Exelon 2015 Annual Report Download - page 279

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)—(Continued)
PJM Transmission Rate Design and Operating Agreements (Exelon, ComEd, PECO and BGE). PJM Transmission Rate Design
specifies the rates for transmission service charged to customers within PJM. Currently, ComEd, PECO and BGE incur costs based on the
existing rate design, which charges customers based on the cost of the existing transmission facilities within their load zone and the cost of new
transmission facilities based on those who benefit from those facilities. In April 2007, FERC issued an order concluding that PJM’s current rate
design for existing facilities is just and reasonable and should not be changed. In the same order, FERC held that the costs of new facilities 500
kV and above should be socialized across the entire PJM footprint and that the costs of new facilities less than 500 kV should be allocated to the
customers of the new facilities who caused the need for those facilities. A number of parties appealed to the U.S. Court of Appeals for the Seventh
Circuit for review of the decision.
In August 2009, the court issued its decision affirming the FERC’s order with regard to the existing facilities, but remanded to FERC the
issue of the cost allocation associated with the new facilities 500 kV and above (Cost Allocation Issue) for further consideration by the FERC. On
remand, FERC reaffirmed its earlier decision to socialize the costs of new facilities 500 kV and above. A number of parties filed appeals of these
orders. In June 2014, the court again remanded the Cost Allocation Issue to FERC. On December 18, 2014, FERC issued an order setting an
evidentiary hearing and settlement proceeding regarding the Cost Allocation Issue. The hearing only concerns new facilities approved by the PJM
Board prior to February 1, 2013. As of December 31, 2015, settlement discussions are continuing.
Because a new cost allocation had been adopted for projects approved by the PJM Board on or after February 1, 2013, this latest remand
only involves the cost allocation for facilities 500 kV and above approved prior to that date. ComEd anticipates that all impacts of any rate design
changes effective after December 31, 2006, should be recoverable through retail rates and, thus, the rate design changes are not expected to have
a material impact on ComEd’s results of operations, cash flows or financial position. PECO anticipates that all impacts of any rate design changes
should be recoverable through the transmission service charge rider approved in PECO’s 2010 electric distribution rate case settlement and, thus,
the rate design changes are not expected to have a material impact on PECO’s results of operations, cash flows or financial position. To the
extent any rate design changes are retroactive to periods prior to January 1, 2011, there may be an impact on PECO’s results of operations. BGE
anticipates that all impacts of any rate design changes effective after the implementation of its standard offer service programs in Maryland should
be recoverable through retail rates and, thus, the rate design changes are not expected to have a material impact on BGE’s results of operations,
cash flows or financial position.
ComEd, PECO and BGE are committed to the construction of transmission facilities under their operating agreements with PJM to maintain
system reliability. ComEd, PECO and BGE will work with PJM to continue to evaluate the scope and timing of any required construction projects.
ComEd, PECO and BGE’s estimated commitments are as follows:
Total 2016 2017 2018 2019 2020
ComEd $297 $204 $ 61 $ 26 $ 6 $—
PECO 67 31 24 8 4 —
BGE 373 140 112 62 46 13
Demand Response Resource Order (Exelon, Generation, ComEd, PECO, BGE). On May 23, 2014, the D.C. Circuit Court issued an
opinion vacating the FERC Order No. 745 (D.C. Circuit Decision). Order No. 745 established uniform compensation levels for demand response
resources
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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