ComEd 2001 Annual Report Download - page 32

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Generation’s EBIT increased $522 million for 2001 compared to 2000. The Merger accounted for $22 million of the variance.
The remaining $500 million increase resulted primarily from higher margins on market and affiliate wholesale energy sales,
coupled with decreased operating costs at the nuclear plants, partially offset by additional depreciation and amortization.
During the first five months of 2001, Generation benefited from increases in wholesale market prices, particularly in the
Pennsylvania-New Jersey-Maryland control area and Mid-America Interconnected Network regions.The increase in wholesale
market prices was primarily driven by significant increases in fossil fuel prices. The large concentration of nuclear generation
in the Generation portfolio allowed Exelon to capture the higher prices in the wholesale market for sales to non-affiliates
with minimal increase in fuel prices. Generation revenues for 2001 include charges to affiliates for line losses. Line loss
charges were not included in pro forma 2000 revenue. Generation also benefited from higher nuclear plant output due to
increased capacity factors during 2001. Energy marketing activities positively impacted 2001 results. Mark-to-market gains
were $16 million and $14 million on non-trading and trading energy contracts, respectively offset by realized trading losses of
$6 million. Lower operating costs are attributable to reductions in the number of employees and fewer nuclear outages in
2001 than in 2000, which offset the effect of increases in reserves related to litigation of $30 million. In addition, Generation’s
EBIT benefited from an increase in equity in earnings of AmerGen and Sithe of $90 million in 2001 compared to the prior year
period as a result of acquisitions in 2000. The increase in depreciation and amortization expense primarily reflects an
increase in decommissioning expense of $140 million reflecting the discontinuance of regulatory accounting practices for
certain nuclear generating stations,partially offset by a $90 million reduction in depreciation and decommissioning expense
attributable to the extension of estimated service lives of Generation’s generating plants.
For 2001, Generation’s sales were 201,879 GWhs, approximately 60% of which were to affiliates.
Supply sources were as follows:
Nuclear units 54%
Purchases 37%
Fossil and hydro units 3%
Generation investments 6%
Total 100%
Generation’s nuclear fleet, including AmerGen, performed at a weighted average capacity factor of 94.4% for 2001
compared to 93.8% in 2000. Generation’s nuclear fleet’s production costs, including AmerGen, were $12.79 per MWh for
2001, compared to $14.65 per MWh for 2000.
Enterprises
Components of Variance
Merger Normal
(in millions) 2001 2000 Variance Variance Operations
Operating Revenue $ 2,292 $ 1,395 $ 897 $ 467 $ 430
Operating Expense and Other 2,330 1,500 830 491 339
Depreciation & Amortization 69 35 34 8 26
EBIT $ (107) $ (140) $ 33 $ (32) $ 65
Enterprises’ EBIT increased $33 million for 2001 compared to 2000. Normal operations contributed $65 million of the variance,
which was partially offset by a $32 million reduction attributable to the Merger. The increase in EBIT from normal operations
primarily reflects $27 million of net realized gains on investments, $23 million from lower net losses in communications joint
ventures, $21 million of reduced losses on the sale of assets, and $15 million primarily from improved margins and reduced
operating expenses of retail energy sales in Pennsylvania.These increases were partially offset by $13 million of net writedowns
on investments.