Exelon 2015 Annual Report Download - page 118

Table of Contents
participants related to benefit eligibility age was 10.8 years, 9.1 years and 8.7 years for the years ended December 31, 2015, 2014 and 2013,
respectively. The average remaining service period of postretirement benefit plan participants related to expected retirement was 9.7 years, 10.1
years and 9.8 years for the years ended December 31, 2015, 2014 and 2013, respectively.
Regulatory Accounting (Exelon, ComEd, PECO and BGE)
Exelon, ComEd, PECO and BGE account for their regulated electric and gas operations in accordance with the authoritative guidance for
accounting for certain types of regulations, which requires Exelon, ComEd, PECO and BGE to reflect the effects of cost-based rate regulation in
their financial statements. This guidance is applicable to entities with regulated operations that meet the following criteria: (1) rates are established
or approved by a third-party regulator; (2) rates are designed to recover the entities’ cost of providing services or products; and (3) a reasonable
expectation that rates are set at levels that will recover the entities’ costs from customers. Regulatory assets represent incurred costs that have
been deferred because of their probable future recovery from customers through regulated rates. Regulatory liabilities represent (1) the excess
recovery of costs or accrued credits that have been deferred because it is probable such amounts will be returned to customers through future
regulated rates; or (2) billings in advance of expenditures for approved regulatory programs. As of December 31, 2015, Exelon, ComEd, PECO and
BGE have concluded that the operations of ComEd, PECO and BGE meet the criteria to apply the authoritative guidance. If it is concluded in a
future period that a separable portion of those operations no longer meets the criteria of this guidance, Exelon, ComEd, PECO and BGE would be
required to eliminate any associated regulatory assets and liabilities and the impact would be recognized in the Consolidated Statements of
Operations and could be material. See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional
information regarding regulatory matters, including the regulatory assets and liabilities tables of Exelon, ComEd, PECO and BGE.
For each regulatory jurisdiction in which they conduct business, Exelon, ComEd, PECO and BGE assess whether the regulatory assets and
liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur.
This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs in ComEd’s, PECO’s and BGE’s
jurisdictions, and factors such as changes in applicable regulatory and political environments. Furthermore, Exelon, ComEd, PECO and BGE
make other judgments related to the financial statement impact of their regulatory environments, such as the types of adjustments to rate base
that will be acceptable to regulatory bodies, if any, to which costs will be recoverable through rates. Refer to the revenue recognition discussion
below for additional information on the annual revenue reconciliations associated with ComEd’s distribution formula rate tariff, pursuant to EIMA,
and FERC-approved transmission formula rate tariffs for ComEd and BGE. Additionally, estimates are made in accordance with the authoritative
guidance for contingencies as to the amount of revenues billed under certain regulatory orders that may ultimately be refunded to customers upon
finalization of applicable regulatory or judicial processes. These assessments are based, to the extent possible, on past relevant experience with
regulatory bodies in ComEd’s, PECO’s and BGE’s jurisdictions, known circumstances specific to a particular matter and hearings held with the
applicable regulatory body. If the assessments and estimates made by Exelon, ComEd, PECO and BGE are ultimately different than actual
regulatory outcomes, the impact on their results of operations, financial position, and cash flows could be material.
The Registrants treat the impacts of a final rate order received after the balance sheet date but prior to the issuance of the financial
statements as a non-recognized subsequent event, as the receipt of a final rate order is a separate and distinct event that has future impacts on
the parties affected by the order.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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