Exelon 2015 Annual Report Download - page 297

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
the remaining life of the CENG nuclear plants as if they were a part of the Generation nuclear fleet, subject to EDF’s rights as a member of CENG
(the Integration Transaction). CENG will reimburse Generation for its direct and allocated costs for such services. As part of the arrangement, Nine
Mile Point Nuclear Station, LLC, a subsidiary of CENG, also assigned to Generation its obligations as Operator of Nine Mile Point Unit 2 under an
operating agreement with Long Island Power Authority, the Unit 2 co-owner. In addition, on April 1, 2014, the Power Services Agency Agreement
(PSAA) was amended and extended until the permanent cessation of power generation by the CENG generation plants.
In addition, on April 1, 2014, Generation made a $400 million loan to CENG, bearing interest at 5.25% per annum and payable out of
specified available cash flows of CENG or payable upon the maturity date of April 1, 2034. Immediately following receipt of the proceeds of such
loan, CENG made a $400 million special distribution to EDF. Unpaid principal and accrued interest on the loan was $300 million as of
December 31, 2015.
Exelon, Generation, and subsidiaries of Generation, EDF and CENG also executed a Fourth Amended and Restated Operating Agreement
for CENG on April 1, 2014, pursuant to which, among other things, CENG committed to make preferred distributions to Generation (after
repayment of the $400 million loan and associated interest) quarterly out of specified available cash flows until Generation has received aggregate
distributions of $400 million plus a return of 8.5% per annum from April 1, 2014 (Preferred Distribution Rights).
Generation and EDF also entered into a Put Option Agreement on April 1, 2014, pursuant to which EDF has the option, exercisable beginning
on January 1, 2016 and thereafter until June 30, 2022, to sell its 49.99% interest in CENG to Generation for a fair market value price determined
by agreement of the parties, or absent agreement, a third-party arbitration process. The appraisers determining fair market value of EDF’s 49.99%
interest in CENG under the Put Option Agreement are instructed to take into account all rights and obligations under the CENG Operating
Agreement, including Generation’s rights with respect to any unpaid aggregate preferred distributions and the related return, and the value of
Generation’s rights to other distributions. Under limited circumstances, the period for exercise of the put option may be extended for 18 months. In
order to exercise its option, EDF must give 60 days advance written notice to Generation stating that it is exercising its option. As of the date
these financial statements were issued, EDF has not given notice to Generation that it is exercising its option.
On April 1, 2014, Generation also executed an Indemnity Agreement pursuant to which Generation indemnified EDF against third-party
claims that may arise from any future nuclear incident (as defined in the Price Anderson Act) in connection with the CENG nuclear plants or their
operations. Exelon guarantees Generation’s obligations under this indemnity.
In addition, on April 1, 2014, Generation, EDF, CENG and Nine Mile Point Nuclear Station, LLC entered into an Employee Matters
Agreement (EMA) that provides for the transfer of CENG employees to Exelon or one of its affiliates and Exelon’s assumption of the sponsorship
of the employee benefit plans (including certain incentive, health and welfare, and postemployment benefit plans, among others) and their related
trusts by Exelon as the plan sponsor as of July 14, 2014. The EMA also generally requires CENG to fund the obligation related to pre-transfer
service of employees, including the underfunded balance of the pension and other postretirement welfare benefit plans measured as of July 14,
2014 by making periodic payments to Generation. These payments will be made on an agreed
290
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.