Variable Interest Entities

9 Months Ended

Sep. 30, 2011

Variable Interest Entities

Variable Interest Entities

Variable Interest Entities

As of September 30, 2011, we consolidate four variable interest entities (VIEs) for which we are the primary beneficiary, and we have significant interests in six other VIEs for which we do not have controlling financial interests. We discuss our VIEs in more detail in Note 4 of our 2010 Annual Report on Form 10-K.

Consolidated Variable Interest Entities

Our, and BGE's, consolidated VIEs consist of:

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  RSB BondCo LLC (BondCo), a special purpose bankruptcy-remote limited liability company formed by BGE to acquire, hold, and to issue and service bonds secured by rate stabilization property,

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  a retail gas group formed to enter into a collateralized gas supply agreement with a third party gas supplier,

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  a retail power supply company, and

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  a group of solar project limited liability companies formed to build, own, and operate solar power facilities. While we own 100% of these entities, we determined that the individual solar project entities are VIEs because either the entities require additional subordinated financial support in the form of parental guarantee of debt, loans from the customers in order to obtain the necessary funds for construction of the solar facilities, or the customers absorb price variability from the entities through the fixed price power and/or renewable energy credits purchase agreements. We are the primary beneficiary of the solar project entities because we control the design, construction, and operation of the solar power facilities.

        We further discuss how we determine whether we are the primary beneficiary of VIEs in more detail in Note 4 of our 2010 Annual Report on Form 10-K.

        For each of our consolidated VIEs:

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  The assets of the VIEs are restricted and can only be used to settle obligations of the respective VIE. In the case of BondCo, BGE is required to remit all payments it receives from customers for rate stabilization charges to BondCo. During the quarter and nine months ended September 30, 2011, BGE remitted $26.5 million and $65.0 million, respectively, to BondCo. During the quarter and nine months ended September 30, 2010, BGE remitted $26.7 million and $68.7 million, respectively, to BondCo.

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  Except for providing a parental guarantee of a $150 million credit facility and capital funding to the solar entities for ongoing construction of the solar power facilities and a $75 million parental guarantee to the third party gas supplier in support of the retail gas group, during the quarter and nine months ended September 30, 2011, neither we nor BGE:

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    provided any additional financial support to the VIEs, and

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    had any contractual commitments or obligations to provide financial support to the VIEs.

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The creditors of the VIEs do not have recourse to our or BGE's general credit with the exception of certain of the solar entities where we have issued a parental guarantee for a $150 million credit facility.

        We include four consolidated VIEs in our consolidated financial statements at September 30, 2011 and three consolidated VIEs in our consolidated financial statements at December 31, 2010 as follows:

	September 30, 2011		December 31, 2010
	(In millions)
Current assets	$	544.1	$	516.6
Noncurrent assets		222.6		57.7
Total Assets	$	766.7	$	574.3
Current liabilities	$	370.9	$	345.5
Noncurrent liabilities		550.6		399.0
Total Liabilities	$	921.5	$	744.5

Unconsolidated Variable Interest Entities

As of September 30, 2011 and December 31, 2010, we had significant interests in six VIEs for which we were not the primary beneficiary. We have not provided any material financial or other support to these entities during the quarter and nine months ended September 30, 2011 and we do not intend to provide any additional financial or other support to these entities in the future.

        The following tables present summary information about these entities:

As of September 30, 2011		Power Contract Monetization VIEs		All Other VIEs		Total
		(In millions)
Total assets		$	389.7	$	318.1	$	707.8
Total liabilities			307.1		117.1		424.2
Our ownership interest			—		56.6		56.6
Other ownership interests			82.6		144.4		227.0
Our maximum exposure to loss:
	Letters of credit		18.6		—		18.6
	Carrying amount of our investment—Other investments		—		49.6		49.6
	Debt and payment guarantees		—		5.0		5.0

As of December 31, 2010		Power Contract Monetization VIEs		All Other VIEs		Total
		(In millions)
Total assets		$	492.9	$	288.3	$	781.2
Total liabilities			382.6		113.2		495.8
Our ownership interest			—		48.7		48.7
Other ownership interests			110.3		126.4		236.7
Our maximum exposure to loss:
	Letters of credit		24.9		—		24.9
	Carrying amount of our investment—Other investments		—		41.4		41.4
	Debt and payment guarantees		—		5.0		5.0

        We assess the risk of a loss equal to our maximum exposure to be remote. In addition, there are no agreements with, or commitments by, third parties that would affect the fair value or risk of our variable interests in these VIEs.