 31,2013 and2012,respectively.
DuringtheyearsendedDecember 31,2013,2012,and2011 Generation’s former energy-relatedcash flowhedgeactivityimpactto
pre-taxearnings basedon thereclassification adjustment fromaccumulated OCI to earnings wasa$683million,$1,368 million and
$968 million pre-taxgain,respectively. Given that thecash flowhedgeshadprimarilyconsistedofforwardpower salesandpower
swapsand did not includepower andgasoptionsor sales, theineffectiveness ofGeneration’s cash flowhedgeswasprimarilythe
result of differencesbetween thelocational settlement pricesofthecash flowhedgesandthehedgedgeneratingunits. Changesin
cash flowhedgeineffectiveness were lossesof$5million andagainof$10 million for theyearsended2012 and2011,respectively.
Exelon’s former energy-relatedcash flowhedgeactivityimpact to pre-taxearnings basedon thereclassification adjustment from
accumulated OCI to earnings wasa$464 million, $747 million and$512 million pre-taxgainfor theyearsendedDecember 31,2013,
2012 and2011,respectively. Changesincash flowhedgeineffectiveness, primarilydue to changesinmarket prices, were lossesof
$5 million andgainsof$10 million for theyearsended2012 and2011,respectively. Neither Exelon nor Generation will incur
changesincash flowhedgeineffectiveness infuture periods asall energy-relatedcash flowhedgepositionswere de-designated
prior to themerger date.
Economic Hedges Theseinstrumentsrepresent hedgesthat economicallymitigate exposure to fluctuationsincommoditypricesand
includefinancial options, futures, swaps, physical forwardsalesandpurchases, but for which thefairvalue or cash flowhedge
electionswere not made.Additionally, Generation entersinto interest rate derivativecontractsandforeignexchangecurrency swaps
to managetheexposure relatedto theinterest rate component ofcommoditypositionsandinternational purchasesofcommodities
incurrenciesother than U.S. Dollars. For theyearsendedDecember 31,2013,2012 and2011,thefollowingnet pre-taxmark-to-
market gains(losses) ofcertain purchaseandsale contractswere reportedin operatingrevenuesor purchasedpower andfuel
expenseatExelon andGeneration intheConsolidatedStatementsofOperationsandComprehensiveIncomeandare includedin
“Net fairvalue changesrelatedto derivatives” inExelon’s andGeneration’s ConsolidatedStatementsofCash Flows. Inthetables
below, “Changeinfairvalue”representsthechangeinfairvalue ofthederivativecontractsheldat the reportingdate.The
“Reclassification to realizedat settlement”representstherecognizedchangeinfairvalue that wasreclassifiedto realizeddue to
settlement ofthederivativeduringthe period.
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