Exelon 2015 Annual Report Download - page 240

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
purchased power and fuel expense on the face of Exelon’s consolidated Statement of Operations and Comprehensive Income for all periods
presented. The reclassifications described herein were made for presentation purposes and did not affect any of the Registrants’ total revenues or
net income.
Accounting for the Effects of Regulation (Exelon, ComEd, PECO and BGE)
Exelon, ComEd, PECO and BGE apply the authoritative guidance for accounting for certain types of regulation, which requires ComEd,
PECO and BGE to record in their consolidated financial statements the effects of cost-based rate regulation for 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) there is a reasonable expectation that rates are set at levels that will recover the entities’ costs from
customers. Exelon, ComEd, PECO and BGE account for their regulated operations in accordance with regulatory and legislative guidance from the
regulatory authorities having jurisdiction, principally the ICC, the PAPUC, and the MDPSC, in the cases of ComEd, PECO and BGE, respectively,
under state public utility laws and the FERC under various Federal laws. Regulatory assets and liabilities are amortized and the related expense or
revenue is recognized in the Consolidated Statements of Operations consistent with the recovery or refund included in customer rates. Exelon
believes that it is probable that its currently recorded regulatory assets and liabilities will be recovered and settled, respectively, in future rates.
However, Exelon, ComEd, PECO and BGE continue to evaluate their respective abilities to apply the authoritative guidance for accounting for
certain types of regulation, including consideration of current events in their respective regulatory and political environments. If a separable portion
of ComEd’s, PECO’s or BGE’s business was no longer able to meet the criteria discussed above, the affected entities would be required to
eliminate from their consolidated financial statements the effects of regulation for that portion, which could have a material impact on their results
of operations and financial positions. See Note 3—Regulatory Matters for additional information.
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.
Revenues (Exelon, Generation, ComEd, PECO and BGE)
Operating Revenues. Operating revenues are recorded as service is rendered or energy is delivered to customers. At the end of each
month, the Registrants accrue an estimate for the unbilled amount of energy delivered or services provided to customers. ComEd records its best
estimates of the distribution and transmission revenue impacts resulting from changes in rates that ComEd believes are probable of approval by
the ICC and FERC in accordance with its formula rate mechanisms. BGE records its best estimate of the transmission revenue impact resulting
from changes in rates that BGE believes are probable of approval by FERC in accordance with its formula rate mechanism. See Note 3—
Regulatory Matters and Note 6—Accounts Receivable for further information.
RTOs and ISOs. In RTO and ISO markets that facilitate the dispatch of energy and energy-related products, the Registrants generally report
sales and purchases conducted on a net hourly basis in either revenues or purchased power on their Consolidated Statements of Operations and
Comprehensive Income, the classification of which depends on the net hourly activity. In addition, capacity revenue and expense classification is
based on the net sale or purchase position of the Company in the different RTOs and ISOs.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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