Exelon 2015 Annual Report Download - page 407

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
contracts with the DOE (Standard Contracts) to provide for disposal of SNF from Generation’s nuclear generating stations. In accordance with the
NWPA and the Standard Contracts, Generation historically had paid the DOE one mill ($0.001) per kWh of net nuclear generation for the cost of
SNF disposal. On November 19, 2013, the D.C. Circuit Court ordered the DOE to submit to Congress a proposal to reduce the current SNF
disposal fee to zero, unless and until there is a viable disposal program. On May 9, 2014, the DOE notified Generation that the SNF disposal fee
remained in effect through May 15, 2014, after which time the fee was set to zero. As a result, for the year ended December 31, 2015, Generation
did not incur any expense in SNF disposal fees. For the year ended December 31, 2014 and 2013, Generation incurred expense of $49 million and
$136 million, respectively, in SNF disposal fees recorded in Purchased power and fuel expense within Exelon’s and Generation’s Consolidated
Statements of Operations and Comprehensive Income, including Exelon’s share of Salem and net of co-owner reimbursements (not including such
fees incurred by CENG). Until such time as a new fee structure is in effect, Exelon and Generation will not accrue any further costs related to SNF
disposal fees. This fee may be adjusted prospectively in order to ensure full cost recovery. The NWPA and the Standard Contracts required the
DOE to begin taking possession of SNF generated by nuclear generating units by no later than January 31, 1998. The DOE, however, failed to
meet that deadline and its performance has been, and is expected to be, delayed significantly.
The 2010 Federal budget (which became effective October 1, 2009) eliminated almost all funding for the creation of the Yucca Mountain
repository while the Obama administration devised a new strategy for long-term SNF management. A Blue Ribbon Commission (BRC) on
America’s Nuclear Future, appointed by the U.S. Energy Secretary, released a report on January 26, 2012, detailing comprehensive
recommendations for creating a safe, long-term solution for managing and disposing of the nation’s spent nuclear fuel and high-level radioactive
waste.
In early 2013, the DOE issued an updated “Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive
Waste” in response to the BRC recommendations. This strategy included a consolidated interim storage facility that is planned to be operational in
2025.
Generation uses the 2025 date as the assumed date for when the DOE will begin accepting SNF for purposes of determining nuclear
decommissioning asset retirement obligations.
In August 2004, Generation and the DOJ, in close consultation with the DOE, reached a settlement under which the government agreed to
reimburse Generation, subject to certain damage limitations based on the extent of the government’s breach, for costs associated with storage of
SNF at Generation’s nuclear stations pending the DOE’s fulfillment of its obligations. Settlement agreements pertaining to Calvert Cliffs and Ginna
were executed during 2011, and Nine Mile Point during 2012, (the “DOE Settlement Agreements”), as amended in 2014 for Calvert Cliffs and Nine
Mile Point, under which the government has agreed to reimburse the costs associated with SNF storage expended or to be expended through 2016
as a result of the DOE delays. The DOE Settlement Agreement is expected to be amended for Ginna in a similar manner as needed. Generation,
including CENG, submits annual reimbursement requests to the DOE for costs associated with the storage of SNF. In all cases, reimbursement
requests are made only after costs are incurred and only for costs resulting from DOE delays in accepting the SNF.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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