ComEd 2015 Annual Report Download - page 102

Table of Contents
See Note 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for further detail related to
environmental matters, including the impact of environmental regulation.
Other Regulatory and Legislative Actions
NRC Task Force Insights from the Fukushima Daiichi Accident (Exelon and Generation). In July 2011, an NRC Task Force formed in
the aftermath of the March 11, 2011, 9.0 magnitude earthquake and ensuing tsunami, that seriously damaged the nuclear units at the Fukushima
Daiichi Nuclear Power Station, issued a report of its review of the accident, including tiered recommendations for future regulatory action by the
NRC to be taken in the near and longer term. The Task Force’s report concluded that nuclear reactors in the United States are operating safely and
do not present an imminent risk to public health and safety. The NRC and its staff have issued orders and implementation guidance for
commercial reactor licensees operating in the United States. The NRC and its staff are continuing to evaluate additional requirements. Generation
has assessed the impacts of the Tier 1 orders and information requests and will continue monitoring the additional recommendations under review
by the NRC staff, both from an operational and a financial impact standpoint. A comprehensive review of the NRC Tier 1 orders and information
requests, as well as preliminary engineering assumptions and analysis, indicate that the financial impact of compliance for Generation, net of
expected co-owner reimbursements, for the period from 2016 through 2019 is expected to be between approximately $175 million and $200 million
of capital (which includes approximately $25 million for the CENG plants) and $25 million of operating expense (which includes approximately $5
million for the CENG plants). Generation’s current assessments are specific to the Tier 1 recommendations as the NRC has not taken specific
action with respect to the Tier 2 and Tier 3 recommendations. Exelon and Generation are unable to conclude at this time to what extent any
actions to comply with the requirements of Tier 2 and Tier 3 will impact their future financial position, results of operations, and cash flows.
Generation will continue to engage in nuclear industry assessments and actions and stakeholder input. See ITEM 1A. RISK FACTORS for
additional information.
Financial Reform Legislation (Exelon, Generation, ComEd, PECO, and BGE). The Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Act) was enacted in July 2010. The part of the Act that applies to Exelon is Title VII, which is known as the Dodd-Frank Wall
Street Transparency and Accountability Act (Dodd-Frank). Dodd-Frank requires the creation of a new regulatory regime for over-the-counter swaps
(Swaps), including mandatory clearing for certain categories of Swaps, incentives to shift Swap activity to exchange trading, margin and capital
requirements, and other obligations designed to promote transparency. For non security-based Swaps including commodity Swaps, Dodd-Frank
empowers the Commodity Futures Trading Commission (CFTC) to promulgate regulations implementing the law’s objectives. The primary aim of
Dodd-Frank is to regulate the key intermediaries in the Swaps market, which entities are either swap dealers (SDs), major swap participants
(MSPs), and certain other financial entities, but the law also applies to a lesser degree to end-users of Swaps. On January 12, 2015, President
Obama signed into law a bill that exempts from margin requirements Swaps used by end-users to hedge or mitigate commercial risk. Moreover,
the CFTC’s Dodd-Frank regulations preserve the ability of end users in the energy industry to hedge their risks using Swaps without being subject
to mandatory clearing, and excepts or exempts end-users from many of the other substantive regulations. Accordingly, as an end-user, Generation
is conducting its commercial business in a manner that does not require registration with the CFTC as an SD or MSP. Generation does not
anticipate transacting in the future in a manner in which it would become a SD or MSP.
There are, however, some rules, including the capital and margin rules for (non-cleared) Swaps that do not impact Generation’s collateral
requirements directly, but may have an indirect impact.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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