ComEd 2015 Annual Report Download - page 365

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
During 2014, Generation’s ARO increased by approximately $2.1 billion. The increase is largely driven by the recording of an ARO on
Exelon’s and Generation’s Consolidated Balance Sheets at fair value, including subsequent purchase accounting adjustments, upon consolidation
of CENG (see Note 5—Investment in Constellation Energy Nuclear Group, LLC ). The change in the ARO was also driven by an increase for
accretion of the obligation and an increase in the estimated costs to decommission Byron, Braidwood, and LaSalle nuclear units resulting from the
completion of updated decommissioning costs studies received during 2014 as part of the annual assessment. These increases in the ARO were
partially offset by decreases in the ARO due to a reduction in estimated escalation rates, primarily for labor and energy costs. The increase in the
ARO due to the changes in, and timing of, estimated cash flows was offset within Property, plant and equipment on Exelon’s and Generation’s
Consolidated Balance Sheets, aside from an approximate $16 million credit to income, which is included in Operating and maintenance expense
within Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income.
Nuclear Decommissioning Trust Fund Investments
NDT funds have been established for each generating station unit to satisfy Generation’s nuclear decommissioning obligations. Generally,
NDT funds established for a particular unit may not be used to fund the decommissioning obligations of any other unit.
The NDT funds associated with Generation’s nuclear units have been funded with amounts collected from the previous owners and their
respective utility customers. PECO is authorized to collect funds, in revenues, for decommissioning the former PECO nuclear plants through
regulated rates, and these collections are scheduled through the operating lives of the former PECO plants. The amounts collected from PECO
customers are remitted to Generation and deposited into the NDT funds for the unit for which funds are collected. Every five years, PECO files a
rate adjustment with the PAPUC that reflects PECO’s calculations of the estimated amount needed to decommission each of the former PECO
units based on updated fund balances and estimated decommissioning costs. The rate adjustment is used to determine the amount collectible
from PECO customers. The most recent rate adjustment occurred on January 1, 2013, and the effective rates currently yield annual collections of
approximately $24 million. The next five-year adjustment is expected to be reflected in rates charged to PECO customers effective January 1,
2018. Aside from the former PECO units, Generation does not currently collect any amounts, nor is there any mechanism by which Generation
can seek to collect additional amounts, from utility customers. Apart from the contributions made to the NDT funds from amounts previously
collected from ComEd and currently collected from PECO customers, Generation has not made contributions to the NDT funds.
Any shortfall of funds necessary for decommissioning, determined for each generating station unit, is ultimately required to be funded by
Generation, with the exception of a shortfall for the current decommissioning activities at Zion Station, where certain decommissioning activities
have been transferred to a third-party (see Zion Station Decommissioning below) and the CENG units, where any shortfall is required to be funded
by both Generation and EDF. Generation, through PECO, has recourse to collect additional amounts from PECO customers related to a shortfall
of NDT funds for the former PECO units, subject to certain limitations and thresholds, as prescribed by an order from the PAPUC. Generally,
PECO, and likewise Generation will not be allowed to collect amounts associated with the first $50 million of any shortfall of trust funds compared
to decommissioning costs, as well as 5% of any additional shortfalls, on an aggregate basis for all former PECO units. The initial $50 million and
up to 5% of any additional shortfalls would be borne by Generation. No recourse exists to collect additional amounts from utility customers for any
of Generation’s other nuclear units. With respect to
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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