Exelon 2014 Annual Report Download - page 182

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
The fair value of CENG’s assets and liabilities recorded in consolidation was determined based on significant estimates and
assumptions that are judgmental in nature, including projected future cash flows (including timing); discount rates reflecting risk
inherent in the future cash flows; and future market prices. There were also judgments made to determine the expected useful lives
assigned to each class of assets acquired and duration of liabilities assumed.
The valuations necessary to assess the fair values of certain assets and liabilities are considered preliminary as a result of the short
time period between the execution of the NOSA and the end of the second quarter of 2014. The estimates of the fair value of assets
and liabilities may be modified up to one year from April 1, 2014, as more information is obtained about the fair value of assets and
liabilities. The principal items that have been revised include the asset retirement obligation liabilities and related asset retirement
costs. These items have been updated with inputs from a third party engineering firm with corresponding adjustments recorded in
2014. See Note 15—Asset Retirement Obligations for discussion of the impacts of adjustments recorded during 2014 related to
updated estimates of the CENG asset retirement obligation liabilities. In the period of such revisions, these and any other material
changes to the fair value assessments have resulted in adjustments to the amounts recorded upon consolidation. In addition, the
asset or liability adjustments impacting depreciation and/or accretion expense recorded after the consolidation date have impacted
Generation’s post-consolidation results of operations. No material changes are expected to the fair value of assets and liabilities.
Generation recorded the assets and liabilities of CENG at fair value as of April 1, 2014. The following assets and liabilities of CENG
were recorded within Exelon’s Consolidated Balance Sheets as of the date of integration, adjusted for the modifications discussed
above:
Fair Values
Current assets .......................................................................................... $ 499
Nuclear decommissioning trust fund ......................................................................... 1,955
Property, plant and equipment ............................................................................. 3,017
Nuclear fuel ............................................................................................. 482
Other assets ............................................................................................ 10
Total assets ............................................................................................. 5,963
Current liabilities ......................................................................................... 237
Asset retirement obligation ................................................................................ 1,760
Pension and other employee benefit obligations ............................................................... 281
Unamortized energy contract liabilities ....................................................................... 171
Other liabilities .......................................................................................... 114
Total liabilities ........................................................................................... 2,563
Total net assets ......................................................................................... $3,400
Exelon also recorded the fair value of the noncontrolling interest on its Consolidated Balance Sheets of approximately $1.5 billion,
net of the fair value of $152 million for certain specified additional distribution rights under the Operating Agreement. In addition, the
noncontrolling interest was further reduced by the $400 million special cash distribution to EDF.
Due to the Preferred Distribution Rights that Generation has on CENG’s available cash, the earnings attributable to the
noncontrolling interest on Exelon’s Statements of Operations and Comprehensive Income as well as the corresponding adjustment
to Noncontrolling interest on Exelon’s Consolidated Balance Sheets will not be in proportion to Generation’s and EDF’s equity
ownership interests. Rather, the attribution will consider Generation’s Preferred Distribution Rights and allocate net income based on
each owner’s rights to CENG’S net assets. For the year ended December 31, 2014, Generation reduced by $13 million the amount
of Net income attributable to noncontrolling interests on Exelon’s Consolidated Statements of Operations and Comprehensive
Income. As a result of the consolidation, Exelon’s Consolidated Statements of Operations and Comprehensive Income includes
CENG’s incremental operating revenues of $218 million and CENG’s net income, prior to any intercompany eliminations and any
adjustments for noncontrolling interest, of $407 million during the year ended December 31, 2014.
Exelon incurred integration-related costs of $26 million for the year ended December 31, 2014. The costs incurred are classified
primarily within Operating and maintenance expense in Exelon’s Consolidated Statements of Operations and Comprehensive
Income for the year ended December 31, 2014.
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