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20
Thedecreaseintotalrevenuesresultedfromthefollowingsources:
FortheYearsEnded
December31,
Increase
(Decrease)
RevenuesbyTypeofService
2015
2014
(Inmillions)
ContractSales:
Direct
$
1,269
$
2,359
$
(1,090
)
GovernmentalAggregation
1,012
1,184
(172
)
MassMarket
265
452
(187
)
POLR
712
902
(190
)
StructuredSales
558
522
36
TotalContractSales
3,816
5,419
(1,603
)
Wholesale
1,225
461
764
Transmission
138
220
(82
)
Other
205
189
16
TotalRevenues
$
5,384
$
6,289
$
(905
)
FortheYearsEnded
December31,
Increase
(Decrease)
MWHSalesbyChannel
2015
2014
(Inthousands)
ContractSales:
Direct
23,585
44,012
(46.4
)%
GovernmentalAggregation
15,443
19,569
(21.1
)%
MassMarket
3,878
6,773
(42.7
)%
POLR
11,950
15,708
(23.9
)%
StructuredSales
12,902
12,814
0.7
%
TotalContractSales
67,758
98,876
(31.5
)%
Wholesale
7,326
680
977.4
%
TotalMWHSales
75,084
99,556
(24.6
)%
Thefollowingtablessummarizethepriceandvolumefactorscontributingtochangesinrevenues:
SourceofChangeinRevenues
Increase(Decrease)
MWHSalesChannel:
Sales
Volumes
Prices
Gainon
Settled
Contracts
Capacity
Revenue
Total
(Inmillions)
Direct
$
(1,095
)
$
5
$
—
$
—
$
(1,090
)
GovernmentalAggregation
(249
)
77
—
—
(172
)
MassMarket
(193
)
6
—
—
(187
)
POLR
(216
)
26
—
—
(190
)
StructuredSales
3
33
—
—
36
Wholesale
197
(8
)
107
468
764
 
LowersalesvolumesintheDirect,GovernmentalAggregationandMassMarketsaleschannelsprimarilyreflectCES'effortstomore
effectivelyhedgeitsgenerationbyreducingexposuretoweathersensitiveload.Althoughunitpricingwashigheryearoveryearin
theDirect,GovernmentalAggregation,andMassMarketchannels,theincreasewasprimarilyattributabletohighercapacityexpense
asdiscussedbelow,whichisacomponentoftheretailprice,partiallyoffsetbyalowerenergycomponentoftheretailpriceresulting
21
fromloweryearoveryearmarketprices.TheDirect,GovernmentalAggregationandMassMarketcustomerbasewas1.6millionas
ofDecember31,2015,comparedto2.1millionasofDecember31,2014.
ThedecreaseinPOLRsalesof$190millionwasduetolowervolumes,partiallyoffsetbyhigherratesassociatedwithrecentPOLR
auctions.StructuredSalesincreased$36millionduetolowmarketpricesthatincreasedthegainsonvariousstructuredfinancial
salescontractsandhigherstructuredtransactionvolumes.
Wholesalerevenuesincreased$764millionprimarilyduetoanincreaseincapacityrevenuefromhighercapacityprices,increasein
shortterm(nethourlyposition)transactions,andhighernetgainsonfinanciallysettledcontracts,partiallyoffsetbylowerspotmarket
energypriceswhichlimitedadditionalwholesalesales.
Transmission revenue decreased $82 million primarily due to lower congestion revenue resulting from the market conditions
associatedwiththeextremeweathereventsin2014.
Otherrevenueincreased$16millionprimarilyduetohigherleaserevenuesfromadditionalequityinterestsinaffiliatedsaleand
leasebacksrepurchasedinNovember2014.CESearnsleaserevenueassociatedwiththeequityinterestsitpurchased.
OperatingExpenses—
Totaloperatingexpensesdecreased$1,747millionin2015duetothefollowing:
•Fuelcostsdecreased$391millionprimarilyduetolowereconomicdispatchoffossilunitsresultingfromlowspotmarket
energypricesandlowernuclearunitprices,resultingfromthesuspensionoftheDOEnucleardisposalfee,effectiveMay
16,2014.Additionally,fuelcostswereimpactedbyadecreaseinsettlementandterminationcostsrelatedtocoaland
transportationcontracts.Theimpactofterminationsandsettlementsofcoalandtransportationcontractsresultedinapre
taxlossof$67millionand$166millionin2015and2014,respectively.
•Purchasedpowercostsdecreased$694millionduetolowervolumes($888million),partiallyoffsetbyhigherunitprices
($39 million) and higher capacity expenses ($155 million). Lower volumes were primarily due to decreased load
requirementsresultingfromlowersalesasdiscussedabove,partiallyoffsetbylowerfossilgenerationasdiscussedabove.
Thehigherunitpricesareprimarilyduetohigherlossesonfinanciallysettledcontracts,partiallyoffsetbylowermarket
pricesin2015ascomparedto2014.Theincreaseincapacityexpense,whichisacomponentofCES'retailprice,was
primarilytheresultofhighercapacityratesassociatedwithCES'retailsalesobligations.
•Nuclearoperatingcostsincreased$84millionasaresultofhigherplannedoutagecostsandhigheremployeebenefit
expenses.Therewerethreeplannedrefuelingoutagesin2015ascomparedtotwoplannedoutagesin2014.
•Transmissionexpensesdecreased$273millionprimarilyduetoloweroperatingreserveandmarketbasedancillarycosts
associatedwithmarketconditionsresultingfromtheextremeweathereventsin2014.
•Generaltaxesdecreased$31millionprimarilyduetolowergrossreceiptstaxesassociatedwithdecreasedretailsales
volumes.
•PensionandOPEBmarktomarketadjustmentdecreased$267millionto$60million,whichwasimpactedbylowerthan
expectedassetreturns,partiallyoffsetbyanincreaseinthediscountrateusedtomeasurebenefitobligations.
•Otheroperatingexpensesdecreased$212millionprimarilyduetoa$141milliondecreaseinmarktomarketexpenseson
commoditycontractpositionsreflectinglowermarketpricesanda$71milliondecreaseinretailrelatedcosts.
•Impairmentsoflonglivedassetsincreased$34millionduetoimpairmentchargesassociatedwithnoncoreassets.
OtherExpense—
Totalotherexpenseincreased$63millionin2015comparedto2014primarilyduetohigherOTTIonNDTinvestments,partiallyoffset
bytheabsenceofan$8millionlossondebtredemptionsincurredin2014.
DiscontinuedOperations—
Therewerenodiscontinuedoperationsin2015.In2014,discontinuedoperationsprimarilyincludedapretaxgainofapproximately
$142million($78millionaftertax)associatedwiththesaleofcertainhydroelectricassetsonFebruary12,2014.
IncomeTaxes(Benefits)—
CES'effectivetaxratewas36.0%and34.8%for2015and2014,respectively.Theincreaseintheeffectivetaxrateresultedfrom
changesinstateapportionmentfactorsandrealizedtaxbenefitsrecognizedin2014.