Exelon 2015 Annual Report Download - page 284

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
deferred costs associated with Exelon’s other postretirement benefit plans. PECO’s pension regulatory recovery is based on cash contributions
and is not included in the regulatory asset (liability) balances. The regulatory asset (liability) is amortized in proportion to the recognition of prior
service costs (gains), transition obligations and actuarial losses (gains) attributable to Exelon’s pension and other postretirement benefit plans
determined by the cost recognition provisions of the authoritative guidance for pensions and postretirement benefits. ComEd, PECO and BGE will
recover these costs through base rates as allowed in their most recently approved regulated rate orders. The pension and other postretirement
benefit regulatory asset balance includes a regulatory asset established at the date of the Constellation merger related to BGE’s portion of the
deferred costs associated with legacy Constellation’s pension and other postretirement benefit plans. The BGE-related regulatory asset is being
amortized over a period of approximately 12 years, which generally represents the expected average remaining service period of plan participants
at the date of the Constellation merger. See Note 17—Retirement Benefits for additional detail. No return is earned on Exelon’s regulatory asset.
Deferred income taxes. These costs represent the difference between the method by which the regulator allows for the recovery of income
taxes and how income taxes would be recorded under GAAP. Regulatory assets and liabilities associated with deferred income taxes, recorded in
compliance with the authoritative guidance for accounting for certain types of regulation and income taxes, include the deferred tax effects
associated principally with accelerated depreciation accounted for in accordance with the ratemaking policies of the ICC, PAPUC and MDPSC, as
well as the revenue impacts thereon, and assume continued recovery of these costs in future transmission and distribution rates. For BGE, this
amount includes the impacts of a reduction in the deductibility, for Federal income tax purposes, of certain retiree health care costs pursuant to
the March 2010 Health Care Reform Acts. For BGE, these additional income taxes are being amortized over a 5-year period that began in March
2011 in accordance with the MDPSC’s March 2011 rate order. For PECO, this amount includes the impacts of electric and gas distribution repairs
in the deductibility pursuant to PUC’s 2010 and 2015 rate case settlement agreements. See Note 15—Income Taxes and Note 17—Retirement
Benefits for additional information. ComEd, PECO and BGE are not earning a return on the regulatory asset in base rates.
AMI programs. For ComEd, this amount represents meter costs associated with ComEd’s AMI pilot program approved in ComEd’s 2010
rate case. The recovery periods for the meter costs are through January 1, 2020. As of December 31, 2015 and December 31, 2014, ComEd had
regulatory assets of $137 million and $88 million, respectively, related to accelerated depreciation costs resulting from the early retirements of non-
AMI meters, which will be amortized over an average ten year period pursuant to the ICC approved AMI Deployment plan. ComEd is earning a
return on the regulatory asset. For PECO, this amount represents accelerated depreciation and filing and implementation costs relating to the
PAPUC-approved Smart Meter Procurement and Installation Plan as well as the return on the un-depreciated investment, taxes, and operating and
maintenance expenses. The approved plan allows for recovery of filing and implementation costs incurred through December 31, 2012. In addition,
the approved plan provides for recovery of program costs, which includes depreciation on new equipment placed in service, beginning in January
2011 on full and current basis, which includes interest income or expense on the under or over recovery. The approved plan also provides for
recovery of accelerated depreciation on PECO’s non-AMI meter assets over a 10-year period ending December 31, 2020. Recovery of smart meter
costs will be reflected in base rates effective January 1, 2016. For BGE, this amount represents smart grid pilot program costs as well as the
incremental costs associated with implementing full deployment of a smart grid program. Pursuant to a MDPSC order, pilot program costs of $11
million were deferred in a regulatory asset, and, beginning with the MDPSC’s March 2011 rate order, is earning BGE’s most current authorized rate
of return. In August
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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