Exelon 2015 Annual Report Download - page 305

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
asset may be impaired. Generation concluded that the estimated undiscounted future cash flows and fair value of eleven wind projects, primarily
located in West Texas and Minnesota, were less than their respective carrying values at September 30, 2013. As a result, long-lived assets held
and used with a carrying amount of approximately $75 million were written down to their fair value of $32 million and a pre-tax impairment charge of
$43 million, net of the impairment amount attributable to noncontrolling interests for certain of the projects, was recorded within Operating and
maintenance expense in Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income.
During 2015 and 2014, significant declines in oil and gas prices suggested that the carrying value of certain Upstream assets may be
impaired. Generation concluded that the estimated undiscounted future cash flows and fair value of various Upstream properties, primarily located
in Oklahoma and Texas, were less than their respective carrying values at December 31, 2015 and 2014. As a result, pre-tax impairment charges
of $5 million and $124 million were recorded for the years ended December 31, 2015 and 2014, respectively, within Operating and maintenance
expense within Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income. After reflecting the impairment
charges, Generation has $187 million of Upstream assets remaining on its Consolidated Balance Sheets at December 31, 2015. Further declines
in commodity prices could potentially result in future impairments of the Upstream assets.
The fair value analysis used in the above impairments was primarily based on the income approach using significant unobservable inputs
(Level 3) including revenue, generation and production forecasts, projected capital and maintenance expenditures and discount rates. Changes in
the assumptions described above could potentially result in future impairments of Exelon’s long-lived assets, which could be material.
In 2014, certain non-nuclear generating assets were identified as assets held for sale on Exelon’s and Generation’s Consolidated Balance
Sheets. When long-lived assets are held for sale, an impairment loss is recognized to the extent that the asset’s carrying value exceeds its
estimated fair value less costs to sell. Long-lived assets with a carrying amount of approximately $1 billion were written down to their fair value of
$556 million and a pre-tax impairment charge of $450 million was recorded within Operating and maintenance expense on Exelon’s and
Generation’s Consolidated Statements of Operations and Comprehensive Income. See Note 4—Mergers, Acquisitions, and Dispositions for further
information on asset sales.
Nuclear Uprate Program (Exelon and Generation)
Generation is engaged in individual projects as part of a planned power uprate program across its nuclear fleet. When economically viable,
the projects take advantage of new production and measurement technologies, new materials and application of expertise gained from a half-
century of nuclear power operations. Based on ongoing reviews, the nuclear uprate implementation plan was adjusted during 2013 to cancel certain
projects. The Measurement Uncertainty Recapture (MUR) uprate projects at the Dresden and Quad Cities nuclear stations were cancelled as a
result of the cost of additional plant modifications identified during final design work which, when combined with then current market conditions,
made the projects not economically viable. Additionally, the market conditions prompted Generation to cancel the previously deferred extended
power uprate projects at the LaSalle and Limerick nuclear stations. During 2013, Exelon and Generation recorded a pre-tax charge to Operating
and maintenance expense and Interest expense within their Statements of Operations and Comprehensive Income of approximately $111 million
and $8 million, respectively, to accrue remaining costs and reverse the previously capitalized costs.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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