Exelon 2015 Annual Report Download - page 274

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
October 24, 2013, the U.S. District Court issued a judgment order finding that the MDPSC’s Order directing BGE and the two other Maryland
utilities to enter into a CfD, which assures that CPV receives a guaranteed fixed price regardless of the price set by the federally regulated
wholesale market, violates the Supremacy Clause of the United States Constitution. On November 22, 2013, the MDPSC and CPV appealed the
District Court’s ruling to the United States Court of Appeals for the Fourth Circuit. The Fourth Circuit affirmed the District Court ruling in an opinion
issued June 2, 2014. The MDPSC and CPV filed petitions for certiorari, seeking review of the case by the U.S. Supreme Court. On October 29,
2015, the U.S. Supreme Court granted the petition to review the Fourth Circuit decision, and that appeal is now pending in the Supreme Court with
oral argument scheduled for February 24, 2016.
On February 9, 2011, a civil complaint was filed by Exelon and other unaffiliated parties in the United States District Court for the District of
New Jersey, challenging a 2011 New Jersey law, the Long Term Capacity Pilot Program Act (LCAPP). LCAPP provides eligible generators with 15-
year fixed contracts for the sale of capacity in the PJM capacity market. On October 25, 2013, the U.S. District Court issued a judgment order
finding that LCAPP violates the Supremacy Clause of the United States Constitution. CPV and New Jersey appealed the District Court’s ruling to
the United States Court of Appeals for the Third Circuit. On September 11, 2014, the Third Circuit affirmed the District Court’s ruling finding LCAPP
unconstitutional. On November 26, 2014, CPV and New Jersey sought Supreme Court review of the Third Circuit decision. On October 29, 2015,
the Supreme Court stayed the petition to review the Third Circuit case pending their review of the Fourth Circuit Maryland case described above.
On May 4, 2012, BGE filed a petition in the Circuit Court for Anne Arundel County, Maryland, seeking judicial review of the MDPSC order
under state law. That petition was subsequently transferred to the Circuit Court for Baltimore City and consolidated with similar appeals that have
been filed by other interested parties. On October 1, 2013, the Circuit Court Judge issued a Memorandum Opinion and Order finding the decisions
of the MDPSC were within its statutory authority under Maryland law. This decision is separate from the judgment in the federal litigation that the
MDPSC Order is unconstitutional and the CfD is unenforceable under federal law. The federal judgment, if upheld, would prevent enforcement of
the CfD even if the Circuit Court decision stands. On October 29, 2013, BGE and the two other Maryland utilities appealed the Circuit Court’s ruling
to the Maryland Court of Special Appeals. That appeal has been stayed pending decision by the U.S. Supreme Court in the federal action
described above.
Depending on the ultimate outcome of the pending state and federal litigation, on the eventual market conditions, and on the manner of cost
recovery as of the effective date of the agreement, the CfD could have a material impact on Exelon and BGE’s results of operations, cash flows
and financial positions.
Exelon believes that this and other states’ projects may have artificially suppressed capacity prices in PJM and may continue to do so in
future auctions to the detriment of Exelon’s market driven position. In addition to this litigation, Exelon is working with other market participants to
implement market rules that will appropriately limit the market suppressing effect of such state activities.
MDPSC Derecho Storm Order (Exelon and BGE). Following the June 2012 Derecho storm which hit the mid-Atlantic region interrupting
electrical service to a significant portion of the State of Maryland, the MDPSC issued an order on February 27, 2013 requiring BGE and other
Maryland utilities to file several comprehensive reports with short-term and long-term plans to improve reliability and grid resiliency that were due at
various times before August 30, 2013.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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