Exelon 2015 Annual Report Download - page 103

Table of Contents
These rules, in addition to certain international regulatory requirements still under development and that are similar to Dodd-Frank, could subject
Generation’s SD or MSP counterparties to additional and potentially significant capitalization requirements and could motivate the SDs and MSPs
to increase collateral requirements or cash postings from their counterparties, including Generation.
Generation cannot predict to what extent, if any, further refinements to Dodd-Frank and international regulatory requirements relating to
Swaps may impact its cash flows or financial position, but such impacts could be material.
ComEd, PECO and BGE could also be subject to some Dodd-Frank requirements to the extent they were to enter into Swaps. However, at
this time, management of ComEd, PECO and BGE continue to expect that their companies will not be materially affected by Dodd-Frank.
Market-Based Rates (Exelon, Generation, ComEd, PECO and BGE). Generation, ComEd, PECO and BGE are public utilities for purposes
of the Federal Power Act and are required to obtain FERC’s acceptance of rate schedules for wholesale electricity sales. Currently, Generation,
ComEd, PECO and BGE have authority to execute wholesale electricity sales at market-based rates. As is customary with market-based rate
schedules, FERC has reserved the right to suspend market-based rate authority on a retroactive basis if it subsequently determines that
Generation, ComEd, PECO or BGE has violated the terms and conditions of its tariff or the Federal Power Act. FERC is also authorized to order
refunds in certain instances if it finds that the market-based rates are not just and reasonable under the Federal Power Act.
As required by FERC’s regulations, as promulgated in the Order No. 697 series, Generation, ComEd, PECO and BGE file market power
analyses using the prescribed market share screens to demonstrate that Generation, ComEd, PECO and BGE qualify for market-based rates in
the regions where they are selling energy, capacity, and ancillary services under market-based rate tariffs. On December 30, 2013, Generation,
ComEd, PECO and BGE filed its updated analysis for the Northeast Region, based on 2012 historic test period data which the FERC accepted on
August 5, 2014. On December 23, 2014, Generation filed its updated market power analysis for the Southeast Region which the FERC accepted
on July 16, 2015. On December 23, 2014, Generation filed its updated market power analysis for the Central Region which the FERC accepted on
November 25, 2015. On December 29, 2015, Generation filed its updated market power analysis for the SPP Region, and the FERC has not yet
acted on the filing.
Illinois Low Carbon Portfolio Standard (Exelon, Generation and ComEd). In March 2015, the Low Carbon Portfolio Standard (LCPS)
was introduced in the Illinois General Assembly. The legislation would require ComEd and Ameren to purchase low carbon energy credits to match
70 percent of the electricity used on the distribution system. The LCPS is a technology-neutral solution, so all generators of zero or low carbon
energy would be able to compete in the procurement process, including wind, solar, hydro, clean coal and nuclear. Costs associated with
purchasing the low carbon energy credits would be collected from customers. The LCPS proposal includes consumer protection such as a price
cap that would limit the impact to a 2.015% increase based off 2009 monthly bills, or about $2 per month for the average residential electricity
customer. The legislation also includes a separate customer rebate provision that would provide a direct bill credit to customers in the event
wholesale prices exceed a specified level. The proposed legislation is pending and Exelon and Generation continue to work with stakeholders.
Legislation to Maximize Smart Grid Investments and to Promote a Cleaner and Greener Illinois (Exelon and ComEd). In March 2015,
legislation was introduced in the Illinois General Assembly that would (1) build on ComEd’s investment in the Smart Grid to reinforce the resiliency
and security of the electrical grid to withstand unexpected challenges, (2) expand energy efficiency
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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