ComEd 2013 Annual Report Download - page 43

(n)Reflectscostsincurredto establish estimatedliabilitiesfor theyearsendedDecember 31,2013 andDecember 31,2012 (net oftaxesof$10 million and$5million,
respectively) pursuant to theMidwestGeneration bankruptcy, primarilyrelatedto leasepaymentsunder a coal railcar leaseandestimatedpaymentsfor asbestos-
relatedpersonal injuryclaims.
As discussedabove,Exelon hasincurredandwill continue to incur costsassociatedwiththeConstellation merger,including
meetingthevariouscommitmentsset forthbyregulatorsandagreed-upon withother interestedpartiesaspart ofthemerger
approval process, andintegratingtheformer Constellation businessesinto Exelon.
For theyear endedDecember 31,2013,expensehasbeen recognizedfor costsincurredto achievethemerger,prior to
consideration ofregulatoryaccountingtreatment,asfollows:
Pre-tax Expense
Twelve Months Ended
December 31, 2013
Merger and Integration Costs: Exelon (a)
Employee-Related(b) ......................................................................... 58
Other (c) .................................................................................... 84
Total ....................................................................................... $142
Pre-tax Expense
Twelve Months Ended
December 31, 2012
Merger and Integration Costs: Exelon (a)
MarylandCommitments ....................................................................... 328
Employee-Related(b) ......................................................................... 207
Other (c) .................................................................................... 211
Transaction (d) ............................................................................... $ 58
Total ....................................................................................... $804
(a)For Exelon,Generation and BGE, includesthe operationsoftheacquiredbusinessesfromthedate ofthemerger March 12,2012 through theyear ended
December 31,2013.
(b) Costsprimarilyfor employee severance,pension and OPEB expenseandretention bonuses. ComEd establishedregulatoryassetsof$2million and$21 million for
theyearsendedDecember 31,2013 andDecember 31,2012,respectively. BGE establishedregulatoryassetsof$0million and$22 million for theyearsended
December 31,2013 andDecember 31,2012,respectively. Themajorityofthesecostsare expectedto berecoveredover a five-year period.
(c) Coststo integrate Constellation processesand systems into Exelon andto terminate certainConstellation debtagreements. ComEd establishedaregulatoryasset of
$9 million and$15million for theyearsendedDecember 31,2013 andDecember 31,2012,respectively, for certainother merger andintegration costs. BGE
establishedaregulatoryasset of$12 million and$0million for theyearsendedDecember 31,2013 andDecember 31,2012,respectively, for certainother merger
andintegration costs.
(d) External,third-partycostspaid to advisors, consultants, lawyersandother expertsto assistinthedue diligenceandregulatoryapproval processesandintheclosing
ofthe transaction.
AsofDecember 31,2013,Exelon expectsto incur total additional Constellation merger-relatedexpensesin 2014and2015of
approximately$34million.
Pursuant to theconditionsset forthbytheMDPSC initsapproval ofthemerger transaction,Exelon committedto provideapackage
ofbenefitsto BGE customers, andmakecertaininvestmentsintheCityofBaltimore andtheState ofMaryland, resultinginan
estimateddirectinvestment intheState ofMarylandofapproximately$1billion.Thedirectinvestment includes $95 million to $120
million for therequirement to causeconstruction ofaheadquartersbuildinginBaltimore for Generation’s competitive energy
businesses. OnMarch 20,2013,Generation signedatwenty-year leaseagreement that is contingent upon thedeveloper obtaining
financingfor theconstruction ofthebuilding. Oncerequiredapprovalsare receivedandfinancingcondition is satisfied, construction
ofthebuildingwill commence.Thebuildingisexpectedto be ready for occupancy intwoyearsfollowingcommencement of
construction.Thedirectinvestment estimate alsoincludes$625million inexpendituresrelatingto thedevelopment of285-300 MW
ofnewelectric generation facilitiesinMaryland(expectedto becompletedover thenext ten years).
Exelon’s Strategy and Outlook for 2014 and Beyond
Exelon’s value proposition andcompetitiveadvantagecomefromitsscope andscale across the energy value chainanditscore
strengths ofoperational excellenceandfinancial discipline.
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