ComEd 2015 Annual Report Download - page 288

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Electric generation-related regulatory asset. As a result of the deregulation of electric generation, BGE ceased to meet the requirements
for accounting for a regulated business for the previous electric generation portion of its business. As a result, BGE wrote-off its entire individual,
generation-related regulatory assets and liabilities and established a single, generation-related regulatory asset to be collected through its regulated
rates, which is being amortized on a basis that approximates the pre-existing individual regulatory asset amortization schedules. The portion of
this regulatory asset that does not earn a regulated rate of return was $19 million as of December 31, 2015, and $28 million as of December 31,
2014. BGE will continue to amortize this amount through 2017.
Rate stabilization deferral. In June 2006, Senate Bill 1 was enacted in Maryland and imposed a rate stabilization measure that capped rate
increases by BGE for residential electric customers at 15% from July 1, 2006, to May 31, 2007. As a result, BGE recorded a regulatory asset on
its Consolidated Balance Sheets equal to the difference between the costs to purchase power and the revenues collected from customers, as well
as related carrying charges based on short-term interest rates from July 1, 2006 to May 31, 2007. In addition, as required by Senate Bill 1, the
MDPSC approved a plan that allowed residential electric customers the option to further defer the transition to market rates from June 1, 2007 to
January 1, 2008. During 2007, BGE deferred $306 million of electricity purchased for resale expenses and certain applicable carrying charges,
which are calculated using the implied interest rates of the rate stabilization bonds, as a regulatory asset related to the rate stabilization plans.
During 2015 and 2014, BGE recovered $73 million and $65 million, respectively, of electricity purchased for resale expenses and carrying charges
related to the rate stabilization plan regulatory asset. BGE began amortizing the regulatory asset associated with the deferral which ended in May
2007 to earnings over a period not to exceed ten years when collection from customers began in June 2007.
Energy efficiency and demand response programs. For ComEd, these amounts represent over recoveries related to ComEd’s ICC-
approved Energy Efficiency and Demand Response Plan. ComEd refunds these over recoveries through a rider over a twelve-month period.
ComEd earns a return on the capital investment incurred under the program, but does not earn or pay interest on under or over recoveries,
respectively. For PECO, these amounts represent over recoveries of program costs related to both Phase I and Phase II of its PAPUC-approved
EE&C Plan. PECO began recovering the costs of its Phase I and Phase II EE&C Plans through a surcharge in January 2010 and June 2013,
respectively, based on projected spending under the programs. Phase I recovery continued over the life of the program, which expired on May 31,
2013 and excess funds collected began being refunded in June 2013. Phase II of the program began on June 1, 2013, and will continue over the
life of the program, which will expire on May 31, 2016. Excess funds collected are required to be refunded beginning in June 2016. PECO earned a
return on the capital investment incurred under Phase I of the program. PECO does not earn (pay) interest on under (over) collections. For BGE,
these amounts represent under (over) recoveries related to BGE’s Smart Energy Savers Program , which includes both MDPSC-approved demand
response and energy efficiency programs. For the BGE Peak Rewards demand response program which began in January 2008, actual
marketing and customer bonus costs incurred in the demand response program are being recovered over a 5-year amortization period from the
date incurred pursuant to an order by the MDPSC. Fixed assets related to the demand response program are recovered over the life of the
equipment. Also included in the demand response program are customer bill credits related to BGE’s Smart Energy Rewards program which began
in July 2013 and are being recovered through the surcharge. Actual costs incurred in the energy efficiency program are being amortized over a 5-
year period with recovery beginning in 2010 pursuant to an order by the MDPSC. BGE earns a rate of return on the capital investments and
deferred costs incurred under the program and earns (pays) interest on under (over) collections.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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