ComEd 2013 Annual Report Download - page 12

Merger with Constellation Energy Group, Inc.
OnMarch 12,2012,Exelon completedthemerger contemplatedbytheMerger Agreement amongExelon,Bolt Acquisition
Corporation,awhollyownedsubsidiaryofExelon (Merger Sub), andConstellation.Asaresult ofthat merger,Merger Subwas
mergedinto Constellation (theInitial Merger)andConstellation becameawhollyownedsubsidiaryofExelon.Followingthe
completion oftheInitial Merger,Exelon andConstellation completedaseriesofinternal corporate organizational restructuring
transactions. Constellation mergedwithandinto Exelon,withExelon continuingasthesurvivingcorporation (theUpstreamMerger).
SimultaneouslywiththeUpstreamMerger,Constellation’s interestinRFHoldCoLLC, which holds Constellation’s interestinBGE,
wastransferredto Exelon Energy DeliveryCompany, LLC, awhollyownedsubsidiaryofExelon that alsoownsExelon’s interestsin
ComEd and PECO. FollowingtheUpstreamMerger andthe transfer ofRFHoldCoLLC, Exelon contributedto Generation certain
subsidiaries, includingthosewithgeneration andcustomer supplyoperationsthat were acquiredfromConstellation asaresult ofthe
Initial Merger andtheUpstreamMerger.See Note 4oftheCombinedNotesto ConsolidatedFinancial Statementsfor additional
information on theConstellation transaction.
Generation
Generation,one ofthe largestcompetitive electric generation companiesintheUnitedStatesasmeasuredbyownedandcontracted
MW, physicallydeliversandmarketspower across multiple geographic regionsthrough itscustomer-facingbusiness, Constellation.
Generation operatesinwell-developedenergy marketsandemploys an integratedhedgingstrategy to managecommodityprice
volatility. Itsgeneration fleet,includingitsnuclear plants which consistentlyoperate at high capacityfactors, also providegeographic
andsupplysourcediversity. Thesefactorshelp Generation mitigate thecurrent challengingconditionsincompetitive energy
markets. Generation operatesasan integratedbusiness, leveragingitsownedandcontractedelectric generation capacityto market
andsell power to wholesale andretailcustomers. Generation’s customersincludedistribution utilities, municipalities, cooperatives,
financial institutions, andcommercial,industrial,governmental,andresidential customersincompetitivemarkets. Generation also
sellsnatural gasandrenewable energy andother energy-relatedproductsandservices, andengagesin natural gasexploration and
production activities.
Generation is apublic utilityunder theFederal Power ActandissubjecttoFERC’s exclusive ratemakingjurisdiction over wholesale
salesofelectricityandthe transmission ofelectricityininterstate commerce.Under theFederal Power Act,FERChasthe authority
to grant or denymarket-basedratesfor salesofenergy, capacityandancillaryservicesto ensure that such salesare justand
reasonable.FERC’s jurisdiction over ratemakingalsoincludesthe authorityto suspendthemarket-basedratesofutilities(including
Generation, which is apublic utilityasFERCdefinesthat term) andset cost-basedratesshouldFERCfindthat itspreviousgrant of
market-basedratesauthorityisno longer justandreasonable.Other matterssubjecttoFERCjurisdiction include,but are not limited
to,third-partyfinancings; reviewofmergers; dispositionsofjurisdictional facilitiesandacquisitionsofsecuritiesofanother public
utilityor an existingoperational generatingfacility; affiliate transactions; intercompanyfinancings andcash management
arrangements; certaininternal corporate reorganizations; andcertainholdingcompanyacquisitionsofpublic utilityandholding
companysecurities. Additionally, ERCOT is not subjecttoregulation by FERCbut performs asimilar function inTexasto that
performedbyRTOs inmarketsregulatedbyFERC. Specific operationsofGeneration are alsosubjecttothejurisdiction ofvarious
other Federal,state,regional andlocal agencies, includingtheNRCandFederal andstate environmental protection agencies.
Additionally, Generation is subjecttomandatoryreliabilitystandards promulgatedbytheNERC, withthe approval ofFERC.
RTOs and ISOs existinanumber ofregionsto provide transmission serviceacross multiple transmission systems. PJM, MISO,
ISO-NE and SPP, havebeen approvedbyFERCasRTOs, andCAISO and ISO-NY havebeen approvedas ISOs. These entities
are responsible for regional planning, managingtransmission congestion,developingwholesale marketsfor energy andcapacity,
maintainingreliability, market monitoring, theschedulingofphysical power salesbrokeredthrough ICE and NYMEX andthe
elimination or reduction ofredundant transmission chargesimposedbymultiple transmission providerswhen wholesale customers
take transmission serviceacross several transmission systems.
Significant Acquisitions
Antelope Valley Solar Ranch One.OnSeptember 30,2011,Exelon announcedthecompletion ofitsacquisition ofall ofthe
interestsin Antelope Valley, a 230-MW solar photovoltaic (PV) projectunder development in northern LosAngelesCounty,
California,fromFirstSolar,Inc., which is developing, building, operating, andmaintainingthe project.Thefirst portion ofthe project
began operationsinDecember 2012,with six additional blocks comingonline in 2013.Exelon hasbeen informedbyFirstSolar of
issuesrelatingto delays inthecertification ofcertaincomponentsrelatingto thefinal twoblocks ofthe project, which will delay
commercial operation ofthesetwoblocks untilthefirsthalfof2014. Thedelaywill not haveamaterial financial effectonExelon.
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