ComEd 2013 Annual Report Download - page 135

on pension asset for 2011 and$60million pre-taxreflectsthe return on pension asset for 2012.Newratesreflectingtheimpactsof
theRehearingOrder went into effectinNovember 2012.ComEd hasfiledan appeal withtheIllinois Appellate Court.ComEd cannot
predicttheresultsofanysuch appeals.
InMarch 2013,theIllinois legislature passedSenate Bill 9to clarify theintent of EIMAonthethree issuesdecidedintheRehearing
Order:an allowedreturn on ComEd’s pension asset;theuseofyear-endrather than average rate baseandcapital structure inthe
annual reconciliation;andtheuseofComEd’s weightedaveragecostofcapital interest rate rather than a short-termdebt rate to
applyto the annual reconciliation.OnMay22,2013,Senate Bill 9becameeffectiveafter theIllinois legislature overrodethe
Governor’s veto ofthat Bill.OnJune 5, 2013,theICC approvedComEd’s updated distribution formula rate structure to reflectthe
impactsofSenate Bill 9.
InOctober 2013,theICC openedan investigation (theInvestigation), inresponsetoacomplaint filedbytheIllinois AttorneyGeneral,
to changetheformula rate structure by requestingthree changes: theelimination oftheincometaxgross-up on theweighted
averagecostofcapital usedto calculate interestonthe annual reconciliation balance,the nettingofassociatedaccumulated
deferredincometaxesagainstthe annual reconciliation balanceincalculatinginterest,andtheuseofaverage rather than year-end
rate basefor determininganyROE collar adjustment.OnNovember 26, 2013,theICC issueditsfinal order intheInvestigation,
rejectingtwoofthe proposedchangesbut acceptingthe proposedchangetoeliminate theincometaxgross-up on theweighted
averagecostofcapital usedto calculate interestonthe annual reconciliation balance.Theacceptedchangebecameeffectivein
January2014, andisestimatedto reduceComEd’s 2014revenue by approximately$8million. This changehadno financial
statement impactonComEd in 2013.ComEd andintervenorsrequestedrehearing, however all rehearingrequestswere deniedby
theICC. ComEd andintervenorshavefiledappealswiththeIllinois Appellate Court.ComEd cannot predicttheresultsofanysuch
appeals.
Annual Reconciliation
2012 Filing. On April30,2012,ComEd fileditsannual distribution formula rate.OnDecember 20,2012,theICC, issueditsfinal
order, which increasedtherevenue requirement by $73million,inconformitywiththeformula rate structure providedintheMay
2012 andRehearingOrders. The$73million reflectedan increaseof$80million for theinitial revenue requirement for 2012 anda
decreaseof$7million for the annual reconciliation for 2011.The rate increasewasset usingan allowedreturn on capital of 7.54%
(inclusiveofan allowedreturn on common equityof 9.81%). The ratestookeffectinJanuary2013.ComEd andintervenors
requestedarehearingon specific issues, which wasdeniedbytheICC. ComEd andintervenorsalsofiledappealswiththeIllinois
Appellate Court.ComEd cannot predicttheresultsofanysuch appeals.
OnMay30,2013,ComEd updateditsrevenue requirement allowedintheDecember 2012 Order to reflecttheimpactsofSenate Bill
9, which resultedinareduction to thecurrent revenue requirement ineffectof$14million.The ratestookeffectinJuly2013.
2013 Filing. On April29, 2013,ComEd fileditsannual distribution formula rate, which wasupdatedinAugust 2013,to request a total
increasetotherevenue requirement of$353million of which approximately$42million relatedto Senate Bill 9. OnDecember 19,
2013,theICC issueditsfinal order which increasedtherevenue requirement by $341million,reflectingan increaseof$160million
for theinitial revenue requirement for 2013 andan increaseof$181million for the annual reconciliation for 2012.The rate increase
wasset usingan allowedreturn on capital of 6.94% (inclusiveofan allowedreturn on common equityof 8.72%). The ratestook
effectinJanuary2014. ComEd requestedarehearingon specific issues, which wasdeniedbytheICC. ComEd alsofiledan appeal.
ComEd cannot predicttheresultsofanysuch appeals.
Expenditures and Capital Investment
Aspart ofthe enactment of EIMAlegislation ComEd madeaninitial contribution of$15million (recognizedasexpensein 2011)to a
new ScienceandTechnology Innovation Trustfundon July31,2012,andwill makerecurringannual contributionsof$4million,the
firstof which wasmadeonDecember 31,2012, which will beusedfor customer education for aslongastheAMI Deployment Plan
remainsineffect.Inaddition,ComEd will contribute $10 million per year for fiveyears, aslongasComEd is subjecttoEIMA,to fund
customer assistance programs for low-incomecustomers, which will not berecoverable through rates. Thesecontributionsbegan in
2012.
OnJanuary6,2012,ComEd fileditsInfrastructure Investment Plan withtheICC. Under that plan,ComEd will invest approximately
$2.6 billion over ten yearsto modernizeandstorm-harden its distribution systemandto implement smart grid technology. On
April23,2012,ComEd fileditsinitial AMI Deployment Plan withtheICC, which wasapprovedbytheICC on June 22,2012,with
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