Exelon 2014 Annual Report Download - page 74

fuel expense, lower operating and maintenance expense and higher earnings from Generation’s interest in CENG; partially offset by
impairment of certain generating assets, higher depreciation expense, higher property taxes, and higher interest expense. The
increase in revenue, net of purchased power and fuel expense was primarily due to increased capacity prices and higher nuclear
volume, partially offset by lower realized energy prices, higher nuclear fuel costs, and lower mark-to-market gains in 2013. The
decrease in operating and maintenance expense was largely due to 2012 costs associated with a settlement with FERC in 2012 and
decreases in transaction costs and employee-related costs associated with the merger.
Revenue Net of Purchased Power and Fuel Expense
Generation’s six reportable segments are based on the geographic location of its assets, and are largely representative of the
footprints of an ISO/RTO and/or NERC region. Descriptions of each of Generation’s six reportable segments are as follows:
• Mid-Atlantic represents operations in the eastern half of PJM, which includes Pennsylvania, New Jersey, Maryland, Virginia,
West Virginia, Delaware, the District of Columbia and parts of North Carolina.
• Midwest represents operations in the western half of PJM, which includes portions of Illinois, Indiana, Ohio, Michigan, Kentucky
and Tennessee, and the United States footprint of MISO excluding MISO’s Southern Region, which covers all or most of North
Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, the remaining parts of Illinois, Indiana, Michigan and Ohio not
covered by PJM, and parts of Montana, Missouri and Kentucky.
• New England represents the operations within ISO-NE covering the states of Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island and Vermont.
• New York represents operations within New York ISO, which covers the state of New York in its entirety.
• ERCOT represents operations within Electric Reliability Council of Texas, covering most of the state of Texas.
• Other Regions not considered individually significant:
• South represents operations in the FRCC, MISO’s Southern Region, and the remaining portions of the SERC not included
within MISO or PJM, which includes all or most of Florida, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Tennessee,
North Carolina, South Carolina and parts of Missouri, Kentucky and Texas. Generation’s South region also includes
operations in the SPP, covering Kansas, Oklahoma, most of Nebraska and parts of New Mexico, Texas, Louisiana,
Missouri, Mississippi and Arkansas.
• West represents operations in the WECC, which includes California ISO, and covers the states of California, Oregon,
Washington, Arizona, Nevada, Utah, Idaho, Colorado, and parts of New Mexico, Wyoming and South Dakota.
• Canada represents operations across the entire country of Canada and includes the AESO, OIESO and the Canadian
portion of MISO.
The following business activities are not allocated to a region, and are reported under Other: retail and wholesale gas, investments in
gas and oil exploration and production activities, proprietary trading, distributed generation, heating, cooling, and cogeneration
facilities, and home improvements, sales of electric and gas appliances, servicing of heating, air conditioning, plumbing, electrical,
and indoor quality systems and investments in energy-related proprietary technology. Further, the following activities are not
allocated to a region, and are reported in Other: compensation under the reliability-must-run rate schedule; results of operations from
the Maryland Clean-Coal assets sold in the fourth quarter of 2012; unrealized mark-to-market impact of economic hedging activities;
amortization of certain intangible assets relating to commodity contracts recorded at fair value and other miscellaneous revenues.
Generation evaluates the operating performance of its power marketing activities and allocates resources using the measure of
revenue net of purchased power and fuel expense which is a non-GAAP measurement. Generation’s operating revenues include all
sales to third parties and affiliated sales to ComEd, PECO and BGE. Purchased power costs include all costs associated with the
procurement and supply of electricity including capacity, energy and ancillary services. Fuel expense includes the fuel costs for
internally generated energy and fuel costs associated with tolling agreements.
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