ComEd 2015 Annual Report Download - page 410

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
The historical nature of the MGP sites and the fact that many of the sites have been buried and built over, impacts the ability to determine a
precise estimate of the ultimate costs prior to initial sampling and determination of the exact scope and method of remedial activity. Management
determines its best estimate of remediation costs using all available information at the time of each study, including probabilistic and deterministic
modeling for ComEd and PECO, and the remediation standards currently required by the applicable state environmental agency. Prior to
completion of any significant clean up, each site remediation plan is approved by the appropriate state environmental agency.
During the third quarter of 2015, ComEd and PECO completed an annual study of their future estimated MGP remediation requirements. For
ComEd, the results of the study resulted in a $50 million increase to ComEd’s environmental liabilities and related regulatory assets. The increase
at ComEd was primarily driven by refined assumptions and scopes based on further experience and analysis, including one site where a new
option is being considered for a facility under which contamination exists and certain sites where another PRP leads the remediation efforts and
ComEd shares responsibility. For PECO, the results of the study resulted in a $1 million decrease to PECO’s environmental liabilities and related
regulatory assets.
The Registrants cannot reasonably estimate whether they will incur other significant liabilities for additional investigation and remediation
costs at these or additional sites identified by the Registrants, environmental agencies or others, or whether such costs will be recoverable from
third parties, including customers.
Water Quality
Groundwater Contamination. In October 2007, a subsidiary of Constellation entered into a consent decree with the MDE relating to
groundwater contamination at a third-party facility that was licensed to accept fly ash, a byproduct generated by coal-fired plants. The consent
decree required the payment of a $1 million penalty, remediation of groundwater contamination resulting from the ash placement operations at the
site, replacement of drinking water supplies in the vicinity of the site, and monitoring of groundwater conditions. As of December 31, 2015 and
2014, Generation’s remaining groundwater contamination reserve was $12 million and $13 million respectively.
Air Quality
Notices and Finding of Violations and Midwest Generation Bankruptcy. In December 1999, ComEd sold several generating stations to
Midwest Generation, LLC (Midwest Generation), a subsidiary of Edison Mission Energy (EME). Under the terms of the sale agreement, Midwest
Generation and EME assumed responsibility for environmental liabilities associated with the ownership, occupancy, use and operation of the
stations, including responsibility for compliance by the stations with environmental laws before their purchase by Midwest Generation. Midwest
Generation and EME additionally agreed to indemnify and hold ComEd and its affiliates harmless from claims, fines, penalties, liabilities and
expenses arising from third party claims against ComEd resulting from or arising out of the environmental liabilities assumed by Midwest
Generation and EME under the terms of the agreement governing the sale. In connection with Exelon’s 2001 corporate restructuring, Generation
assumed ComEd’s rights and obligations with respect to its former generation business, including its rights and obligations under the sale
agreement with Midwest Generation and EME.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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