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Forum List » Business News and Headlines SEC Filings, Earing Reports, Press Releases  
Exelon Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 26, 2011 03:08PM
Exelon Corp. (EXC) filed Quarterly Report for the period ended 2011-09-30. Highlight of Business Operations:The Level 3 balance does not include current and noncurrent assets for Generation and current and noncurrent liabilities for ComEd of $415 million and $247 million at September 30, 2011 and $450 million and $525 million at December 31, 2010, respectively, related to the fair value of Generation’s financial swap contract with ComEd; and current assets for Generation and current liabilities for PECO of $2 million and $5 million at September 30, 2011 and December 31, 2010, respectively, related to the fair value of Generation’s block contracts with PECO, which eliminate upon consolidation in Exelon’s Consolidated Financial Statements.The Level 3 balance includes current and noncurrent assets for Generation of $415 million and $247 million at September 30, 2011 and $450 million and $525 million at December 31, 2010, respectively, related to the fair value of Generation’s financial swap contract with ComEd; and current assets of $2 million and $5 million at September 30, 2011 and December 31, 2010, respectively, related to the fair value of Generation’s block contracts with PECO. All of the mark-to-market balances Generation carries associated with the financial swap contract with ComEd and the block contracts with PECO eliminate upon consolidation in Exelon’s Consolidated Financial Statements. hedges commodity risk on a ratable basis over three-year periods. As of September 30, 2011, the percentage of expected generation hedged was 97%-100%, 85%-88%, and 56%-59% for the remainder of 2011, 2012 and 2013, respectively. The percentage of expected generation hedged is the amount of equivalent sales divided by the expected generation. Expected generation represents the amount of energy estimated to be generated or purchased through owned or contracted capacity. Equivalent sales represent all hedging products, which include cash flow hedges, other derivatives and certain non-derivative contracts including sales to ComEd and PECO to serve their retail load. During the three and nine months ended September 30, 2011, Generation’s cash flow hedge activity impact to pre-tax earnings based on the reclassification adjustment from accumulated OCI to earnings was a $162 million and a $617 million pre-tax gain, respectively, and a $171 million and $715 million pre-tax gain for the three and nine months ended September 30, 2010, respectively. Given that the cash flow hedges primarily consist of forward power sales and power swaps and do not include gas options or sales, the ineffectiveness of Generation’s cash flow hedges is primarily the result of differences between the locational settlement prices of the cash flow hedges and the hedged generating units. This price difference is actively managed through other instruments, which include financial transmission rights, whose changes in fair value are recognized in earnings each period, and auction revenue rights. Changes in cash flow hedge ineffectiveness, primarily due to changes in market prices, were decreases of $12 million and increases of $3 million for the three months ended September 30, 2011 and 2010, respectively, none of which was related to Generation’s financial swap contract with ComEd or Generation’s block contracts with PECO. During the nine months ended September 30, 2011 and 2010, cash flow hedge ineffectiveness decreased by $4 million and increased by $3 million, respectively, primarily due to changes in market prices during the period, none of which was related to Generation’s financial swap contract with ComEd or Generation’s block contracts with PECO. At September 30, 2011 and 2010, cash flow hedge ineffectiveness resulted in a decrease of $3 million and an increase of $3 million, respectively, related to accumulated OCI on the balance sheet in order to reflect the effective portions of derivative gains or losses. Exelon’s energy-related cash flow hedge activity impact to pre-tax earnings based on the reclassification adjustment from accumulated OCI to earnings was a $74 million and a $305 million pre-tax gain for the three and nine months ended September 30, 2011, respectively, and a $102 million and a $485 million pre-tax gain for the three and nine months ended September 30, 2010, respectively. Changes in cash flow hedge ineffectiveness, primarily due to changes in market prices, were decreases of $12 million and increases of $3 million pre-tax for the three months ended September 30, 2011 and 2010, respectively, and decreases of $4 million and increases of $3 million for the nine months ended September 30, 2011 and 2010, respectively. At September 30, 2011 and 2010, cash flow hedge ineffectiveness resulted in a decrease of $3 million and an increase of $3 million, respectively, related to accumulated OCI on the balance sheet in order to reflect the effective portions of derivative gains or losses.
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