Exelon 2014 Annual Report Download - page 100

Liquidity and Capital Resources
Exelon’s and Generation’s current year activity presented below includes the activity of CENG, from the integration date effective
April 1, 2014 through December 31, 2014. All results included throughout the liquidity and capital resources section are presented on
a GAAP basis.
The Registrants’ operating and capital expenditures requirements are provided by internally generated cash flows from operations as
well as funds from external sources in the capital markets and through bank borrowings. The Registrants’ businesses are capital
intensive and require considerable capital resources. Each Registrant’s access to external financing on reasonable terms depends
on its credit ratings and current overall capital market business conditions, including that of the utility industry in general. If these
conditions deteriorate to the extent that the Registrants no longer have access to the capital markets at reasonable terms, Exelon,
Generation, ComEd, PECO and BGE have access to unsecured revolving credit facilities with aggregate bank commitments of $0.5
billion, $5.3 billion, $1 billion, $0.6 billion and $0.6 billion, respectively. The Registrants’ revolving credit facilities are in place until
2019. In addition, Generation has $0.5 billion in bilateral facilities with banks which have various expirations between October 2015
and January 2017. The Registrants utilize their credit facilities to support their commercial paper programs, provide for other short-
term borrowings and to issue letters of credit. See the “Credit Matters” section below for further discussion. The Registrants expect
cash flows to be sufficient to meet operating expenses, financing costs and capital expenditure requirements.
The Registrants primarily use their capital resources, including cash, to fund capital requirements, including construction
expenditures, retire debt, pay dividends, fund pension and other postretirement benefit obligations and invest in new and existing
ventures. The Registrants spend a significant amount of cash on capital improvements and construction projects that have a long-
term return on investment. Additionally, ComEd, PECO and BGE operate in rate-regulated environments in which the amount of new
investment recovery may be delayed or limited and where such recovery takes place over an extended period of time.
See Note 13—Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for further discussion of
the Registrants’ debt and credit agreements.
Cash Flows from Operating Activities
General
Generation’s cash flows from operating activities primarily result from the sale of electric energy and energy-related products and
services to customers. Generation’s future cash flows from operating activities may be affected by future demand for and market
prices of energy and its ability to continue to produce and supply power at competitive costs as well as to obtain collections from
customers.
ComEd’s, PECO’s and BGE’s cash flows from operating activities primarily result from the transmission and distribution of electricity
and, in the case of PECO and BGE, gas distribution services. ComEd’s, PECO’s and BGE’s distribution services are provided to an
established and diverse base of retail customers. ComEd’s, PECO’s and BGE’s future cash flows may be affected by the economy,
weather conditions, future legislative initiatives, future regulatory proceedings with respect to their rates or operations, competitive
suppliers, and their ability to achieve operating cost reductions.
See Notes 3—Regulatory Matters and 22—Commitments and Contingencies of the Combined Notes to Consolidated Financial
Statements for further discussion of regulatory and legal proceedings and proposed legislation.
Pension and Other Postretirement Benefits
Management considers various factors when making pension funding decisions, including actuarially determined minimum
contribution requirements under ERISA, contributions required to avoid benefit restrictions and at-risk status as defined by the
Pension Protection Act of 2006, management of the pension obligation and regulatory implications. On July 6, 2012, President
Obama signed into law the Moving Ahead for Progress in the Twenty-first Century Act, which contains a pension funding provision
that results in lower pension contributions in the near term while increasing the premiums pension plans pay to the Pension Benefit
Guaranty Corporation. Certain provisions of the law were applied in 2012 while others took effect in 2013. On August 8, 2014, this
funding relief was extended for five years. The estimated impacts of the law are reflected in the projected pension contributions
below.
Exelon expects to make qualified pension plan contributions of $447 million to its qualified pension plans in 2015, of which
Generation, ComEd, PECO and BGE expect to contribute $230 million, $138 million, $40 million and $1 million, respectively.
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