ComEd 2015 Annual Report Download - page 89

Table of Contents
(d) Reflects costs incurred at Generation for a Constellation merger commitment for the year ended December 31, 2014.
(e) Costs primarily for employee severance, pension and OPEB expense and retention bonuses.
As of December 31, 2015, Exelon projects incurring total PHI acquisition and integration related costs of approximately $700 million,
excluding the amounts Exelon and PHI are committed, if approved, to provide to the PHI utility’s respective customers. Of this amount, including
2014 and through December 31, 2015, Exelon has incurred approximately $300 million of costs associated with the proposed merger. Included in
this amount are costs to fund the merger of which $76 million has been expensed, $56 million has been paid and recorded as deferred debt
issuance costs and $60 million has been incurred and charged to common stock. The remaining costs will be primarily within Operating and
maintenance expense within Exelon’s Consolidated Statements of Operations and Comprehensive Income and will also include approximately $60
million for integration costs expected to be capitalized to Property, plant and equipment. The increase from the previous estimate of $635 million is
due to higher transaction costs primarily driven by the merger delay. This increase in transaction costs is partially offset by lower integration costs.
Pursuant to the conditions set forth by the MDPSC in its approval of the Constellation merger transaction, Exelon committed to provide a
package of benefits to BGE customers, and make certain investments in the City of Baltimore and the State of Maryland, resulting in an estimated
direct investment in the State of Maryland of approximately $1 billion. The direct investment estimate includes $95 million to $120 million for the
requirement to cause construction of a headquarters building in Baltimore for Generation’s competitive energy businesses. On March 20, 2013,
Generation signed a twenty year lease agreement for office space that was contingent upon the developer obtaining all required approvals, permits
and financing for the construction of a building in Baltimore, Maryland. The operating lease became effective during the second quarter of 2014
when these outstanding contingencies were met by the developer. Construction began late in the second quarter of 2014 and the building is
expected to be ready for occupancy by the end of 2016. See Note 23—Commitments and Contingencies of the Combined Notes to Consolidated
Financial Statements for further information related to the lease commitments.
Exelon’s Strategy and Outlook for 2016 and Beyond
Exelon’s value proposition and competitive advantage come from its scope and its core strengths of operational excellence and financial
discipline. Exelon leverages its integrated business model to create value. Exelon’s regulated and competitive businesses feature a mix of
attributes that, when combined, offer shareholders and customers a unique value proposition:
• Exelon’s utilities provide a foundation for stable earnings, which translates to a stable currency in our stock.
• Generation’s competitive businesses provide free cash flow to invest primarily into the utilities and in long-term, contracted assets.
Exelon believes its strategy provides a platform for optimal success in an energy industry experiencing fundamental and sweeping change.
Exelon’s utility strategy is to improve reliability and operations and enhance the customer experience, while ensuring ratemaking
mechanisms provide the utilities fair financial returns. The Exelon utilities only invest in rate base where it provides a net benefit to customers and
the community by improving reliability and the service experience or otherwise meeting customer needs. The Exelon utilities make these
investments prudently and at the lowest reasonable cost to customers. Exelon seeks to leverage its scale and expertise across the utilities
platform through enhanced standardization and sharing of best practices to achieve improved operational and financial results. Additionally,
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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