ComEd 2013 Annual Report Download - page 131

Solar Project Entity Group. In 2011,Constellation formedagroup ofsolar projectlimitedliabilitycompaniesto build, own,and
operate solar power facilities, which are nowpart ofGeneration.Additionally, on September 30,2011,Generation acquiredall ofthe
equityinterestsin Antelope ValleySolar Ranch One (Antelope Valley) fromFirstSolar,Inc., a 230-MW solar PV projectunder
construction in northern LosAngelesCounty, California. While Generation owns100%ofthese entities, ithasbeen determinedthat
certainoftheindividual solar project entitiesare VIEs becausethe entitiesrequire additional subordinatedfinancial support inthe
formofa parental guarantee ofdebt,loansfromthecustomersinorder to obtainthenecessaryfunds for construction ofthesolar
facilities, or thecustomersabsorbpricevariabilityfromthe entitiesthrough thefixedpricepower and/or REC purchaseagreements.
Generation is theprimarybeneficiaryofthesolar project entitiesthat qualify as VIEs becauseGeneration controlsthedesign,
construction,andoperation ofthesolar power facilities. Generation providescapital fundingto thesesolar VIE entitiesfor ongoing
construction ofthesolar power facilities. Inaddition,thesesolar VIE entitieshaveanaggregate amount ofoutstandingdebtwiththird
partiesof$536million,asofDecember 31,2013,for which thecreditorshavenorecoursetoGeneration,however there is limited
recoursetoGeneration withrespecttoremainingequitycontributionsnecessaryto complete the Antelope Valleyproject.For
additional information on these project-specific financingarrangementsrefer to Note 13—DebtandCreditAgreements.
Retail Power Supply Entity. InAugust 2013,Generation executedan agreement to terminate itsenergy supplycontractwitha
retailpower supplycompanythat waspreviouslyaconsolidated VIE. Generation did not haveanownershipinterestinthe entity, but
wastheprimarybeneficiarythrough the energy supplycontract.Asaresult ofthe termination,Generation no longer hasavariable
interestinthe retailpower supplycompanyandceasedconsolidation ofthe entityduringthethirdquarter of2013.Upon
deconsolidation,there wasno gainorloss recognized. Theassets, liabilities, andnon-controllinginterestwere removedfrom
Exelon’s andGeneration’s balancesheet andthechangein non-controllinginterestis alsoreflectedon theStatement ofChangesin
Shareholders’ EquityandtheStatement ofChangesinMember’s Equityfor Exelon andGeneration,respectively.
Wind Project Entity Group. Generation ownsandoperatesanumber ofwindprojectlimitedliabilityentities, themajorityof which
were acquiredon December 9, 2010 when Generation completedtheacquisition ofall oftheequityinterestsofJohnDeere
Renewables, LLC (nowknownasExelon Wind). Generation hasevaluatedthesignificant agreementsandownershipstructuresand
risks ofeach ofitswindprojectsandunderlyingentities, anddeterminedthat certainofthe entitiesare VIEs becauseeither the
projectshave non-controllinginterestholdersthat absorbvariabilityfromthewindprojects, or thecustomersabsorbpricevariability
fromthe entitiesthrough thefixedpricepower and/or REC purchaseagreements. Generation is theprimarybeneficiaryofthewind
project entitiesthat qualify as VIEs becauseGeneration controlsthedesign,construction,andoperation ofthewindpower
facilities. While Generation owns100%ofthemajorityofthewindproject entities, 10 ofthe projectshave non-controllingequity
interestsheldbythirdparties, that currentlyrangebetween 1%and 6%. Of these 10 projects, Generation’s current economic
interestsinnine ofthe projectsare significantlygreater than itsstatedcontractual governancerightsandall ofthese projectshave
reversionaryinterest provisionsthat providethe non-controllinginterestholder witha purchase option,certainof which are
consideredbargain purchaseprices, which, if exercised, transfersownershipofthe projectsto the non-controllinginterestholder
upon either thepassageoftimeortheachievement oftargetedfinancial returns. Theownershipagreementswiththe non-controlling
interestsstate that Generation is to providefinancial support to the projectsin proportion to itscurrent economic interestsinthe
projectsthat currentlyrangebetween 94% and 99%. However,no additional support to these projectsbeyondwhat was
contractuallyrequiredhasbeen providedduring2013.AsofDecember 31,2013,thecarryingamount oftheassetsandliabilities
that are consolidatedasaresult ofGeneration beingtheprimarybeneficiaryofthewind VIE entitiesprimarilyrelate to thewind
generatingassets, PPAintangible assetsandworkingcapital amounts.
AsofDecember 31,2013 and2012,ComEd and PECO did not haveanyconsolidated VIEs.
Unconsolidated Variable Interest Entities
Exelon’s andGeneration’s variable interestsinunconsolidated VIEs generallyincludethree transaction types: (1)equity
investments, (2)energy purchaseandsale contracts, and(3)fuel purchasecommitments. For theequityinvestments, thecarrying
amount oftheinvestmentsisreflectedon theirConsolidatedBalanceSheetsinInvestmentsinaffiliates. For the energy purchase
andsale contractsandthefuel purchasecommitments(commercial agreements), thecarryingamount ofassetsandliabilitiesin
Exelon’s andGeneration’s ConsolidatedBalanceSheetsthat relate to theirinvolvement withtheVIEs are predominatelyrelatedto
workingcapital accountsandgenerallyrepresent theamountsowed by, or owedto,Exelon andGeneration for thedeliveries
associatedwiththecurrent billing cyclesunder thecommercial agreements. Further,Exelon andGeneration have not provided
material debtorequitysupport,liquidityarrangementsor performanceguaranteesassociatedwiththesecommercial agreements.
AsofDecember 31,2013 and2012,Exelon andGeneration had significant unconsolidatedvariable interestsineightandnine,
respectively, VIEs for which theywere not theprimarybeneficiary; includingcertainequityinvestmentsandcertaincommercial
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