Exelon 2014 Annual Report Download - page 29

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.
ComEd, PECO and BGE
Transmission Services
ComEd, PECO and BGE provide unbundled transmission service under rates approved by FERC. FERC has used its regulation of
transmission to encourage competition for wholesale generation services and the development of regional structures to facilitate
regional wholesale markets. Under FERC’s open access transmission policy promulgated in Order No. 888, ComEd, PECO and
BGE, as owners of transmission facilities, are required to provide open access to their transmission facilities under filed tariffs at
cost-based rates. ComEd, PECO and BGE are required to comply with FERC’s Standards of Conduct regulation governing the
communication of non-public information between the transmission owner’s employees and wholesale merchant employees.
PJM is the ISO and the FERC-approved RTO for the Mid-Atlantic and Midwest regions. PJM is the transmission provider under, and
the administrator of, the PJM Open Access Transmission Tariff (PJM Tariff), operates the PJM energy, capacity and other markets,
and, through central dispatch, controls the day-to-day operations of the bulk power system for the PJM region. ComEd, PECO and
BGE are members of PJM and provide regional transmission service pursuant to the PJM Tariff. ComEd, PECO, BGE and the other
transmission owners in PJM have turned over control of their transmission facilities to PJM, and their transmission systems are
currently under the dispatch control of PJM. Under the PJM Tariff, transmission service is provided on a region-wide, open-access
basis using the transmission facilities of the PJM members at rates based on the costs of transmission service.
ComEd’s transmission rates are established based on a formula that was approved by FERC in January 2008. FERC’s order
establishes the agreed-upon treatment of costs and revenues in the determination of network service transmission rates and the
process for updating the formula rate calculation on an annual basis.
PECO default service customers are charged for retail transmission services through a rider designed to recover PECO’s PJM
transmission network service charges and RTEP charges on a full and current basis in accordance with PECO’s 2010 electric
distribution rate case settlement.
The transmission rate in the PJM Open Access Transmission Tariff under which PECO incurs costs to serve its default service
customers and earns revenue as a transmission facility owner is a FERC-approved rate. This is the rate that all load serving entities
in the PECO transmission zone pay for wholesale transmission service.
BGE’s transmission rates are established based on a formula that was approved by FERC in April 2006. FERC’s order establishes
the agreed-upon treatment of costs and revenues in the determination of network service transmission rates and the process for
updating the formula rate calculation on an annual basis.
See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information regarding
transmission services.
Environmental Regulation
General
Exelon, Generation, ComEd, PECO and BGE are subject to comprehensive and complex legislation regarding environmental
matters by the federal government and various state and local jurisdictions in which they operate their facilities. The Registrants are
also subject to regulations administered by the U.S. EPA and various state and local environmental protection agencies. Federal,
state and local regulation includes the authority to regulate air, water, and solid and hazardous waste disposal.
The Exelon Board of Directors is responsible for overseeing the management of environmental matters. Exelon has a management
team to address environmental compliance and strategy, including the CEO; the Senior Vice President, Corporate Strategy and
Chief Sustainability Officer; the Corporate Environmental Strategy Director and the Environmental Regulatory Strategy Director, as
well as senior management of Generation, ComEd, PECO and BGE. Performance of those individuals directly involved in
environmental compliance and strategy is reviewed and affects compensation as part of the annual individual performance review
process. The Exelon Board has delegated to its corporate governance committee authority to oversee Exelon’s compliance with laws
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