ComEd 2013 Annual Report Download - page 22

ComEd
ComEd is engagedprincipallyinthe purchaseandregulatedretailsale ofelectricityandthe provision of distribution and
transmission servicesto a diversebaseofresidential,commercial andindustrial customersin northern Illinois. ComEd is apublic
utilityunder theIllinois Public UtilitiesActsubjecttoregulation by theICC relatedto distribution ratesandservice,theissuanceof
securities, andcertainother aspectsofComEd’s business. ComEd is apublic utilityunder theFederal Power Actsubjectto
regulation by FERCrelatedto transmission ratesandcertainother aspectsofComEd’s business. Specific operationsofComEd are
alsosubjecttothejurisdiction ofvariousother Federal,state,regional andlocal agencies. Additionally, ComEd is subjecttoNERC
mandatoryreliabilitystandards.
ComEd’s retailservice territoryhasan area ofapproximately11,400 square milesandan estimatedpopulation of9million.The
service territoryincludestheCityof Chicago,an area ofabout 225square mileswithan estimatedpopulation of2.7 million.ComEd
hasapproximately3.8 million customers.
ComEd’s franchisesare sufficient to permitittoengageinthebusiness itnowconducts. ComEd’s franchiserightsare generally
nonexclusiverightsdocumentedinagreementsand, insomecases, certificatesofpublic convenienceissuedbytheICC. Withfew
exceptions, thefranchiserightshavestatedexpiration datesrangingfrom2014to 2066. ComEd anticipatesworkingwiththe
appropriate agenciesto extendor replacethefranchiseagreementsprior to expiration.
ComEd’s kWh deliveriesandpeakelectricityloadare generally higher duringthesummer andwinter months, when temperature
extremescreate demandfor either summer coolingor winter heating. ComEd’s highest peakloadoccurredon July20,2011,and
was23,753MWs; its highest peakloadduringawinter season occurredon January6,2014, andwas16,514 MWs.
Retail Electric Services
Electric revenuesandpurchasedpower expense are affectedbyfluctuationsincustomers’ purchasesfromcompetitive electric
generation suppliers. All ComEd customershavetheabilityto purchase electricityfromacompetitive electric generation supplier.
Thecustomers’ choiceactivityaffectsrevenue collectedfromcustomersrelatedto suppliedenergy; however,that activityhasno
impact on electric revenue net ofpurchasedpower expense.ComEd’s costofelectric supplyispassedwithout markup directly
through to thosecustomersnot servedbyacompetitive electric generation supplier andthose ratesare subjecttoadjustment
monthlyto recover or refundthedifferencebetween ComEd’s actual costofelectricitydeliveredandtheamount includedin rates.
For thosecustomersthat chooseacompetitive electric generation supplier,ComEd actsasthebillingagent but doesnot record
revenuesor expensesrelatedto the electric supply. ComEd remainsthedistribution service provider for all customersinitsservice
territoryandchargesaregulatedrate for distribution service.See Management’s Discussion andAnalysis ofFinancial Condition and
ResultsofOperationsfor additional information on customer switchingto competitive electric generation suppliers, andNote 3 ofthe
CombinedNotesto ConsolidatedFinancial Statementsfor additional information on ComEd’s electricityprocurement process and
for additional information.
Under Illinois law, ComEd is requiredto deliver electricityto all customers. ComEd’s obligation to providegeneration supplyservice,
which is referredto asaPOLRobligation,primarilyvariesbycustomer size.ComEd’s obligation to providesuch serviceto
residential customersandother small customerswithdemands ofunder 100 kWs continuesfor all customerswhodo not choosea
competitive electric generation supplier or whochoose to return to ComEd after takingservicefromacompetitive electric generation
supplier.ComEd doesnot haveafixed-pricegeneration supplyserviceobligation to mostofitslargestcustomerswithdemands of
100 kWs or greater,asthis group ofcustomershaspreviouslybeen declaredcompetitive.Customerswithcompetitivedeclarations
maystill purchasepower andenergy fromComEd, but onlyat hourlymarket prices.
Energy Infrastructure Modernization Act (EIMA). Since 2011,ComEd’s distribution ratesare establishedthrough a performance-
basedrate formula pursuant to EIMA. EIMAalso providesastructure for substantial capital investment by utilitiesover a ten-year
periodto modernizeIllinois’ electric utilityinfrastructure.Inaddition,aslongasComEd is subjecttoEIMA,ComEd will fundcustomer
assistance programs for low-incomecustomers, which amountswill not berecoverable through rates.
ComEd filesan annual reconciliation oftherevenue requirement ineffectinagiven year to reflecttheactual coststhat theICC
determinesare prudentlyandreasonablyincurredfor such year.Under the terms of EIMA,ComEd’s target rate ofreturn on common
equityissubjecttoreduction if ComEd doesnot deliver the reliabilityandcustomer servicebenefits, asdefined, ithascommittedto
over the ten-year lifeoftheinvestment program. See Note 3 oftheCombinedNotesto ConsolidatedFinancial Statementsfor
additional information.
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