Exelon 2015 Annual Report Download - page 281

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)—(Continued)
Run Pumped Storage Project (Muddy Run), respectively. On December 22, 2015, FERC issued a new 40-year license for Muddy Run. The license
term expires on December 1, 2055. The financial impact associated with Muddy Run license commitments is estimated to be in the range of an
incremental $25 million to $35 million, and includes both capital expenditures and operating expenses, primarily relating to fish passage and habitat
improvement projects. At December 31, 2015, $22 million of direct costs associated with the licensing effort have been capitalized.
Generation is working with stakeholders to resolve water quality licensing issues with the MDE for Conowingo, including: (1) water quality,
(2) fish passage and habitat, and (3) sediment. On January 30, 2014, Generation filed a water quality certification application pursuant to
Section 401 of the CWA with MDE for Conowingo, addressing these and other issues, although Generation cannot currently predict the conditions
that ultimately may be imposed. MDE indicated that it believed it did not have sufficient information to process Generation’s application. As a
result, Generation entered into an agreement with MDE to work with state agencies in Maryland, the U.S. Army Corps of Engineers, the U.S.
Geological Survey, the University of Maryland Center for Environmental Science and the U.S. Environmental Protection Agency Chesapeake Bay
Program to design, conduct and fund an additional multi-year sediment study. Generation has agreed to contribute up to $3.5 million to fund the
additional study. Because states must act on applications under Section 401 of the CWA within one year and the sediment study would not be
completed prior to January 31, 2015, Exelon withdrew its application for a water quality certification on December 4, 2014. FERC policy requires
that an applicant resubmit its request for a water quality certification within 90 days of the date of withdrawal. Accordingly, on March 3, 2015,
Generation refiled its application for a water quality certification. Exelon has agreed with MDE to withdraw and refile its application for a water
quality certification as necessary pending completion of the sediment study. On August 7, 2015, US Fish and Wildlife Service (USFWS) submitted
its modified fishway prescription to FERC in the Conowingo licensing proceedings. On September 11, 2015, Exelon filed a request for an
administrative hearing and proposed an alternative prescription to challenge USFWS’s preliminary prescription. Resolution of these issues relating
to Conowingo may have a material effect on Exelon’s and Generation’s results of operations and financial position through an increase in capital
expenditures and operating costs.
The FERC license for Conowingo expired on September 1, 2014. Under the Federal Power Act, FERC is required to issue an annual license
for a facility until the new license is issued. On September 10, 2014, FERC issued an annual license for Conowingo, effective as of the expiration
of the previous license. If FERC does not issue a new license prior to the expiration of an annual license, the annual license will renew
automatically. On March 11, 2015, FERC issued the final Environmental Impact Statement for Conowingo. The stations are currently being
depreciated over their estimated useful lives, which includes the license renewal period. As of December 31, 2015, $23 million of direct costs
associated with licensing efforts have been capitalized.
Regulatory Assets and Liabilities (Exelon, ComEd, PECO and BGE)
Exelon, ComEd, PECO and BGE prepare their consolidated financial statements in accordance with the authoritative guidance for
accounting for certain types of regulation. Under this guidance, regulatory assets represent incurred costs that have been deferred because of their
probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess recovery of costs or accrued credits
that have been deferred because it is probable such amounts will be returned to customers through future regulated rates or represent billings in
advance of expenditures for approved regulatory programs.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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