Exelon 2014 Annual Report Download - page 137

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Nuclear Outage Costs
Costs associated with nuclear outages, including planned major maintenance activities, are expensed to operating and maintenance
expense or capitalized to property, plant and equipment (based on the nature of the activities) in the period incurred.
New Site Development Costs
New site development costs represent the costs incurred in the assessment and design of new power generating facilities. Such
costs are capitalized when management considers project completion to be probable, primarily based on management’s
determination that the project is economically and operationally feasible, management and/or the Exelon board of directors has
approved the project and has committed to a plan to develop it, and Exelon and Generation have received the required regulatory
approvals or management believes the receipt of required regulatory approvals is probable. Capitalized development costs are
charged to Operating and maintenance expense when project completion is no longer probable. At December 31, 2014 and 2013,
there were not material capitalized development costs for projects not yet under construction included in Property, plant and
equipment, net on Exelon’s Consolidated Balance Sheets. Approximately $13 million, $10 million and $4 million of costs were
expensed by Exelon for the years ended December 31, 2014, 2013, and 2012, respectively. These costs primarily related to the
possible development of new renewable energy projects.
Capitalized Software Costs
Costs incurred during the application development stage of software projects that are internally developed or purchased for
operational use are capitalized. Such capitalized amounts are amortized ratably over the expected lives of the projects when they
become operational, generally not to exceed five years. Certain other capitalized software costs are being amortized over longer
lives based on the expected life or pursuant to prescribed regulatory requirements. The following table presents net unamortized
capitalized software costs and amortization of capitalized software costs by year:
Net unamortized software costs Exelon (a) Generation (a) ComEd PECO BGE
December 31, 2014 ............................................... $596 $193 $133 $84 $163
December 31, 2013 ............................................... 479 129 101 71 155
Amortization of capitalized software costs Exelon (a)(b) Generation (a)(b) ComEd PECO BGE (b)
2014 ........................................................... $186 $ 59 $ 45 $28 $ 43
2013 ........................................................... 198 67 52 33 36
2012 ........................................................... 208 81 56 30 32
(a) On April 1, 2014, Generation assumed operational control of CENG’s nuclear fleet. As a result, the 2014 financial results include CENG’s financial position and
results of operations beginning April 1, 2014.
(b) Exelon activity for the year ended December 31, 2012 includes the results of Constellation and BGE for March 12, 2012—December 31, 2012. Generation activity for
the year ended December 31, 2012 includes the results of Constellation for March 12, 2012—December 31, 2012. BGE activity represents the activity for the year
ended December 31, 2012.
Depreciation, Depletion and Amortization
Except for the amortization of nuclear fuel, depreciation is generally recorded over the estimated service lives of property, plant and
equipment on a straight-line basis using the composite method. ComEd’s and BGE’s depreciation includes a provision for estimated
removal costs as authorized by the respective regulators. The estimated service lives for ComEd, PECO and BGE are primarily
based on the average service lives from the most recent depreciation study for each respective company. The estimated service
lives of the nuclear-fuel generating facilities are based on the remaining useful lives of the stations, which assume a 20-year license
renewal extension of the operating licenses (to the extent that such renewal has not yet been granted) for all of Generation’s
operating nuclear generating stations except for Oyster Creek. The estimated service lives of the hydroelectric generating facilities
are based on the remaining useful lives of the stations, which assume a license renewal extension of the operating licenses. The
estimated service lives of the fossil fuel and other renewable generating facilities are based on the remaining useful lives of the
stations, which Generation periodically evaluates based on feasibility assessments taking into account economic and capital
requirement considerations.
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