ComEd 2015 Annual Report Download - page 94

Table of Contents
On September 10, 2015, after considering the results of the recent PJM capacity auctions, Exelon and Generation decided to defer decisions
about the future operations of its Quad Cities and Byron nuclear plants and will offer both plants in the 2019/2020 auction in May 2016. As a result
of clearing the other PJM capacity auction in September 2015 for the 2017/2018 transitional capacity auction, Exelon and Generation will continue
to operate its Quad Cities nuclear power plant through at least May 2018. The Byron plant is already obligated to operate through May 2019. On
October 29, 2015, Exelon and Generation announced the deferral of any decision about the future operations of its Clinton nuclear plant and plans
to bid the plant into the MISO capacity auction for the 2016-2017 planning year April 2016. This decision was driven by MISO’s acknowledgment
of the need for market design changes to ensure long-term power system reliability in southern Illinois, the desire to provide Illinois policy makers
with additional time to consider needed reforms as well as the potential long-term impact of EPA’s Clean Power Plan. Exelon and Generation
previously committed to cease operation of the Oyster Creek nuclear plant by the end of 2019. Exelon and Generation have not made any
decisions regarding potential nuclear plant closures at other sites at this time.
As a result of a decision to early retire one or more other nuclear plants, certain changes in accounting treatment would be triggered and
Exelon’s and Generation’s results of operations and cash flows could be materially affected by a number of items including, among other items:
accelerated depreciation expense, impairment charges related to inventory that cannot be used at other nuclear units and cancellation of in-flight
capital projects, accelerated amortization of plant specific nuclear fuel costs, employee-related costs (i.e. severance, relocation, retention, etc.),
accelerated asset retirement obligation expense related to future decommissioning activities, and additional funding of nuclear decommissioning
trust funds. In addition, any early plant retirement would also result in reduced operating costs, lower fuel expense, and lower capital expenditures
in the periods beyond shutdown. While there are a number of Generation’s nuclear plants that are at risk of early retirement, the following table
provides the balance sheet amounts as of December 31, 2015 for significant assets and liabilities associated with the three nuclear plants
currently considered by management to be at the greatest risk of early retirement due to their current economic valuations and other factors:
(in millions) Quad Cities Clinton Ginna Total
Asset Balances
Materials and supplies inventory $ 50 $ 57 $ 29 $ 136
Nuclear fuel inventory, net 218 107 60 385
Completed plant, net 1,030 579 127 1,736
Construction work in progress 11 9 11 31
Liability Balances
Asset retirement obligation (698) (401) (644) (1,743)
NRC License Renewal Term 2032 2046 2029
(a) Assumes Clinton seeks and receives a 20-year operating license renewal extension.
In the event a decision is made to retire early one or more nuclear plants, the precise timing of the retirement date, and resulting financial
statement impact, is uncertain and would be influenced by a number of factors such as the results of any transmission system reliability study
assessments, the nature of any co-owner requirements and stipulations, and decommissioning trust fund requirements, among other factors.
However, the earliest retirement date for any plant would usually be the first year in which the unit does not have capacity obligations and just prior
to its next scheduled nuclear refueling outage date in that year.
NRC regulations require that licensees of nuclear generating facilities demonstrate reasonable assurance that sufficient funds will be
available in certain minimum amounts to decommission the facility. These NRC minimum funding levels are based upon the assumption that
decommissioning activities will commence after the end of the current licensed life of each unit. If a unit fails the NRC
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(a)
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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