Exelon 2014 Annual Report Download - page 152

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
and purchased receivables. As of December 31, 2014, the balance of purchased accounts receivable was $139 million. ComEd
recovers from RES and customers the costs for implementing and operating the program under an ICC approved tariff. A number of
municipalities, including the City of Chicago have switched to RES electric supply. As a result, ComEd experienced a significant
increase in the amount of RES receivables it purchased in 2013.
Illinois Procurement Proceedings. ComEd is permitted to recover its electricity procurement costs from retail customers without
mark-up. Since June 2009, the IPA designs, and the ICC approves, an electricity supply portfolio for ComEd and the IPA administers
a competitive process under which ComEd procures its electricity supply from various suppliers, including Generation.
ComEd is required to purchase an increasing percentage of the electricity for customer deliveries from renewable energy
resources. Purchases by customers of electricity from competitive generation suppliers, whether as a result of the customers’ own
actions or as a result of municipal aggregation, are not included in this calculation and have the effect of reducing ComEd’s purchase
obligation. ComEd entered into several 20-year contracts with unaffiliated suppliers in December 2010 regarding the procurement of
long-term renewable energy and associated RECs in order to meet its obligations under the state’s RPS. All associated costs are
recoverable from customers.
On December 18, 2013, the ICC approved the IPA’s 2014-2019 procurement plan, which provided for two separate energy
procurements during 2014 to address potential fluctuations in energy due to customers switching between ComEd and competitive
electric generation suppliers. During May and September 2014, ComEd conducted energy procurements to meet the IPA’s 2014-
2019 procurement plan. On December 17, 2014, the ICC approved the IPA’s 2015-2020 procurement plan. See Note 22—
Commitments and Contingencies for additional information on ComEd’s energy commitments.
FutureGen Industrial Alliance, Inc. During 2013, the ICC approved, and directed ComEd and Ameren (the Utilities) to enter into
20-year sourcing agreements with FutureGen Industrial Alliance, Inc (FutureGen), under which FutureGen will retrofit and repower
an existing plant in Morgan County, Illinois to a 166 MW near zero emissions coal-fueled generation plant, with an assumed
commercial operation date in 2017. The sourcing agreement provides that ComEd and Ameren will pay FutureGen’s contract prices,
which are set annually pursuant to a formula rate. The contract prices are based on the difference between the costs of the facility
and the revenues FutureGen receives from selling capacity and energy from the unit into the MISO or other markets, as well as any
other revenue FutureGen receives from the operation of the facility. The order also directs ComEd and Ameren to recover these
costs from their electric distribution customers through the use of a tariff, regardless of whether they purchase electricity from
ComEd or Ameren, or from competitive electric generation suppliers.
In February 2013, ComEd filed an appeal with the Illinois Appellate Court questioning the legality of requiring ComEd to procure
power for retail customers purchasing electricity from competitive electric generation suppliers. On July 22, 2014, the Illinois
Appellate Court issued its ruling re-affirming the ICC’s order requiring ComEd to enter into the sourcing agreement with FutureGen
and allowing the use of a tariff to recover its costs. ComEd decided not to appeal the Illinois Appellate Court’s decision to the Illinois
Supreme Court. However, the competitive electric generation suppliers and several large consumers petitioned for leave to appeal
the Illinois Appellate Court’s decision. On November 26, 2014, the Illinois Supreme Court granted the petition. A decision from the
Illinois Appellate Court is expected in late 2015.
A significant portion of the cost of the development of FutureGen was being funded by the DOE under the American Recovery and
Reinvestment Act of 2009. In early February 2015, the DOE suspended funding for the project until further clarity could be obtained
on certain significant hurdles facing the project, including the outcome of the litigation described above. Whether or not the DOE
funding will be reinstated at some later date is unknown at this time.
ComEd executed the sourcing agreement with FutureGen in accordance with the ICC’s order. In addition, ComEd filed a petition with
the ICC seeking approval of the tariff allowing for the recovery of its costs associated with the FutureGen contract from all of its
electric distribution customers, which was approved by the ICC on September 30, 2014. Depending on eventual market conditions
and the cost of the facility, the sourcing agreement could have a material adverse impact on Exelon’s and ComEd’s cash flows and
financial positions.
See Note 22—Commitments and Contingencies for additional information on ComEd’s energy commitments.
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