Exelon 2015 Annual Report Download - page 57

Table of Contents
The Registrants could be subject to higher costs and/or penalties related to mandatory reliability standards, including the likely
exposure of ComEd, PECO, and BGE to the results of PJM’s RTEP and NERC compliance requirements. (Exelon, Generation, ComEd,
PECO and BGE)
As a result of the Energy Policy Act of 2005, users, owners and operators of the bulk power transmission system, including Generation,
ComEd, PECO and BGE, are subject to mandatory reliability standards promulgated by NERC and enforced by FERC. As operators of natural gas
distribution systems, PECO and BGE are also subject to mandatory reliability standards of the U.S. Department of Transportation. The standards
are based on the functions that need to be performed to ensure the bulk power system operates reliably and are guided by reliability and market
interface principles. Compliance with or changes in the reliability standards could subject the Registrants to higher operating costs and/or
increased capital expenditures. In addition, the ICC, PAPUC and MDPSC impose certain distribution reliability standards on ComEd, PECO and
BGE, respectively. If the Registrants were found not to be in compliance with the mandatory reliability standards, they could be subject to
remediation costs as well as sanctions, which could include substantial monetary penalties.
ComEd, PECO and BGE as transmission owners are subject to NERC compliance requirements. NERC provides guidance to transmission
owners regarding assessments of transmission lines. The results of these assessments could require ComEd, PECO and BGE to incur
incremental capital or operating and maintenance expenditures to ensure their transmission lines meet NERC standards.
See Note 3—Regulatory Matters and Note 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial
Statements for additional information.
The Registrants cannot predict the outcome of the legal proceedings relating to their business activities. An adverse determination could
negatively impact their results of operations, cash flows or financial positions. (Exelon, Generation, ComEd, PECO and BGE)
The Registrants are involved in legal proceedings, claims and litigation arising out of their business operations, the most significant of which
are summarized in Note 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements. Adverse outcomes in
these proceedings could require significant expenditures that could have a material adverse effect on the Registrants’ results of operations.
Generation could be negatively affected by possible Nuclear Regulatory Commission actions that could affect the operations and
profitability of its nuclear generating fleet. (Exelon and Generation)
Regulatory risk. A change in the Atomic Energy Act or the applicable regulations or licenses could require a substantial increase in capital
expenditures or could result in increased operating or decommissioning costs and significantly affect Generation’s results of operations or financial
positions. Events at nuclear plants owned by others, as well as those owned by Generation, could cause the NRC to initiate such actions.
Spent nuclear fuel storage. The approval of a national repository for the storage of SNF, such as the one previously considered at Yucca
Mountain, Nevada, and the timing of such facility opening, will significantly affect the costs associated with storage of SNF, and the ultimate
amounts received from the DOE to reimburse Generation for these costs. The NRC’s temporary storage rule (also referred to as the “waste
confidence decision”) recognizes that licensees can safely store spent nuclear fuel at nuclear power plants for up to 60 years beyond the original
and renewed licensed operating life of the plants. In June 2012, the United States Court of Appeals for the DC Circuit vacated the NRC’s
temporary storage rule on the grounds that the NRC should have conducted a more comprehensive
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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