ComEd 2013 Annual Report Download - page 29

BGE hasunder contractsufficient volumesofpropane for the operation ofthe propane airfacilityandiscapable ofliquefying
sufficient volumesofnatural gasduringthesummer months for operationsofitsliquefiednatural gasfacilityduringpeakwinter
periods. BGE historicallyhasbeen able to arrangeshort-termcontractsor exchangeagreementswithother gascompaniesinthe
event ofshort-term disruptionsto gassuppliesor to meet additional demand.
BGE also participatesintheinterstate marketsbyreleasingpipeline capacityor bundlingpipeline capacitywithgasfor off-system
sales. Off-systemgassalesare low-margindirectsalesofgasto wholesale suppliersofnatural gas. Earnings fromtheseactivities
are sharedbetween shareholdersandcustomers. BGE makesthesesalesaspart ofa programto balanceitssupplyof, andcostof,
natural gas.
Natural Gas Distribution Rate Cases. InDecember 2010,theMDPSC issueda rate order authorizing BGE to increasethegas
distribution baserevenue requirement for service renderedon or after December 4, 2010 by no more than $9.8 million.InMarch
2011,theMDPSC issuedacomprehensive rate order settingforththedetailsofthedecision containedinitsabbreviatedcombined
electric andgas distribution rate order issuedinDecember 2010.
OnJuly27, 2012, BGE filedan application for an increasetoitsgasbase rateswiththeMDPSC. OnFebruary22,2013,theMDPSC
issuedan order inBGE’s 2012 gasrate casefor increasesin annual distribution servicerevenue of$32 million.The electric
distribution rate increasewasset usingan allowedreturn on equityof 9.60%.
OnMay17, 2013, BGE filedan application for an increasetoitsgasbase rateswiththeMDPSC. OnDecember 13,2013,the
MDPSC issuedan order inBGE’s 2013 natural gas distribution rate case authorizingan increasein annual distribution service
revenue of$12 million.Thegas distribution rate increasewasset usingan allowedreturn on equityof 9.60%. The approvednatural
gas distribution rate becameeffectivefor servicesrenderedon or after December 13,2013.
Construction Budget
BGE’s business is capital intensiveandrequires significant investmentsprimarilyin electric andnatural gas distribution andelectric
transmission facilitiesto ensure theadequate capacity, reliabilityandefficiency ofits system. BGE, asa transmission facilities
owner,hasvariousconstruction commitmentsunder PJM’s RTEP as discussedinNote 3 oftheCombinedNotesto Consolidated
Financial Statements. BGE’s mostrecent estimate ofcapital expendituresfor plant additionsandimprovementsfor 2014is
approximately$600 million, which includescapital expendituresrelatedto theSGIP net ofexpected SGIG DOE reimbursements.
ComEd, PECO and BGE
Transmission Services
ComEd, PECO and BGE provideunbundledtransmission serviceunder ratesapprovedbyFERC. FERChasuseditsregulation of
transmission to encouragecompetition for wholesale generation servicesandthedevelopment ofregional structuresto facilitate
regional wholesale markets. Under FERC’s open access transmission policy promulgatedinOrder No. 888, ComEd, PECO and
BGE, asownersoftransmission facilities, are requiredto provide open access to their transmission facilitiesunder filedtariffs at
cost-basedrates. ComEd, PECO and BGE are requiredto complywithFERC’s Standards ofConductregulation governingthe
communication ofnon-public information between the transmission owner’s employeesandwholesale merchant employees.
PJM is theISO andtheFERC-approvedRTO for theMid-Atlantic and Midwestregions. PJM is the transmission provider under,and
theadministrator of, thePJM Open Access Transmission Tariff (PJM Tariff), operatesthePJM energy, capacityandother markets,
and, through central dispatch, controlstheday-to-dayoperationsofthebulkpower systemfor thePJM region.ComEd, PECO and
BGE are membersof PJM andprovideregional transmission service pursuant to thePJM Tariff. ComEd, PECO, BGE andtheother
transmission ownersinPJM have turnedover control oftheir transmission facilitiesto PJM, andtheir transmission systems are
currentlyunder thedispatch control of PJM. Under thePJM Tariff, transmission serviceis providedon a region-wide,open-access
basis usingthe transmission facilitiesofthePJM membersat ratesbasedon thecostsoftransmission service.
ComEd’s transmission ratesare establishedbasedon a formula that wasapprovedbyFERCinJanuary2008. FERC’s order
establishestheagreed-upon treatment ofcostsandrevenuesinthedetermination ofnetworkservice transmission ratesandthe
process for updatingtheformula rate calculation on an annual basis.
PECO default servicecustomersare chargedfor retail transmission servicesthrough arider designedto recover PECO’s PJM
transmission networkservicechargesandRTEP chargeson a full andcurrent basis inaccordancewiththe 2010 electric distribution
rate casesettlement.
23