SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income

Comprehensive income is the change in common shareholders’ equity during a period from transactions and events from non-owner sources, including net income. As shown in the following tables, amounts recorded to accumulated other comprehensive loss for the three and nine months ended September 30, 2013 include unrealized gains and losses from derivatives accounted for as cash flow hedges, unrealized gains and losses on available-for-sale securities and the Company’s interest in other comprehensive income of equity investees, which comprise the net unrealized gains and losses on investments, changes in benefit obligations, consisting of deferred actuarial losses, prior service costs and transition amounts related to pension and other postretirement benefit plans, and foreign currency translation adjustments.



	Changes in Accumulated Other Comprehensive Loss by Component (a)
	For The Three Months Ended September 30, 2013
	Net Unrealized Gain/(Loss) on Derivatives			Net Unrealized Gain/(Loss) on Investments			Benefit Obligations (b)			Foreign Currency Translation		Total
	(In millions)
Beginning balance, June 30, 2013	$	(4	)	$	(8	)	$	(143	)	$	—	$	(155	)
Other comprehensive income before reclassifications	—			1			—			1		2
Amounts reclassified from accumulated other comprehensive income	—			—			2			—		2
Net current-period other comprehensive income	—			1			2			1		4
Ending balance, September 30, 2013	$	(4	)	$	(7	)	$	(141	)	$	1	$	(151	)



	Changes in Accumulated Other Comprehensive Loss by Component (a)
	For The Nine Months Ended September 30, 2013
	Net Unrealized Gain/(Loss) on Derivatives			Net Unrealized Gain/(Loss) on Investments			Benefit Obligations (b)			Foreign Currency Translation			Total
	(In millions)
Beginning balance, December 31, 2012	$	(4	)	$	(8	)	$	(148	)	$	2		$	(158	)
Other comprehensive income before reclassifications	—			1			—			(1		)	—
Amounts reclassified from accumulated other comprehensive income	—			—			7			—			7
Net current-period other comprehensive income (loss)	—			1			7			(1		)	7
Ending balance, September 30, 2013	$	(4	)	$	(7	)	$	(141	)	$	1		$	(151	)

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(a)	All amounts are net of tax.


(b)	The amounts reclassified from accumulated other comprehensive income are included in the computation of the net periodic pension cost (see Retirement Benefits and Trusteed Assets Note 13).

Intangible Assets

The Company has certain intangible assets relating to emission allowances, renewable energy credits and non-utility contracts as shown below:



	September 30,		December 31,
	2013		2012
	(In millions)
Emission allowances	$	3	$	6
Renewable energy credits	48		44
Contract intangible assets	126		139
	177		189
Less accumulated amortization	41		34
Intangible assets, net	136		155
Less current intangible assets	14		20
	$	122	$	135

Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the operation of the business. The Company amortizes contract intangible assets on a straight-line basis over the expected period of benefit, ranging from 3 to 30 years.

Income Taxes

The Company's effective tax rate from continuing operations for the three months ended September 30, 2013 was 28 percent as compared to 32 percent for the three months ended September 30, 2012. The Company's effective tax rate from continuing operations for the nine months ended September 30, 2013 was 29 percent as compared to 32 percent for the nine months ended September 30, 2012. The decrease in the effective tax rate in 2013 is due primarily to higher production tax credits.

The Company had $3 million of unrecognized tax benefits at September 30, 2013, that, if recognized, would favorably impact its effective tax rate. The Company believes that it is possible that there will be a decrease in the unrecognized tax benefits of up to $1 million in the next twelve months.