ComEd 2015 Annual Report Download - page 263

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
promissory note. In November 2015, Generation sold 69% of its equity interest in 2015 ESA Investco, LLC to a tax equity investor. Generation and
the tax equity investor will contribute $250 million of equity incrementally through December 2016 in proportion to their ownership interests, which
equates to approximately $172 million for the tax equity investor and $78 million for Generation (see Note 23—Commitments and Contingencies for
additional details). Generation and the tax equity investor provide a parental guarantee of up to $275 million in proportion to their ownership
interests in support of 2015 ESA Investco, LLC’s obligation to make equity contributions to the distributed energy company. The investment in the
distributed energy company was evaluated and it was determined to be a VIE for which Generation is not the primary beneficiary. Generation
continues to consolidate 2015 ESA Investco, LLC under the voting interest model.
Both distributed energy companies from the 2014 and 2015 arrangements are considered related parties.
ComEd, PECO and BGE
The financing trust of ComEd, ComEd Financing III, the financing trusts of PECO, PECO Trust III and PECO Trust IV, and the financing
trust of BGE, BGE Capital Trust II are not consolidated in Exelon’s, ComEd’s, PECO’s or BGE’s financial statements. These financing trusts were
created to issue mandatorily redeemable trust preferred securities. ComEd, PECO, and BGE have concluded that they do not have a significant
variable interest in ComEd Financing III, PECO Trust III, PECO Trust IV or BGE Capital Trust II as each Registrant financed its equity interest in
the financing trusts through the issuance of subordinated debt and, therefore, has no equity at risk. See Note 14—Debt and Credit Agreements for
additional information.
3. Regulatory Matters (Exelon, Generation, ComEd, PECO and BGE)
The following matters below discuss the current status of material regulatory and legislative proceedings of the Registrants.
Illinois Regulatory Matters
Energy Infrastructure Modernization Act (Exelon and ComEd).
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Since 2011, ComEd’s electric distribution rates are established through a performance-based rate formula, pursuant to EIMA. EIMA also
provides a structure for substantial capital investment by utilities to modernize Illinois’ electric utility infrastructure. EIMA was scheduled to
sunset, ending ComEd’s performance based rate formula and investment commitment, at December 31, 2017, unless approved to continue
through 2022 by the Illinois General Assembly. On April 3, 2015, the Governor signed legislation extending the EIMA sunset from 2017 to 2019.
Participating utilities are required to file an annual update to the performance-based formula rate tariff on or before May 1, with resulting rates
effective in January of the following year. This annual formula rate update is based on prior year actual costs and current year projected capital
additions (initial revenue requirement). The update also reconciles any differences between the revenue requirement in effect for the prior year and
actual costs incurred for that year (annual reconciliation). See  below for further details. Throughout each year,
ComEd records regulatory assets or regulatory liabilities and corresponding increases or decreases to
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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