Exelon 2014 Annual Report Download - page 73

Results of Operations—Generation
2014 (c) 2013
Favorable
(unfavorable)
2014 vs. 2013
variance 2012 (b)
Favorable
(unfavorable)
2013 vs. 2012
variance
Operating revenues ........................................ $17,393 $15,630 $ 1,763 $14,437 $ 1,193
Purchased power and fuel expense .......................... 9,925 8,197 (1,728) 7,061 (1,136)
Revenue net of purchased power and fuel expense (a) .......... 7,468 7,433 35 7,376 57
Other operating expenses
Operating and maintenance ............................... 5,566 4,534 (1,032) 5,028 494
Depreciation and amortization ............................. 967 856 (111) 768 (88)
Taxes other than income ................................. 465 389 (76) 369 (20)
Total other operating expenses ........................ 6,998 5,779 (1,219) 6,165 386
Equity in (losses) earnings of unconsolidated affiliates ......... (20) 10 (30) (91) 101
Gain (loss) on sales of assets ............................... 437 13 424 (7) 20
Gain on consolidation and acquisition of businesses .......... 289 — 289 — —
Operating income .......................................... 1,176 1,677 (501) 1,113 564
Other income and (deductions)
Interest expense ........................................ (356) (357) 1 (301) (56)
Other, net .............................................. 406 355 51 246 109
Total other income and (deductions) .................... 50 (2) 52 (55) 53
Income before income taxes ................................ 1,226 1,675 (449) 1,058 617
Income taxes .............................................. 207 615 408 500 (115)
Net income ................................................ 1,019 1,060 (41) 558 502
Net income (loss) attributable to noncontrolling interest ............ 184 (10) 194 (4) (6)
Net income attributable to membership interest ............... $ 835 $ 1,070 $ (235) $ 562 $ 508
(a) Generation evaluates its operating performance using the measure of revenue net of purchased power and fuel expense. Generation believes that revenue net of
purchased power and fuel expense is a useful measurement because it provides information that can be used to evaluate its operational performance. Revenue net
of purchased power and fuel expense is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more
useful than the GAAP information provided elsewhere in this report.
(b) Includes the operations of Constellation from the date of the merger, March 12, 2012.
(c) 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.
Net Income Attributable to Membership Interest
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013. Generation’s net income attributable to membership
interest decreased compared to the same period in 2013 primarily due to higher operating and maintenance expense and higher
depreciation expense; partially offset by higher revenue, net of purchase power and fuel expense, higher other income, the gains
recorded on the sale of Generation’s ownership interest in generating stations, the bargain-purchase gain recorded related to the
Integrys acquisition, and the gain recorded upon consolidation of CENG. The increase in operating and maintenance expense was
largely due to increased labor contracting and materials expense due to the inclusion of CENG’s results beginning April 1, 2014 and
impairment charges related to 1) generating assets held-for-sale, 2) certain Upstream assets, and 3) wind generating assets. The
increase in revenue, net of purchased power and fuel expense was primarily due to the inclusion of CENG’s results beginning
April 1, 2014, a decrease in fuel costs related to the cancellation of DOE spent nuclear fuel disposal fees, an increase in capacity
prices, and favorable portfolio management activities in the New England an South regions, partially offset by lower realized energy
prices related to executing Exelon’s ratable hedging strategy, higher procurement costs for replacement power due to extreme cold
weather in the first quarter of 2014, and unrealized mark-to-market losses in 2014. The increase in other income is primarily the
result of increased realized and unrealized gain on NDT funds.
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012. Generation’s net income attributable to membership
interest increased compared to the same period in 2012 primarily due to higher revenue, net of purchased power and
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