Exelon 2015 Annual Report Download - page 157

Table of Contents
expect to contribute $13 million, $3 million, $1 million, and $18 million, respectively. See Note 17— Retirement Benefits of the Combined Notes to
Consolidated Financial Statements for the Registrants’ 2015 and 2014 other postretirement benefit contributions.
See the “Contractual Obligations” section for management’s estimated future pension and other postretirement benefits contributions.
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The Registrants’ future cash flows from operating activities may be affected by the following tax matters:
• In the event of a fully successful IRS challenge to Exelon’s like-kind exchange position, Exelon would be required to either post a bond
or pay the tax and interest for the tax years before the court to appeal the decision. If an adverse decision is reached in 2016, the
potential tax and after-tax interest, exclusive of penalties, that could become payable may be as much as $860 million, of which
approximately $300 million would be attributable to ComEd after consideration of Exelon’s agreement to hold ComEd harmless from any
unfavorable impacts of the after-tax interest amounts on ComEd’s equity, and the balance at Exelon. It is expected that Exelon’s
remaining tax years affected by the litigation will be settled following a final appellate decision which could take several years.
• Exelon, Generation, and ComEd expect to receive tax refunds of approximately $430 million, $190 million, and $260 million,
respectively, in 2016. PECO expects to make tax payments of approximately $7 million related to IRS positions settling in 2016.
• State and local governments continue to face increasing financial challenges, which may increase the risk of additional income tax
levies, property taxes and other taxes or the imposition, extension or permanence of temporary tax levies.
• On December 18, 2015, President Obama signed H.R. 2029, the Protecting Americans from Tax Hikes (PATH) Act. The Act included an
extension of 50% bonus depreciation for 2015—2017. It also includes provisions for 40% and 30% bonus depreciation allowance for
qualified property placed in service in 2018 and 2019, respectively. As a result of the 50% bonus depreciation extension for 2015,
Exelon, Generation, ComEd, PECO, and BGE are estimated to generate incremental cash in 2016 of approximately $690 million, $350
million, $220 million, $70 million, and $50 million, respectively. Furthermore, the extension of 50% bonus depreciation resulted in a
decrease to Generation’s Domestic Production Activities Deduction, reducing cash tax benefits and increasing income tax expense by
approximately $65 million in 2015. Due to the extension of bonus depreciation, ComEd’s 2015 revenue requirement decreased by
approximately $10 million (after-tax).
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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