ComEd 2015 Annual Report Download - page 156

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activities may be affected by future demand for and market prices of energy and its ability to continue to produce and supply power at competitive
costs as well as to obtain collections from customers.
ComEd’s, PECO’s and BGE’s cash flows from operating activities primarily result from the transmission and distribution of electricity and, in
the case of PECO and BGE, gas distribution services. ComEd’s, PECO’s and BGE’s distribution services are provided to an established and
diverse base of retail customers. ComEd’s, PECO’s and BGE’s future cash flows may be affected by the economy, weather conditions, future
legislative initiatives, future regulatory proceedings with respect to their rates or operations, competitive suppliers, and their ability to achieve
operating cost reductions.
See Notes 3—Regulatory Matters and 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements
for further discussion of regulatory and legal proceedings and proposed legislation.
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Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution
requirements under ERISA, contributions required to avoid benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006,
management of the pension obligation and regulatory implications. On July 6, 2012, President Obama signed into law the Moving Ahead for
Progress in the Twenty-first Century Act, which contains a pension funding provision that results in lower pension contributions in the near term
while increasing the premiums pension plans pay to the Pension Benefit Guaranty Corporation. Certain provisions of the law were applied in 2012
while others took effect in 2013. On August 8, 2014, this funding relief was extended for five years. On November 2, 2015 the funding relief was
extended for an additional three years and premiums pension plans pay to the Pension Benefit Guaranty Corporation were further increased. The
estimated impacts of the law are reflected in the projected pension contributions below.
Exelon expects to make qualified pension plan contributions of $250 million to its qualified pension plans in 2016, of which Generation,
ComEd, PECO and BGE expect to contribute $134 million, $30 million, $28 million and $31 million, respectively. Exelon’s and Generation’s
expected qualified pension plan contributions above include $25 million related to the legacy CENG plans that will be funded by CENG as provided
in an Employee Matters Agreement (EMA) between Exelon and CENG. Exelon’s non-qualified pension plans are not funded. Exelon expects to
make non-qualified pension plan benefit payments of $21 million in 2016, of which Generation, ComEd, PECO and BGE will make payments of $9
million, $2 million, $1 million and $1 million respectively. See Note 17—Retirement Benefits of the Combined Notes to Consolidated Financial
Statements for the Registrants’ 2015 and 2014 pension contributions.
To the extent interest rates decline significantly or the pension plans do not earn the expected asset return rates, annual pension contribution
requirements in future years could increase. Additionally, the contributions above could change if Exelon changes its pension funding strategy.
Unlike qualified pension plans, other postretirement benefit plans are not subject to statutory minimum contribution requirements and certain
plans are not funded. Exelon’s management has historically considered several factors in determining the level of contributions to its funded other
postretirement benefit plans, including levels of benefit claims paid and regulatory implications (amounts deemed prudent to meet regulator
expectations and best assure continued recovery). Exelon expects to make other postretirement benefit plan contributions, including benefit
payments related to unfunded plans, of approximately $35 million in 2016, of which Generation, ComEd, PECO, and BGE
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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