ComEd 2015 Annual Report Download - page 406

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
As part of the execution of the NOSA on April 1, 2014, Generation executed an Indemnity Agreement pursuant to which Generation agreed
to indemnify EDF and its affiliates against third-party claims that may arise from any future nuclear incident (as defined in the Price-Anderson Act)
in connection with the CENG nuclear plants or their operations. Exelon guarantees Generation’s obligations under this indemnity. See Note 5—
Investment in Constellation Energy Nuclear Group, LLC for additional information on Generation’s operations relating to CENG.
Generation is required each year to report to the NRC the current levels and sources of property insurance that demonstrates Generation
possesses sufficient financial resources to stabilize and decontaminate a reactor and reactor station site in the event of an accident. The property
insurance maintained for each facility is currently provided through insurance policies purchased from NEIL, an industry mutual insurance
company of which Generation is a member.
NEIL may declare distributions to its members as a result of favorable operating experience. In recent years NEIL has made distributions to
its members, but Generation cannot predict the level of future distributions or if they will continue at all. Generation’s portion of the distribution
declared by NEIL is estimated to be $20.7 million for 2015, and was $18.3 million for 2014 and $18.5 million for 2013. The distributions were
recorded as a reduction to Operating and maintenance expense within Exelon and Generation’s Consolidated Statements of Operations and
Comprehensive Income. Premiums paid to NEIL by its members are subject to assessment for adverse loss experience (the retrospective
premium obligation). NEIL has never exercised this assessment since its formation in 1973, and while Generation cannot predict the level of future
assessments, or if they will be imposed at all, as of December 31, 2015, the current maximum aggregate annual retrospective premium obligation
for Generation is approximately $365 million. NEIL requires its members to maintain an investment grade credit rating or to ensure collectability of
their annual retrospective premium obligation by providing a financial guarantee, letter of credit, deposit premium, or some other means of
assurance.
NEIL provides “all risk” property damage, decontamination and premature decommissioning insurance for each station for losses resulting
from damage to its nuclear plants, either due to accidents or acts of terrorism. If the decision is made to decommission the facility, a portion of the
insurance proceeds will be allocated to a fund, which Generation is required by the NRC to maintain, to provide for decommissioning the facility. In
the event of an insured loss, Generation is unable to predict the timing of the availability of insurance proceeds to Generation and the amount of
such proceeds that would be available. In the event that one or more acts of terrorism cause accidental property damage within a twelve-month
period from the first accidental property damage under one or more policies for all insured plants, the maximum recovery for all losses by all
insureds will be an aggregate of $3.2 billion plus such additional amounts as the insurer may recover for all such losses from reinsurance,
indemnity and any other source, applicable to such losses.
For its insured losses, Generation is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance
maintained. Uninsured losses and other expenses, to the extent not recoverable from insurers or the nuclear industry, could also be borne by
Generation. Any such losses could have a material adverse effect on Exelon’s and Generation’s financial condition, results of operations and
liquidity.
Spent Nuclear Fuel Obligation
Under the NWPA, the DOE is responsible for the development of a geologic repository for and the disposal of SNF and high-level radioactive
waste. As required by the NWPA, Generation is a party to
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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