ComEd 2015 Annual Report Download - page 307

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
2014 for these stations. These impairment charges were recorded within Investments and Operating and maintenance expense in Exelon’s
Consolidated Balance Sheets and the Consolidated Statements of Operations and Comprehensive Income, respectively. Changes in the
assumptions described above could potentially result in future impairments of Exelon’s direct financing lease investments, which could be
material. Through December 31, 2015, no events have occurred that would require Exelon to review the estimated residual values of its direct
financing lease investments subsequent to the review performed in the second quarter of 2015.
At December 31, 2015 and 2014, the components of the net investment in long-term leases were as follows:
December 31, 2015 December 31, 2014
Estimated residual value of leased assets $ 639 $ 685
Less: unearned income 287 324
Net investment in long-term leases $ 352 $ 361
9. Implications of Potential Early Plant Retirements (Exelon and Generation)
Exelon and Generation continue to evaluate the current and expected economic value of each of Generation’s nuclear plants. Factors that
will continue to affect the economic value of Generation’s nuclear plants include, but are not limited to: market power prices, results of capacity
auctions, potential legislative solutions in New York and Illinois such as the proposed Low Carbon Portfolio Standard (LCPS) legislation, the impact
of final rules from the EPA requiring reduction of carbon and other emissions and the efforts of the states to implement those final rules, and the
outcome of the Ginna RSSA hearing and settlement procedures and the resulting contractual terms and conditions. On September 10, 2015, after
considering the results of the recent PJM capacity auctions, Exelon and Generation decided to defer decisions about the future operations of its
Quad Cities and Byron nuclear plants and will offer both plants in the 2019/2020 auction in May 2016. As a result of clearing the other PJM
capacity auction in September 2015 for the 2017/2018 transitional capacity auction, Exelon and Generation will continue to operate its Quad Cities
nuclear power plant through at least May 2018. The Byron plant is already obligated to operate through May 2019. On October 29, 2015, Exelon
and Generation announced the deferral of any decision about the future operations of its Clinton nuclear plant and plans to bid the plant into the
MISO capacity auction for the 2016-2017 planning year in April 2016. This decision was driven by MISO’s acknowledgment of the need for market
design changes to ensure long-term power system reliability in southern Illinois, the desire to provide Illinois policy makers with additional time to
consider needed reforms as well as the potential long-term impact of EPA’s Clean Power Plan. Exelon and Generation previously committed to
cease operation of the Oyster Creek nuclear plant by the end of 2019. Exelon and Generation have not made any decisions regarding potential
nuclear plant closures at other sites at this time.
As a result of a decision to early retire one or more other nuclear plants, certain changes in accounting treatment would be triggered and
Exelon’s and Generation’s results of operations and cash flows could be materially affected by a number of items including, among other items:
accelerated depreciation expense, impairment charges related to inventory that cannot be used at other nuclear units and cancellation of in-flight
capital projects, accelerated amortization of plant specific nuclear fuel costs, employee-related costs (i.e. severance, relocation, retention, etc.),
accelerated asset retirement obligation expense related to future decommissioning activities, and additional funding of nuclear decommissioning
trust funds. In addition, any early plant retirement would also result in reduced
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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