Exelon 2014 Annual Report Download - page 72

Regulated Transmission & Distribution Revenues.ComEd’s EIMA distribution formula rate tariff provides for annual
reconciliations to the distribution revenue requirement. As of the balance sheet dates, ComEd has recorded its best estimates of the
distribution revenue impact resulting from changes in rates that ComEd believes are probable of approval by the ICC in accordance
with the formula rate mechanism. Estimates are based upon actual costs incurred and investments in rate base for the period and
the rates of return on common equity and associated regulatory capital structure allowed under the applicable tariff. The estimated
reconciliation can be affected by, among other things, variances in costs incurred and investments made and actions by regulators
or courts.
ComEd’s and BGE’s FERC transmission formula rate tariffs provide for annual reconciliations to the transmission revenue
requirements. As of the balance sheet dates, ComEd and BGE have recorded the best estimate of their respective transmission
revenue impact resulting from changes in rates that ComEd and BGE believe are probable of approval by FERC in accordance with
the formula rate mechanism. Estimates are based upon actual costs incurred and investments in rate base for the period and the
rates of return on common equity and associated regulatory capital structure allowed under the applicable tariff. The estimated
reconciliation can be affected by, among other things, variances in costs incurred and investments made and actions by regulators
or courts.
Allowance for Uncollectible Accounts
The allowance for uncollectible accounts reflects the Registrants’ best estimates of losses on the accounts receivable balances. For
Generation, the allowance is based on accounts receivable aging historical experience and other currently available information.
ComEd and PECO estimate the allowance for uncollectible accounts on customer receivables by applying loss rates developed
specifically for each company to the outstanding receivable balance by customer risk segment. At December 31, 2013, BGE
estimated the allowance for uncollectible accounts on customer receivables by assigning a reserve factor for each aging bucket.
These percentages were derived from a study of billing progression which determined the reserve factors by aging bucket. At
December 31, 2014, BGE changed to a methodology for estimating the allowance for uncollectible accounts, which was consistent
with ComEd and PECO, as described above. Risk segments represent a group of customers with similar credit quality indicators that
are computed based on various attributes, including delinquency of their balances and payment history. Loss rates applied to the
accounts receivable balances are based on historical average charge-offs as a percentage of accounts receivable in each risk
segment. ComEd, PECO and BGE customers’ accounts are generally considered delinquent if the amount billed is not received by
the time the next bill is issued, which normally occurs on a monthly basis. ComEd, PECO and BGE customer accounts are written off
consistent with approved regulatory requirements. ComEd’s, PECO’s and BGE’s provisions for uncollectible accounts will continue
to be affected by changes in volume, prices and economic conditions as well as changes in ICC, PAPUC and MDPSC regulations,
respectively. See Note 6—Accounts Receivable of the Combined Notes to Consolidated Financial Statements for additional
information regarding accounts receivable.
Results of Operations by Business Segment
The comparisons of operating results and other statistical information for the years ended December 31, 2014, 2013 and 2012 set
forth below include intercompany transactions, which are eliminated in Exelon’s consolidated financial statements.
Net Income Attributable to Common Shareholders by Registrant
2014 (b) 2013
Favorable
(unfavorable)
2014 vs. 2013
variance 2012 (a)
Favorable
(unfavorable)
2013 vs. 2012
variance
Exelon ....................................................... $1,623 $1,719 $ (96) $1,160 $ 559
Generation .................................................... 835 1,070 (235) 562 508
ComEd ....................................................... 408 249 159 379 (130)
PECO ........................................................ 352 388 (36) 377 11
BGE ......................................................... 198 197 1 (9) 206
(a) For BGE, reflects BGE’s operations for the year ended December 31, 2012. For Exelon and Generation, includes the operations of the Constellation and BGE from
the date of the merger, March 12, 2012, through December 31, 2012.
(b) On April 1, 2014, Generation assumed operational control of CENG’s nuclear fleet. As a result, the 2014 financial results include CENG’s results of operations on a
fully consolidated basis from April 1, 2014, through December 31, 2014.
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