Exelon 2014 Annual Report Download - page 169

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Fair value of BGE long-term debt. These amounts represent the regulatory asset recorded at Exelon for the difference in the fair
value of the long-term debt of BGE as of the Constellation merger date based on the MDPSC practice to allow BGE to recover its
debt costs through rates. Exelon is amortizing the regulatory asset and the associated fair value over the life of the underlying debt
and is not earning a return on the recovery of these costs.
Fair value of BGE supply contract. These amounts represent the regulatory asset recorded at Exelon representing the fair value of
BGE’s supply contracts as of the close of the Constellation merger date based on the MDPSC practice to allow BGE to recover its
supply contracts through rates. Exelon amortized the regulatory asset and the associated fair value through December 31, 2014 and
was not earning a return on the recovery of these contracts.
Severance. For ComEd, these costs represent previously incurred severance costs that ComEd was granted recovery of in the
December 20, 2006, ICC rehearing rate order and the May 24, 2011, ICC order in ComEd’s 2010 rate case, and such costs were
fully recovered as of December 31, 2014. ComEd did not earn a return on these costs. For BGE, these costs represent deferred
severance costs that BGE has previously been granted recovery of in rates. Costs include the portion of costs associated with a
2008 workforce reduction that relate to BGE’s gas business which were deferred in 2009 as a regulatory asset in accordance with
the MDPSC’s orders in prior rate cases and are being amortized over a 5-year period through December 31, 2013. Also included are
costs associated with a 2010 workforce reduction that were deferred as a regulatory asset and are being amortized over a 5-year
period that began in March 2011 in accordance with the MDPSC’s March 2011 rate order. Finally, costs associated with the 2012
BGE voluntary workforce reduction were deferred in 2012 as a regulatory asset in accordance with the MDPSC’s orders in prior rate
cases and are being amortized over a 5-year period that began in July 2012. BGE is earning a regulated return on the regulatory
asset included in base rates.
Asset retirement obligations. These costs represent future legally required removal costs associated with existing asset retirement
obligations. PECO will begin to earn a return on, and a recovery of, these costs once the removal activities have been performed.
ComEd and BGE will recover these costs through future depreciation rates and will earn a return on these costs once the removal
activities have been performed. See Note 15—Asset Retirement Obligations for additional information.
MGP remediation costs. ComEd is allowed recovery of these costs under ICC approved rates. For PECO, these costs are
recoverable through rates as affirmed in the 2010 approved natural gas distribution rate case settlement. The period of recovery for
both ComEd and PECO will depend on the timing of the actual expenditures. ComEd and PECO are not earning a return on the
recovery of these costs. While BGE does not have a rider for MGP clean-up costs, BGE has historically received recovery of actual
clean-up costs on a site-specific basis in distribution rates. For BGE, $5 million of clean-up costs incurred during the period from July
2000 through November 2005 and an additional $1 million from December 2005 through November 2010 are recoverable through
rates in accordance with MDPSC orders. These costs are being amortized over 10-year periods that began in January 2006 and
December 2010, respectively. BGE is earning a return on this regulatory asset. See Note 22—Commitments and Contingencies for
additional information.
RTO start-up costs. Recovery of these RTO start-up costs was approved by FERC. The recovery period is through March 31,
2015. ComEd is earning a return on these costs.
Under (Over)-recovered universal service fund costs. The universal service fund cost is a recovery mechanism that allows
PECO to recover discounts issued to electric and gas customers enrolled in assistance programs. As of December 31, 2014, PECO
was under-recovered for its gas program and over-recovered for its electric program. Whereas, as of December 31, 2013, PECO
was over-recovered for both its electric and gas programs PECO earns interest on under-recovered costs and pays interest on over-
recovered costs to customers.
Under (Over)-recovered uncollectible accounts. ComEd adjusts its rates annually to reflect the increases and decreases in
annual uncollectible accounts costs. The recovery or refund of the difference in the uncollectible accounts costs takes place over a
12-month time frame beginning in June of the following year. ComEd is not earning a return or paying interest on these under (over)-
recovered costs.
Renewable Energy. On December 17, 2010, ComEd entered into several 20-year floating-to-fixed energy swap contracts with
unaffiliated suppliers for the procurement of long-term renewable energy. Delivery under the contracts began in June 2012. Since
the swap contracts were deemed prudent by the Illinois Settlement Legislation, ensuring ComEd of full recovery in rates, the
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