Exelon 2015 Annual Report Download - page 183

Table of Contents
Maturity of Credit Risk Exposure
Rating as of December 31, 2015
Less than
2 Years
2-5
Years
Exposure
Greater than
5 Years
Total Exposure
Before Credit
Collateral
Investment grade $ 1,036 $343 $ 18 $ 1,397
Non-investment grade 40 19 8 67
No external ratings
Internally rated—investment grade 452 46 23 521
Internally rated—non-investment grade 71 6 — 77
Total $ 1,599 $414 $ 49 $ 2,062
Net Credit Exposure by Type of Counterparty
As of
December 31,
2015
Financial institutions $ 187
Investor-owned utilities, marketers, power producers 886
Energy cooperatives and municipalities 872
Other 35
Total $ 1,980
(a) As of December 31, 2015, credit collateral held from counterparties where Generation had credit exposure included $13 million of cash and $69 million of letters of credit.
ComEd
Credit risk for ComEd is managed by credit and collection policies, which are consistent with state regulatory requirements. ComEd is
currently obligated to provide service to all electric customers within its franchised territory. ComEd records a provision for uncollectible accounts,
based upon historical experience, to provide for the potential loss from nonpayment by these customers. See Note 1—Significant Accounting
Policies of the Combined Notes to Consolidated Financial Statements for the allowance for uncollectible accounts policy. ComEd is permitted to
recover its costs of procuring energy through the Illinois Settlement Legislation as well as the ICC-approved procurement tariffs. ComEd will
monitor nonpayment from customers and will make any necessary adjustments to the provision for uncollectible accounts. The Illinois Settlement
Legislation prohibits utilities, including ComEd, from terminating electric service to a residential electric space heat customer due to nonpayment
between December 1 of any year through March 1 of the following year. ComEd’s ability to disconnect non space-heating residential customers is
also impacted by certain weather restrictions, at any time of year, under the Illinois Public Utilities Act. ComEd will monitor the impact of its
disconnection practices and will make any necessary adjustments to the provision for uncollectible accounts. ComEd did not have any customers
representing over 10% of its revenues as of December 31, 2015. See Note 3—Regulatory Matters of the Combined Notes to Consolidated
Financial Statements for additional information regarding ComEd’s recently approved tariffs to adjust rates annually through a rider mechanism to
reflect increases or decreases in annual uncollectible accounts expense.
ComEd’s power procurement contracts provide suppliers with a certain amount of unsecured credit. The credit position is based on forward
market prices compared to the benchmark prices. The benchmark prices are the forward prices of energy projected through the contract term and
are set at the point of supplier bid submittals. If the forward market price of energy exceeds the benchmark price, the suppliers are required to post
collateral for the secured credit portion after adjusting for any unpaid deliveries and unsecured credit allowed under the contract. The unsecured
credit used by the suppliers represents ComEd’s net credit exposure. ComEd’s counterparty credit risk is mitigated by its ability to
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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