SEC Comment Letter for COMMONWEALTH EDISON Co (CIK 0000022606) — Apr 6, 2020
COMMONWEALTH EDISON Co (CIK 0000022606)
Date: April 6, 2020 · CIK: 0000022606 · Accession: 0000000000-20-002937
AI Filing Summary & Sentiment
File numbers found in text: 001-16169
Letter
April 3, 2020 Fabian Souza Senior Vice President and Corporate Controller EXELON CORP 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 Re:EXELON CORP Form 10-K for the Fiscal Year Ended December 31, 2019 Filed February 11, 2020 Response dated March 19, 2020 File No. 001-16169 Dear Mr. Souza: We have reviewed your March 19, 2020 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Unless we note otherwise, our references to prior comments are to comments in our March 6, 2020 letter. Form 10-K for the Fiscal Year Ended December 31, 2019 Critical Accounting Policies Depreciable Lives of Property, Plant and Equipment (All Registrants), page 78 1.We have read your response to comment 2. We note from your disclosure on page 272 that you increased your asset retirement obligation by $780 million in part due to changes in the assumed retirement timing probabilities of economically challenged nuclear plants. In this regard, it appears that you revised the planned asset retirement dates of the nuclear plants that are economically challenged. Your proposed disclosure indicates that when a determination has been made that an asset will be retired before the end of its current estimated useful life, depreciation provisions will be accelerated to reflect the shortened
FirstName LastNameFabian Souza Comapany NameEXELON CORP April 3, 2020 Page 2 FirstName LastName Fabian Souza EXELON CORP April 3, 2020 Page 2 estimated useful life, which could have a material unfavorable impact on Exelon’s and Generation’s future results of operations. A company should address specifically why its accounting estimates or assumptions bear the risk of change. The reason may be that there is an uncertainty attached to the estimate or assumption, or it just may be difficult to measure or value. Equally important, companies should address the questions that arise once the critical accounting estimate or assumption has been identified, by analyzing, to the extent material, such factors as how they arrived at the estimate, how accurate the estimate/assumption has been in the past, how much the estimate/assumption has changed in the past, and whether the estimate/assumption is reasonably likely to change in the future. Since critical accounting estimates and assumptions are based on matters that are highly uncertain, a company should analyze their specific sensitivity to change, based on outcomes that are reasonably likely to occur and would have a material effect. Please note a Company is required to provide quantitative as well as qualitative disclosure when quantitative information is reasonably available and will provide material information for investors pursuant to Section V of SEC Release 33-8350. Please disclose the accounting estimates or assumptions used to determine the depreciable lives of your Dresden, Byron and Braidwood units at risk of early retirement, including their book values, based on the guidance in SEC Release 33-8350.
Results of Operations by Registrant, page 84 2.We have read your response to comment 3. It appears the Company’s chief operating decision maker (“CODM”) uses net income as the segment measure for the utility registrants. Please reconcile the non-GAAP measure revenues net of purchased power and fuel expense (“RNF”) to a GAAP gross margin that includes depreciation and amortization expense for the utility registrants. In this regard, a GAAP gross margin should be used as the starting point of the non-GAAP reconciliation of RNF and should be shown even if it is not otherwise presented in the utility registrants financial statements.
You may contact Robert Babula, Senior Staff Accountant at (202) 551-3339, or Gus Rodriguez, Branch Chief at (202) 551-3752 if you have questions regarding comments on the financial statements and related matters. Sincerely, Division of Corporation Finance Office of Energy & Transportation
Show Raw Text
April 3, 2020
Fabian Souza
Senior Vice President and Corporate Controller
EXELON CORP
10 South Dearborn Street
P.O. Box 805379
Chicago, Illinois 60680-5379
Re:EXELON CORP
Form 10-K for the Fiscal Year Ended December 31, 2019
Filed February 11, 2020
Response dated March 19, 2020
File No. 001-16169
Dear Mr. Souza:
We have reviewed your March 19, 2020 response to our comment letter and have the
following comments. In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional
comments. Unless we note otherwise, our references to prior comments are to comments in
our March 6, 2020 letter.
Form 10-K for the Fiscal Year Ended December 31, 2019
Critical Accounting Policies
Depreciable Lives of Property, Plant and Equipment (All Registrants), page 78
1.We have read your response to comment 2. We note from your disclosure on page 272
that you increased your asset retirement obligation by $780 million in part due to changes
in the assumed retirement timing probabilities of economically challenged nuclear plants.
In this regard, it appears that you revised the planned asset retirement dates of the nuclear
plants that are economically challenged. Your proposed disclosure indicates that when a
determination has been made that an asset will be retired before the end of its current
estimated useful life, depreciation provisions will be accelerated to reflect the shortened
FirstName LastNameFabian Souza
Comapany NameEXELON CORP
April 3, 2020 Page 2
FirstName LastName
Fabian Souza
EXELON CORP
April 3, 2020
Page 2
estimated useful life, which could have a material unfavorable impact on Exelon’s and
Generation’s future results of operations. A company should address specifically why its
accounting estimates or assumptions bear the risk of change. The reason may be that there
is an uncertainty attached to the estimate or assumption, or it just may be difficult to
measure or value. Equally important, companies should address the questions that arise
once the critical accounting estimate or assumption has been identified, by analyzing, to
the extent material, such factors as how they arrived at the estimate, how accurate the
estimate/assumption has been in the past, how much the estimate/assumption has changed
in the past, and whether the estimate/assumption is reasonably likely to change in the
future. Since critical accounting estimates and assumptions are based on matters that are
highly uncertain, a company should analyze their specific sensitivity to change, based on
outcomes that are reasonably likely to occur and would have a material effect. Please note
a Company is required to provide quantitative as well as qualitative disclosure when
quantitative information is reasonably available and will provide material information for
investors pursuant to Section V of SEC Release 33-8350. Please disclose the accounting
estimates or assumptions used to determine the depreciable lives of your Dresden, Byron
and Braidwood units at risk of early retirement, including their book values, based on the
guidance in SEC Release 33-8350.
Results of Operations by Registrant, page 84
2.We have read your response to comment 3. It appears the Company’s chief operating
decision maker (“CODM”) uses net income as the segment measure for the utility
registrants. Please reconcile the non-GAAP measure revenues net of purchased power
and fuel expense (“RNF”) to a GAAP gross margin that includes depreciation and
amortization expense for the utility registrants. In this regard, a GAAP gross margin
should be used as the starting point of the non-GAAP reconciliation of RNF and should be
shown even if it is not otherwise presented in the utility registrants financial statements.
You may contact Robert Babula, Senior Staff Accountant at (202) 551-3339, or Gus
Rodriguez, Branch Chief at (202) 551-3752 if you have questions regarding comments on the
financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Energy & Transportation