ComEd 2013 Annual Report Download - page 128

wasfrozen inaccumulated OCI andwill bereclassifiedto resultsofoperationswhen theforecastedpurchaseorsale ofthe energy
commodityoccurs, or becomesprobable ofnot occurring. None ofConstellation’s designatedcash flowhedgesfor commodity
transactionsprior to themerger were re-designatedascash flowhedges. Theeffectofthis decision is that all derivativesexecutedto
hedgeeconomic risk for commoditiesare recordedat fairvalue withchangesinfairvalue recognizedthrough earnings for the
combinedcompany.
Aspart ofGeneration’s energy marketingbusiness, Generation entersinto contractsto buyandsell energy to meet therequirements
ofitscustomers. Thesecontractsincludeshort-termandlong-termcommitmentsto purchaseandsell energy andenergy-related
productsinthe energy marketswiththeintent andabilityto deliver or takedeliveryoftheunderlyingphysical commodity. Normal
purchasesandnormal salesare contractswhere physical deliveryisprobable,quantitiesare expectedto beusedor soldinthe
normal courseofbusiness over a reasonable periodoftimeandwill not befinanciallysettled. Revenuesandexpenseson derivative
contractsthat qualify, andare designated, asnormal purchasesandnormal salesare recognizedwhen theunderlyingphysical
transaction is completed. While thesecontractsare consideredderivativefinancial instruments, theyare not requiredto berecorded
at fairvalue,but rather are recordedon an accrual basis ofaccounting. See Note 12—DerivativeFinancial Instrumentsfor additional
information.
Retirement Benefits
Exelon sponsorsdefinedbenefit pension plansandother postretirement benefit plansfor essentiallyall Generation,ComEd, PECO,
BGE and BSC employees. EffectiveMarch 12,2012,Exelon becamethesponsor ofall ofConstellation’s definedbenefit pension
andother postretirement benefit plansanddefinedcontribution savings plans.
Themeasurement ofthe plan obligationsandcostsofprovidingbenefitsunder these plansinvolvevariousfactors, including
numerousassumptionsandaccountingelections. Theassumptionsare reviewedannuallyandat anyinterim remeasurement ofthe
plan obligations. Theimpactofassumption changesor experiencedifferent fromthat assumedon pension andother postretirement
benefitobligationsisrecognizedover time rather than immediatelyrecognizedintheincomestatement.Gainsor lossesinexcess of
thegreater often percent ofthe projectedbenefitobligation or theMRVofplan assetsare amortizedover theexpectedaverage
remainingservice periodofplan participants. See Note 16—Retirement Benefitsfor additional discussion ofExelon’s accountingfor
retirement benefits.
Equity Investment Earnings (Losses) of Unconsolidated Affiliates
Exelon andGeneration includeequityin earnings fromequitymethodinvestmentsinqualifyingfacilities, power projectsandjoint
ventures, includingGeneration’s 50.01%interestinCENG, inequityin earnings (losses) ofunconsolidatedaffiliates. Equityin
earnings (losses) ofunconsolidatedaffiliatesalsoincludesanyadjustmentsto amortizethedifference,ifany, except for goodwill and
land, between theircostinanequitymethodinvestment andtheunderlyingequityin net assetsoftheinvestee at thedate of
investment.See Note 5—Investment inCENG andNote 25—RelatedPartyTransactionsfor additional discussion ofExelon’s and
Generation’s investment inCENG.
Exelon andGeneration continuouslymonitor for issuesthat potentiallycouldimpactfuture profitabilityoftheseequitymethod
investmentsand which couldresult intherecognition ofan impairment loss if such investment experiencesan other than temporary
decline invalue.
New Accounting Pronouncements
Exelon hasidentifiedthefollowingnewaccountingpronouncementsthat havebeen recentlyadoptedor issuedthat mayaffect
Exelon.
Presentation of Items Reclassified out of Accumulated Other Comprehensive Income
InFebruary2013,theFASB issuedauthoritativeguidancerequiringentitiesto present either inthe notesor parentheticallyon the
faceofthefinancial statements, reclassificationsfromeach component ofaccumulatedother comprehensiveincomeandthe
affectedincomestatement line items. Entitiesonlyneedto disclosetheaffectedincomestatement line itemfor components
reclassifiedto net incomeintheir entirety; otherwise,across-referencetothe relatednote shouldbe provided. This guidancewas
effectivefor theRegistrantsfor periods beginningafter December 15, 2012 andwasrequiredto be appliedprospectively. Asthis
guidance providesonly disclosure requirements, theadoption ofthis standard did not impactExelon’s resultsofoperations, cash
flows or financial positions. See Note 21—ChangesinAccumulatedOther ComprehensiveIncomefor thenew disclosures.
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