ComEd 2015 Annual Report Download - page 250

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
For commodity derivative contracts Generation no longer utilizes the election provided for by the cash flow hedge designation and de-
designated all of its existing cash flow hedges prior to the Constellation merger. Because the underlying forecasted transactions remained
probable, the fair value of the effective portion of these cash flow hedges was frozen in accumulated OCI and was reclassified to results of
operations when the forecasted purchase or sale of the energy commodity occurred through March 31, 2015. The effect of this decision is that all
derivatives executed to hedge economic risk related to commodities are recorded at fair value with changes in fair value recognized through
earnings for the combined company.
As part of Generation’s energy marketing business, Generation enters into contracts to buy and sell energy to meet the requirements of its
customers. These contracts include short-term and long-term commitments to purchase and sell energy and energy-related products in the energy
markets with the intent and ability to deliver or take delivery of the underlying physical commodity. Normal purchases and normal sales are
contracts where physical delivery is probable, quantities are expected to be used or sold in the normal course of business over a reasonable period
of time and will not be financially settled. Revenues and expenses on derivative contracts that qualify, and are designated, as normal purchases
and normal sales are recognized when the underlying physical transaction is completed. While these contracts are considered derivative financial
instruments, they are not required to be recorded at fair value, but rather are recorded on an accrual basis of accounting. See Note 13—Derivative
Financial Instruments for additional information.
Retirement Benefits (Exelon, Generation, ComEd, PECO and BGE)
Exelon sponsors defined benefit pension plans and other postretirement benefit plans for essentially all Generation, ComEd, PECO, BGE
and BSC employees.
The measurement of the plan obligations and costs of providing benefits under these plans involve various factors, including numerous
assumptions and accounting elections. The assumptions are reviewed annually and at any interim remeasurement of the plan obligations. The
impact of assumption changes or experience different from that assumed on pension and other postretirement benefit obligations is recognized
over time rather than immediately recognized in the income statement. Gains or losses in excess of the greater of ten percent of the projected
benefit obligation or the MRV of plan assets are amortized over the expected average remaining service period of plan participants. See Note 17—
Retirement Benefits for additional discussion of Exelon’s accounting for retirement benefits.
Equity Investment Earnings (Losses) of Unconsolidated Affiliates (Exelon and Generation)
Exelon and Generation include equity in earnings from equity method investments in qualifying facilities, power projects and joint ventures, in
equity in earnings (losses) of unconsolidated affiliates within their Consolidated Statements of Operations and Comprehensive Income. Equity in
earnings (losses) of unconsolidated affiliates also includes any adjustments to amortize the difference, if any, except for goodwill and land,
between their cost in an equity method investment and the underlying equity in net assets of the investee at the date of investment.
Exelon and Generation continuously monitor for issues that potentially could impact future profitability of these equity method investments
and which could result in the recognition of an impairment loss if such investment experiences an other-than-temporary decline in value.
New Accounting Pronouncements (Exelon, Generation, ComEd, PECO and BGE)
Exelon has identified the following new accounting standards that have been recently adopted that management believes may significantly
affect the Registrants.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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