ComEd 2013 Annual Report Download - page 245

At December 31,2013 and2012,Generation hadreservedapproximately$90million and$63million,respectively, in total for
asbestos-relatedbodilyinjuryclaims. AsofDecember 31,2013,approximately$19million ofthis amount relatedto 224open claims
presentedto Generation, while theremaining$71million ofthereserveis for estimatedfuture asbestos-relatedbodilyinjuryclaims
anticipatedto arisethrough 2050,basedon actuarial assumptionsandanalyses, which are updatedon an annual basis. Ona
quarterlybasis, Generation monitorsactual experienceagainstthenumber offorecastedclaims to bereceivedandexpectedclaim
paymentsandevaluateswhether an adjustment to thereserveis necessary.
OnNovember 22,2013,theSupremeCourt ofPennsylvaniaheldthat thePennsylvaniaWorkersCompensation Actdoesnot apply
to an employee’s disabilityor deathresultingfromoccupational disease,such as diseasesrelatedto asbestosexposure, which
manifestsmore than 300 weeks after theemployee’s lastemployment-basedexposure,andthat therefore theexclusivityprovision
oftheActdoesnot applyto precludesuch employee fromsuing his or her employer incourt.TheSupremeCourt’s rulingreverses
previousrulings by thePennsylvaniaSuperior Court precludingcurrent andformer employeesfromsuingtheiremployersincourt,
despite thefactthat thesameemployee wasnot eligible for workerscompensation benefitsfor diseasesthat manifestmore than
300 weeks after theemployee’s lastemployment-basedexposure to asbestos. Currently, Exelon,Generation and PECO are unable
to predictwhether andto what extent theymayexperienceadditional claims inthefuture asaresult ofthis ruling; assuch no
increasetotheasbestos-relatedbodilyinjuryliabilityhasbeen recordedasofDecember 31,2013.Increasedclaims activityresulting
fromthis rulingcouldhaveamaterial adverseimpactonExelon,Generation’s and PECO’s future resultsofoperationsandcash
flows.
BGE. Since1993, BGE andcertainConstellation (nowGeneration)subsidiarieshavebeen involvedinseveral actionsconcerning
asbestos. Theactionsare basedupon thetheoryof“premisesliability,” allegingthat BGE andGeneration knewofandexposed
individualsto an asbestoshazard. Inaddition to BGE andGeneration,numerousother partiesare defendantsinthesecases.
Approximately 486 individualswhowere never employeesof BGE or certainConstellation subsidiarieshave pendingclaims each
seekingseveral million dollarsincompensatoryandpunitivedamages. Cross-claims andthird-partyclaims broughtby other
defendantsmayalsobefiledagainstBGE andcertainConstellation subsidiariesintheseactions. Todate,mostasbestosclaims
which havebeen resolvedhavebeen dismissedor resolvedwithout anypayment by BGE or certainConstellation subsidiariesanda
small minorityofthesecaseshasbeen resolvedfor amountsthat were not material to BGE or Generation’s financial results.
Discoverybeginsinthesecasesafter theyare placedon thetrial docket.At present,onlytwoofthe pendingcasesare set for trial.
Given thelimited discoveryinthesecases, BGE andGeneration do not knowthespecific factsthat are necessaryto providean
estimate ofthe reasonablypossible loss relatingto theseclaims; assuch, no accrual hasbeen madeanda rangeofloss is not
estimable.Thespecific factsnot knowninclude:
•theidentityofthefacilitiesat which the plaintiffs allegedlyworkedascontractors;
•thenamesofthe plaintiffs’ employers;
•thedateson which andthe placeswhere theexposure allegedlyoccurred; and
•thefactsandcircumstancesrelatingto the allegedexposure.
Insuranceandholdharmless agreementsfromcontractorswhoemployedthe plaintiffs maycover a portion ofanyawards inthe
actions.
Federal Energy Regulatory Commission Investigation
OnJanuary30,2012,FERCpublisheda noticeonitswebsite regardinga non-public investigation ofcertainofConstellation’s power
tradingactivitiesinandaroundtheISO-NY fromSeptember 2007through December 2008. Prior to themerger,Constellation
announcedon March 9, 2012,that ithadresolvedtheFERCinvestigation.Under thesettlement,Constellation agreedto pay, and
haspaid, a$135million civil penaltyand$110 million indisgorgement.
Duringtheyear endedDecember 31,2012,Generation recordedexpenseof$195 million in operatingandmaintenanceexpense
withtheremaining$50million recordedasaConstellation pre-acquisition contingency. See Note 4—Merger andAcquisitionsfor
additional information on themerger.
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