ComEd 2013 Annual Report Download - page 65

Use of Estimates. Estimatesare basedupon actual costsincurredandinvestmentsin rate basefor the periodandthe ratesof
return on common equityandassociatedregulatorycapital structure allowedunder the applicable tariff. Theestimated
reconciliationscan beaffected by, amongother things, variancesincostsincurredandinvestmentsmadeandactionsbyregulators
or courts.
Unbilled Revenues.Thedetermination ofGeneration’s, ComEd’s, PECO’s and BGE’s retail energy salesto individual customersis
basedon systematic readings ofcustomer metersgenerallyon a monthlybasis. At theendofeach month, amountsofenergy
deliveredto customerssincethedate ofthelastmeter readingare estimated, andcorrespondingunbilledrevenue is recorded. The
measurement ofunbilledrevenue is affectedbythefollowingfactors: dailycustomer usagemeasuredbygeneration or gas
throughput volume,customer usageby class, lossesofenergy duringdeliveryto customersandapplicable customer rates.
Increasesor decreasesinvolumesdeliveredto theutilities’ customersandfavorable or unfavorable rate mix due to changesin
usage patternsincustomer classesinthe periodcouldbesignificant to thecalculation ofunbilledrevenue.Inaddition,volumesmay
fluctuate monthlyasaresult ofcustomerselectingto use an alternate supplier, which couldbesignificant to thecalculation of
unbilledrevenue sinceunbilledcommodityreceivablesare not recordedfor thesecustomers. Changesinthetimingofmeter reading
schedulesandthenumber andtype ofcustomers scheduledfor each meter readingdate wouldalsohaveaneffectonthe
measurement ofunbilledrevenue;however,total operatingrevenueswouldremainmateriallyunchanged.
See Note 6oftheCombinedNotesto ConsolidatedFinancial Statementsfor additional information.
Regulated Transmission & Distribution Revenues.ComEd’s EIMAdistribution formula rate tariff providesfor annual
reconciliationsto thedistribution revenue requirement.Asofthebalancesheet dates, ComEd hasrecordeditsbestestimatesofthe
distribution revenue impactresultingfromchangesin ratesthat ComEd believesare probable ofapproval by theICC inaccordance
withtheformula rate mechanism. Estimatesare basedupon actual costsincurredandinvestmentsin rate basefor the periodand
the ratesofreturn on common equityandassociatedregulatorycapital structure allowedunder the applicable tariff. Theestimated
reconciliation can beaffected by, amongother things, variancesincostsincurredandinvestmentsmadeandactionsbyregulators
or courts.
ComEd’s and BGE’s FERCtransmission formula rate tariffs providefor annual reconciliationsto the transmission revenue
requirements. Asofthebalancesheet dates, ComEd and BGE haverecordedthebestestimate oftheirrespective transmission
revenue impactresultingfromchangesin ratesthat ComEd and BGE believe are probable ofapproval by FERCinaccordancewith
theformula rate mechanism. Estimatesare basedupon actual costsincurredandinvestmentsin rate basefor the periodandthe
ratesofreturn on common equityandassociatedregulatorycapital structure allowedunder the applicable tariff. Theestimated
reconciliation can beaffected by, amongother things, variancesincostsincurredandinvestmentsmadeandactionsbyregulators
or courts.
Allowance for Uncollectible Accounts
The allowancefor uncollectible accountsreflectstheRegistrants’ bestestimatesoflosseson theaccountsreceivable balances. For
Generation,the allowanceis basedon accountsreceivable aging historical experienceandother currentlyavailable information.
ComEd and PECO estimate the allowancefor uncollectible accountson customer receivablesbyapplyingloss ratesdeveloped
specificallyfor each companyto the outstandingreceivable balanceby risk segment.Risk segmentsrepresent a group ofcustomers
with similar creditqualityindicatorsthat are computedbasedon variousattributes, includingdelinquency oftheirbalancesand
payment history. Loss ratesappliedto theaccountsreceivable balancesare basedon historical averagecharge-offs asa
percentageofaccountsreceivable ineach risk segment. BGE estimatesthe allowancefor uncollectible accountson customer
receivablesbyassigningreservefactorsfor each agingbucket.These percentageswere derivedfromastudy ofbillingprogression
which determinedthereservefactorsbyagingbucket.ComEd, PECO and BGE customers’ accountsare generallyconsidered
delinquent if theamount billedisnot receivedbythetimethenextbill is issued, which normallyoccurson a monthlybasis. ComEd,
PECO and BGE customer accountsare written off consistent withapprovedregulatoryrequirements. ComEd’s, PECO’s and BGE’s
provisionsfor uncollectible accountswill continue to beaffectedbychangesinvolume,pricesandeconomic conditionsaswell as
changesinICC, PAPUC and MDPSC regulations, respectively. See Note 6oftheCombinedNotesto ConsolidatedFinancial
Statementsfor additional information regardingaccountsreceivable.
Results of Operations by Business Segment
Thecomparisonsofoperatingresultsandother statistical information for theyearsendedDecember 31,2013,2012 and2011 set
forthbelowincludeintercompanytransactions, which are eliminatedinExelon’s consolidatedfinancial statements.
59