Exelon 2015 Annual Report Download - page 45

Table of Contents
market value of the pension and OPEB plan assets will increase the funding requirements associated with Exelon’s pension and OPEB plan
obligations. Additionally, Exelon’s pension and OPEB plan liabilities are sensitive to changes in interest rates. As interest rates decrease, the
liabilities increase, potentially increasing benefit costs and funding requirements. Changes in demographics, including increased numbers of
retirements or changes in life expectancy assumptions or changes to Social Security or Medicare eligibility requirements could also increase the
costs and funding requirements of the obligations related to the pension and OPEB plans. If future increases in pension and other postretirement
costs as a result of reduced plan assets or other factors cannot be recovered, or cannot be recovered in a timely manner, from ComEd, PECO and
BGE customers, the results of operations and financial positions of ComEd, PECO and BGE could be negatively affected. Ultimately, if the
Registrants are unable to manage the investments within the NDT funds and benefit plan assets, and are unable to manage the related benefit plan
liabilities, their results of operations, cash flows or financial positions could be negatively impacted.
Unstable capital and credit markets and increased volatility in commodity markets could adversely affect the Registrants’ businesses in
several ways, including the availability and cost of short-term funds for liquidity requirements, the Registrants’ ability to meet long-term
commitments, Generation’s ability to hedge effectively its generation portfolio, and the competitiveness and liquidity of energy markets;
each could negatively impact the Registrants’ results of operations, cash flows or financial positions. (Exelon, Generation, ComEd,
PECO and BGE)
The Registrants rely on the capital markets, particularly for publicly offered debt, as well as the banking and commercial paper markets, to
meet their financial commitments and short-term liquidity needs if internal funds are not available from the Registrants’ respective operations.
Disruptions in the capital and credit markets in the United States or abroad could adversely affect the Registrants’ ability to access the capital
markets or draw on their respective bank revolving credit facilities. The Registrants’ access to funds under their credit facilities is dependent on
the ability of the banks that are parties to the facilities to meet their funding commitments. Those banks may not be able to meet their funding
commitments to the Registrants if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests
from the Registrants and other borrowers within a short period of time. The inability to access capital markets or credit facilities, and longer term
disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of
significant financial institutions could result in the deferral of discretionary capital expenditures, changes to Generation’s hedging strategy in order
to reduce collateral-posting requirements, or a reduction in dividend payments or other discretionary uses of cash.
In addition, the Registrants have exposure to worldwide financial markets, including Europe. Disruptions in the European markets could
reduce or restrict the Registrants’ ability to secure sufficient liquidity or secure liquidity at reasonable terms. As of December 31, 2015,
approximately 25%, or $2.1 billion of the Registrants’ available credit facilities were with European banks. The credit facilities include $8.4 billion in
aggregate total commitments of which $6.9 billion was available as of December 31, 2015. There were no borrowings under the Registrants’ credit
facilities as of December 31, 2015. See Note 14—Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for
additional information on the credit facilities.
The strength and depth of competition in energy markets depend heavily on active participation by multiple trading parties, which could be
adversely affected by disruptions in the capital and credit markets and legislative and regulatory initiatives that may affect participants in
commodities transactions. Reduced capital and liquidity and failures of significant institutions that participate in the energy markets could diminish
the liquidity and competitiveness of energy markets that are important to the respective businesses of the Registrants. Perceived weaknesses in
the competitive strength of
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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