ML12094A040
| ML12094A040 | |
| Person / Time | |
|---|---|
| Site: | Ginna  |
| Issue date: | 03/29/2012 |
| From: | Harding T Constellation Energy Nuclear Group, Ginna, EDF Group |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| Download: ML12094A040 (22) | |
Text
Thomas Harding Licensing Director R.E. Ginna Nuclear Power Plant, LLC CENG a joint venture of 1503 Lake Road Ontario, New York 14519-9364 585.771.5219 Consteflalon Energy- D 585.771.3681 Fax Thomas.HardingJr@cengllc.com March 29, 2012 U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 ATTENTION: Document Control Desk
SUBJECT:
R.E. Ginna Nuclear Power Plant Docket No. 50-244 Guarantee of Payment of Deferred Premiums On March 12, 2012, Constellation Energy Group, Inc. merged with Exelon Corporation. The merger is discussed in each company's Form 10-K to the Securities and Exchange Commission for the fiscal year ending December 31, 2011.
Pursuant to the Commission's requirements stated in 10 CFR 140.2 1(e), enclosures 1 and 2 are excerpts from the Constellation Energy Group and Exelon Corporation Form 10-K Reports, respectively, which show that cash flow can be generated and would be available for payment of the R.E. Ginna Nuclear Power Plant, LLC retrospective premiums of $17.5 million. Enclosure 2 includes additional pertinent pages for the Staff's review. The complete Form 10-K Reports are available upon request.
If you should have any questions regarding this submittal, please contact Tom Harding at (585) 771-5219.
Very truly yours Thomas ding : Consolidated Statements of Cash Flows for Constellation Energy Group Inc. : Consolidated Statements of Cash Flows and additional pages from the Exelon Corporation 10-K Report
Document Control Desk March 29, 2012 Page 2 cc: W.M. Dean, NRC D.V. Pickett, NRC Ginna Resident Inspector, NRC
ENCLOSURE 1 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR CONSTELLATION ENERGY GROUP, INC.
R. E. Ginna Nuclear Power Plant March 29, 2012
Enclosure 1 CONSOLIDATED STATEMENTS OF CASH FLOWS Consfellation Energy Group, Inc. and Subsidiaries.
Year Ended December31, 2011 2010 2009 (In milliont)
Cas FlwsFroi.peiratingA fc~iies_' J I ' i Net (loss) income S (306.8) $ (931.8) S 4,503.4
,,,Adjtmitqpc~toreconcile to netcash rovide by operating atvities - ,..<.,
Depreciation, depletion, accretion, and amortization 589.3 519.5 651.4 "Ai F udi ___l ,, -j 21.% 117.9 Amortization of energy contractsand derivatives designated as hedges 438.0 319.6 (138.4)
A1,,'qMI *.-- 3i.4fii " 135JV.J Deferred income taxes (193.7) (716.3) 1,847.0
.. .. eta'na ....... .~.-
o,.,- .. :,? '*/::. (4.3)-.,.j
- ': i?.j t,(4.):*-::-..:: fZ)
Deferred fuel costs 5.0 67.4 68.9 sfoim costs!,-(5
- Dfr~ ' -
Defined benefit obligation expense 93.6 89.4 107.6 Difined befi~lgt: opyet (140'~,, j (24.)- - . (17Z-5)
Merger costs 62.5 - 128.2 Impairment losses and other costs 891.0 2,476.8 124.7 anii.jent lossaoh Iruleairdectiimissioing tryst assets " .' -- -= ,. :- . ".
Gain on sale of 49.99% membership interest in CENG - - - (7,445.6)
- fE..gy sttl(76.8) ~. (26.9) 1(26.9) .. " . . . ..
Gainson termination of contracts Accrual of BGE residential customer credit - - - 112.4
.:aofaflblia"esss*12th.ndiv r ved 9. ' . , : .? .. I55 Derivative contracts classified as financing activities 8.8 186.0 .1,138.3 Changsm.... gcapital L iT-'.
Accounts receivable, excluding margin (26.8) (236.5) . 543.3 Derivativass-t ahd:"li-biji-t*s,-cluding collaterali'* .75.3 .. 449.-_ _ ... .4--
Net collateral and margin (245.0) 44.2 1,522.8
_ .jd-eralstsuppls-s:andfis.ls :. * .: " -- . " ". .4-. - o. . . .220...
.Other current assets 5.5 (150.0) 217.2 Liability for unrcognized tax bnefit (2.8) . .
J. (6..6). . 1023.1
.Ac-rid' taices andothr: current-liabilitie- ' .:- -'-. .' '.. ~.? '., ',- 7"-,¢..';". . -.. : ... . (96.2):::..,,: (1,.028.4).: ;. ... ... -788.8:.!.
Other (67.8) L7 149.3 Necash provided by operating..ct..itie.... :. ... ....-. "......:.. 4,390.V.!1 Cash Flows From Investing Activities Investmints ýt pj landq. ent , ., . (i,106:8) - ,(i,05 (12..7).
Asset acquisitions and business combinations, net of cash acquied (1,501.9) (445.8) (41.1) from nuclear decommissioning trust fund securities._ . . . 366.5
,... Proceeds svsninem Jnmt i oe'.'*2-1/2! ca. .=i
-**k ;..5- :,_..., 7'*...._."-.. _, ._. _ -= .-.- :.
.. *._- .- L __(~..).
Proceeds from sale.of 49.99% membership interest in CENG -- 3,528.7 Proceeds.fio gra--t, . ,..'...._..r,.nt..,.of.."gy 547 Proceeds from sales of investments and other assets 105.8 244.0 88.3 Proiee(sfrom. investment tax credits angrants related to renewable energy investi*ents 81..7,56.5, -
Payment for issuance of loans receivable (75.0) - -
Proceeds from, repayment of loans receivable . , . 45.0 .' .
Contract and portfolio acquisitions (3.7) (208.3) (2,153.7)
Decres..,crease.)nre.striced.fUnds . .. , . 51.8 '.-603) . 1o03.3',
Other (17.7) (35.7) 0.1 Net cash (used in) provided by investing agtivities (2,380.2) (1,4452). 675.6 Cash Flows From Financing Actiyities
,zNetepymentofshort-term Wriowings' . . (12.1)_ . (36 . (809.7.
Proceeds from issuance of common stock 21.1 14.0 33.9 Proceed..from issuance of lo'n-tfrrn debt 564.2' :--550.0 136.1'.,
Common stock dividends paid (182.6). (Q83.3) (228.0)
BGE preference stock'divideids paid. (13.2) . " (132) . (13.2)
Proceeds from contract and portfolio acquisitions 2.0 52.2 2,263.1 Repayiinent'oflong-terndebt' ..-.. (305.3) .... (66,t5). (1,986.8).
Derivative contracts classified as financing activities (8.8) (186.0) (1,138.3)
DbD d credit flciiiy- cost"s .. (3.2) .. :L. (32.8).,. . . (984)
Other (0.3) (0.4) 12.7 Net cish provided by (used in)financing activities . .61.8 .. (477.6) J.(1,828.6)
Net (Decrease) Increase in Cash and Cash Equivalents (1,064.0) (1,411.5) 3,237.8 2,028.5 -., 3,440.0 202.2 Cash and Cash Equivalents atBegiannig of ear .
Cash and Cash Equivalents at'End of Year S 964.5 $ 2,028.5 S 3,440.0 utnerCashCash naid Flow during,iniormauion:'.
the year for.
lnterest.(neofamountscapitalized):' S. 265.3':.. ,-. $., '289.5 . - 369.5.
Income taxes S (66.7) $ 1,044.2 $ 57.1 See Notes to ConsolidatedFinancialStatements.
Certainprior-yearamounts have been reclassifiedto conform with the currentyear'spresentation.
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ENCLOSURE 2 CONSOLIDATED STATEMENTS OF CASH FLOWS and ADDITIONAL PAGES from the EXELON CORPORATION 10-K REPORT R. E. Ginna Nuclear Power Plant March 29, 2012
Enclosure 2 EXELON CORP 10-K Annual report pursuant to section 13 and 15(d)
Filed on 2/9/2012 Filed Period 12/31/2011 THOMSON REUTERS ACCELUST . THOMSON REUTERS Pagie of 17
Enclosure 2 Table of Contents PART I ITEM 1. BUSINESS General Corporate Structure and Business and Other Information Exelon, incorporated in Pennsylvania in February 1999, is a utility services holding company engaged, through its principal subsidiaries, Generation, in the energy generation business, and ComEd and PECO, 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 business consists of its owned and contracted electric generating facilities, its wholesale energy marketing operations and its competitive retail supply operations. Generation has three reportable segments consisting of the Mid-Atlantic, Midwest, and South and West 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 CornEd 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.
CornEd 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.
CornEd 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 retailsale of natural gas and the provision of distribution services to.retail customers in the Pennsylvania. counties~surroundingthe.
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.
Operating Segments
.See Note .20of the Combined Notes to Consolidated;Financial Statements for additional information on Exel6n's Operating'segments.
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Enclosure 2 Table of Contents Proposed Merger with Constellation Energy Group, Inc.
On April 28, 2011, Exelon and Constellation announced that they signed an agreement and plan of merger to combine the two companies in a stock-for-stock transaction. Under the merger agreement, Constellation's shareholders will receive 0.930 shares of Exelon common stock in exchange for each share of Constellation common stock. Constellation is a leading competitive supplier of power, natural gas and energy products and services for homes and businesses across the continental United States. It owns a diversified fleet of generating units, totaling approximately 12,000 megawatts of generating capacity, and is a leading advocate for clean, environmentally sustainable energy sources, such as solar power and nuclear energy. Baltimore Gas and Electric Company (BGE), Constellation's regulated utility, delivers electricity and natural gas in central Maryland. The resulting company will retain the Exelon name and be headquartered in Chicago.
See Note 3 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 controlled MW. Generation combines its large generation fleet with an experienced wholesale energy marketing operation and a competitive retail supply operation. Generation's presence in well-developed wholesale energy markets, integrated hedging strategy that mitigates the adverse impact of short-term market volatility, and low-cost nuclear generating fleet, which is operated consistently at high capacity factors, position it well to succeed in competitive energy markets.
At December 31, 2011, Generation owned generation resourceswith an aggregate net capacity of 25,544 MW, including 17,115 MW of nuclear capacity. Generation controlled another 5,025 MW of capacity through long-term contracts.
Generation's wholesale marketing unit, Power Team, utilizes Generation's energy generation portfolio and logistical expertise to ensure delivery of energy to Generation's wholesale customers under long-term and short-term contracts and in spot markets.
Generation's retail businessprovides retail electric and gas services as an unregulated retail energy supplier in Illinois, Pennsylvania, Michigan and Ohio. Generation's retail business is dependent upon continued deregulation of retail electric and gas markets and Generation's ability to obtain supplies of electricity and gaps at competitive, prices in the wholesale 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-basedrates 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 justand reasonable. Other matters subject to FERC jurisdiction include, but are not limited to, third-party financings;.review of mergers; dispositions of jurisdictional facilities and acquisitions of securities of another public utility or~an existing operational generating facility; affiliate transactions; intercompany financings and cash management arrangements; certain internal corporate reorganizations; and certain holdingcompany acquisitions of public utility and holding company securities. Specific operations of Generation are also subject to the jurisdiction of various other Federal, state, regional and local agencies, including the NRC and Federal andstate environmental protection agencies. Additionally, Generation is subject to mandatory, reliability standards promulgated by the NERC, with the approval of FERC.
Page 3 of 17
Enclosure 2 Table of Contents As an example, prior to the Fukushima Daiichi accident on March 11, 2011, the NRC. had been evaluating seismic risk. After the Fukushima Daiichi accident, the NRC's focus on seismic risk intensified. As part of the NRC Near-Term Task Force (Task Force) review and evaluation of the Fukushima Daiichi accident, the Task Force recommended that plant operators conduct seismic reevaluations. In January 2012.. the NRC released an updated seismic risk model that plant operators must use in performing the seismic reevaluations recommended by the Task Force. These reevaluations could result in the required implementation of additional mitigation strategies or modifications. See ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Exelon Corporation, Executive Overview for a more detailed discussion of the Task Force Recommendations.
Operationalrisk. Operations at any of Generation's nuclear generation plants could degrade to the point where Generation has to shut down the plant or operate at less than full capacity. If this were to happen, identifying and correcting the causes may require significant time and expense. Generation may choose to close a plant rather than incur the expense of restarting it or retuming the plant to full capacity. In either event, Generation may lose revenue and incur increased fuel and purchased power expense to meet supply commitments. In addition, Generation may not achieve the anticipated results under its series of planned power uprates across its nuclear fleet. For plants operated but not wholly owned by Generation, Generation may also incur liability to the co-owners. For the plant not wholly owned by Generation and operated by PSEG, Salem Units 1 and 2, from which Generation receives its share of the plant's output, Generation's results of operations are dependent on the operational performance of the co-owner operator and could be adversely affected by a significant event at those plants. Additionally, poor operating performance at nuclear plants not owned by Generation could result in increased regulation and reduced public support for nuclear-fueled energy, which could significantly affect Generation's results of operations or financial position. In addition, closure of generating plants owned by others, or extended interruptions of generating plants or failure of transmission lines, could effect transmission systems that could adversely affect the sale and delivery of electricity in markets served by Generation.
Nuclearmajor Incident risk. Although the safety record of nuclear reactors generally has been very good, accidents and other unforeseen problems have occurred both in the United States and abroad. The consequences of a major incident can be severe and include loss of life and property damage. Any resulting liability from a nuclear plant major incident within the United States, owned by Generation or owned by others, may exceed Generation's resources, including insurance, coverage. Uninsured losses and other expenses, to the extent not recovered from insurers or the nuclear industry, could be bome by Generation and could have a material adverse effect on Generation's results of operations or financial position. Additionally, an accident or other significant event at a nuclear plant within the United States or abroad, owned by others or Generation, may result in increased regulation and reduced public support for nuclear-fueled energy and significantly affect Generation's results of operations or financial position.
Nuclearinsurance.As required by the Price-Anderson Act, Generation carriesthe maximum available amount of nuclear liability insurance. The required amount of nuclear liability insurance is $375 million for each operating site. Claims.exceeding that amount are covered through mandatory participation in a financial protection pool. In addition, the U.S. Congress could impose revenue-raising measures on the nuclear industry to pay claims exceeding the $12.6 billion limit for a single incident.
Generation is a member of an industry mutual insurance company, NEIL, which providesproperty and business interruption insurance for Generation's nuclear operations. In recent years, NEIL has made distributions to its members but Generation cannotpredict the leviel of future distributions or ifthey Will continue at all. See Note 18 of the Combined Notes to Consolidated Financial Statements for additional discussion of nuclear insurance.
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Enclosure 2 Table of Contents before or after the merger dosing as a result of previously unknown events or conditions occurring or existing before the merger closing.
Adverse changes in Constellation's business or operations could occur or arise as a result of actions by Constellation, legal or regulatory developments including the emergence or unfavorable resolution of pre-acquisition loss contingencies, deteriorating general business, market, industry or economic conditions, and other factors both within and beyond the control of Constellation. A significant decline in the value of Constellation assets to be acquired by Exelon or a significant increase in Constellation liabilities to be assumed by Exelon could adversely affect the combined company's future business, financial condition, cash flows, operating results and prospects.
The merger agreement containsprovisions that limit.each of Exelon's and Constellation's ability to pursue alternatives to the merger, which could discourage a potential acquirer of either Constellation or Exelon from making an alternative transaction proposal and, in certain circumstances, could require Exelon or Constellation to pay to the other a significant termination fee.
Under the merger agreement, Exelon and Constellation are restricted, subject to limited exceptions, from entering into altemative.
transactions-in lieu of the merger. Ingeneral, unless and until the merger agreement is terminated, both Exelon and Constellation are restricted from, among other things, soliciting, initiating, knowingly encouraging or facilitating a competing acquisition proposal from any person. Each of the Exelon board of directors and the Constellation board of directors is limited in its ability to change its recommendation with respect to the merger-related proposals. Exelon or Constellation may terminate the merger agreement and enter into an agreement with respect to a superior proposal only if specified conditions have been satisfied, including compliance with the non-solicitation provisions of the merger agreement. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Exelon or Constellation from considering or proposing such an acquisition, even if such third party were prepared to pay consideration with a higher per share cash or market value than the consideration proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to. pay a lower price than it would otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances. Under the merger agreement, in the event Exelon or Constellation terminates the merger agreementto accept a superior proposal, or under certain other circumstances, Exelon or Constellation, as applicable, would be required to pay a termination fee of $800 million in the case of a termination fee payable by Exelon to Constellation and a termination fee of $200 million in the case of a termination fee payable by Constellation to Exelon.
Exelon and Constellation will be subject to various uncertainties and contractual restrictions while the merger is pending that. may cause disruption and could adversely affect their financial results.
Uncertainty about the effect'of the merger on employees, suppliers and customers may have an adverse effect on Exelon and/or Constellation. These uncertainties may impair Exelon's and/or Constellation's ability to.attract, retain and motivate key personnel until the merger is completed and for a period of time thereafter, as employees and prospective employees may experience uncertaintyabout their future roles with the combined company, and could cause customers, suppliers and others who deal.with Exelon or Constellation to seek to change existing business relationships with Exelon or Constellation. The pursuit of the merger and the preparation for the integration mayalso place a burden on management and intemal resources. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could affect Exelon's and/or Constellation's financial results.
in addition, the merger agreement restricts each of Exelonand Constellation, without the other's consent, from making certain acquisitionsand taking~other specified actions while themerger is Page 5 of 17
Enclosure 2 Table of Contents pending.. These restrictions may prevent Exelon and/or Constellation from pursuing otherwise attractive business opportunities and making other changes to their respective businesses prior to completion of the merger or termination of the merger agreement.
If completed, the merger may not achieve its anticipated results, and Exelon and Constellation may be unable to integrate their operations in the manner expected.
Exelon and Constellation entered into the merger agreement with the expectation that the merger will result in various benefits, including, among other things, cost savings and operating efficiencies. Achieving the anticipated benefits of the merger is.subject to a number of uncertainties, including Whether the businesses of Exelon and Constellation can be integrated in an efficient, effective and timely manner.
It is possiblethat the integration process could take longer than anticipated and could result in the loss of valuable employees, the disruption of each company's ongoing businesses, processes and systemsor inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect the combined company's ability to achieve the anticipated benefits of the merger as and when expected. The companies may have difficulty addressing possible differences in corporate cultures and management philosophies. Failure to achieve these anticipated benefits could result in increased costs or decreases in the amount of expected revenues and could adversely affect the combined company's future business, financial condition, operating results and prospects.
The merger may not be accretive to earnlngsand may cause dilution to Exelon's earnings per share, which may negatively affect the market price of Exelon's common stock.
Exelon currentlyanticipates that the merger will be accretive to earnings per share in 2013, which is expectedto be the first full year following completion of the merger. This expectation is based on preliminary estimates that are subject to change. Exelon also could encounter additional transaction and integration-related costs, may fail to realize all of the benefits anticipated in the merger or be subject tol other factors that affect preliminary estimates. Any of these factors could cause a decrease in Exelon's adjusted earnings per share or decrease or delay the expected accretive effect of the merger and contribute to a.decrease in the price of Exelon's common stock.
Exelon may record.goodwill that could become impairedand adversely affect its operating results.
Accounting standards in the United States requirethat one party to the merger be identified as the acquirer. In accordance with these standards, the merger will be accounted for as an acquisition of Constellation common stock by Exelon and will follow the acquisition method of accounting for business combinations. The assets and liabilities of Constellation will be consolidated with those of Exelon. The excess Of thepurchase price over the fair values of Constellation's assets and liabilities, if any, will be recorded as goodwill.
The amount of goodwill, which could be material, will be allocated to the appropriate reporting units of the combined company. Exelon is required to assess goodwill for impairment at least annually by comparing the fair value of reporting units to thecarrying value of those reporting units. To the extent the carrying value of any of those reporting units, is greater than the-fair value, a second step comparing the implied fair value of goodwill to the carrying amount would be required to determine if the goodwill is impaired.ISuch a potential impairment could result in a material charge that would have a material impact on Exelon's future operating results and consolidated balance sheet.
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Enclosure 2 Table of Contents ITEM 6. SELECTED FINANCIAL DATA Exelon The selected financial data presented below has been derived from the audited consolidated financial statements of Exelon. This data is qualified in its entirety by reference to and should be read in conjunction with Exelon's Consolidated Financial Statements and ITEM 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
For the Years Ended December 31 millnerpnt pe 4IUnUU he,. data) 201 2=11-- 2o 2007-Statement of Operations data:
Operatingrevenues $18,924 $18,644 $17,318 $18,859 $18,916 Operating income 4,480 4,726 4,750 5,299 4,668 Income from continuing operations $ 2,495 $ 2,563 $ 2,706 $ 2,717 $ 2,726 Income from discontinued operations - - 1 20 10 Net income $ 2,495 $ 2*563 $ 2,707 $ 2,737 $ 2736 Earnings per average common share (diluted):
Income from continuing operations $ 3.75 $ 3.87 $ 4.09 $ 4.10 0.03 $ 4.03 Income from discontinued operations 0.02 Net income $ 3.75 $ 3.87 $ 4.09 $ 4.13 $ 4.05 Dividends per common share $ 2.10. $ 2.10 $ 2.10 $ 2.03 $ 1.76 Average shares of common stock outstanding- diluted 665 663 662 662 676 (in rmillnng) 2011. 2oL 2oL 2007 (a)(b)
Balance Sheetdata:
Current assets $ 5,489 $ 6,398 $ 5,441 $ 5,130 $ 4,416 Property, plant and equipment, net 32,570 29,941 27,341 25,813 24,153 Noncurrent regulatoryassets 4,839 4,140 4,872. 5,940 5,133 Goodwill 2,625 2,625 2,625 2,625 2,625:
Other deferred debits and other assets 9,569 9,136 8,901 8,038 8,760 Total assets $55,092 $52,240 $49,180 $47,546 $ 45,087 Current liabilities .$ 4,989 $ 4,240 $ 41238 $ 3,811 $. 5,466 Long-term debt, including long-term debt to financing trusts 12,189 12,004 11 385 12,592 11,965 Noncurrent regulatory. liabilities .3,771 3,555 3,492 2;520 3,301 Other deferred credits and other liabilities 19,668 18,791 17,338 17,489. 14,131 Preferred securities of subsidiary 87 87 87 87 87 Noncontrolling interest 3 3 -
Shareholders' equity 14,385 13,560 12,640 11,047 10,137 Total liabilities and shareholders' equity $55,092 $52,240 $49,180 $47,546 $ 45,087 (a) Exelon retrospectively reclassified certain assets and liabilities with respect to option premiums into the mark-to-market net asset and liability accounts to conform to the current year presentation.
(b) Exelon retrospectively reclassified certain assets and liabilities in accordance with the applicable authoritative guidance for offsetting amounts related to qualifying derivative contracts.
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Enclosure 2 Table of Contents Generation The selected financial data presented below has been derived from the audited consolidated financial statements of Generation. This data is qualified in its entirety by reference to and should be read in conjunction with Generation's Consolidated Financial Statements and ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
For the Years Ended December 31.
_29iL-. 2Lo9 2008 2007 Statement of Operations data:
Operating revenues $10,308 $10,025 $ 9,703 $10,754 $ 10,749 Operating income 2,876 3,046 3,295 3,994 3,392 Income from continuing operations $ 1,771 $ 1,972 $ 2,122 $ 2,258 $ 2,025 Income from discontinued operations - - - 20 4 Net income $ 1,771 $ 1,972 $ 2,122 $ 2,278 $ 2,029 December31.
41nmillinn*)- .Z 1.q 2._22 92 -- 2008 ta) 2007 (e Balance.Sheet data:
Current assets $ 3,204 $. 3,087 $ 3,360 $ 3,486 $ 2,160 Property, plant and equipment, net 13.475 11,662 9,809 8;907 8,043 Other deferred debits and other assets 10,754 '9,785 9,237 7,691 8,044 Total assets $27,433 $24,534 $22,406 $20,084 $ 18,247 Current liabilities $ 2,144 $ 1,843 $. 2,262 $ 2,168 $ 1,917 Long-terrm debt 3,674 3,676 2,967 2,502 2,513 Other deferred credits and other liabilities 12,907 11,838 10,385 8,848 9A447 Noncontrolling interest 5 5 2 1 1 Member's equity 8,703. 7,172 6,790 6,565 4,369 Total liabilitiesand member's equity $27,433 $24,534 $22,406 $20,084 $ 18,247 (a) Generation retrospectively reclassified certain assets and liabilities with respect to option premiums into the mark-to-market'net asset and liability accounts to
. conform with the current year presentation.
(b) Generation reclassified certain assets and liabilities In accordance with the applicable authoritative guidance for offsetting arnounts related to qualifying derivative contracts.
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Enclosure 2 Table of Contents Exelon Corporation and Subsidiary Companies Consolidated Statements of Operations and Comprehensive Income For the Years Ended December 31.
20.11 2009 0Imlln rlevne anrtp r cntnrp Operating revenues $18,924 $18,644 $17;318 Operating expenses Purchased power 5,284 4,425 .3.215 Fuel 1,844 2,010 2,066 Operating and maintenance 5,012 4,453 4,612 Operating and maintenance for regulatory required programs 184 147 63 Depredation and amortization 1,335 2,075 1,834 Taxes other than income 785 808 7.78 Total operating expenses 14,444 13,918 12,568 Operating income 4,480 4,726 4,750 Other Income and deductions Interest expense,. net (701 (792) (654 Interest expense to affiliates, net (25 (25) (77)
Loss in equity method investments (1 (27)
Other, net 199 312. 427 Total other income and deductions (528 (505) (331.)
Income beforeincome taxes 3,952 4,221 4.419 Income taxes 1,457 1,'658 1,712 Net income 2495 2,563. 2,707 Other comprehensive Income (loss)
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic costs, net of taxes of $(4), $(7) and $(6). (5 (11) (13) respectively Actuarial loss reclassified to periodic cost, net of taxes of $93, $79 'and $74, respectively 136 114 93 Transition obligation reclassified to periodic cost, net of taxes of $2, $2 and $2, *3 respectively 4 3 Pension and. non-pension postretirement benefit plan valuation adjustment, net of taxes of $(171), $(188) and $47,respectively (250)) (288) 86.
Change in unrealized gain (loss) on cash flow hedges, net of taxes of $39, $(107) and $(2),
respectively 88 (151). (12)
Change in unrealized gain (loss) onmarketable securities, net of taxes of $0, $0.and $3, respectively .( ) 5 Other comprehensive income (loss) (27 (334) 162 Comprehensive income $ 2,468 $ 2,229 $ 2,869 Average shares of common stock outstanding:
Basic 663 661 659 Diluted 665 .663 662 Earnings per average common share: 3.88 Basic $ 3.76 $ $ 4.10 Diluted $ 3.75 $ 3.87 4.09 Dividends per common share $ 2.10 $ 2.10 2.10 See the Combined Notes to Consolidated Financial Statements Paae 9 of 17
Enclosure 2 Table of Contents Exelon Corporation and Subsidiary Companies Consolidated Statements of Cash Flows For the Years Ended December 31.
-2011- 2010 9nmHilnn5 Cash flow%from operating activities Net income $ 2,495 $ 2,563 $ 2,707 Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel amortization 2.304 2,943 2,601 Impairment of long-lived assets 223 Deferred income taxes and amortization of investment tax credits 1,457 981 756 Net fair value changes related to derivatives 291 (88) (95)
Net realized and unrealized losses (gains) on nuclear decommissioning trust fund investments 14 (105) (207)
Other non-cash operating activities 782 609 652 Changes in assets and liabilities:
Accounts receivable 57 (232) 234 Inventories (58) (62) 51 Accounts payable, accrued expenses and other current liabilities (254) 472 (254)
Option premiums paid. net 124) (40)
Counterparty collateral (posted) received, net (3'44P 155) 196 Income taxes 492 (543) (29)
Pension and non-pension postretirement benefit contributions. (2,360) (959) (588)
Other assets and liabilities (20) (56) (113)
Net cash flows provided by operating activities 4,853 5,244 6,094 Cash flows from investing activities Capital expenditures (4,042) (3,326) (3,273)
Proceeds from nuclear decommissioning trust fund sales 6,139 3,764 4.292 Investment in nuclear decommissioning trust funds (6M332) (3,907) (4,531)
Acquisitions (387) (893)
Proceeds from sales of investments 6 28 41 Purchases of investments (22) (28)
Change in restricted cash 423 35 Other investing activities 20 39 6 Net cash flows used in Investing activities (4,603) (3,894) (3,458)
Cash flows from financing activities Changes in short-term debt 161 (155) (56)
Issuance of long-term.debt 1,199 1,398 1,987 Retirement of long-term debt (789) (828). (1,773)
Retirement of long-term debt of variable interest entity (806)
Retirement of long-:term debt to financing affiliates (709)
Dividends paid on common stock (1,393) (1,389) (1,385)
Proceeds from employee stock plans 38 48 42 Other financing activities (62) (16) (3)
Net cash flows used In financing activities (846) (1,748) (1,897) increase (decrease) in cash and cash equivalents (596) (398) 739 Cash and cash equivalents at beginning of period 1,612 2,010 1,271.
Cash and cash equivalents at end of period $ 1,016 $1.612 $ 2,010 See the Combined. Notes to Consolidated Financial Statements Page 10 of 17
Enclosure 2 Table of Contents Exelon Corporation and Subsidiary Companies Consolidated Balance Sheets December 31.
amUwwns)- 2011 -2&1(L ASSETS assets Current Cash and cash equivalents $ 1,016 $ 1,612 Restricted cash and investments 40 30 Accounts receivable, net Customer ($329 and $346 gross accounts receivables pledged as collateral as of December 31,.2011 and December 31, 2010, respectively) 1.613 1,932 Other 1,000 1,196 Mark-to-market derivative assets 432 487 Inventories, net Fossil fuel 208 216 Materials and supplies 656 590 Deferred income taxes 97 Regulatory assets 69 10 Other 358 325 Total current assets 5,489 6.398 Property, plant and equipment, net 32;570 29,941 Deferred debits and other assets Regulatory assets 4,839 4,140 Nuclear decommissioning trust funds 6,507 6,408 Investments 751 717 Investments in affiliates 15 15 Goodwill 2.625 2,625 Mark-to-market derivative assets 650 .409 Pledged assets for Zion Station decommissioning 734 824 Other 912 763 Total deferred debits and other assets '17,033 15,901 Total assets $55,092 $52,240 See the Combined Notes to Consolidated Financial Statements Page 11 of 17
Enclosure 2 I
Table of Contents Exelon Corporation and Subsidiary Companies Consolidated Balance Sheets December 31.
(in m~illiong) 2011 -2&Di-LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings $ 163 Short-term notes payable-accounts receivable agreement 225 225 Long-term debt due within one.year 828 599 Accounts payable 1,444 1,373 Mark-to-market derivative liabilities 112 38 Accrued expenses 1,255 1,040 Deferred income taxes 85 Regulatory liabilities 53 44 Dividends payable 349 1 Other 560 835 Total current liabilities 4,989 4,240 Long-term debt 11.799 11,614 Long-term debt to other financing trusts 390 390.
Deferred credits and other liabilities Deferred income taxes and unamortized investment tax credits 8,351 6,621 Asset retirement obligations 3:884 3,494 Pension obligations 2,194. 3,658 Non-pension postretirement benefit obligations ,2,263 2,218 Spent nuclear fuel obligation 1,019 1,018 Regulatory liabilities .3,771 3,555 Mark-to-market derivative liabilities 126 21 Payable.for Zion Station decommissioning 563 659 Other 1,268 1,102 Total deferred credits and other liabilities 23,439 22.346 Total liabilities 40,617 38,590 Commitments and contingencies Preferred securities of subsidiary 87 87 Shareholders' equity Common stock (No par value, 2,000 shares authorized, 663 and 662 shares outstanding atDecember 31, 2011 and 2010, respectively) 9,107 9,006 Treasury stock, at cost (35 shares held at December 31, 2011 and 2010, respectively) (2,327) *(2.327)
. Retained earnings 10,055 9.304 Accumulated other comprehensive loss, net. (2,450) (2,423)
Total shareholders' equity .13,560 14,385 Noncontrolling interest 3 3 Total equity 14,388 13,563 Total liabilities and shareholders' equity $55,092 $52.240 See the Combined Notes to Consolidated Financial Statements Page 12 of 17
Enclosure 2 Table of Contents Combined Notes to Consolidated Financial Statements--(Continued)
(Dollars in millions, except per share data unless otherwise noted)
- 3. Merger and Acquisitions (Exelon and Generation)
Proposed Merger with Constellation Energy Group, Inc. (Exelon)
On April 28, 2011, Exelon and Constellation Energy Group, Inc. (Constellation) announced that.they signed an agreement and plan of merger to combine the two companies in a stock-for-stock transaction. Under the merger agreement, Constellation's shareholders will receive 0.930 shares of Exelon common stock In exchange for each share of Constellation common stock. Based on Exelon's closing share price on April 27, 2011, Constellation shareholders would receive $7.9 billion in total equity value. The resulting company will retain the.
Exelon name and be headquartered in Chicago. The transaction requires the approval by the shareholders of both Exelon and Constellation.
Completion of the transaction is also conditioned upon review of the transaction by the U.S. Department of Justice (DOJ) and approval by the FERC, NRC, Maryland Public Service Commission (MDPSC), the New York Public Service Commission (NYPSC), the Public Utility Commission of Texas (PUCT), and other state and federal regulatory bodies. As of February 9, 2012, Exelon and Constellation have received approval of the-transaction from the shareholders of Exelon and Constellation, DOJ, PUCT and the NYPSC. Exelon and Constellation are awaiting final approval of the transaction from the MDPSC, FERC and NRC.
On January 30, 2012, FERC.published a notice on its website regarding a non-public investigation of certain of Constellation's power trading activities in and around the New York ISO from September 2007 through December 2008. Exelon continues to evaluate the matter in order to make an assessment regarding (1) the likely outcome of the investigation and (2) whether the ultimate resolution of the investigation will be material to the results of operations, cash flows, or financial condition of Constellation before the merger or Exelon after the merger.
Absent any delay in the FERC approval process, the companies anticipate closing the transaction in the first quarter of 2012.
Associated with certain of the'regulatory approvals required for the merger, the companies have proposed to divest three Constellation.
generating stations located in PJM, which is the only market where there is a material overlap of generation owned by both companies. These stations, Brandon Shores and H.A. Wagner in Anne Arundel County, Maryland, and C.P. Crane in Baltimore County, Maryland, include base-load, coal-fired generation units plus associated gas/oil units located at the same sites, and total 2,648 MW of generation capacity. In October 2011, Exelon and Constellation reached a settlement withthe PJM Independent Market Monitor, who had previously raised market power concerns regarding-the merger. The settlement contains a number of commitments by the merged company, including limiting the.
universe of potential buyers of the divested assets to entities without significant market shares in the relevant PJM markets. The settlement also includes assurances about how the merged company will bid its units into the PJM markets. The proposed divestiture and the settlement with the PJM Market Monitor were filed with FERC and the MDPSC and are included in their decisions to issue a final order approving the merger.
In December 2011, Exelon and Constellation reached a settlement with the State of Maryland and the City of Baltimore and other interested parties in connection with the regulatory proceedings pending before the MDPSC. As part of this settlement and the application for approval of the merger. by MDPSC, Exelon and Constellation have proposed a package of-benefits to Baltimore Gas and Electric Company SB3GE) customers, the City of Baltimore and the state of Maryland, which results-in a direct investment in the state of Maryland of more than 1 billion. This investment includes capital projects including development of new renewable and gas-fired generation in Maryland, representing a substantial portion of the investment.
Paae 13 of 17
Enclosure 2 Table of Contents Combined Notes to Consolidated Financial Statements--(Contlnued)
(Dollars In millions, except per share data unless otherwise noted)
In addition, in January 2012 Exelon and Constellation reached an agreement with Electricite de France (EDF) under which EDF has withdrawn its opposition to the Exelon-Constellation merger. The terms address Constellation Energy Nuclear Group (CENG), a joint venture between Constellation and EDF that owns and operates three nuclear facilities with five generating units in Maryland and New York. The agreement reaffirms the terms of the joint venture. The agreement did not include any exchange of monetary consideration and Exelon does not expect the agreement will have a'significant impact on Exelon and Generation's future results of operations, financial position and cash flows.
Exelon was named in suits filed in the Circuit Court of Baltimore City, Maryland alleging that individual directors of Constellation breached their fiduciary duties by entering into the proposed merger transaction and Exelon aided and abetted the individual directors' breaches. Similar suits were also filed in the United States District Court for the District of Maryland. The suits sought to enjoin a Constellation shareholder vote on the proposed merger until all material information is disclosed and sought rescission of the proposed merger. During the third quarter, the parties to the suits. reached an agreement in principle to settle the suits through additional disclosures to Constellation shareholders. The settlement is subject to court approval.
Through December 31, 2011, Exelon has incurred approximately $77 million of expense associated with the transaction, primarily related to fees incurred as part of the acquisition. Under the merger agreement, in the event Exelon or Constellation terminates the merger agreement to accept a superior proposal, or under certain other circumstances, Exelon or Constellation, as applicable, would. be required to pay a termination fee of $800 million in the case of a termination fee payable by Exelon to Constellation or a termination fee of $200 million in thecase of a termination fee payable by Constellation to Exelon.
Acquisitions (Exelon and Generation)
Consistent with the applicable accounting guidance, the fair value of the assets acquired and liabilities assumed was determined as of the acquisition date through the use of significant estimates and assumptions that are judgmental in nature. Some of the more significant estimates.and assumptions used include: projected future cash flows (including the amount and timing); discount rates reflecting the risk inherent in the future cash flows; future power and fuel market prices. Additionally, market prices based on the Market Price Referent (MPR) established by the CPUC for renewable energy resources were used In determining the fair value of the Antelope Valley assets.acquired: and liabilities assumed. There were also judgments made to determine the expected useful lives assigned to each class of assets acquired and the duration of the liabilities assumed. Generation did not record any goodwill related to any of the respective acquisitions.
Page 14 of 17
Enclosure 2 Table of Contents Combined Notes to Consolidated Financial Statements-(Continued)
(Dollars in millions, except per share data unless otherwise noted)
- 17. Earnings Per Share and Equity (Exelon)
Earningsper Share Diluted earnings per share is calculated by. dividing net income by the weighted average. number of shares of common stock outstanding, including shares to be issued upon exercise of stock options, performance share awards and restricted stock outstanding under Exelon's LTIPs considered to be common stock equivalents. The following table sets forth the components of basic and diluted earnings per share and shows the effect of these stock options, performance share awards and restricted stock on the weighted average number of shares outstanding used in calculating diluted earnings pershare:
Year Ended December 31.
1 z200 2O09 Net income $2,495. $2,563 $2,707 Weighted average common shares outstanding-basic 663 661 659 Assumed exercise and/or distributions of stock-based awards 2 2 3 Weighted average common shares outstanding-diluted 665 663 662 The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 9 million in 2011,8 million in 2010 and 5 million in 2009.
- 18. Commitments and Contingencies (Exelon, Generation, ComEd and PECGO)
Nuclear Insurance The Price-Anderson Act was enacted to ensure the availability of funds for public liability claims arising from an incident at any of the U.S. licensed nuclear facilitiesand also to limit the liability of nuclear reactor owners for such claims from any single incident. As of December 31, 2011, the current liability limit per incident was $12.6 billion and is subject to change to account for theeffects of inflation and changes in the number of licensed reactors. An inflation adjustment must be made at least once every 5 years and the last inflation adjustment was made effective October 29,2008. In accordance with the Price-Anderson Act, Generation maintains financial protection at levels equal to the amount of liability insurance available from private sources through the purchase of private nuclear energy liability insurance for public liability claims that could arise in the event of an incident. As of January 1, 2012, the amount of nuclear energy liability, insurance purchased is $375 million for each operating site. Additionally, the. Price-Anderson Act requires a second layer of protection through the mandatory participation in a retrospective rating plan for power reactors (currently 104 reactors) resulting in an additional $12.2 billion in funds available for public liability claims. Participation in this secondary financial protection pool requires the operator of each reactor to fund its proportionateshare of costs for any single incident that exceeds the primary layer of financial protection. Under the Price-Anderson Act, the maximum assessment in the event of an incident for each nuclear operator, per reactor, per incident (including a 5% surcharge), is,
$117.5 million, payable at no more than $17.5 million per reactor per incident per year. Exelon's maximum, liability per incident is approximately $2.0 billion. In addition, the U.S. Congress could impose revenue-raising measures on the nuclear industry to pay public liability claims exceeding the $12.6 billion limit for a single incideriL Generation is required each year to report to the NRC the current levels and sources of insurance that demonstrates Generation possesses sufficient financial resources to stabilize and decontaminate Page 15 of 17
Enclosure 2 Table of Contents Combined Notes to Consolidated Financial Statements--(Continued)
(Dollars in millions, except per share data unless otherwise noted) a reactor and reactor station site in the event of an accident. The insurance maintained for each facility is currently provided through insurance policies purchased from NEIL, an industry mutual insurance company of which Generation is a member.
NEIL may declare distributions to its members as a result of favorable operating experience. In recent years NEIL has made distributions to its members, but Generation cannot predict the level of future distributions or ifthey will continue at all. No distributions were declared In 2011. Premiums paid to NEIL by its members are subject to assessment (the retrospective premium obligation) for adverse loss experience. NEIL-has never exercised this assessment since its formation in 1973, and while Generation cannot predict the level of future assessments, or ifthey will be imposed at all, the current maximum aggregate annual retrospective premium obligation for Generation is approximately $219 million.
NEIL provides property damage, decontamination and premature decommissioning insurance for each station for losses resulting from damage to its nuclear plants, either due to accidents or acts of terrorism. Generation's current limit for this coverage is $2.1 billion. For property limits in excess of the first $1.25 billion of that limit, Generation participates in an $850 million single limit blanket policy shared by all the Generation operating nuclear sites and the Salem and Hope Creek nuclear sites. This blanket limit is not subject to automatic reinstatement in the event of a loss. In the event of an accident, insurance proceeds must first be used for reactor stabilization and site decontamination. If the decision is made to decommission the facility, a portion of the insurance proceeds Will be allocated to a fund, which Generation is required by the NRC to maintain, to provide for decommissioning the facility. In the event of an insured loss, Generation is unable to predict the timing of the availability of insurance proceeds to Generation and the amount of such proceeds that would be available.
Under the terms of the various insurance agreements, Generation could be assessed up to $175 million per year for losses incurred at any plant insured by the insurance company (the retrospective premium obligation). In the event that one or more acts of terrorism cause accidental property damage within a twelve-month period from the first accidental property damage under one or more policies for all insured plants, the maximum recovery for all losses by all insureds will be an aggregate of $3.2 billion plus such additional amounts as the insurer may recover for all such losses from reinsurance, indemnity and any other source, applicable to such losses. The $3.2 billion maximum recovery limit is not applicable, however, in the event of a "certified act of terrorism' as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007. The Terrorism Risk Insurance Act expires on December 31, 2014.
Additionally, NEIL provides replacement power cost insurance in the event of a major accidental outage at an insured nuclear station.
The premium for this coverage is subject to assessment for adverse loss experience. Generation's maximum share of any assessment is $44.
million per year (the retrospective premium obligation). Recovery under this insurance for terrorist acts is subject to the $3.2 billion aggregate limit-and secondarytothe property insurance described above. This limit would not apply in cases of certified acts of terrorism under the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007, as described above.
Effective April. 1,:2009, NEIL requires its members to maintain an investment gradecredit rating or to ensure cbl1ectability of their annual retrospective premium obligation by providing a financial guarantee, letter of credit, deposit premium, or some other means of assurance. "
In addition, Generation participateslin the Master Worker Program, which provides coverage for worker tort claims filed for bodily injury caused by a nublear'energy accident. This program was modified, effective January 1, 1998, to provide coverage to all workerswhose "nuclear-related Page 16 of 17
Enclosure 2 Table of Contents Combined Notes to Consolidated Financial Statements-(Continued)
(Dollars in millions, except per share data unless otherwise noted) employment" began on or after the commencement date of reactor operations. Generation will not be liable for a retrospective assessment under this policy.
For its insured losses, Generation is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance maintained. Uninsured losses and other expenses, to the eXtent not recoverable from insurers or the nuclear industry, could also be bome by Generation. Any such losses could have a material adverse effecton Exelon's and Generation's financial condition, results of operations and liquidity.
Spent Nuclear Fuel Obligation Under the NWPA, the DOE is responsible for the development of a geologic repository for and the disposal of SNF and high-level radioactive waste. As required by the NWPA, Generation is a party to 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 pays the DOE one mill ($0.001) per kWh of net nuclear generation for the cost of SNF disposal. 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 will be delayed significantly. In January 2009, the DOE issued its Draft National Transportation Plan for the proposed repository. The DOE's press statement accompanying the release of the plan indicated that shipments to the repository are not expected to begin before 2020.
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 devises a new strategy for long-term SNF management. Debate surrounding any new strategy likely will address centralized interim storage, permanent storage atmultiple sites and/or SNF reprocessing. In early 2010, Secretary of Energy.Steven Chu appointed the Blue Ribbon Commission on America's Nuclear Future toevaluate and recommend a new plan for managing the back end of the nuclear fuel cycle, including used fuel storage, disposal and fees. John W. Rowe, Exelon's Chairman and Chief Executive Officer, is oneof 15 members of the Commission. The Commission released its final report to the U.S. Energy Secretary 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. The strategy recommended by the Commission encompasses 8 key elements;
- 1) A new consent-based approach to siting storage and disposal facilities; 2) A new organization to implement the waste management program; 3) Access to utility waste disposal fees for their intended purpose; 4) Prompt efforts to .develop a new geological disposal facility: 5)
Prompt efforts to develop one or more consolidated storage facilities; 6) Early.preparation for the eventual large-scale transport of spent.
nuclear fuel and high-level waste to consolidated storage and disposal facilities: 7) Support for advances in nuclear energy technology and for workforce development-, and 8) Active U.S. leadership in international efforts to address safety, non-proliferation and-security concerns.
Implementation of the BRC's recommendations will require action.by both the Administration andCongress.
Given the full implementation of the BRC's recommendations will.require action by both the Administrationand Congress, itis uncertain whether interim.storage facilities or permanent disposal facilities will be operational by 2020. Because there .is no particular date before or after 2020 that Generation can establish as having a higher probability as the start date for facility operations, Generation uses the 2020 date as the assumed date for when the DOE will begin accepting SNF for purposes of determining nuclear decommissioning assetretirement obligations. The extended delay in Page 17 of 17