Exelon 2014 Annual Report Download - page 142

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
2. Variable Interest Entities
Under the applicable authoritative guidance, a VIE is a legal entity that possesses any of the following characteristics: an insufficient
amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the
entity (or have voting rights that are disproportionate to their ownership interest), or equity owners who do not have the obligation to
absorb expected losses or the right to receive the expected residual returns of the entity. Companies are required to consolidate a
VIE if they are its primary beneficiary, which is the enterprise that has the power to direct the activities that most significantly affect
the entity’s economic performance.
At December 31, 2014 and 2013, Exelon, Generation, and BGE collectively consolidated six and four VIEs or VIE groups,
respectively, for which the applicable Registrant was the primary beneficiary. As of December 31, 2014 and 2013, the Registrants
had significant interests in six and eight other VIEs, respectively, for which the Registrants do not have the power to direct the
entities’ activities and, accordingly, were not the primary beneficiary.
Consolidated Variable Interest Entities
The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the Registrants’ consolidated
financial statements at December 31, 2014 and 2013 are as follows:
December 31,
2014 (a)(b) 2013
Current assets .................................................................................. $1,271 $ 484
Noncurrent assets .............................................................................. 7,580 1,905
Total assets ................................................................................ $8,851 $2,389
Current liabilities ................................................................................ $ 611 $ 566
Noncurrent liabilities ............................................................................. 2,730 774
Total liabilities .............................................................................. $3,341 $1,340
(a) Includes certain purchase accounting adjustments not pushed down to the BGE standalone entity.
(b) Includes total assets of $6.1 billion and total liabilities of $2.1 billion due to the consolidation of CENG. See Note 5— Investment in Constellation Energy Nuclear
Group, LLC for additional information.
Except as specifically noted below, the assets in the table above are restricted for settlement of the VIE obligations and the liabilities
in the table can only be settled using VIE resources.
RSB BondCo LLC. In 2007, BGE formed RSB BondCo LLC (BondCo), a special purpose bankruptcy remote limited liability
company, to acquire and hold rate stabilization property and to issue and service bonds secured by the rate stabilization property. In
June 2007, BondCo purchased rate stabilization property from BGE, including the right to assess, collect, and receive non-
bypassable rate stabilization charges payable by all residential electric customers of BGE. These charges are being assessed in
order to recover previously incurred power purchase costs that BGE deferred pursuant to Senate Bill 1. BGE has determined that
BondCo is a VIE for which it is the primary beneficiary. As a result, BGE consolidates BondCo.
BondCo’s assets are restricted and can only be used to settle the obligations of BondCo. Further, BGE is required to remit all
payments it receives from customers for rate stabilization charges to BondCo. During 2014, 2013, and 2012, BGE remitted $85
million, $83 million, and $85 million, respectively, to BondCo.
BGE did not provide any additional financial support to BondCo during 2014. Further, BGE does not have any contractual
commitments or obligations to provide additional financial support to BondCo unless additional rate stabilization bonds are issued.
The BondCo creditors do not have any recourse to the general credit of BGE in the event the rate stabilization charges are not
sufficient to cover the bond principal and interest payments of BondCo.
Retail Gas Group. During 2009, Constellation formed two new entities, which now are part of Generation, and combined them with
its existing retail gas activities into a retail gas entity group for the purpose of entering into a collateralized gas supply agreement with
a third-party gas supplier. While Generation owns 100% of these entities, it has been determined that the retail gas entity group is a
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