Exelon 2015 Annual Report Download - page 271

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Pennsylvania Retail Electricity and Gas Markets (Exelon and PECO). Beginning in 2011, the PAPUC issued an order outlining the next
steps in its investigation into the status of competition in Pennsylvania’s retail electricity market. The PAPUC found that the existing default
service model presents substantial impediments to the development of a vibrant retail market in Pennsylvania and directed its Office of
Competitive Markets Oversight to evaluate potential intermediate and long-term structural changes to the default service model. Through various
orders, the PAPUC issued default electric service pricing for customers in PECO’s service territory. See Pennsylvania procurement proceedings
discussed above for additional details.
In early 2014, the extreme weather in PECO’s service territory resulted in increased electricity commodity costs causing certain shopping
customers to receive unexpectedly high utility bills. In response to a significant number of customer complaints throughout Pennsylvania, on
April 3, 2014, the PAPUC unanimously voted to adopt two rulemaking orders to address the issue. The first rulemaking order requires electric
generation suppliers to provide more consumer education regarding their contract. The second rulemaking order requires electric distribution
companies to enable customers to switch suppliers within three business days (known as accelerated switching). The improved customer
education and accelerated switching were to be in place within 30 days and six months of approval of the orders, respectively. The orders became
final on June 14, 2014. On December 4, 2014, the PAPUC approved PECO’s implementation plan (known as Bill on Supplier Switch), allowing
PECO to implement accelerated switching by the December 15, 2014 deadline.
On September 12, 2013, the PAPUC issued an Order that initiated an investigation into Pennsylvania’s natural gas retail market, including
the role of the existing default service model and opportunities for market enhancements. On December 18, 2014, the PAPUC issued a Final Order
directing the Office of Competitive Market Oversight (OCMO) to continue its investigation, confirming that natural gas distribution companies
should remain with the default service model for the time being and directing establishment of a working group to examine other competitive
issues. The OCMO has established a working group to review operation of the natural gas retail market and to consider potential recommendations
on competitive issues.
Pennsylvania Act 11 of 2012 (Exelon and PECO). In February 2012, Act 11 was signed into law, which provided the PAPUC authority to
approve the implementation of a distribution system improvement charge (DSIC) in rates designed to recover capital project costs incurred to
repair, improve or replace utilities’ aging electric and natural gas distribution systems in Pennsylvania. Prior to recovering costs pursuant to a
DSIC, the PAPUC’s implementation order requires a utility to have a Long Term Infrastructure Improvement Plan (LTIIP) approved by the
Commission, which outlines how the utility is planning to increase its investment for repairing, improving or replacing aging infrastructure.
On May 7, 2015, the PAPUC approved PECO’s modified natural gas LTIIP. In accordance with the approved LTIIP, PECO plans to spend
$534 million through 2022 to further accelerate the replacement of existing gas mains and to relocate meters from indoors to outside in accordance
with recent PAPUC rulemaking. In addition, on March 20, 2015, PECO filed a petition with the PAPUC for approval of its gas DSIC mechanism for
recovery of gas LTIIP expenditures. On September 11, 2015, the PAPUC entered its Opinion and Order approving PECO’s petition for a gas DSIC.
On March 27, 2015, PECO filed a petition with the PAPUC for approval of its proposed electric DSIC and LTIIP. In accordance with the
LTIIP (System 2020 plan), PECO plans to spend $275 million over the next five years to modernize and storm-harden its electric distribution
system, making it more
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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