Exelon 2014 Annual Report Download - page 233

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Zion Station Decommissioning
On September 1, 2010, Generation completed an Asset Sale Agreement (ASA) with EnergySolutions Inc. and its wholly owned
subsidiaries, EnergySolutions, LLC (EnergySolutions) and ZionSolutions under which ZionSolutions has assumed responsibility for
decommissioning Zion Station, which is located in Zion, Illinois and ceased operation in 1998. Specifically, Generation transferred to
ZionSolutions substantially all of the assets (other than land) associated with Zion Station, including assets held in related NDT
funds. In consideration for Generation’s transfer of those assets, ZionSolutions assumed decommissioning and other liabilities,
excluding the obligation to dispose of SNF and decommission the SNF dry storage facility, associated with Zion Station. Pursuant to
the ASA, ZionSolutions will periodically request reimbursement from the Zion Station-related NDT funds for costs incurred related to
its decommissioning efforts at Zion Station. During 2013, EnergySolutions entered a definitive acquisition agreement and was
acquired by another Company. Generation reviewed the acquisition as it relates to the ASA to decommission Zion Station. Based on
that review, Generation determined that the acquisition will not adversely impact decommissioning activities under the ASA.
ZionSolutions is subject to certain restrictions on its ability to request reimbursements from the Zion Station NDT funds as defined
within the ASA. Therefore, the transfer of the Zion Station assets did not qualify for asset sale accounting treatment and, as a result,
the related NDT funds were reclassified to Pledged assets for Zion Station decommissioning within Exelon’s Consolidated Balance
Sheets and will continue to be measured in the same manner as prior to the completion of the transaction. Additionally, the
transferred ARO for decommissioning was replaced with a Payable for Zion Station decommissioning in Generation’s and Exelon’s
Consolidated Balance Sheets. Changes in the value of the Zion Station NDT assets, net of applicable taxes, will be recorded as a
change in the Payable to ZionSolutions. At no point will the payable to ZionSolutions exceed the project budget of the costs
remaining to decommission Zion Station. Generation has retained its obligation for the SNF. Following ZionSolutions’ completion of
its contractual obligations and transfer of the NRC license to Generation, Generation will store the SNF at Zion Station until it is
transferred to the DOE for ultimate disposal, and will complete all remaining decommissioning activities associated with the SNF dry
storage facility. Generation has a liability of approximately $86 million, which is included within the nuclear decommissioning ARO at
December 31, 2014. Generation also has retained NDT assets to fund its obligation to maintain the SNF at Zion Station until transfer
to the DOE and to complete all remaining decommissioning activities for the SNF storage facility. Any shortage of funds necessary to
maintain the SNF and decommission the SNF storage facility is ultimately required to be funded by Generation. Any Zion Station
NDT funds remaining after the completion of all decommissioning activities will be returned to ComEd customers in accordance with
the applicable orders. The following table provides the pledged assets and payables to ZionSolutions, and withdrawals by
ZionSolutions at December 31, 2014 and 2013:
2014 2013
Carrying value of Zion Station pledged assets ................................................... $319 $458
Payable to Zion Solutions (a) .................................................................. 292 414
Current portion of payable to Zion Solutions (b) .................................................. 137 109
Cumulative withdrawals by Zion Solutions to pay decommissioning costs ............................ 666 498
(a) Excludes a liability recorded within Exelon’s Consolidated Balance Sheets related to the tax obligation on the unrealized activity associated with the Zion Station NDT
Funds. The NDT Funds will be utilized to satisfy the tax obligations as gains and losses are realized.
(b) Included in Other current liabilities within Exelon’s Consolidated Balance Sheets.
ZionSolutions leased the land associated with Zion Station from Generation pursuant to a Lease Agreement. Under the Lease
Agreement, ZionSolutions has committed to complete the required decommissioning work according to an established schedule and
constructed a dry cask storage facility on the land and has loaded the SNF from the SNF pools onto the dry cask storage facility at
Zion Station. Rent payable under the Lease Agreement is $1.00 per year, although the Lease Agreement requires ZionSolutions to
pay property taxes associated with Zion Station and penalty rents may accrue if there are unexcused delays in the progress of
decommissioning work at Zion Station or the construction of the dry cask SNF storage facility. To reduce the risk of default by
ZionSolutions, EnergySolutions provided a $200 million letter of credit to be used to fund decommissioning costs in the event the
NDT assets are insufficient. EnergySolutions and its parent company have also provided a performance guarantee and
EnergySolutions has entered into other agreements that will provide rights and remedies for Generation and the NRC in the case of
other specified events of default, including a special purpose easement for disposal capacity at the EnergySolutions site in Clive,
Utah, for all LLRW volume of Zion Station.
229