ComEd 2015 Annual Report Download - page 338

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
The tables below provide the activity of Accumulated OCI related to cash flow hedges for the years ended December 31, 2015 and 2014,
containing information about the changes in the fair value of cash flow hedges and the reclassification from Accumulated OCI into results of
operations. The amounts reclassified from Accumulated OCI, when combined with the impacts of the hedged transactions, result in the ultimate
recognition of net revenues or expenses at the contractual price.
Income Statement
Location
Total Cash Flow Hedge OCI Activity,
Net of Income Tax
Generation Exelon
Total Cash
Flow
Hedges
Total
Cash Flow
Hedges
Accumulated OCI derivative gain at January 1, 2014 $ 114 $ 120
Effective portion of changes in fair value (15) (31)
Reclassifications from accumulated OCI to net income Operating revenues (117) (117)
Accumulated OCI derivative gain at December 31, 2014 (18) (28)
Effective portion of changes in fair value (8) (12)
Reclassifications from accumulated OCI to net income Other, net — 16
Reclassifications from accumulated OCI to net income Interest expense 7 7
Reclassifications from accumulated OCI to net income Operating revenues (2) (2)
Accumulated OCI derivative gain at December 31, 2015 $ (21) $ (19)
(a) Amount is net of related income tax expense of $78 million for the year ended December 31, 2014.
(b) Amount is net of related income tax benefit of $10 million for the year ended December 31, 2015.
(c) Amount is net of related income tax expense of $4 million for the year ended December 31, 2015.
During the years ended December 31, 2015, 2014, and 2013, Generation’s former energy-related cash flow hedge activity impact to pre-tax
earnings based on the reclassification adjustment from Accumulated OCI to earnings was a $2 million, $195 million and $683 million pre-tax gain,
respectively. In addition, the effect of Exelon’s former energy-related cash flow hedge activity impact on pre-tax earnings based on the
reclassification adjustment from Accumulated OCI to earnings was a $2 million, $195 million and $464 million pre-tax gain for the years ended
December 31, 2015, 2014 and 2013, respectively. Given that the cash flow hedges had primarily consisted of forward power sales and power
swaps and did not include power and gas options or sales, neither Exelon nor Generation will incur changes in cash flow hedge ineffectiveness in
future periods relating to energy-related hedge positions as all were de-designated prior to the merger date.
 These instruments represent hedges that economically mitigate exposure to fluctuations in
commodity prices and include financial options, futures, swaps, physical forward sales and purchases, but for which the fair value or cash flow
hedge elections were not made. Additionally, Generation enters into interest rate derivative contracts and foreign exchange currency swaps
(“treasury”) to manage the exposure related to the interest rate component of commodity positions and international purchases of commodities in
currencies other
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(a) (a)
(b)
(c) (c)
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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