Exelon 2014 Annual Report Download - page 26

Construction Budget
PECO’s business is capital intensive and requires significant investments primarily in electric transmission and electric and natural
gas distribution facilities to ensure the adequate capacity, reliability and efficiency of its system. PECO, as a transmission facilities
owner, has various construction commitments under PJM’s RTEP. PECO’s most recent estimate of capital expenditures for plant
additions and improvements for 2015 is $550 million, which includes RTEP projects and capital expenditures related to the smart
meter and smart grid project.
See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional details. See
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Liquidity and
Capital Resources for further information.
BGE
BGE is engaged principally in the purchase and regulated retail sale of electricity and the provision of electricity transmission and
distribution services to retail customers in central Maryland, including the City of Baltimore, as well as the purchase and regulated
retail sale of natural gas and the provision of gas distribution services to retail customers in central Maryland, including the City of
Baltimore. BGE is a public utility under the Public Utilities Article of the Maryland Annotated Code subject to regulation by the
MDPSC as to electric and gas distribution rates and service, the issuances of certain securities and certain other aspects of BGE’s
operations. BGE is a public utility under the Federal Power Act subject to regulation by FERC as to transmission rates and certain
other aspects of BGE’s business and by the U.S. Department of Transportation as to pipeline safety and other areas of gas
operations. Specific operations of BGE are subject to the jurisdiction of various other Federal, state, regional and local agencies.
Additionally, BGE is also subject to NERC mandatory reliability standards.
BGE serves an estimated population of 2.8 million in its 2,300 square mile combined electric and gas retail service territory. BGE
provides electric distribution service in an area of approximately 2,300 square miles and gas distribution service in an area of
approximately 800 square miles, both with a population of approximately 2.8 million, including approximately 621,000 in the City of
Baltimore. BGE delivers electricity to approximately 1.2 million customers and natural gas to approximately 655,000 customers.
BGE has the necessary authorizations to provide regulated electric and natural gas distribution services in the various municipalities
and territories in which it now supplies such services. With respect to electric distribution service, BGE’s authorizations consist of
charter rights, a state-wide franchise grant and a franchise grant from the City of Baltimore. The franchise rights are nonexclusive
and are perpetual. With respect to natural gas distribution service, BGE’s authorizations consist of charter rights, a perpetual state-
wide franchise grant, and franchises granted by all the municipalities and/or governmental bodies in which BGE now supplies
services. The franchise grants are not exclusive; some are perpetual and some are for a limited duration, which BGE anticipates
being able to extend or replace prior to expiration.
BGE’s kWh sales and peak electricity load are generally higher during the summer and winter months, when temperature extremes
create demand for either summer cooling or winter heating. BGE’s highest peak load occurred on July 21, 2011 and was 7,236 MW;
its highest peak load during winter months occurred on January 7, 2014 and was 6,526 MW.
BGE’s natural gas sales are generally higher during the winter months when cold temperatures create demand for winter heating.
BGE’s highest daily natural gas send out occurred on February 5, 2007 and was 840 mmcf.
The demand for electricity and gas is affected by weather and usage conditions. The MDPSC has allowed BGE to record a monthly
adjustment to its electric and gas distribution revenues from all residential customers, commercial electric customers, the majority of
large industrial electric customers, and all firm service commercial gas customers to eliminate the effect of abnormal weather and
usage patterns per customer on BGE’s electric and gas distribution volumes, thereby recovering a specified dollar amount of
distribution revenues per customer, by customer class, regardless of changes in consumption levels. This adjustment allows BGE to
recognize revenues at MDPSC-approved levels per customer, regardless of what actual distribution volumes are for a billing period
(referred to as “revenue decoupling”). Therefore, while these revenues are affected by customer growth, they will not be affected by
actual weather or usage conditions. BGE bills or credits affected customers in subsequent months for the difference between
approved revenue levels under revenue decoupling and actual customer billings.
Retail Electric Services
BGE’s retail electric sales and distribution service revenues are derived from electricity deliveries at rates regulated by the MDPSC.
As a result of the deregulation of electric generation in Maryland effective July 1, 2000, all customers can choose a competitive
electric generation supplier. While BGE does not sell electric supply to all customers in its service territory, BGE continues to deliver
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