Exelon 2015 Annual Report Download - page 278

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
For each of the following years, the following total increases/(decreases) were included in ComEd’s and BGE’s electric transmission formula
rate filings:
Annual Transmission Filings
ComEd BGE
2015 2014 2013 2015 2014 2013
Initial revenue requirement increase $ 68 $ 36 $ 38 $ — $ 9 $ 2
Annual reconciliation (decrease) increase 18 (14) 30 (3) 5 (3)
Total revenue requirement increase $ 86 $ 22 $ 68 $ (3) $ 14 $ (1)
Allowed return on rate base 8.61% 8.62% 8.7% 8.46% 8.53% 8.35%
Allowed ROE 11.5% 11.5% 11.5% 11.3% 11.3% 11.3%
Effective date of rates June 2015 June 2014 June 2013 June 2015 June 2014 June 2013
(a) For BGE, this excludes the increase in revenue requirement associated with dedicated facilities charges. The increases for dedicated facilities were $13 million and $3 million for
2015 and 2014, respectively. There were no dedicated facilities charges in 2013 for BGE.
(b) Refers to the weighted average debt and equity return on transmission rate bases for ComEd and BGE. As part of the FERC-approved settlement of ComEd’s 2007 transmission
rate case, the rate of return on common equity is 11.50% and the common equity component of the ratio used to calculate the weighted average debt and equity return for the
transmission formula rate is currently capped at 55%. As part of the FERC-approved settlement of BGE’s 2005 transmission rate case, the rate of return on common equity is
11.30%, inclusive of a 50 basis point incentive for participating in PJM.
(c) The time period for any challenges to the annual transmission formula rate update filings expired with no challenges submitted.
FERC Transmission Complaint (Exelon and BGE). On February 27, 2013, consumer advocates and regulators from the District of
Columbia, New Jersey, Delaware and Maryland, and the Delaware Electric Municipal Cooperatives (the parties), filed a complaint at FERC against
BGE and the PHI companies relating to their respective transmission formula rates. BGE’s formula rate includes a 10.8% base rate of return on
common equity (ROE) and a 50 basis point incentive for participating in PJM (and certain additional incentive basis points on certain projects). The
parties sought a reduction in the base return on equity to 8.7% and changes to the formula rate process. Under FERC rules, any revenues subject
to refund are limited to a fifteen month period and the earliest date from which the base ROE could be adjusted and refunds required is the date of
the complaint.
On August 21, 2014, FERC issued an order in the BGE and PHI companies’ proceeding, which established hearing and settlement judge
procedures for the complaint, and set a refund effective date of February 27, 2013.
On December 8, 2014, various state agencies in Delaware, Maryland, New Jersey, and D.C. filed a second complaint against BGE regarding
the base ROE of the transmission business seeking a reduction from 10.8% to 8.8%. The filing of the second complaint created a second refund
window. By order issued on February 9, 2015, FERC established a hearing on the second complaint with the complainants’ requested refund
effective date of December 8, 2014. On February 20, 2015, the Chief Judge issued an order consolidating the two complaint proceedings and
established an Initial Decision issuance deadline of February 29, 2016.
On November 6, 2015, BGE and the PHI companies and the complainants filed a settlement with FERC covering the issues raised in the
complaints. The settlement provides for a 10% base ROE, effective March 8, 2016, which will be augmented by the PJM incentive adder of 50
basis points, and refunds to BGE customers of $13.7 million. The settlement also provides a moratorium on any change in the ROE until June 1,
2018. On December 16, 2015, the Presiding Administrative Law Judge submitted a Certification of the Uncontested Settlement to the FERC
Commissioners. The settlement remains subject to FERC approval.
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(a)
(b)
(c)
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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