Exelon 2014 Annual Report Download - page 180

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
At December 31, 2014, the assets and liabilities of the Quail Run generating facility were reported as Assets held for sale and within
Other current liabilities on Exelon’s Consolidated Balance Sheets. The table below presents the major classes of assets and
liabilities held for sale at December 31, 2014.
December 31, 2014
Assets:
Property, plant and equipment, net (a) .............................................................. $143
Inventory ...................................................................................... 4
Total assets held for sale ..................................................................... $147
Liabilities:
Accrued expenses .............................................................................. $ 1
Asset retirement obligations ...................................................................... 4
Total liabilities held for sale (b) ................................................................. $ 5
(a) The total aggregate book value of property, plant and equipment is net of a $50 million pre-tax impairment loss recorded within Operating and maintenance expense
on Exelon’s and Generation’s Statements of Operations and Comprehensive Income. See Note 8—Impairment of Long-Lived Assets for further information.
(b) Included within Other current liabilities on Exelon’s Consolidated Balance Sheets.
5. Investment in Constellation Energy Nuclear Group, LLC
As a result of the Constellation merger, Generation owns a 50.01% interest in CENG, a nuclear generation business. Generation has
historically had various agreements with CENG to purchase power and to provide certain services. For further information regarding
these agreements, see Note 25—Related Party Transactions.
On April 1, 2014, Generation and subsidiaries of Generation, EDF, EDF, Inc. (EDFI) (a subsidiary of EDF) and CENG entered into a
Nuclear Operating Services Agreement (NOSA) pursuant to which Generation will operate the CENG nuclear generation fleet owned
by CENG subsidiaries and provide corporate and administrative services for the remaining life of the CENG nuclear plants as if they
were a part of the Generation nuclear fleet, subject to EDFI’s rights as a member of CENG (the Integration Transaction). CENG will
reimburse Generation for its direct and allocated costs for such services. As part of the arrangement, Nine Mile Point Nuclear
Station, LLC, a subsidiary of CENG, also assigned to Generation its obligations as Operator of Nine Mile Point Unit 2 under an
operating agreement with Long Island Power Authority, the Unit 2 co-owner. In addition, on April 1, 2014, the Power Services
Agency Agreement (PSAA) was amended and extended until the permanent cessation of power generation by the CENG generation
plants.
In addition, on April 1, 2014, Generation made a $400 million loan to CENG, bearing interest at 5.25% per annum and payable out of
specified available cash flows of CENG and, in any event, payable upon the settlement of the Put Option Agreement discussed
below (if the put option is exercised) or payable upon the maturity date of April 1, 2034, whichever occurs first. Immediately following
receipt of the proceeds of such loan, CENG made a $400 million special distribution to EDFI.
Exelon, Generation, and subsidiaries of Generation, EDFI and its parent (E.D.F. International S.A.S.), and CENG also executed a
Fourth Amended and Restated Operating Agreement for CENG on April 1, 2014, pursuant to which, among other things, CENG
committed to make preferred distributions to Generation (after repayment of the $400 million loan and associated interest) quarterly
out of specified available cash flows until Generation has received aggregate distributions of $400 million plus a return of 8.5% per
annum from April 1, 2014 (Preferred Distribution Rights).
Generation and EDFI also entered into a Put Option Agreement on April 1, 2014, pursuant to which EDFI has the option, exercisable
beginning on January 1, 2016 and thereafter until June 30, 2022, to sell its 49.99% interest in CENG to Generation for a fair market
value price determined by agreement of the parties, or absent agreement, a third-party arbitration process. The appraisers
determining fair market value of EDF’s 49.99% interest in CENG under the Put Option Agreement are instructed to take into account
all rights and obligations under the CENG Operating Agreement, including Generation’s rights with respect to any unpaid aggregate
preferred distributions and the related return, and the value of Generation’s rights to other distributions. The beginning of the
exercise period will be accelerated if Exelon’s affiliates cease to own a majority of CENG and exercise a related right to terminate the
NOSA. In addition, under limited circumstances, the period for exercise of the put option may be extended for 18 months.
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