ComEd 2015 Annual Report Download - page 62

Table of Contents
be adversely affected by increased depreciation rates and accelerated future decommissioning costs, since depreciation rates and
decommissioning cost estimates currently include assumptions that license renewal will be received. Generation could also lose revenue and incur
increased fuel and purchased power expense to meet supply commitments. In addition, conditions could be imposed as part of the license renewal
process that could adversely affect operations, could require a substantial increase in capital expenditures or could result in increased operating
costs and significantly affect Generation’s results of operations or financial positions. Similar effects could result from a change in the Federal
Power Act or the applicable regulations due to events at hydroelectric facilities owned by others, as well as those owned by Generation.
ComEd’s, PECO’s and BGE’s operating costs, and customers’ and regulators’ opinions of ComEd, PECO and BGE, respectively, are
affected by their ability to maintain the availability and reliability of their delivery and operational systems. (Exelon, ComEd, PECO and
BGE)
Failures of the equipment or facilities, including information systems, used in ComEd’s, PECO’s and BGE’s delivery systems could interrupt
the electric transmission and electric and natural gas delivery, which could negatively impact related revenues, and increase maintenance and
capital expenditures. Equipment or facilities failures can be due to a number of factors, including weather or information systems failure.
Specifically, if the implementation of advanced metering infrastructure, smart grid or other technologies in ComEd’s, PECO’s or BGE’s service
territory fail to perform as intended or are not successfully integrated with billing and other information systems, ComEd’s, PECO’s and BGE’s
results of operations, cash flows or financial conditions could be negatively impacted. Furthermore, if any of the financial, accounting, or other data
processing systems fail or have other significant shortcomings, ComEd’s, PECO’s or BGE’s financial results could be negatively impacted. If an
employee causes the operational systems to fail, either as a result of inadvertent error or by deliberately tampering with or manipulating the
operational systems, ComEd’s, PECO’s or BGE’s financial results could also be negatively impacted. In addition, dependence upon automated
systems may further increase the risk that operational system flaws or employee tampering or manipulation of those systems will result in losses
that are difficult to detect.
The aforementioned failures or those of other utilities, including prolonged or repeated failures, could affect customer satisfaction and the
level of regulatory oversight and ComEd’s, PECO’s and BGE’s maintenance and capital expenditures. Regulated utilities, which are required to
provide service to all customers within their service territory, have generally been afforded liability protections against claims by customers relating
to failure of service. Under Illinois law, however, ComEd could be required to pay damages to its customers in some circumstances involving
extended outages affecting large numbers of its customers, and those damages could be material to ComEd’s results of operations or cash flows.
See Note 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information regarding
proceedings related to storm-related outages in ComEd’s service territory.
ComEd’s, PECO’s and BGE’s respective ability to deliver electricity, their operating costs and their capital expenditures could be
negatively impacted by transmission congestion. (Exelon, ComEd, PECO and BGE)
Demand for electricity within ComEd’s, PECO’s and BGE’s service areas could stress available transmission capacity requiring alternative
routing or curtailment of electricity usage with consequent effects on operating costs, revenues and results of operations. Also, insufficient
availability of electric supply to meet customer demand could jeopardize ComEd’s, PECO’s and BGE’s ability to comply with reliability standards
and strain customer and regulatory agency relationships. As with all utilities, potential concerns over transmission capacity or generation facility
retirements could result in PJM or FERC requiring ComEd, PECO and BGE to upgrade or expand their respective transmission systems through
additional capital expenditures.
55
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.