Exelon 2015 Annual Report Download - page 178

Table of Contents
Generation’s total Revenue net of purchase power and fuel expense from continuing operations for the year ended December 31, 2015 of $9,114
million.
Fuel Procurement. Generation procures coal and natural gas through long-term and short-term contracts, and spot-market purchases.
Nuclear fuel assemblies are obtained predominantly through long-term uranium concentrates supply contracts, contracted conversion services,
contracted enrichment services, or a combination thereof, and contracted fuel fabrication services. The supply markets for uranium concentrates
and certain nuclear fuel services are subject to price fluctuations and availability restrictions. Supply market conditions may make Generation’s
procurement contracts subject to credit risk related to the potential non-performance of counterparties to deliver the contracted commodity or
service at the contracted prices. Approximately 50% of Generation’s uranium concentrate requirements from 2016 through 2020 are supplied by
three producers. In the event of non-performance by these or other suppliers, Generation believes that replacement uranium concentrates can be
obtained, although at prices that may be unfavorable when compared to the prices under the current supply agreements. Non-performance by
these counterparties could have a material adverse impact on Exelon’s and Generation’s results of operations, cash flows and financial positions.
See ITEM 7.—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for additional
information regarding uranium and coal supply agreement matters.
ComEd
The financial swap contract between Generation and ComEd was deemed prudent by the Illinois Settlement Legislation, thereby ensuring
that ComEd would be entitled to receive full cost recovery in rates. The change in fair value each period was recorded by ComEd with an offset to
a regulatory asset or liability. This financial swap contract between Generation and ComEd expired on May 31, 2013. All realized impacts have
been included in Generation’s and ComEd’s results of operations.
ComEd entered into 20-year contracts for renewable energy and RECs beginning in June 2012. ComEd is permitted to recover its renewable
energy and REC costs from retail customers with no mark-up. The annual commitments represent the maximum settlements with suppliers for
renewable energy and RECs under the existing contract terms. Pursuant to the ICC’s Order on December 19, 2012, ComEd’s commitments under
the existing long-term contracts were reduced for the June 2013 through May 2014 procurement period. In addition, the ICC’s December 18, 2013
Order approved the reduction of ComEd’s commitments under those contracts for the June 2014 through May 2015 procurement period, and the
amount of the reduction was approved by the ICC in March 2014. See Note 3—Regulatory Matters and Note 13—Derivative Financial Instruments
of the Combined Notes to Consolidated Financial Statements for additional information regarding energy procurement and derivatives.
PECO
PECO has contracts to procure electric supply that were executed through the competitive procurement process outlined in its PAPUC-
approved DSP Programs, which are further discussed in Note 3—Regulatory Matters of the Combined Notes to the Consolidated Financial
Statements. PECO has certain full requirements contracts and block contracts, which are considered derivatives and qualify for the normal
purchases and normal sales scope exception under current derivative authoritative guidance, and as a result are accounted for on an accrual basis
of accounting. Under the DSP Programs, PECO is permitted to recover its electric supply procurement costs from retail customers with no mark-
up.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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