Exelon 2015 Annual Report Download - page 276

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
would make a recommendation, subject to approval by the CENG board, that the Ginna plant be retired as soon as practicable. A formal study
conducted by the ISO-NY and RG&E dated as of May 12, 2014 concluded that Ginna needs to remain in operation to maintain the reliability of the
transmission grid in the Rochester region through September 2018 when planned transmission system upgrades undertaken by RG&E are
expected to be completed.
In November 2014, in response to a petition filed by Ginna, the NYPSC directed Ginna and RG&E to negotiate a Reliability Support Services
Agreement (RSSA). In February 2015, regulatory filings, including RSSA terms negotiated between Ginna and RG&E, to support the continued
operation of Ginna for reliability purposes were made with the NYPSC and with the FERC for their approval. Although the RSSA contract is still
subject to such regulatory approvals, on April 1, 2015, Ginna began delivering the power and capacity from the Ginna plant into the ISO-NY
consistent with the technical provisions of the proposed RSSA contract.
In April 2015, the FERC issued an order which directed Ginna to make a compliance filing to ensure that the RSSA does not allow Ginna to
receive revenues above its full cost of service and which rejected any extension of the RSSA beyond its initial term; rather the order required that
any extension be subject to the rules currently being developed by the ISO-NY. The FERC order also set the RSSA for hearing and settlement
procedures. In response to the FERC’s April 2015 order, in May 2015, Ginna submitted a compliance filing to the FERC containing proposed
revisions to the RSSA addressing the FERC’s requirements and maintaining the April 1, 2015 proposed effective date. In July 2015, the FERC
accepted Ginna’s compliance filing effective April 1, 2015. The FERC accepted Ginna’s proposal for market revenue sharing subject to a cap
effective April 1, 2015, and rejected requests for rehearing by intervenors on a number of matters related to jurisdiction, the reliability need, the
RSSA term, and possible price suppression.
In August 2015, Ginna reached a settlement in principle with intervenors modifying certain terms and conditions in the originally negotiated
agreement. The proposed RSSA under the settlement preserves the value of the contract originally negotiated with RG&E, but shortens the term
from 3.5 to 2 years, expiring March 31, 2017 and required RG&E to complete a new transmission reliability study to determine whether an interim
reliability solution is required beyond March 31, 2017. That reliability study was completed in October 2015, and it identified certain RG&E projects
that are needed to solve reliability problems that would be caused by an early retirement of Ginna. Under the settlement agreement, Ginna was
required by December 29, 2015 to submit a bid to provide reliability services beginning April 1, 2017 until the necessary RG&E transmission
upgrades are in service, which RG&E expects will be no later than October 31, 2017. Ginna submitted such a bid in December 2015. RG&E has
the right until June 30, 2016 to select Ginna as an ongoing reliability solution. If such a need exists, and if Ginna is selected, Ginna and RG&E
could enter into an additional RSSA commencing April 1, 2017 on the rates, terms and conditions set forth in Ginna’s bid, or as might be otherwise
agreed by Ginna and RG&E.
If RG&E seeks a reliability solution with Ginna, but RG&E and Ginna do not reach an agreement on rates, terms, and conditions of a new
RSSA by March 31, 2016 (or by June 30, 2016 if RG&E elects to defer the decision date), the settlement agreement requires Ginna to file an
unexecuted additional RSSA with the FERC for adjudication. If Ginna is not selected for continued reliability service and does not plan to retire
shortly after the expiration of the RSSA, Ginna is required to file a notice to that effect with the NYPSC no later than September 30, 2016. Under
the terms of the proposed RSSA, if RG&E does not select Ginna to provide reliability service after March 31, 2017, and Ginna continues to
operate after June 14, 2017, Ginna would be required to make certain refund payments related to capital expenditures to RG&E.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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