ComEd 2013 Annual Report Download - page 137

Illinois Procurement Proceedings ComEd is permittedto recover itselectricityprocurement costsfromretailcustomerswithout
mark-up.SinceJune 2009, asaresult oftheIllinois Settlement Legislation,theIPAdesigns, andtheICC approves, an electricity
supplyportfoliofor ComEd andtheIPAadministersacompetitive process under which ComEd procuresitselectricitysupplyfrom
varioussuppliers, includingGeneration.OnDecember 21,2011,theICC approvedtheIPA’s procurement plan coveringthe period
June 2012 through May2017.
TheIllinois Settlement Legislation requiresComEd to purchaseanincreasingpercentageofthe electricityit purchasesfor customer
deliveriesfromrenewable energy resources. Purchasesbycustomersofelectricityfromcompetitivegeneration suppliers, whether
asaresult ofthecustomers’ ownactionsor asaresult ofmunicipal aggregation,are not includedinthis calculation andhavethe
effectofreducingComEd’s purchaseobligation.ComEd enteredinto several 20-year contractswithunaffiliatedsuppliersin
December 2010 regardingthe procurement oflong-termrenewable energy andassociatedRECs inorder to meet itsobligations
under thestate’s RPS. Under theIllinois Settlement Legislation,all associatedcostsare recoverable fromcustomers.
Asaresult ofreducedComEd loadforecasts, purchasesunder theexistinglong-termcontractsfor energy andtheassociatedRECs
were reducedon a pro-rata basis under the terms ofthosecontractsfor theJune 2013—May2014periodto keep the purchases
under thestatutoryrate impactcap.Thecurtailment’s impactonComEd’s financial position andcash flows was immaterial.
OnDecember 18, 2013,theICC approvedtheIPA’s 2014-2019procurement plan.The plan providesfor twoseparate energy
procurementsduring2014to address potential fluctuationsin energy demanddue to customer switchingbetween ComEd and
competitive electric generation suppliers. TheCommission also approvedtheIPA’s expansion ofenergy efficiency programs for both
ComEd andAmeren.TheICC did not require theacquisition ofadditional renewable resourcesin 2014-2015due to insufficient
available funds to procure thoseresources. Further,theICC again approvedareduction ofpurchasesunder theexistinglong-term
contractsfor energy andtheassociatedRECs on a pro-rata basis under the terms ofthosecontractsfor theJune 2014—May2015
periodto keep the purchasesunder thestatutoryrate impactcap;however theamount ofthereduction will not befinalizedand
approvedbytheICC untilMarch 2014. Thecurtailment’s impactonComEd’s financial position andcash flows is expectedto be
immaterial.See Note 12—DerivativeFinancial Instrumentsfor additional information regardingComEd’s financial swap contractwith
Generation, which expiredinMay2013,andlong-termrenewable energy contracts.
During2013,theICC approved, anddirectedComEd andAmeren (theUtilities) to enter into 20-year sourcingagreementswith
FutureGen Industrial Alliance,Inc(FutureGen), under which FutureGen will retrofitandrepower an existingplant inMorgan County,
Illinois to a 166 MW near zero emissionscoal-fueledgeneration plant,withan assumedcommercial operation date in 2017. The
sourcingagreement providesthat theUtilitieswill payFutureGen’s contractprices, which are set annuallypursuant to a formula rate.
Thecontractpricesare basedon thedifferencebetween thecostsofthefacilityandtherevenuesFutureGen receivesfromselling
capacityandenergy fromtheunitinto theMISO or other markets, aswell asanyother revenue FutureGen receivesfromthe
operation ofthefacility. Theorder alsodirectstheUtilitiesto recover (or pass along) thesecostsfromtheUtilities’ distribution system
customers, regardless ofwhether theypurchase electricityfromtheutilityor fromcompetitive electric generation suppliers. In
February2013,ComEd filedan appeal withtheIllinois Appellate Court questioningthelegalityofrequiringComEd to procure power
for retailcustomerspurchasingelectricityfromcompetitive electric generation suppliers.
OnAugust22,2013,theUtilitiesexecutedthesourcingagreement withFutureGen inaccordancewiththeICC order.However,in
theevent theorder is reversedasaresult ofthe appeal,ComEd’s obligationsunder thesourcingagreement shouldbesuspended.
Dependingon the ultimate outcomeofthe appeals, theeventual market conditionsandthecostofthefacility, thesourcing
agreement couldhaveamaterial adverseimpactonExelon’s andComEd’s cash flows andfinancial positions.
See Note 22—CommitmentsandContingenciesfor additional information on ComEd’s energy commitments.
Energy Efficiency and Renewable Energy Resources Asaresult oftheIllinois Settlement Legislation,electric utilitiesinIllinois
are requiredto includecost-effective energy efficiency resourcesintheir plansto meet an incremental annual programenergy
savings requirement of0.2%ofenergy deliveredto retailcustomersfor theyear endedJune 1,2009, which increasesannuallyto
2.0%ofenergy deliveredintheyear commencingJune 1,2015andeach year thereafter.Additionally, duringthe ten-year period
that began June 1,2008, electric utilitiesmustimplement cost-effectivedemandresponsemeasuresto reduce peakdemandby
0.1%over theprior year for eligible retailcustomers. The energy efficiency anddemandresponsegoalsare subject to rate impact
capseach year.Utilitiesare allowedrecoveryofcostsfor energy efficiency anddemandresponse programs, subject to approval by
theICC. InDecember 2010,theICC approvedComEd’s secondthree-year Energy Efficiency andDemandResponsePlan covering
the periodJune 2011 through May2014. The plansare designedto meet theIllinois Settlement Legislation’s energy efficiency and
demandresponsegoalsthrough May2014, includingreductionsindeliveredenergy to all retailcustomersandinthe peakdemand
ofeligible retailcustomers.
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