Exelon 2014 Annual Report Download - page 147

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
As of December 31, 2014 and 2013, Exelon and Generation had significant unconsolidated variable interests in six and eight VIEs,
respectively, for which Exelon or Generation, as applicable, was not the primary beneficiary; including certain equity method
investments and certain commercial agreements. The decrease in the number of unconsolidated VIEs is due to the sale of
Generation’s ownership interest in four unconsolidated VIEs in 2014, offset by the execution of an energy purchase and sale
agreement with an unconsolidated VIE and an equity investment in another unconsolidated VIE. The following tables present
summary information about Exelon and Generation’s significant unconsolidated VIE entities:
December 31, 2014
Commercial
Agreement
VIEs
Equity
Investment
VIEs Total
Total assets (a) ...................................................................... $506 $ 91 $597
Total liabilities (a) .................................................................... 237 49 286
Exelon’s ownership interest in VIE (a) ................................................... — 9 9
Other ownership interests in VIE (a) ..................................................... 269 33 302
Registrants’ maximum exposure to loss:
Carrying amount of equity method investments — 13 13
Contract intangible asset 9— 9
Debt and payment guarantees — 3 3
Net assets pledged for Zion Station decommissioning (b) 27 — 27
December 31, 2013
Commercial
Agreement
VIEs
Equity
Investment
VIEs Total
Total assets (a) ...................................................................... $128 $332 $460
Total liabilities (a) .................................................................... 17 123 140
Exelon’s ownership interest in VIE (a) ................................................... — 86 86
Other ownership interests in VIE (a) ..................................................... 111 123 234
Registrants’ maximum exposure to loss:
Carrying amount of equity method investments 7 67 74
Contract intangible asset 9—9
Debt and payment guarantees — 5 5
Net assets pledged for Zion Station decommissioning (b) 44 — 44
(a) These items represent amounts on the unconsolidated VIE balance sheets, not on Exelon’s or Generation’s Consolidated Balance Sheets. These items are included
to provide information regarding the relative size of the unconsolidated VIEs.
(b) These items represent amounts on Exelon’s Consolidated Balance Sheets related to the asset sale agreement with ZionSolutions, LLC. The net assets pledged for
Zion Station decommissioning includes gross pledged assets of $319 million and $458 million as of December 31, 2014 and December 31, 2013, respectively; offset
by payables to ZionSolutions LLC of $292 million and $414 million as of December 31, 2014 and December 31, 2013, respectively. These items are included to
provide information regarding the relative size of the ZionSolutions LLC unconsolidated VIE.
For each unconsolidated VIE, Exelon and Generation assessed the risk of a loss equal to their maximum exposure to be remote
and, accordingly Exelon and Generation have not recognized a liability associated with any portion of the maximum exposure to
loss. In addition, there are no agreements with, or commitments by, third parties that would materially affect the fair value or risk of
their variable interests in these variable interest entities.
Energy Purchase and Sale Agreements. Generation has several energy purchase and sale agreements with generating facilities.
Generation has evaluated the significant agreements, ownership structures and risks of each entity, and determined that certain of
the entities are VIEs because the entity absorbs risk through the sale of fixed price power and renewable energy credits. Generation
has reviewed the entities and has determined that Generation is not the primary beneficiary of the VIEs because Generation does
not have the power to direct the activities that most significantly impact the VIEs economic performance.
In March 2005, Constellation, to which Generation is now a successor, closed a transaction in which Generation assumed from a
counterparty two power sales contracts with previously existing VIEs. The VIEs previously were created by the counterparty to issue
debt in order to monetize the value of the original contracts to purchase and sell power. Under the power sales contracts, Generation
sold power to the VIEs which, in turn, sold that power to an electric distribution utility through 2013. In connection with this
transaction, a third-party acquired the equity of the VIEs and Generation loaned that party a portion of the purchase price. If the
143