Exelon 2014 Annual Report Download - page 271

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
(and Generation, through its agreement in Exelon’s 2001 corporate restructuring to assume ComEd’s rights and obligations
associated with its former generation business) could face liability (along with any other potentially responsible parties) for
environmental conditions at the stations requiring remediation, with the determination of the allocation among the parties subject to
many uncertain factors. ComEd and Generation have reviewed available public information as to potential environmental exposures
regarding the Midwest Generation station sites. Midwest Generation publicly disclosed in its March 31, 2014 Form 10-Q, its last
public filing prior to its deregistration, that (i) it has accrued a probable amount of approximately $9 million for estimated
environmental investigation and remediation costs under CERCLA, or similar laws, for the investigation and remediation of
contaminated property at two Midwest Generation plant sites, (ii) it has identified stations for which a reasonable estimate for
investigation and/ or remediation cannot be made and (iii) it and the Illinois EPA entered into Compliance Commitment Agreements
outlining specified environmental remediation measures and groundwater monitoring activities to be undertaken at its Crawford,
Powerton, Joliet, Will County and Waukegan generating stations. At this time, however, ComEd and Generation do not have
sufficient information to reasonably assess the potential likelihood or magnitude of any remediation requirements that may be
asserted. For these reasons, ComEd and Generation are unable to predict whether and to what extent they may ultimately be held
responsible for remediation and other costs relating to the generating stations and as a result no liability has been recorded as of
December 31, 2014. Any liability imposed on ComEd or Generation for environmental matters relating to the generating stations
could have a material adverse impact on their future results of operations and cash flows.
Generation increased its reserve for asbestos-related bodily injury claims at December 31, 2013 by $25 million, as a result of
Midwest Generation listing such agreement in the January 2014 plan supplement as an agreement to be rejected in connection with
the Plan. As discussed above, the rejection became effective as part of the Plan. Subsequently, Generation increased its reserve by
$15 million pursuant to the second quarter 2014 actuarial study of such claims, of which an estimated $6 million pertains to Midwest
Generation’s share. Midwest Generation publicly disclosed in its March 31, 2014 Form 10-Q, its last public filing prior to its
deregistration, that it had $53 million recorded related to asbestos bodily injury claims under the contractual indemnity with ComEd.
Exelon and Generation may be entitled to damages associated with the rejection of the agreement. These amounts are considered
to be contingent gains and would not be recognized until realized.
Solid and Hazardous Waste
Cotter Corporation. The U.S. EPA has advised Cotter Corporation (Cotter), a former ComEd subsidiary, that it is potentially liable in
connection with radiological contamination at a site known as the West Lake Landfill in Missouri. On February 18, 2000, ComEd sold
Cotter to an unaffiliated third-party. As part of the sale, ComEd agreed to indemnify Cotter for any liability arising in connection with the
West Lake Landfill. In connection with Exelon’s 2001 corporate restructuring, this responsibility to indemnify Cotter was transferred to
Generation. On May 29, 2008, the U.S. EPA issued a Record of Decision approving the remediation option submitted by Cotter and
the two other PRPs that required additional landfill cover. By letter dated January 11, 2010, the U.S. EPA requested that the PRPs
perform a supplemental feasibility study for a remediation alternative that would involve complete excavation of the radiological
contamination. On September 30, 2011, the PRPs submitted the final supplemental feasibility study to the U.S. EPA for review. In
June 2012, the U.S. EPA requested that the PRPs perform additional analysis and groundwater sampling as part of the supplemental
feasibility study, and subsequently requested additional analysis sampling and modeling that will be conducted throughout 2015. In
light of these additional requests, it is unknown when the U.S EPA will propose a remedy for public comment, but will likely be
sometime in 2016 at the earliest. Thereafter the U.S. EPA will select a final remedy and enter into a Consent Decree with the PRPs to
effectuate the remedy. A complete excavation remedy would be significantly more expensive than the previously selected additional
cover remedy; however, Generation believes the likelihood that the U.S. EPA would require a complete excavation remedy is remote.
The current estimated cost of the landfill cover remediation for the site is approximately $50 million, which will be allocated among all
PRPs. Generation has accrued what it believes to be an adequate amount to cover its anticipated share of such liability.
On April 11, 2014, a class action complaint was filed in the U.S. District Court for the Eastern District of Missouri against Cotter and
six additional defendants. The complaint alleges that individuals living in the North St. Louis area within a three-mile radius of the
West Lake Landfill suffered damage to property or loss of use of property due to the defendants’ negligent handling of radioactive
materials. On August 22, 2014, the plaintiffs voluntarily dismissed the case without prejudice.
On August 8, 2011, Cotter was notified by the DOJ that Cotter is considered a PRP with respect to the government’s clean-up costs
for contamination attributable to low level radioactive residues at a former storage and reprocessing facility named Latty Avenue
near St. Louis, Missouri. The Latty Avenue site is included in ComEd’s indemnification responsibilities discussed above as part of the
sale of Cotter. The radioactive residues had been generated initially in connection with the processing of uranium ores as part of the
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