Exelon 2015 Annual Report Download - page 60

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factors increase Generation’s operating costs by requiring Generation to produce additional energy from primarily its fossil facilities or purchase
additional energy in the spot or forward markets in order to satisfy Generation’s obligations to committed third-party sales, including ComEd,
PECO and BGE. These sources generally have higher costs than Generation incurs to produce energy from its nuclear stations.
Nuclear refueling outages. In general, refueling outages are planned to occur once every 18 to 24 months. The total number of refueling
outages, along with their duration, could have a significant impact on Generation’s results of operations. When refueling outages last longer than
anticipated or Generation experiences unplanned outages, capacity factors decrease and Generation faces lower margins due to higher energy
replacement costs and/or lower energy sales.
Nuclear fuel quality. The quality of nuclear fuel utilized by Generation could affect the efficiency and costs of Generation’s operations.
Certain of Generation’s nuclear units have previously had a limited number of fuel performance issues. Remediation actions could result in
increased costs due to accelerated fuel amortization, increased outage costs and/or increased costs due to decreased generation capabilities.
Operational risk. Operations at any of Generation’s nuclear generation plants could degrade to the point where Generation has to shut down
the plant or operate at less than full capacity. If this were to happen, identifying and correcting the causes could require significant time and
expense. Generation could choose to close a plant rather than incur the expense of restarting it or returning the plant to full capacity. In either
event, Generation could lose revenue and incur increased fuel and purchased power expense to meet supply commitments. In addition, Generation
may not achieve the anticipated results under its series of planned power uprates across its nuclear fleet. For plants operated but not wholly
owned by Generation, Generation could also incur liability to the co-owners. For plants not operated and not wholly owned by Generation, from
which Generation receives a portion of the plants’ output, Generation’s results of operations are dependent on the operational performance of the
operators and could be adversely affected by a significant event at those plants. Additionally, poor operating performance at nuclear plants not
owned by Generation could result in increased regulation and reduced public support for nuclear-fueled energy, which could significantly affect
Generation’s results of operations or financial positions. In addition, closure of generating plants owned by others, or extended interruptions of
generating plants or failure of transmission lines, could affect transmission systems that could adversely affect the sale and delivery of electricity
in markets served by Generation.
Nuclear major incident risk. Although the safety record of nuclear reactors generally has been very good, accidents and other unforeseen
problems have occurred both in the United States and abroad. The consequences of a major incident could be severe and include loss of life and
property damage. Any resulting liability from a nuclear plant major incident within the United States, owned or operated by Generation or owned by
others, could exceed Generation’s resources, including insurance coverage. Uninsured losses and other expenses, to the extent not recovered
from insurers or the nuclear industry, could be borne by Generation and could have a material adverse effect on Generation’s results of operations
or financial positions. Additionally, an accident or other significant event at a nuclear plant within the United States or abroad, owned by others or
Generation, could result in increased regulation and reduced public support for nuclear-fueled energy and significantly affect Generation’s results of
operations or financial positions.
Nuclear insurance. As required by the Price-Anderson Act, Generation carries the maximum available amount of nuclear liability insurance.
The required amount of nuclear liability insurance is $375 million for each operating site. Claims exceeding that amount are covered through
mandatory participation in a financial protection pool. In addition, the U.S. Congress could impose revenue-raising measures on the nuclear
industry to pay claims exceeding the $13.5 billion limit for a single incident.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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