Exelon 2014 Annual Report Download - page 164

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
requirement, on February 28, 2014, ISO-NE filed the results of its eighth capacity auction (covering the June 1, 2017 through
May 30, 2018 delivery period). On June 27, 2014, the FERC issued a letter to ISO-NE noting that ISO-NE’s February 28, 2014 filing
was deficient and that ISO-NE must file additional information before the FERC can process the filing. ISO-NE filed the information
on July 17, 2014, and the ISO-NE’s filings became effective by operation of law pursuant to a notice issued by the FERC’s secretary
on September 16, 2014. Several parties sought rehearing of the secretary’s notice which was effectively denied in October 2014 and
have since appealed the matter to the U.S. D.C. Circuit Court of Appeals. It is not clear whether such appeal would be effective as
there is no action by the Commission to be considered. Nonetheless, while we think any change in the auction results to be unlikely,
Exelon and Generation cannot predict with certainty what further action the court may take concerning the results of that auction, but
any court action could be material to Exelon’s and Generation’s expected revenues from the capacity auction.
License Renewals. In June 2012, the United States Court of Appeals for the DC Circuit vacated the NRC’s temporary storage rule
on the grounds that the NRC should have conducted a more comprehensive environmental review to support the rule. The
temporary storage rule (also referred to as the “waste confidence decision”) recognized that licensees can safely store spent nuclear
fuel at nuclear plants for up to 60 years beyond the original and renewed licensed operating life of the plants and that licensing
renewal decisions do not require discussion of the environmental impact of spent fuel stored on site. In August 2012, the NRC
placed a hold on issuing new or renewed operating licenses that depend on the temporary storage rule until the court’s decision is
addressed. On August 26, 2014, the NRC Commissioners approved the issuance of a revised rule codifying the NRC’s generic
determinations regarding the environmental impacts of continued storage of spent nuclear fuel beyond a reactor’s licensed operating
life and removed the hold on final licensing decision as of the effective date of the final rule. On September 19, 2014, the NRC
issued the Continued Storage Rule, which became effective on October 20, 2014. On October 24, 2014, New York, Vermont, and
Connecticut filed a petition for review in federal court which alleges that the Continued Storage Rule violates various federal laws
and regulations. The petition additionally challenges the Continued Storage Rule’s supporting generic environmental impact
statement (GEIS) as well as the August 26, 2014 NRC order lifting the suspension of all final licensing decisions for affected
applications in view of the rule and GEIS.
On May 29, 2013, Generation submitted applications to the NRC to extend the current operating licenses of Byron Units 1 and 2,
which are currently set to expire in 2024 and 2026, respectively, and Braidwood Units 1 and 2, currently set to expire in 2026 and
2027, respectively, by 20 years. Generation does not expect the NRC to issue license renewals for Byron and Braidwood until late
2015 at the earliest.
On October 20, 2014, the NRC approved Generation’s request to extend the operating licenses of Limerick Units 1 and 2 by 20
years to 2044 and 2049, respectively.
On December 9, 2014, Generation submitted applications to the NRC to extend the operating licenses of LaSalle Units 1 and 2 by
20 years, which are currently set to expire in 2022 and 2023, respectively. Generation does not expect the NRC to issue license
renewals for LaSalle until 2016 at the earliest.
On August 29, 2012 and August 30, 2012, Generation submitted hydroelectric license applications to the FERC for 46-year licenses
for the Conowingo Hydroelectric Project (Conowingo) and the Muddy Run Pumped Storage Facility Project (Muddy Run), respectively.
Generation is working with stakeholders to resolve water quality licensing issues with the MDE for Conowingo, including: (1) water
quality, (2) fish passage and habitat, and (3) sediment. On January 30, 2014, Generation filed a water quality certification application
pursuant to Section 401 of the CWA with MDE for Conowingo, addressing these and other issues, although Generation cannot
currently predict the conditions that ultimately may be imposed. MDE indicated that it believed it did not have sufficient information to
process Generation’s application. As a result, on December 5, 2014, Generation withdrew its pending application for a water quality
certification. FERC policy requires that an applicant resubmit its request for a water quality certification within 90 days of the date of
withdrawal. Accordingly, Generation is working with MDE to coordinate the refiling of its application for certification within the 90-day
period. In addition, Generation has entered into an agreement with MDE to work with state agencies in Maryland, the U.S. Army
Corps of Engineers, the U.S. Geological Survey, the University of Maryland Center for Environmental Science and the U.S.
Environmental Protection Agency Chesapeake Bay Program to design, conduct and fund an additional multi-year sediment study.
Exelon has agreed to contribute up to $3.5 million to fund the additional study. Resolution of these issues relating to Conowingo may
have a material effect on Exelon’s and Generation’s results of operations and financial position through an increase in capital
expenditures and operating costs.
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