ComEd 2001 Annual Report Download - page 90

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88
On February 18, 2000, ComEd sold Cotter to an unaffiliated third party. As part of the sale, ComEd agreed to indemnify
Cotter for any liability incurred by Cotter as a result of these actions, as well as any liability arising in connection with the
West Lake Landfill discussed in the next paragraph. In connection with the corporate restructuring, the responsibility to
indemnify Cotter for any liability related to these matters was transferred to Generation. Exelon’s management believes
adequate reserves have been established in connection with these proceedings.
The United States Environmental Protection Agency (EPA) has advised Cotter that it is potentially liable in connection
with radiological contamination at a site known as the West Lake Landfill in Missouri. Cotter is alleged to have disposed of
approximately 39,000 tons of soils mixed with 8,700 tons of leached barium sulfate at the site. Cotter, along with three
other companies identified by the EPA as potentially responsible parties (PRPs), is reviewing a draft feasibility study that
recommends capping the site. The PRPs are also engaged in discussions with the State of Missouri and the EPA. The
estimated costs of remediation for the site are $10 to $15 million. Once a final feasibility study is complete and a remedy
selected, it is expected that the PRPs will agree on an allocation of responsibility for the costs. Until an agreement is reached,
Exelon cannot predict its share of the costs.
FERC Municipal Request for Refund. Three of ComEd’s wholesale municipal customers filed a complaint and request for refund
with the FERC alleging that ComEd failed to properly adjust its rates, as provided for under the terms of the electric service
contracts with the municipal customers and to track certain refunds made to ComEd’s retail customers in the years 1992 through
1994. In the third quarter of 1998, FERC granted the complaint and directed that refunds be made, with interest. ComEd filed a
request for rehearing. On April 30, 2001, FERC issued an order granting rehearing in which it determined that its 1998 order had
been erroneous and that no refunds were due from ComEd to the municipal customers. On June 29, 2001, FERC denied the
customers’ requests for rehearing of the order granting rehearing. In August 2001, each of the three wholesale municipal
customers appealed the April 30, 2001 FERC order to the Federal circuit court, which consolidated the appeals for the purposes of
briefing and decision. In November 2001, the court suspended briefing pending court-initiated settlement discussions.
Godley Park District Litigation. On April 18, 2001, the Godley Park District filed suit in Will County Circuit Court against ComEd
and Exelon alleging that oil spills at Braidwood Station have contaminated the Park District’s water supply. The complaint
sought actual damages, punitive damages of $100 million and statutory penalties. The court dismissed all counts seeking
punitive damages and statutory penalties, and the plaintiff has filed an amended complaint before the court. Exelon is
contesting the liability and damages sought by the plaintiff.
Pennsylvania Real Estate Tax Appeals. Exelon is involved in tax appeals regarding two of its nuclear facilities, Limerick
Generating Station (Montgomery County) and Peach Bottom Atomic Power Station (York County), and one of its fossil
facilities, Eddystone (Delaware County). Exelon is also involved in the tax appeal for TMI (Dauphin County) through AmerGen.
Exelon does not believe the outcome of these matters will have a material adverse effect on Exelon’s results of operations or
financial condition.
Retail Rate Law. In 1996, several developers of non-utility generating facilities filed litigation against various Illinois officials
claiming that the enforcement against those facilities of an amendment to Illinois law removing the entitlement of those
facilities to state-subsidized payments for electricity sold to ComEd after March 15, 1996 violated their rights under the
Federal and state constitutions. The developers also filed suit against ComEd for a declaratory judgement that their rights
under their contracts with ComEd were not affected by the amendment. On August 4, 1999, the Illinois Appellate Court held
that the developers’ claims against the state were premature, and the Illinois Supreme Court denied leave to appeal that
ruling. Developers of both facilities have since filed amended complaints repeating their allegations that ComEd breached
the contracts in question and requesting damages for such breach, in the amount of the difference between the state-
subsidized rate and the amount ComEd was willing to pay for the electricity. ComEd is contesting this matter.