Exelon 2015 Annual Report Download - page 312

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
1999 to 2002. The intangible asset recognized as a result of these payments is being amortized ratably over the remaining term of the franchise agreement, which ends in 2020.
(j) In February 2003, ComEd entered into separate agreements with the City of Chicago and with Midwest Generation, LLC (Midwest Generation). Under the terms of the settlement
agreement with the City of Chicago, ComEd agreed to pay the City of Chicago a total of $60 million over a ten-year period, beginning in 2003. The intangible asset recognized as
a result of the settlement agreement is being amortized ratably over the remaining term of the City of Chicago franchise agreement, which ends in 2020. As required by the
settlement, ComEd also made a payment of $2 million to a third-party on the City of Chicago’s behalf. Under the terms of the agreement with Midwest Generation, ComEd received
payments of $32 million from Midwest Generation to relieve Midwest Generation’s obligation under the 1999 fossil sale agreement with ComEd to build the generation facility in the
City of Chicago. The payments received by ComEd, which have been recorded in Other deferred credits and other liabilities, and other long-term liabilities on Exelon’s and
ComEd’s Consolidated Balance Sheets are being recognized ratably (approximately $2 million annually) as an offset to amortization expense over the remaining term of the
franchise agreement.
(k) Weighted-average amortization period was calculated at the date of a) acquisition for acquired assets or b) settlement agreement.
The following table summarizes the amortization expense related to intangible assets and liabilities for each of the years ended
December 31, 2015, 2014 and 2013:
For the Year Ended December 31, Exelon Generation ComEd
2015 $ 76 $ 69 $ 7
2014 179 179 7
2013 478 550 7
(a) At Exelon, amortization of unamortized energy contracts totaling $22 million, $135 million and $430 million for the years ended December 31, 2015, 2014 and 2013, respectively,
was recorded in Operating revenues or Purchase power and fuel expense within Exelon’s Consolidated Statement of Operations and Comprehensive Income. At Generation,
amortization of unamortized energy contracts totaling $22 million, $135 million and $507 million for the years ended December 31, 2015, 2014 and 2013, respectively, was
recorded in Operating revenues or Purchase power and fuel expense within Generation’s Consolidated Statement of Operations and Comprehensive Income
Acquired Intangible Assets
Accounting guidance for business combinations requires the acquirer to separately recognize identifiable intangible assets in the application
of purchase accounting.
Unamortized Energy Contracts. Unamortized energy contract assets and liabilities represent the remaining unamortized fair value of non-
derivative energy contracts that Generation has acquired. The valuation of unamortized energy contracts was estimated by applying either the
market approach or the income approach depending on the nature of the underlying contract. The market approach was utilized when prices and
other relevant information generated by market transactions involving comparable transactions were available. Otherwise, the income approach,
which is based upon discounted projected future cash flows associated with the underlying contracts, was utilized. The fair value is based upon
certain unobservable inputs, which are considered Level 3 inputs, pursuant to applicable accounting guidance. Key estimates and inputs include
forecasted power and fuel prices and the discount rate. The Exelon Wind unamortized energy contracts are amortized on a straight line basis over
the period in which the associated contract revenues are recognized as a decrease in Operating revenue within Exelon’s and Generation’s
Consolidated Statement of Operations and Comprehensive Income. In the case of Antelope Valley, Constellation, CENG and Integrys, the fair
value amounts are amortized over the life of the contract in relation to the present value of the underlying cash flows as of the acquisition dates
through either Operating revenues or Purchase power and fuel expense within Exelon’s and Generation’s Consolidated Statement of Operations
and Comprehensive Income.
305
(a) (a)
Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.