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Exelon records impairments after FERC decision on transmission asset recovery

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Exelon records impairments after FERC decision on transmission asset recovery

Exelon Corp. and its regulated subsidiaries are recording more than $70 million in after-tax impairment charges after a November decision by the Federal Energy Regulatory Commission rejecting a request to recover costs related to certain transmission assets.

Baltimore Gas and Electric Co., or BGE, has requested FERC rehear its application to recover certain existing and future transmission-related income tax regulatory assets through its transmission formula rate.

On Nov. 16, the Commission rejected the Exelon subsidiary's Dec. 13, 2016, original proposed revisions to its transmission formula rate to recover regulatory assets that would total $42 million and $38 million as of Sept. 30, 2017, and Dec. 31, 2016, respectively, according to a federal filing. On Dec. 18, BGE filed for clarification and rehearing, still seeking those amounts.

Other Exelon subsidiaries including Commonwealth Edison Co., Potomac Electric Power Co., Delmarva Power & Light Co. and Atlantic City Electric Co. each have similar transmission-related income tax regulatory assets, each requiring FERC approval, according to a Dec. 18 federal filing.

"Each of BGE, ComEd, Pepco, DPL and ACE believe there is sufficient basis to support full recovery of total existing transmission-related income tax regulatory assets, and each intends to further pursue such full recovery with FERC," the company stated. "However, upon further consideration of the November 16, 2017, order, management of each company has concluded that the portion of the total transmission-related income tax regulatory assets that would have been previously amortized and recovered through rates had the transmission formula rate provided for such recovery is no longer probable of recovery."

As a result, each utility is recording an after-tax impairment charge in December of $36 million for Exelon, $3 million for ComEd, $5 million for BGE, $14 million at Potomac Electric Power, $7 million at Delmarva Power & Light and $7 million at Atlantic City Electric.

The management of each utility has concluded, according to the filing, that the portion of total transmission-related income tax regulatory assets related to prospective amortization remains "probable" of recovery through rates, but if those portions were no longer considered probable of recovery, additional after-tax charges would be recorded in the amounts of up to $84 million for Exelon, $39 million for ComEd, $21 million for BGE, $24 million for PHI, $10 million for Potomac Electric Power, $10 million for Delmarva Power & Light and $4 million for Atlantic City Electric.