Exelon 2015 Annual Report Download - page 273

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
In January 2014, the residential consumer advocate in Maryland filed an appeal to the order issued by the MDPSC on December 13, 2013 in
BGE’s 2013 electric and gas distribution rate cases. The residential consumer advocate filed its related legal memorandum on August 22, 2014,
challenging the MDPSC’s approval of the ERI initiative surcharge. BGE submitted a response to the appeal on October 15, 2014, and a hearing
was held on November 17, 2014. On October 26, 2015, the Circuit Court for Baltimore City issued an order affirming the MDPSC’s decision.
However, on November 30, 2015, the residential consumer advocate filed an appeal of the Circuit Court’s decision with the Maryland Court of
Special Appeals. BGE cannot predict the outcome of this appeal. If the residential consumer advocate’s appeal is successful, BGE could recover
ERI expenditures through other regulatory mechanisms.
Smart Meter and Smart Grid Investments (Exelon and BGE). In August 2010, the MDPSC approved a comprehensive smart grid initiative
for BGE that included the planned installation of 2 million residential and commercial electric and gas smart meters at an expected total cost of
$480 million of which $200 million was funded by SGIG. The MDPSC’s approval ordered BGE to defer the associated incremental costs,
depreciation and amortization, and an appropriate return, in a regulatory asset until such time as a cost-effective advanced metering system is
implemented. As of December 31, 2015 and December 31, 2014, BGE recorded a regulatory asset of $196 million and $128 million, respectively,
representing incremental costs, depreciation and amortization, and a debt return on fixed assets related to its AMI program. As part of the
settlement in BGE’s 2014 electric and gas distribution rate case, the cost of the retired non-AMI meters will be amortized over 10 years.
On February 26, 2014, the MDPSC issued an order authorizing BGE to impose a $75 upfront fee and an $11 recurring fee to customers
electing to opt-out of BGE’s smart meter installation program, effective the later of the first full billing cycle following July 1, 2014, or the AMI
installation date in a customer’s community. The fees authorized by the order will be reviewed after an initial 12 to 18 month period. On
November 25, 2014, the MDPSC issued a decision approving BGE’s proposal to automatically enroll unresponsive customers into the opt-out
program and to charge those customers opt-out fees after BGE has exhausted attempts to schedule a meter installation. On November 5, 2015,
the MDPSC held a hearing to evaluate the $11 recurring monthly fee paid by opt-out customers. Effective with January 2016 bills, the monthly
recurring fee was reduced to $5.50.
As part of the 2015 electric and gas distribution rate case filed on November 6, 2015, BGE is seeking recovery of its smart grid initiative
costs. Of BGE’s requested $200 million, $140 million relates to the smart grid initiative. In support of its recovery of smart grid initiative costs,
BGE provided evidence demonstrating that the benefits exceed the costs by a ratio of 2.3 to 1.0, on a nominal basis.
New Electric Generation (Exelon and BGE). On April 12, 2012, the MDPSC issued an order directing BGE and two other Maryland utilities
to enter into a contract for differences (CfD) with CPV Maryland, LLC (CPV), under which CPV will construct an approximately 700MW natural gas-
fired combined-cycle generation plant in Waldorf, Maryland, that CPV projected will be in commercial operation by June 1, 2015. CPV
subsequently sought to extend that date. The initial term of the proposed contract is 20 years. The CfD mandates that BGE and the other utilities
pay (or receive) the difference between CPV’s contract prices and the revenues CPV receives for capacity and energy from clearing the unit in the
PJM capacity market. The MDPSC’s order requires the three Maryland utilities to enter into a CfD in amounts proportionate to their relative SOS
load. On April 16, 2013, the MDPSC issued an order that required BGE to execute a specific form of contract with CPV, and the parties executed
the contract as of June 6, 2013.
On April 27, 2012, a civil complaint was filed in the U.S. District Court for the District of Maryland by certain unaffiliated parties that
challenged the actions taken by the MDPSC on Federal law grounds. On
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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