ComEd 2015 Annual Report Download - page 256

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Retail Gas Group. During 2009, Constellation formed two new entities, which now are part of Generation, and combined them with its
existing retail gas activities into a retail gas entity group for the purpose of entering into a collateralized gas supply agreement with a third-party
gas supplier. While Generation owns 100% of these entities, it has been determined that the retail gas entity group is a VIE because there is not
sufficient equity to fund the group’s activities without the additional credit support that is provided in the form of a parental guarantee. Generation is
the primary beneficiary of the retail gas entity group; accordingly, Generation consolidates the retail gas entity group as a VIE.
The third-party gas supply arrangement is collateralized as follows:
• the assets of the retail gas entity group must be used to settle obligations under the third-party gas supply agreement before it can make
any distributions to Generation,
• the third-party gas supplier has a collateral interest in all of the assets and equity of the retail gas entity group, and
• Generation provides a $75 million parental guarantee to the third-party gas supplier in support of the retail gas entity group.
Other than credit support provided by the parental guarantee, Exelon or Generation do not have any contractual or other obligations to
provide additional financial support under the collateralized third-party gas supply agreement. The third-party gas supply creditors do not have any
recourse to Exelon’s or Generation’s general credit other than the parental guarantee.
Solar Project Entity Group. In 2011, Generation acquired all of the equity interests in Antelope Valley Solar Ranch One (Antelope Valley)
from First Solar, Inc., a 242-MW solar PV project in northern Los Angeles County, California. In addition, Generation owns a number of limited
liability companies that build, own, and operate solar power facilities. While Generation owns 100% of these entities, it has been determined that
certain of the individual solar project entities are VIEs because the entities require additional subordinated financial support in the form of a
parental guarantee of debt, loans from the customers in order to obtain the necessary funds for construction of the solar facilities, or the
customers absorb price variability from the entities through the fixed price power and/or REC purchase agreements. Generation is the primary
beneficiary of the solar project entities that qualify as VIEs because Generation controls the design, construction, and operation of the solar power
facilities. Generation provides operating and capital funding to the solar entities for ongoing construction, operations and maintenance of the solar
power facilities and provides limited recourse related to the Antelope Valley project. In addition, these solar VIE entities have an aggregate amount
of outstanding debt with third parties of $655 million, as of December 31, 2015, for which the creditors have no recourse to Generation. For
additional information on these project-specific financing arrangements refer to Note 14—Debt and Credit Agreements.
Retail Power and Gas Companies. In March 2014, Generation began consolidating retail power and gas VIEs for which Generation is the
primary beneficiary as a result of energy supply contracts that give Generation the power to direct the activities that most significantly affect the
economic performance of the entities. Generation does not have an equity ownership interest in these entities, but provides approximately $12
million in credit support for the retail power and gas companies. These entities are included in Generation’s consolidated financial statements, and
the consolidation of the VIEs do not have a material impact on Generation’s financial results or financial condition.
Wind Project Entity Group. Generation owns and operates a number of wind project limited liability entities, the majority of which were
acquired during 2010 with the acquisition of all of the equity
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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