Exelon 2015 Annual Report Download - page 262

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
(b) These items represent amounts on Exelon’s and Generation’s Consolidated Balance Sheets related to the asset sale agreement with ZionSolutions, LLC. The net assets pledged
for Zion Station decommissioning includes gross pledged assets of $206 million and $319 million as of December 31, 2015 and December 31, 2014, respectively; offset by
payables to ZionSolutions LLC of $189 million and $292 million as of December 31, 2015 and December 31, 2014, respectively. These items are included to provide information
regarding the relative size of the ZionSolutions LLC unconsolidated VIE.
For each unconsolidated VIE, Exelon and Generation assessed the risk of a loss equal to their maximum exposure to be remote and,
accordingly Exelon and Generation have not recognized a liability associated with any portion of the maximum exposure to loss. In addition, there
are no agreements with, or commitments by, third parties that would materially affect the fair value or risk of their variable interests in these
variable interest entities.
Energy Purchase and Sale Agreements. Generation has several energy purchase and sale agreements with generating facilities.
Generation has evaluated the significant agreements, ownership structures and risks of each entity, and determined that certain of the entities are
VIEs because the entity absorbs risk through the sale of fixed price power and renewable energy credits. Generation has reviewed the entities and
has determined that Generation is not the primary beneficiary of the VIEs because Generation does not have the power to direct the activities that
most significantly impact the VIEs economic performance.
ZionSolutions. Generation has an asset sale agreement with EnergySolutions, Inc. and certain of its subsidiaries, including ZionSolutions,
LLC (ZionSolutions), which is further discussed in Note 16—Asset Retirement Obligations. Under this agreement, ZionSolutions can put the assets
and liabilities back to Generation when decommissioning activities under the asset sale agreement are complete. Generation has evaluated this
agreement and determined that, through the put option, it has a variable interest in ZionSolutions but is not the primary beneficiary. As a result,
Generation has concluded that consolidation is not required. Other than the asset sale agreement, Exelon and Generation do not have any
contractual or other obligations to provide additional financial support and ZionSolutions’ creditors do not have any recourse to Exelon’s or
Generation’s general credit.
Investment in Energy Development Projects, Distributed Energy Companies, and Energy Generating Facilities. Generation has
several equity investments in energy development projects and energy generating facilities. Generation has evaluated the significant agreements,
ownership structures and risks of each of its equity investments, and determined that certain of the entities are VIEs because the entity has an
insufficient amount of equity at risk to finance its activities, Generation guarantees the debt of the entity, provides equity support, or provides
operating services to the entity. Generation has reviewed the entities and has determined that Generation is not the primary beneficiary of the
entities that qualify as VIEs because Generation does not have the power to direct the activities that most significantly impact the VIEs economic
performance.
In July 2014, Generation entered into an arrangement to purchase a 90% equity interest and 90% of the tax attributes of a distributed energy
company. Generation’s total equity commitment in this arrangement was $91 million and is paid incrementally over an approximate two year period
(see Note 23—Commitments and Contingencies for additional details). This arrangement did not meet the definition of a VIE and is recorded as an
equity method investment.
In June 2015, 2015 ESA Investco, LLC, then a wholly owned subsidiary of Generation, entered into an arrangement to purchase a 90%
equity interest and 99% of the tax attributes of another distributed energy company. Separate from the equity investment, Generation provided $27
million in cash to the other (10%) equity holder in the distributed energy company in exchange for a convertible
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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