Exelon 2014 Annual Report Download - page 95

Net Income (Loss) Attributable to Common Shareholder
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013. Net income attributable to common shareholder
remained relatively consistent primarily due to an increase in Revenue net of purchased power and fuel expense as a result of the
December 2013 and 2014 electric and gas distribution rate order issued by the MDPSC offset by increases in Operating and
maintenance expense and Depreciation expense.
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012. The increase in Net income was driven primarily by
higher distribution rates as a result of the 2012 rate order issued by MDPSC and decreased Revenue net of purchased power and
fuel expense in 2012 related to the accrual of the residential customer rate credit provided as a condition of the MDPSC’s approval
of Exelon’s merger with Constellation. Additionally, the increase in Net income was also driven by higher Operating and maintenance
expenses in 2012, primarily related to BGE’s accrual of its portion of the charitable contributions to be provided as a condition of the
MDPSC’s approval of the merger and lower storm restoration costs in 2013.
Operating Revenue Net of Purchased Power and Fuel Expense
There are certain drivers to Operating revenue that are offset by their impact on Purchased power expense and fuel expense, such
as commodity procurement costs and programs allowing customers to select a competitive electric or natural gas supplier. Electric
and gas revenue and Purchased power and fuel expense are affected by fluctuations in commodity procurement costs. BGE’s
electric and natural gas rates charged to customers are subject to periodic adjustments that are designed to recover or refund the
difference between the actual cost of purchased electric power and purchased natural gas and the amount included in rates in
accordance with the MDPSC’s market-based SOS and gas commodity programs, respectively.
The number of customers electing to select a competitive electric generation supplier affects electric SOS revenue and purchased
power expense. The number of customers electing to select a competitive natural gas supplier affects gas cost adjustment revenue
and purchased natural gas expense. All BGE customers have the choice to purchase energy from a competitive electric generation
supplier. This customer choice of electric generation suppliers does not impact the volume of deliveries, but affects revenue
collected from customers related to SOS. The number of retail customers purchasing electricity from a competitive electric
generation supplier was 364,000, 399,000 and 362,000 at December 31, 2014, 2013 and 2012, respectively, representing 29%, 32%
and 29% of total retail customers, respectively. Retail deliveries purchased from competitive electric generation suppliers
represented 60%, 61% and 60% of BGE’s retail kWh sales for the years ended December 31, 2014, 2013 and 2012, respectively.
The number of retail customers purchasing natural gas from a competitive natural gas supplier was 161,000, 172,000 and 143,000
at December 31, 2014, 2013 and 2012, respectively, representing 25%, 26% and 22% of total retail customers, respectively. Retail
deliveries purchased from competitive natural gas suppliers represented 53%, 54% and 56% of BGE’s retail mmcf sales for the
years ended December 31, 2014, 2013 and 2012, respectively.
The changes in BGE’s Operating revenue net of purchased power and fuel expense for the year ended December 31, 2014
compared to the same period in 2013 consisted of the following:
Increase (Decrease)
Electric Gas Total
Distribution rate increases .................................................................... $57 $ 28 $ 85
Commodity margin .......................................................................... (1) 12 11
Regulatory required programs ................................................................. 13 (1) 12
Transmission revenue ........................................................................ 10 — 10
Other ..................................................................................... $(12) $ (2) $ (14)
Total increase .............................................................................. $67 $ 37 $104
Revenue Decoupling.
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 revenue from all residential customers, commercial electric customers, the majority of
large industrial electric customers, and all firm service 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 revenue
per customer, by customer class, regardless of changes in consumption levels. This allows BGE to recognize revenue at MDPSC-
approved levels per customer, regardless of what BGE’s actual distribution volumes were for a billing period.
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