Exelon 2015 Annual Report Download - page 298

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
payment schedule or upon the occurrence of certain specified events, such as EDF’s disposition of a majority of its interest in CENG. However, in
the event that EDF exercises its rights under the Put Option, all payments not made as of the put closing date shall accelerate to be paid
immediately prior to such closing date.
As a condition to obtaining regulatory approval for the NOSA and related transactions from the NRC, Exelon executed a support agreement
pursuant to which Exelon may be required under specified circumstances to provide up to $245 million of financial support to CENG (Exelon
Support Agreement). The Exelon Support Agreement supersedes a previous support agreement under which Generation had agreed to provide up
to $205 million of financial support for CENG. In addition, Exelon executed a Guarantee pursuant to which Exelon may be required under specified
circumstances to provide up to $165 million in additional financial support for CENG. A previous support agreement executed by an affiliate of EDF
remains in effect under which the EDF affiliate may be required to provide up to approximately $145 million of financial support for CENG under
specified circumstances. The agreements were executed on April 1, 2014 when the NRC licenses were transferred to Generation. No liability has
been recognized by Exelon for the guarantees.
Prior to April 1, 2014, Exelon and Generation accounted for their investment in CENG under the equity method of accounting. From
January 1, 2014, through March 31, 2014, Generation recorded $19 million of equity in losses of unconsolidated affiliates related to its investment
in CENG and recorded $17 million of revenues from CENG. For the twelve months ended December 31, 2013, Generation recorded $9 million of
equity in losses of unconsolidated affiliates related to its investment in CENG and $56 million of revenues from CENG. The book value of
Generation’s investment in CENG prior to the consolidation was $1.9 billion, and the book value of the AOCI related to CENG prior to consolidation
was $116 million, net of taxes of $77 million.
As a result of the consolidation of CENG on April 1, 2014, there are several additional transactions included in Exelon’s and Generation’s
Consolidated Financial Statements between CENG and Exelon’s affiliates that are considered related party transactions to Generation. As further
described in Note 26—Related Party Transactions, EDF and Generation had a PPA with CENG under which they purchased 15% and 85%,
respectively, of the nuclear output owned by CENG that was not sold to third parties under pre-existing PPAs through December 31, 2014.
Beginning January 1, 2015 and continuing through the life of the respective plants, EDF and Generation purchase 49.99% and 50.01%,
respectively, of the nuclear output owned by CENG not subject to other contractual agreements. Beginning April 1, 2014, CENG’s sales to
Generation have been eliminated in consolidation. For the years ended December 31, 2015 and 2014, Generation had sales to EDF of $488 million
and $137 million, respectively. See discussion above and Note 2—Variable Interest Entities for additional information regarding other transactions
between CENG and EDF included within Exelon and Generation’s consolidated financial statements and for additional information about the
Registrants VIE’s.
Accounting for the Consolidation of CENG
The transfer of the nuclear operating licenses and the execution of the NOSA on April 1, 2014, resulted in the derecognition of the equity
method investment in CENG and the recording of all assets, liabilities and EDF’s noncontrolling interest in CENG at fair value on Exelon’s and
Generation’s Consolidated Balance Sheets. As a result of the consolidation, Exelon and Generation recorded a net gain of $261 million within their
respective Consolidated Statements of Operations and Comprehensive Income. This gain consists of approximately $136 million related to the
step up to fair value basis of
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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