Exelon 2014 Annual Report Download - page 186

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
termination, UII received a net early termination amount of $335 million from CPS and wrote down the net investment in the CPS
long-term lease of $336 million in Investments in Exelon’s Consolidated Balance Sheets in 2014; resulting in a pre-tax loss of $1
million being reflected in Operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive
Income in 2014.
Pursuant to the applicable accounting guidance, Exelon is required to review the estimated residual values of its direct
financing lease investments at least annually and record an impairment charge if the review indicates an other than
temporary decline in the fair value of the residual values below their carrying values. Exelon estimates the fair value of the
residual values of its direct financing lease investments under the income approach, which uses a discounted cash flow
analysis, which takes into consideration significant unobservable inputs (Level 3) including the expected revenues to be
generated and costs to be incurred to operate the plants over their remaining useful lives subsequent to the lease end
dates. Significant assumptions used in estimating the fair value include fundamental energy and capacity prices, fixed and
variable costs, capital expenditure requirements, discount rates, tax rates, and the estimated remaining useful lives of the
plants. The estimated fair values also reflect the cash flows associated with the service contract option discussed above
given that a market participant would take into consideration all of the terms and conditions contained in the lease
agreements.
Based on the annual reviews performed in 2014 and 2013, the estimated residual value of Exelon’s direct financing leases for the
Georgia generating stations experienced other than temporary declines given reduced long-term energy and capacity price
expectations. As a result, Exelon recorded a $24 million and $14 million pre-tax impairment charge in 2014 and 2013, respectively,
for these stations. These impairment charges were recorded in Investments and Operating and maintenance expense in Exelon’s
Consolidated Balance Sheets and the Consolidated Statements of Operations and Comprehensive Income, respectively. Changes in
the assumptions described above could potentially result in future impairments of Exelon’s direct financing lease investments, which
could be material. Through December 31, 2014, no events have occurred that would require Exelon to review the estimated residual
values of its direct financing lease investments subsequent to the review performed in the second quarter of 2014.
At December 31, 2014 and 2013, the components of the net investment in long-term leases were as follows:
December 31, 2014 December 31, 2013
Estimated residual value of leased assets ......................................... $685 $1,465
Less: unearned income ........................................................ 324 767
Net investment in long-term leases ............................................... $361 $ 698
9. Jointly Owned Electric Utility Plant
Exelon, Generation, PECO and BGE’s undivided ownership interests in jointly owned electric plants and transmission facilities at
December 31, 2014 and 2013 were as follows:
Nuclear generation Fossil fuel generation Transmission Other
Quad Cities
Peach
Bottom Salem (a)
Nine Mile
Point Unit
2(g) Keystone (f) Conemaugh (f) Wyman PA (b) DE/NJ (c) Other (d)
Operator
Generation Generation PSEG
Nuclear
Generation GenOn GenOn FP&L First
Energy
PSEG
Ownership interest ............ 75.00% 50.00% 42.59% 82.00% — — 5.89% Various 42.55% 44.24%
Exelon’s share at December 31,
2014:
Plant (e) ...................... $ 995 $1,095 $ 531 $ 676 $ — $ — $ 3 $ 14 $ 64 $ 2
Accumulated depreciation (e) .... 266 343 150 14 — — 3 7 34 1
Construction work in progress . . . 15 133 29 48 — — — — — —
Exelon’s share at December 31,
2013:
Plant (e) ...................... $ 941 $ 883 $ 501 $ — $725 $399 $ 3 $ 14 $ 64 $ 2
Accumulated depreciation (e) .... 226 326 134 — 268 220 3 7 34 1
Construction work in progress . . . 27 174 24 — 6 121 — — — —
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