ComEd 2013 Annual Report Download - page 242

CERCLA,or similar laws, for theinvestigation andremediation ofcontaminatedpropertyat four MidwestGeneration plant sites, (ii) it
hasidentifiedstationsfor which a reasonable estimate for investigation and/ or remediation cannot bemadeand (iii) itandtheIllinois
EPA enteredinto ComplianceCommitment Agreementsoutliningspecifiedenvironmental remediation measuresandgroundwater
monitoringactivitiesto beundertaken at itsCrawford, Powerton,Joliet,Will CountyandWaukegan generatingstations. At this time,
however,ComEd andGeneration do not havesufficient information to reasonablyassess the potential likelihoodor magnitudeof
anyremediation requirementsthat maybeasserted. For these reasons, ComEd andGeneration are unable to predictwhether and
to what extent theymayultimatelybeheldresponsible for remediation andother costsrelatingto thegeneratingstationsandasa
result no liabilityhasbeen recordedasofDecember 31,2013.Anyliabilityimposedon ComEd or Generation for environmental
mattersrelatingto thegeneratingstationscouldhaveamaterial adverseimpactontheirfuture resultsofoperationsandcash flows.
Under a supplemental agreement reachedin 2003, MidwestGeneration agreedto reimburseComEd andGeneration for 50%ofthe
specific asbestosclaims pendingasofFebruary2003 andrelatedexpensesless recoveryofinsurancecostsandagreedto a
sharingarrangement for liabilitiesandexpensesassociatedwithfuture asbestos-relatedclaims asspecifiedintheagreement.In
addition to thesale agreement, MidwestGeneration alsorequestedto rejectthis supplemental agreement intheJanuary17, 2014
plan supplement to itsbankruptcy filing. Exelon andGeneration hadpreviouslyexpected MidwestGeneration or itssuccessor would
remainresponsible for asbestospersonal injuryclaims filedpost-Petition Date,andasaresult hadnot recordedaliabilityfor such
amounts. Exelon andGeneration nowbelievethat therejection ofthe1999 sale andsupplemental agreementsisprobable,andasa
result,Generation hasincreaseditsreservefor asbestos-relatedbodilyinjuryclaims at December 31,2013 by $25million.The
increaseinthereservewasestimatedusingactuarial assumptionsandanalysesavailable to Generation.Generation’s exposure
could differ to theextent newinformation is receivedor madeavailable. MidwestGeneration publicly disclosedinitsquarter ending
September 30,2013 Form10-Q that theyhad$53million recordedrelatedto asbestosbodilyinjuryclaims under thecontractual
indemnitywithComEd. If theagreementsare rejected, Exelon andGeneration maybe entitledto damagesassociatedwiththe
agreement terminations. Theseamountsare consideredto becontingent gainsandwouldnot berecognizeduntil realized.
OnOctober 18, 2013,NRGEnergy enteredinto an agreement to buy EME’s portfolioofgeneration subjecttoregulatoryapprovals.
Exelon continuesto monitor all aspectsofthebankruptcy; the proposedpurchaseby NRGhasnot impactedanyaccounting
conclusionsasofDecember 31,2013.
InMay2010,theUnitedStatesandState ofIllinois initiatedalawsuitagainstMidwestGeneration,ComEd and EME allegingClean
AirActviolationsrelatingto themodification and/or operation of six (coal)electric generation plantsinNorthern Illinois, which ComEd
soldto MidwestGeneration/EME in1999. Thegovernment partiessoughtinjunctive reliefand civil penaltiesagainst all defendants,
although not all oftheclaims specificallypertainedto ComEd. OnMarch 16, 2011,theDistrictCourt grantedComEd’s motion to
dismiss theMay2010 complaint initsentiretyasit relatesto ComEd. OnJanuary3,2012,upon leaveoftheDistrictCourt,the
government partiesappealedthedismissal ofComEd to theU.S. CircuitCourt ofAppealsfor theSeventhCircuit.OnJuly8,2013,
theCircuitCourt affirmedtheDistrictCourt’s dismissal ofthecomplaint againstComEd. OnSeptember 19, 2013,theCircuitCourt
deniedthe petition for a rehearingfiledbythegovernmental parties. Thegovernment parties did not seekUnitedStatesSupreme
Court reviewoftheSeventhCircuit’s decision.Thedeadline for seekingsuch reviewwasinDecember 2013.InlightoftheCircuit
Court decision resolvingthis matter infavor ofComEd, no reservehasbeen established.
Solid and Hazardous Waste
Cotter Corporation. TheU.S. EPAhasadvisedCotter Corporation (Cotter), aformer ComEd subsidiary, that itis potentiallyliable in
connection withradiological contamination at a site knownastheWestLakeLandfill inMissouri. OnFebruary18, 2000,ComEd sold
Cotter to an unaffiliatedthird-party. Aspart ofthesale,ComEd agreedto indemnify Cotter for anyliabilityarisinginconnection with
theWestLakeLandfill.Inconnection withExelon’s 2001 corporate restructuring, this responsibilityto indemnify Cotter was
transferredto Generation.OnMay29, 2008, theU.S. EPAissuedaRecordofDecision approvingtheremediation option submitted
by Cotter andthetwoother PRPs that requiredadditional landfill cover.Thecurrent estimatedcostofthe anticipatedlandfill cover
remediation for thesite is approximately$42million, which will be allocatedamongall PRPs. Generation hasaccruedwhat it
believesto beanadequate amount to cover itsanticipatedshare ofsuch liability. By letter datedJanuary11,2010,theU.S. EPA
requestedthat thePRPs performasupplemental feasibilitystudy for a remediation alternativethat wouldinvolvecomplete
excavation oftheradiological contamination.OnSeptember 30,2011,thePRPs submittedthefinal supplemental feasibilitystudy to
theU.S. EPAfor review. InJune 2012,theU.S. EPArequestedthat thePRPs performadditional analysis andgroundwater sampling
aspart ofthesupplemental feasibilitystudy that couldtake up to one year to complete,andsubsequentlyrequestedadditional
analysis samplingandmodelingto beconductedinto 2014. Inlightoftheseadditional requests, itis unknownwhen theU.S EPAwill
proposearemedy for public comment.Thereafter theU.S. EPAwill selectafinal remedy andenter into a Consent Decree withthe
PRPs to effectuate theremedy. Acomplete excavation remedy wouldbesignificantlymore expensivethan the previouslyselected
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