ComEd 2013 Annual Report Download - page 163

is a166 MW peakingoilunitlocatedinPhiladelphia,Pennsylvania, which wasplacedinservicein1958. RiversideUnit6isa115
MW peakinggas/kerosene unitthat wasplacedinservicein1970,locatedinBaltimore,Maryland. OnDecember 1,2013,
Generation notified PJM ofitsintention to permanentlyretire RiversideGeneratingStation Unit4byJune 1,2016. RiversideUnit4is
a74 MW intermediate gasunitthat wasplacedinservicein1951alsolocatedinBaltimore,Maryland. Theunitsare beingretired
becausetheyare no longer economic to operate due to theirage,relatively high capital andoperatingcostsanddecliningrevenue
expectations. OnNovember 30,2012, PJM notifiedGeneration that itdid not identify anytransmission systemreliability issues
associatedwiththe proposed Schuylkill Unit 1 retirement date,andasaresult, Schuylkill Unit1wasretiredon January1,2013.On
January7,2013 andDecember 23,2013, PJM notifiedGeneration that itdid not identify anytransmission systemreliability issues
associatedwiththe retirementsofRiversideUnits6and4,respectively. The earlyretirementswill not haveamaterial impacton
Generation or Exelon’s resultsofoperations, cash flows or financial position.
Eddystone Station and Cromby Station. InDecember 2009, Exelon announceditsintention to permanentlyretire three coal-fired
generatingunitsandone oil/gas-firedgeneratingunit,effectiveMay31,2011,inresponsetotheeconomic outlookrelatedto the
continuedoperation ofthesefour units. However, PJM determinedthat transmission reliabilityupgradeswouldbenecessaryto
alleviate reliabilityimpactsandthat thoseupgradeswouldbecompletedinamanner that will permitGeneration’s retirement oftwo
oftheunitson that date andtwooftheunitssubsequent to May31,2011.OnMay31,2011,Cromby GeneratingStation (Cromby)
Unit1and Eddystone GeneratingStation (Eddystone)Unit1were retired. OnMay27, 2011,theFERCapprovedasettlement
providingfor a reliability-must-run rate schedule, which definedcompensation to bepaid to Generation for continuingto operate
Cromby Unit2and Eddystone Unit2.Themonthly fixed-costrecoveryduringthe reliability-must-run periodfor Eddystone Unit2was
approximately$6million,andcoveredoperatingcosts, plusa return on net assets, ofthetwounitsduringthe reliability-must-run
period. Inaddition,Generation wasreimbursedfor variable costs, includingfuel,emissionscosts, chemicals, auxiliarypower andfor
projectinvestment costsduringthe reliability-must-run period. Eddystone Unit2andCromby Unit 2 operatedunder the reliability-
must-run agreement fromJune 1,2011 untiltheirrespective retirement dates, Cromby Unit2onDecember 31,2011 and Eddystone
Unit2onMay31,2012.
DuringtheyearsendedDecember 31,2013,2012,and2011,Generation incurred$1million,$11 million,and$2million ofshut
downcostsreflectedwithinOperatingandmaintenanceexpenseinExelon’s andGeneration’s ConsolidatedStatementsof
OperationsandComprehensiveIncome.Expensefor thewrite downofinventorywasnot material for theyearsended
December 31,2013,2012 and2011.
See Note 1—Significant AccountingPolicesfor further information regardingproperty, plant andequipment policiesandaccounting
for capitalizedsoftware costsfor Exelon,Generation,ComEd, PECO and BGE. See Note 13—DebtandCreditAgreementsfor
further information regardingExelon’s, ComEd’s, and PECO’s property, plant andequipment subjecttomortgageliens.
8. Impairment of Long-Lived Assets
Long-Lived Assets
Generation evaluateslong-livedassetsfor recoverabilitywhenever eventsor changesincircumstancesindicate that thecarrying
amount maynot berecoverable.Inthethirdquarter of2013,lower projectedwindproduction andadecline inpower prices
suggestedthat thecarryingvalue ofcertainwindprojectsmaybeimpaired. Generation concludedthat theestimatedundiscounted
future cash flows andfairvalue ofeleven windprojects, primarilylocatedinWestTexasandMinnesota,were less than their
respectivecarryingvaluesat September 30,2013.Thefairvalue analysis wasprimarilybasedon theincome approach using
significant unobservable inputs(Level 3)includingrevenue andgeneration forecasts, projectedcapital andmaintenance
expendituresand discount rates. Asaresult,long-livedassetsheldandusedwithacarryingamount ofapproximately $75 million
were written downtotheirfairvalue of$32 million anda pre-taximpairment chargeof$43million wasrecordedduringthethird
quarter in operatingandmaintenanceexpenseinExelon’s andGeneration’s ConsolidatedStatementsofOperations. Of the$43
million,$4million wasattributable to non-controllinginterestsfor certainofthewindprojects.
Nuclear Uprate Program
Generation is engagedinindividual projectsaspart ofa plannedpower uprate programacross itsnuclear fleet.When economically
viable,the projectstakeadvantageofnewproduction andmeasurement technologies, newmaterialsandapplication ofexpertise
gainedfromahalf-centuryofnuclear power operations. Basedon ongoingreviews, thenuclear uprate implementation plan was
adjustedduring2013 to cancel certain projects. TheMeasurement UncertaintyRecapture (MUR)uprate projectsat theDresden and
QuadCitiesnuclear stationswere cancelledasaresult ofthecostofadditional plant modificationsidentifiedduringfinal designwork
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