ComEd 2013 Annual Report Download - page 124

includedin earnings at Exelon,Generation and BGE. Unrealizedgainsandlosses, net oftax, for Generation’s, ComEd’s and
PECO’s available-for-sale securitiesare reportedinOCI. Anydecline inthefairvalue ofComEd’s and PECO’s available-for-sale
securitiesbelowthecostbasis is reviewedto determine if such decline is other-than-temporary. If thedecline is determinedto be
other-than-temporary, thecostbasis oftheavailable-for-sale securitiesiswritten downtofairvalue asanewcostbasis andthe
amount ofthewrite-downis includedin earnings. See Note 15—Asset Retirement Obligationsfor information regardingmarketable
securitiesheld by NDT funds andNote 23—Supplemental Financial Information for additional information regardingComEd’s and
PECO’s regulatoryassetsandliabilities.
Property, Plant and Equipment
Property, plant andequipment is recordedat original cost.Original costincludeslabor,materialsandconstruction overhead. When
appropriate,original costalsoincludescapitalizedinterestfor Generation andExelon Corporate andAFUDC for regulatedproperty
at ComEd, PECO and BGE. Thecostofrepairsandmaintenance,includingplannedmajor maintenanceactivitiesandminor
replacementsofproperty, is chargedto maintenanceexpenseasincurred. For constructedassets, Exelon capitalizesconstruction-
relateddirectlabor andmaterial costs. ComEd, PECO and BGE alsocapitalizedindirectconstruction costsincludinglabor and
relatedcostsofdepartmentsassociatedwithsupportingconstruction activities.
ThirdpartiesreimburseComEd, PECO and BGE for all or a portion ofexpendituresfor certaincapital projects. Such contributionsin
aid ofconstruction costs (CIAC) are recordedasareduction to Property, Plant andEquipment. DOE SGIG funds reimbursedto
PECO and BGE are accountedfor asCIAC.
For Generation,upon retirement,thecostofpropertyischargedto accumulateddepreciation inaccordancewiththecomposite
methodofdepreciation.Upon replacement ofan asset,thecoststo removetheasset,net ofsalvage,are capitalizedto gross plant
when incurredaspart ofthecostofthenewly-installedasset andrecordedto depreciation expenseover thelifeofthenewasset.
Removal costs, net ofsalvage,incurredfor propertythat will not be replacedischargedto operatingandmaintenanceexpenseas
incurred.
For ComEd, PECO and BGE, upon retirement,thecostofproperty, net ofsalvage,ischargedto accumulateddepreciation in
accordancewiththecomposite methodofdepreciation.ComEd’s and BGE’s depreciation expenseincludestheestimatedcostof
dismantlingandremovingplant fromservice upon retirement, which is consistent witheach utility’s regulatoryrecoverymethod.
ComEd’s and BGE’s actual incurredremoval costsare appliedagainst a relatedregulatoryliability. PECO’s removal costsare
capitalizedto accumulateddepreciation when incurred, andrecordedto depreciation expenseover thelifeofthenewasset
constructedconsistent with PECO’s regulatoryrecoverymethod.
Generation’s oilandgasexploration andproduction activitiesconsistofworkinginterestsingasproducingfields. Generation
accountsfor theseactivitiesunder thesuccessful effortsmethodofaccounting. Acquisition,development andexploration costsare
capitalized. Costsofdrillingexploratorywellsare initiallycapitalizedandlater chargedto expenseif reservesare not discoveredor
deemednot to becommerciallyviable.Other exploratorycostsare chargedto expensewhen incurred.
See Note 7—Property, Plant andEquipment,Note 9—JointlyOwnedElectric UtilityPlant andNote 23—Supplemental Financial
Information for additional information regardingproperty, plant andequipment.
Nuclear Fuel
Thecostofnuclear fuel is capitalizedwithin property, plant andequipment andchargedto fuel expenseusingtheunit-of-production
method. Theestimated disposal costof SNF is establishedper theStandardWaste ContractwiththeDOE andisexpensedthrough
fuel expense at one mill ($0.001)per kWh ofnet nuclear generation.On-site SNF storagecostsare beingreimbursedbytheDOE
sinceaDOE (or government-owned) long-termstoragefacilityhasnot been completed. See Note 22—Commitmentsand
Contingenciesfor additional information regardingtheSNF disposal fee.
Nuclear Outage Costs
Costsassociatedwithnuclear outages, includingplannedmajor maintenanceactivities, are expensedto operatingandmaintenance
expenseorcapitalizedto property, plant andequipment (basedon the nature oftheactivities) inthe periodincurred.
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