ComEd 2013 Annual Report Download - page 205

Basedon theregulatoryagreement supportedbythePAPUC that dictatesGeneration’s rightsandobligationsrelatedto theshortfall
or excess oftrustfunds necessaryfor decommissioningtheseven former PECO nuclear units, regardless ofwhether thefunds held
intheNDT funds are expectedto exceedor fall short ofthe total estimateddecommissioningobligation,decommissioning-related
activitiesare generallyoffset withinExelon’s andGeneration’s ConsolidatedStatementsofOperationsandComprehensiveIncome.
Theoffset ofdecommissioning-relatedactivitieswithintheConsolidatedStatement ofOperationsandComprehensiveIncome
resultsinanequal adjustment to the noncurrent payablesto affiliatesat Generation andan adjustment to theregulatoryliabilitiesat
Exelon. Likewise, PECO hasrecordedan equal noncurrent affiliate receivable fromGeneration andacorrespondingregulatory
liability. Anychangesto thePECO regulatoryagreementscouldimpactExelon’s andGeneration’s abilityto offset
decommissioning-relatedactivitieswithintheConsolidatedStatement ofOperationsandComprehensiveIncome,andtheimpactto
Exelon’s andGeneration’s resultsofoperationsandfinancial position couldbematerial.
Thedecommissioning-relatedactivitiesrelatedto theClinton, Oyster CreekandThree Mile Islandnuclear plants(theformer
AmerGen units) andthe portionsofthePeach Bottomnuclear plantsthat are not subjecttoregulatoryagreementswithrespectto
theNDT funds are reflectedinExelon’s andGeneration’s ConsolidatedStatementsofOperationsandComprehensiveIncome,as
there are no regulatoryagreementsassociatedwiththeseunits.
Refer to Note 3—RegulatoryMattersandNote 25—RelatedPartyTransactionsfor information regardingregulatoryliabilitiesat
ComEd and PECO andintercompanybalancesbetween Generation,ComEd and PECO reflectingtheobligation to refundto
customersanydecommissioning-relatedassetsinexcess ofthe relateddecommissioningobligations.
Zion Station Decommissioning
OnSeptember 1,2010,Generation completedan Asset Sale Agreement (ASA)withEnergySolutionsInc. anditswhollyowned
subsidiaries, EnergySolutions, LLC (EnergySolutions) andZionSolutionsunder which ZionSolutionshasassumedresponsibilityfor
decommissioningZion Station, which is locatedinZion,Illinois andceasedoperation in1998. Specifically, Generation transferredto
ZionSolutionssubstantiallyall oftheassets(other than land) associatedwithZion Station,includingassetsheldin related NDT
funds. Inconsideration for Generation’s transfer ofthoseassets, ZionSolutionsassumeddecommissioningandother liabilities,
excludingtheobligation to disposeof SNF, associatedwithZion Station.Pursuant to theASA,ZionSolutionswill periodicallyrequest
reimbursement fromtheZion Station-related NDT funds for costsincurredrelatedto thedecommissioningeffortsat Zion Station.
During2013,EnergySolutionsenteredadefinitiveacquisition agreement andwasacquiredbyanother Company. Generation
reviewedtheacquisition asit relatesto theASAtodecommission Zion Station.Basedon that review, Generation determinedthat
theacquisition will not adverselyimpactdecommissioningactivitiesunder theASA.
OnJuly14, 2011,three people fileda purportedclass action lawsuitintheUnitedStates DistrictCourt for theNorthern Districtof
Illinois namingZionSolutionsandBankofNewYorkMellon asdefendantsandseeking, amongother things, an accountingfor useof
NDT funds, an injunction againsttheuseof NDT funds, the appointment ofa trustee for theNDT funds, andthe return of NDT funds
to customersofComEd to theextent legallyentitledthereto.OnJuly20,2012,ZionSolutionsandBankofNewYorkMellon fileda
motion to dismiss theamendedcomplaint for failingto state a claim. OnJuly29, 2013,UnitedStates DistrictCourt for theNorthern
DistrictofIllinois dismissedtheamendedcomplaint.OnAugust26, 2013,the plaintiffs fileda noticeofappeal withtheUnitedStates
Court ofAppealsfor theSeventhCircuit.OnJanuary31,2014, theUnitedStatesCourt ofAppealsfor theSeventhCircuitdismissed
the appeal.
ZionSolutionsissubjecttocertainrestrictionson itsabilityto requestreimbursementsfromtheZion Station NDT funds asdefined
withintheASA.Therefore,the transfer oftheZion Station assets did not qualify for asset sale accountingtreatment and, asaresult,
the related NDT funds were reclassifiedto pledgedassetsfor Zion Station decommissioningwithinGeneration’s andExelon’s
ConsolidatedBalanceSheetsandwill continue to bemeasuredinthesamemanner asprior to thecompletion ofthe transaction.
Additionally, the transferredAROfor decommissioningwasreplacedwithapayable to ZionSolutionsinGeneration’s andExelon’s
ConsolidatedBalanceSheets. Changesinthevalue oftheZion Station NDT assets, net ofapplicable taxes, will berecordedasa
changeinthepayable to ZionSolutions. At no point will thepayable to ZionSolutionsexceedthe projectbudget ofthecosts
remainingto decommission Zion Station.Generation hasretaineditsobligation to theSNF followingZionSolutionscompletion ofits
contractual obligations, to transfer theSNF at Zion Station to theDOE for ultimate disposal,andto complete all remaining
decommissioningactivitiesassociatedwiththeSNF storagefacility. Generation hasaliabilityofapproximately$82million, which is
includedwithinthenuclear decommissioningAROat December 31,2013.Generation alsohasretained NDT assetsto fundits
obligation to maintainandtransfer theSNF at Zion Station andto complete all remainingdecommissioningactivitiesfor theSNF
storagefacility. Anyshortageoffunds necessaryto maintaintheSNF anddecommission theSNF storagefacilityisultimately
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