2012 10K - Exelon Corporation

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ITEM 1. BUSINESS General Corporate Structure and Business and Other Information PART I Exelon, incorporated in Pennsylvania in February 1999, is a utility services holding company engaged, through its principal subsidiary, Generation, in the energy generation business, and through its principal subsidiaries ComEd, PECO and BGE, in the energy delivery businesses discussed below. Exelon’s principal executive offices are located at 10 South Dearborn Street, Chicago, Illinois 60603, and its telephone number is 312-394-7398. Generation Generation’s integrated business consists of its owned and contracted electric generating facilities and investments in generation ventures that are marketed through its leading customer-facing activities. These customer-facing activities include, wholesale energy marketing operations and its competitive retail customer supply of electric and natural gas products and services, including renewable energy products, risk management services and natural gas exploration and production activities. Generation has six reportable segments consisting of the Mid-Atlantic, Midwest, New England, New York, ERCOT and Other regions. Generation was formed in 2000 as a Pennsylvania limited liability company. Generation began operations as a result of a corporate restructuring, effective January 1, 2001, in which Exelon separated its generation and other competitive businesses from its regulated energy delivery businesses at ComEd and PECO. Generation’s principal executive offices are located at 300 Exelon Way, Kennett Square, Pennsylvania 19348, and its telephone number is 610-765-5959. ComEd ComEd’s energy delivery business consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in northern Illinois, including the City of Chicago. ComEd was organized in the State of Illinois in 1913 as a result of the merger of Cosmopolitan Electric Company into the original corporation named Commonwealth Edison Company, which was incorporated in 1907. ComEd’s principal executive offices are located at 440 South LaSalle Street, Chicago, Illinois 60605, and its telephone number is 312-394-4321. PECO PECO’s energy delivery business consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in southeastern Pennsylvania, including the City of Philadelphia, as well as the purchase and regulated retail sale of natural gas and the provision of gas distribution services to retail customers in the Pennsylvania counties surrounding the City of Philadelphia. PECO was incorporated in Pennsylvania in 1929. PECO’s principal executive offices are located at 2301 Market Street, Philadelphia, Pennsylvania 19103, and its telephone number is 215-841-4000. BGE BGE’s energy delivery business consists of the purchase and regulated retail sale of electricity and the provision of transmission and distribution services to retail customers in central Maryland, 6
including the City of Baltimore, as well as the purchase and regulated retail sale of natural gas and the provision of gas distribution services to retail customers in central Maryland, including the City of Baltimore. BGE was incorporated in Maryland in 1906. BGE’s principal executive offices are located at 110 West Fayette Street, Baltimore, Maryland 21201, and its telephone number is 410-234-5000. Operating Segments See Note 21 of the Combined Notes to Consolidated Financial Statements for additional information on Exelon’s operating segments. Merger with Constellation Energy Group, Inc. On March 12, 2012, Exelon completed the merger contemplated by the Merger Agreement among Exelon, Bolt Acquisition Corporation, a wholly owned subsidiary of Exelon (Merger Sub), and Constellation Energy Group, Inc. As a result of that merger, Merger Sub was merged into Constellation (the Initial Merger) and Constellation became a wholly owned subsidiary of Exelon. Following the completion of the Initial Merger, Exelon and Constellation completed a series of internal corporate organizational restructuring transactions. Constellation merged with and into Exelon, with Exelon continuing as the surviving corporation (the Upstream Merger). Simultaneously with the Upstream Merger, Constellation’s interest in RF HoldCo LLC, which holds Constellation’s interest in BGE, was transferred to Exelon Energy Delivery Company, LLC, a wholly owned subsidiary of Exelon that also owns Exelon’s interests in ComEd and PECO. Following the Upstream Merger and the transfer of RF HoldCo LLC, Exelon contributed to Generation certain subsidiaries, including those with generation and customer supply operations that were acquired from Constellation as a result of the Initial Merger and the Upstream Merger. See Note 4 of the Combined Notes to Consolidated Financial Statements for additional information on the Constellation transaction. Generation Generation is one of the largest competitive electric generation companies in the United States, as measured by owned and contracted MW. Generation creates incremental strategic value by operating as an integrated business and matching its large generation fleet with a leading customer-facing platform. Generation’s presence in well-developed energy markets, its integrated hedging strategy mitigating shortterm market volatility, and its low-cost nuclear generating fleet operating consistently at high capacity factors, position it well to succeed in competitive energy markets. Generation’s customer-facing business, now referred to as Constellation, utilizes Generation’s energy generation portfolio to ensure delivery of energy to both wholesale and retail customers under long-term and short-term contracts, and in spot markets. Generation also sells other energy-related products and other services to meet its customers’ requirements. Generation is dependent upon continued deregulation of retail electric and gas markets and its ability to generate and obtain supplies of electricity and gas at competitive prices in the market. Generation is a public utility under the Federal Power Act, and is subject to FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce. Under the Federal Power Act, FERC has the authority to grant or deny market-based rates for sales of energy, capacity and ancillary services to ensure that such sales are just and reasonable. FERC’s jurisdiction over ratemaking also includes the authority to suspend the market-based rates of utilities (including Generation, which is a public utility as FERC defines that term) and set cost-based rates should FERC find that its previous grant of market-based rates authority is no longer just and reasonable. Other matters subject to FERC jurisdiction include, but are not limited to, third-party 7
Page 1 and 2: UNITED STATES SECURITIES AND EXCHAN
Page 3 and 4: Exelon Generation Company, LLC and
Page 5 and 6: Page No. ITEM 7A. QUANTITATIVE AND
Page 7 and 8: GLOSSARY OF TERMS AND ABBREVIATIONS
Page 9 and 10: Other Terms and Abbreviations LTIP
Page 11: FILING FORMAT This combined Annual
Page 15 and 16: following the merger completion. In
Page 17 and 18: egulations by the NRC may require a
Page 19 and 20: of new merchant nuclear power plant
Page 21 and 22: y third parties. In 2012 and 2011,
Page 23 and 24: the type of underlying asset. Gener
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Page 27 and 28: due to weather events or conditions
Page 29 and 30: Smart Meter, Smart Grid and Energy
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Page 41 and 42: Name Age Position Period Pramaggior
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Page 47 and 48: under their obligations for operati
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the Registrants face a risk that th
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of funds necessary for decommission
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with most companies in today’s en
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ITEM 2. PROPERTIES Generation The f
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Primary Net Station Region Location
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Transmission and Distribution PECO
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(Dollars in millions except per sha
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PECO As of January 31, 2013, there
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ITEM 6. SELECTED FINANCIAL DATA Exe
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December 31, (In millions) 2012 201
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Item 7. MANAGEMENT’S DISCUSSION A
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purchased power and fuel expense in
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units and compensation for operatin
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(2) the rate of expansion of subsid
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Hedging Strategy Exelon’s policy
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number of factors, including RTO re
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On December 16, 2011, the U.S. EPA
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In April 2011, the NRC named six se
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FERC Ameren Order. In July 2012, FE
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decommissioning. Probabilities assi
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guidance, which became effective Ja
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Impairment may occur when the carry
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changes or experience different fro
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Sensitivity to Changes in Key Assum
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The Registrants account for derivat
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Interest Rate Derivative Instrument
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upon actual costs incurred and inve
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Net Income Year Ended December 31,
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Generation’s supply sources by re
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decreased realized margins in 2011
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Year Ended December 31, 2011 Compar
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ecorded in 2012, a $36 million barg
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Electric revenues and purchased pow
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Volume—delivery Revenues net of p
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Operating and Maintenance Expense Y
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Other, Net The changes in other, ne
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Operating Revenues Net of Purchased
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The changes in PECO’s operating r
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The changes in operating and mainte
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year ended December 31, 2011 includ
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Results of Operations—BGE 2012 20
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Volume. Heating and cooling degree
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Other Other revenues increased duri
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BGE Electric Operating Statistics a
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The Registrants primarily use their
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Cash flows provided by operations f
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(e) The projected capital expenditu
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Company Issuances of long-term debt
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From time to time and as market con
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Other Credit Matters Capital Struct
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Contractual Obligations The followi
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ComEd Total 2013 Payment due within
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• variable interest entities, see
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ComEd The financial swap contract b
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Generation ComEd PECO Intercompany
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Credit Risk, Collateral, and Contin
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PECO’s supplier master agreements
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PECO As of December 31, 2012, PECO
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ITEM 7. MANAGEMENT’S DISCUSSION A
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ITEM 8. FINANCIAL STATEMENTS AND SU
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Management’s Report on Internal C
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Management’s Report on Internal C
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Report of Independent Registered Pu
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Report of Independent Registered Pu
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Exelon Corporation and Subsidiary C
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Exelon Generation Company, LLC and
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Commonwealth Edison Company and Sub
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(In millions) Commonwealth Edison C
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PECO Energy Company and Subsidiary
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BALTIMORE GAS AND ELECTRIC COMPANY
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BALTIMORE GAS AND ELECTRIC COMPANY
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(In millions) BALTIMORE GAS AND ELE
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Combined Notes to Consolidated Fina
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Formula Rate Tariff Combined Notes
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4. Merger and Acquisitions Combined
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For the Year Ended December 31, 201
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For the Year Ended December 31, 201
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BGE Combined Notes to Consolidated
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Year Ended December 31, 2011 (As Re
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Generation Combined Notes to Consol
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Other Tax Matters Combined Notes to
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Components of AOCI and Regulatory A
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Contributions Combined Notes to Con
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Eddystone Station and Cromby Statio
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Other Purchase Obligations Combined
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Solid and Hazardous Waste Combined
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Accumulated Other Comprehensive Inc
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ITEM 9. CHANGES IN AND DISAGREEMENT
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PART III Exelon Generation Company,
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ITEM 12. SECURITY OWNERSHIP OF CERT
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ITEM 14. PRINCIPAL ACCOUNTING FEES
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1. Basis of Presentation Exelon Cor
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5. Related Party Transactions Exelo
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Baltimore Gas and Electric Company
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Exhibit No. Description 2-13 Contri
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Exhibit No. Description 4-2 Exelon
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Exhibit No. Description 4-5 4-6 Ind
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Exhibit No. Description 4-31 Series
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Exhibit No. Description 10-31 Amend
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Exhibit No. Description 10-57 Admin
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Exhibit No. Description 24-29 Chari
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SIGNATURES Pursuant to the requirem
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Exelon Generation Company, LLC Rati
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PECO Energy Company Ratio of Earnin
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Exelon Corporation Subsidiary Listi
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CLT Energy Services Group, L.L.C. P
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Exelon AOG Holding #1, Inc. Delawar
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Michigan Wind 1, LLC Delaware Michi
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Exelon Generation Company, LLC Subs
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Cogenex Corporation MA CoLa Resourc
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Exelon New Boston, LLC DE Exelon Ne
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Residential Solar Holding, LLC DE R
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PECO Energy Company Subsidiary List
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CONSENT OF INDEPENDENT REGISTERED P
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POWER OF ATTORNEY Exhibit 24.2 KNOW
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POWER OF ATTORNEY Exhibit 24.10 KNO
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I, Christopher M. Crane, certify th
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I, Christopher M. Crane, certify th
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I, Anne R. Pramaggiore, certify tha
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I, Craig L. Adams, certify that: CE
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I, Kenneth W. DeFontes Jr., certify
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Certificate Pursuant to Section 135
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