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real*
Exelon Corporation 02 Annual Report

Table of contents

  • Page 1
    real* Exelon Corporation 02 Annual Report

  • Page 2
    Contents Introduction 1 / Letter to Shareholders 3 / Real Customers 8 / Real Assets 11 Real Work 12 / Real Power 15 / Real Results 16 / Exelon at a Glance 18 Management Team 20 / Board of Directors 21 / Financial Section 22

  • Page 3
    Exelon is a real company We are a group of United States electric and gas, generation and delivery companies. We offer no mysteries and make no pretenses. We make commitments to customers, investors and employees and work very hard to keep them. We deliver real earnings and we face real risks. We'd ...

  • Page 4
    real simple 5.1 Million Retail Electric Customers 43,000 MW Generation Supply Portfolio 16,000 MWs of Nuclear Capacity $14,955 Million 2002 Revenue $1,440 Million 2002 Net Income * 2

  • Page 5
    real specific To Our Shareholders Exelon delivered solid performance in 2002 in spite of a stuttering economy, a depressed stock market, falling wholesale power prices and energy trading scandals in other energy companies. Exelon met its operating earnings goals and continued to improve its ...

  • Page 6
    ... and a power team that trades real power: - 5.1 million retail electric customers. 3.6 million in northern Illinois and 1.5 million in southeastern Pennsylvania - the largest electric customer base in North America. - 43,000 megawatt generation supply portfolio - either owned or under contract. This...

  • Page 7
    ... Perform safely - especially in nuclear operations. • Constantly improve our environmental performance. Exelon OneVision Exelon strives to build exceptional value - by becoming the best and most consistently profitable electricity and gas company in the United States. Live up to our commitments...

  • Page 8
    ...Chicago. We are building a diverse management team and workforce. We have come a long way, but we have more to do and we need to move faster. Report our results, opportunities and problems honestly and reliably. In the past 18 months, several large companies have violated securities laws, generally...

  • Page 9
    ... yield the highest long-term value. Make acquisitions that will best employ our limited investment resources to produce the most consistent cash flow and earnings accretion. We are not looking for a one-time big bang. We are seeking to build a company that consistently adds value - year after year...

  • Page 10
    ... 5,100,000 retail electric customers Exelon serves the largest electric customer base in North America. This includes approximately 5.1 million retail electric customers - 3.6 million in northern Illinois and 1.5 million in southeastern Pennsylvania - and approximately 450,000 gas customers in the...

  • Page 11

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  • Page 13
    ... and underground lines, hundreds of substations and valuable generation assets. Exelon has a generation supply portfolio of 43,000 megawatts - either owned or under contract - including the nation's largest fleet of nuclear plants. This includes Exelon's 16,000 megawatts of nuclear capacity - by far...

  • Page 14
    ... and increasing competition. Exelon employees understand the need to observe ethical standards and to earn and maintain the trust of our customers, shareholders, regulators, government officials and the communities we serve. Exelon's Board of Directors and employees abide by a corporate code...

  • Page 15

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  • Page 17
    ... and markets real power, not virtual power - in 2002, Exelon Generation produced 129,000 gigawatt-hours. Whether it's by way of nuclear-, fossil-, hydro-, solar- or wind-generated power, we've promised our customers that we'll "keep the lights on." Exelon has pledged to support renewable energy use...

  • Page 18
    ... PECO Energy merged to become Exelon Corporation, it resulted in the successful creation of one of America's largest utilities. In 2002, Exelon reported consolidated earnings of $1,440 million. Exelon's stock price increased by 10 percent during 2002, which coupled with the dividend provided a total...

  • Page 19

  • Page 20
    ... at a glance Exelon Energy Delivery Exelon Energy Delivery (EED) is the regulated energy transmission and distribution subsidiary of Exelon and the parent company of ComEd in northern Illinois and PECO Energy in southeastern Pennsylvania. EED has the largest electric retail customer base in the...

  • Page 21
    ComEd and PECO operate in states that restructured for competition, which means customers have the opportunity to choose among generation suppliers. Customers in both markets enjoy stable energy prices, as both utilities operate under regulatory rate caps. Several positive trends continued in 2002, ...

  • Page 22
    Management Team pictured left to right 1 2 3 4 John W. Rowe Chairman, President and CEO Ian P. McLean Executive Vice President Katherine K. Combs Vice President, Corporate Secretary and Deputy General Counsel 7 Frank M. Clark Senior Vice President 5 6 8 Randall E. Mehrberg Executive Vice ...

  • Page 23
    ... Thomas Retired Chairman First Chicago NBD Corporation 3 Edward A. Brennan Retired Chairman and Chief Executive Officer Sears, Roebuck and Co. 4 Rosemarie B. Greco Principal GRECOventures, Ltd. Bruce DeMars Admiral (Retired) United States Navy 5 John M. Palms, Ph.D. Retired President University...

  • Page 24
    ... 23 Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Report of Independent Accountants 76 / Consolidated Statements of Income 77 / Consolidated Statements of Cash Flows 78 Consolidated Balance Sheets 79 / Consolidated Statements of Changes in Shareholders...

  • Page 25
    ... 31, 1998 Balance Sheet Data Current Assets Property, Plant and Equipment, net Deferred Debits and Other Assets Total Assets Current Liabilities Long-Term Debt Deferred Credits and Other Liabilities Minority Interest Preferred Securities of Subsidiaries Shareholders' Equity Total Liabilities and...

  • Page 26
    ... of ComEd and PECO were transferred to Exelon Business Services Company (BSC). BSC provides Exelon and its subsidiaries financial, human resource, legal, information technology, supply management and corporate governance services. Exelon, a registered public utility holding company, through...

  • Page 27
    ... 2006. By existing law, after 2006, ComEd will not collect competitive transition charges (CTCs) from customers who elect to receive generation services from alternative energy suppliers including the ComEd Power Purchase Option (PPO). Additionally, the current bundled rate structure may be reset in...

  • Page 28
    ... rates and energy costs. ComEd Delivery Services Rate Case. ComEd is authorized to charge customers who purchase electricity from an alternative supplier for the use of its distribution system to deliver that electricity. These delivery service rates are set through proceedings before the ICC based...

  • Page 29
    ... costs with increases in rates charged to these customers is limited. Therefore, to effectively manage its obligation to provide power to meet its customers' demand, Energy Delivery has established power supply agreements with Generation that reduce exposure to the volatility of market prices...

  • Page 30
    ... customers choosing alternative energy suppliers or the ComEd PPO. Based on increasing mitigation factors and our assumptions about the competitive price of delivered energy and customers' choice of electric suppliers, we estimate that CTC revenue will be approximately $250 to $300 million annually...

  • Page 31
    ...conditions and activity in Energy Delivery's service territories directly affect the demand for electricity. Higher levels of development and business activity generally increase the number of customers and their use of energy. Sales growth on an annual basis is expected to be 1.5% and 0.6% in ComEd...

  • Page 32
    ... fleet of generating assets and markets the output of a portfolio of supply, which includes 100% owned assets, co-owned facilities and purchased power. As discussed previously, Generation has entered into long-term power purchase agreements with ComEd and PECO. The majority of Generation's portfolio...

  • Page 33
    ...forward markets in order to satisfy its obligations to Energy Delivery and other committed third-party sales. These sources generally are at a higher cost than Generation otherwise would have incurred to generate energy from its nuclear stations. Refueling outage scheduling at nuclear plants affects...

  • Page 34
    ...total supply in 2002. As the largest generator of nuclear power in the United States, we can take advantage of our scale and scope to negotiate favorable terms for the materials and services that our business requires. Generation's nuclear plants benefit from stable fuel costs, minimal environmental...

  • Page 35
    ...Energy Delivery. These purchases may be made for more than the energy demanded by Power Team's customers. Power Team then sells this open position, along with our generating capacity not used to meet our customer demand, in the wholesale energy market. Power Team began proprietary trading activities...

  • Page 36
    ...is for 100% of its required load through 2004 at fixed prices, and in 2005 and 2006 it equals 100% of the output of ComEd's former nuclear plants, now owned by Generation at market based prices. PECO's PPA with Generation is a full load requirements contract through 2010. We intend to revise the PPA...

  • Page 37
    ... considerable capital resources. When necessary, we secure funds from external sources by issuing commercial paper and, as required, long-term debt securities. We actively manage our exposure to changes in interest rates through interest-rate swap transactions and our balance of fixed- and floating...

  • Page 38
    ... security measures resulted in increased costs in 2002 of $19 million, of which approximately $10 million was capitalized. On a continuing basis, we are evaluating enhanced security measures at certain critical locations, enhanced response and recovery plans and assessing long-term design changes...

  • Page 39
    ... to raise capital. The introduction of new technologies could increase competition within our markets. While demand for electricity is generally increasing throughout the United States, the rate of construction and development of new, more efficient, electric generation facilities and distribution...

  • Page 40
    ...energy delivery operations conducted by ComEd and PECO. ComEd is engaged principally in the purchase, transmission, distribution and sale of electricity to a diverse base of residential, commercial, industrial and wholesale customers in northern Illinois. ComEd is a public utility under the Illinois...

  • Page 41
    ...including customers returning to PECO as their energy supplier, or ComEd's customers electing to purchase energy from alternative energy suppliers or electing ComEd's PPO, under which non-residential customers can purchase power from ComEd at a market-based rate, - increases in PJM ancillary charges...

  • Page 42
    ... the distribution of the energy. PECO's tariffed rates also include a CTC. See Note 6 of the Notes to Consolidated Financial Statements for a discussion of CTC. (3) Unbundled service reflects customers electing to receive electric generation service from an alternative energy supplier or ComEd's PPO...

  • Page 43
    ... the cost of energy and the delivery cost of the transmission and the distribution of the energy. PECO's tariffed rates also include a CTC charge. (2) Unbundled revenue reflects revenue from customers electing to receive electric generation service from an alternative energy supplier or ComEd's PPO...

  • Page 44
    ...the load requirements of ComEd and PECO. Power Team markets any remaining energy in the wholesale and spot markets. In the second quarter of 2002, Generation early adopted Emerging Issues Task Force (EITF) Issue 02-3 "Accounting for Contracts Involved in Energy Trading and Risk Management Activities...

  • Page 45
    ... Principles Net Income The changes in Generation's revenue, net of purchased power and fuel expense, for 2002 compared to 2001, included the following: - lower margins on market sales attributable to lower average market energy prices, - increased net trading portfolio losses of $36 million due...

  • Page 46
    ... 2002. Generation's average revenue was affected by: - increased weighted average on and off peak prices per MWh for supply agreements with ComEd, - higher contracted prices from Exelon Energy, impacted by lower actual volumes to those customers, and - lower market prices. The lower nuclear capacity...

  • Page 47
    ... of Financial Condition and Results of Operations exelon corporation and subsidiary companies The changes in Enterprises' operating income (loss) for 2002 compared to 2001, included the following: - lower revenues of $65 million from Exelon Services as a result of reduced construction projects...

  • Page 48
    ... and intercompany transactions. Income (Loss) Before the Cumulative Effect of Changes in Accounting Principles by Business Segment 2001 2000 Variance Components of Variance Merger Normal Variance Operations Energy Delivery Generation Enterprises Corporate Total $ $ 1,022 512 (85) (33...

  • Page 49
    ...the distribution of the energy. PECO's tariffed rates also include a CTC. See Note 6 of the Notes to Consolidated Financial Statements for a discussion of CTCs. (3) Unbundled service reflects customers electing to receive electric generation service from an alternative energy supplier or ComEd's PPO...

  • Page 50
    ... the cost of energy and the delivery cost of the transmission and the distribution of the energy. PECO's tariffed rates also include a CTC charge. (3) Unbundled revenue reflects revenue from customers electing to receive electric generation service from an alternative energy supplier or ComEd's PPO...

  • Page 51
    ... to May 2001 to support the open access program in Illinois, partially offset by increased transmission service revenue and the reversal of a $15 million reserve for revenue refunds to ComEd's municipal customers as a result of a favorable FERC ruling. Energy Delivery's gas sales statistics were as...

  • Page 52
    Management's Discussion and Analysis of Financial Condition and Results of Operations exelon corporation and subsidiary companies The changes in Generation's revenue, net of purchased power and fuel expense, for 2001 compared to 2000, included the following: - increases in wholesale market prices ...

  • Page 53
    ...electricity and gas to a stable and diverse base of retail customers and are weighted toward the third quarter. Energy Delivery's future cash flows will depend upon the ability to achieve operating cost reductions and the impact of the economy, weather and customer choice on its revenues. Generation...

  • Page 54
    .... The credit facility is used principally to support the commercial paper programs of Exelon Corporate, ComEd, PECO and Generation. At December 31, 2002, our Consolidated Balance Sheet reflects the $948 million of commercial paper outstanding, of which $267 million was classified as long-term debt...

  • Page 55
    ... value basis. The following table shows our securities ratings at December 31, 2002: Securities Moody's Investors Service Standard & Poors Corporation Fitch Investors Service, Inc. Exelon ComEd PECO Generation Senior unsecured debt Commercial paper Senior secured debt Commercial paper Senior...

  • Page 56
    ...-2007 and beyond Long-Term Debt Notes Payable Short-Term Note to Sithe Operating Leases Purchase Obligations Spent Nuclear Fuel Obligation Obligation to Minority Shareholders Total Contractual Obligations For additional information about: - long-term debt see Note 13 of the Notes to Consolidated...

  • Page 57
    ... a long-term supply agreement through December 2022 with Distrigas to guarantee physical gas supply to our New England generating units. Under the agreement, prices are indexed to New England gas markets. Generation has an obligation to decommission its nuclear power plants. Our current estimate of...

  • Page 58
    ... grade by Standard and Poor's Rating Group or Moody's Investors Service, Inc., a stock purchase agreement between Exelon and Apollo being executed and subsequently terminated, or the occurrence of any event of default, other than a change of control, under certain Exelon or Apollo credit agreements...

  • Page 59
    ... actual issuance and changes in the fair value of outstanding debt which we are planning to retire early, - enter into derivatives to manage the physical and financial risks associated with our energy supply and load obligations, and - enter into energy related derivatives for trading or speculative...

  • Page 60
    ... contracts related to fixed rate debt in order to maintain our targeted percentage of variable rate debt. The fair value of derivatives generally reflects the estimated amounts that we would receive or pay to terminate the contracts at the balance sheet date, thereby taking into account the current...

  • Page 61
    ... Energy Delivery's operating subsidiaries, ComEd and PECO, are regulated by their respective state regulatory commissions as well as by FERC. The regulators in Illinois and Pennsylvania, as well as FERC, use cost-based rate structures to determine the rates we will charge customers. In establishing...

  • Page 62
    ... the site for disposal at a licensed facility and for certain stations, the restoration of the station sites to a natural state. We estimate that, once started, decommissioning of a site can generally be completed in 10 years. Based on the projected extended license lives of our nuclear plants, we...

  • Page 63
    ... 2002 compared to December 31, 2001. We believe that the amounts that ComEd and PECO are recovering from customers through electric rates, along with the earnings on the trust funds, will be sufficient to fund our decommissioning obligations. Cost estimates for decommissioning our nuclear facilities...

  • Page 64
    ... impact of adopting SFAS No. 143 on our financial condition. Based on the current information and the credit-adjusted risk-free rate, we estimate the increase in 2003 non-cash expense to impact earnings before the cumulative effect of a change in accounting principle for the adoption of SFAS No. 143...

  • Page 65
    ... a risk-adjusted discount rate and long-term earnings multiples of comparable companies. In addition to the above-noted assumptions, ComEd's model included varying assumptions regarding: - The timing of future rate case filings to establish new rates for bundled service after the then scheduled 2004...

  • Page 66
    ... in 2007 through 2009 in the different scenarios for ComEd based on the June 2002 extension of the rate freeze. Modifications to any of the assumptions discussed above, particularly changes in discount rates, long-term earnings multiples of comparable companies used to determine terminal values, and...

  • Page 67
    ... which may increase future funding to the pension plan. Stock-Based Compensation Plans We maintain a Long-Term Incentive Plan (LTIP) for certain full-time salaried employees and previously maintained a broad-based incentive program for certain other employees. The types of long-term incentive awards...

  • Page 68
    ... unbilled revenue is estimated each month based on daily customer demand measured by generation volume, estimated customer usage by class, estimated losses of energy during delivery to customers (line loss) and applicable customer rates. Customer accounts receivable as of December 31, 2002 include...

  • Page 69
    ...overall energy marketing activities. For example, the limit on open positions in electricity for any forward month represents less than 1% of our owned and contracted supply of electricity. The trading portfolio is subject to stringent risk management limits and policies, including volume, stop-loss...

  • Page 70
    ... trading and marketing business and gross margin included in the income statement for the year ended December 31, 2002. Normal operations and hedging activities represent the marketing of electricity available from Generation's owned or contracted generation, including Energy Delivery's retail load...

  • Page 71
    Management's Discussion and Analysis of Financial Condition and Results of Operations exelon corporation and subsidiary companies The following table provides detail on changes in Generation's mark-to-market net asset or liability balance sheet position from January 1, 2002 to December 31, 2002. It...

  • Page 72
    ... the Committee of Chief Risk Officers, the average tenor of the proprietary trading portfolio measures the average time to collect value for that portfolio.We measure the tenor by separating positive and negative mark-to-market values in its proprietary trading portfolio, estimating the mid-point in...

  • Page 73
    ... retail electric revenues. We record a provision for uncollectible accounts, based upon historical experience and third-party studies, to provide for the potential loss from nonpayment by these customers. Generation has credit risk associated with counterparty performance on energy contracts which...

  • Page 74
    ...has an energy-only long-term tolling agreement with Dynegy, with a related financial swap arrangement. As of December 31, 2002, Sithe had recognized an asset on its balance sheet related to the fair market value of the financial swap agreement with Dynegy that is marked-to-market under the terms of...

  • Page 75
    ... taxes. Additionally, the future economic value of AmerGen's purchased power arrangement with Illinois Power Company, a subsidiary of Dynegy, could be impacted by events related to Dynegy's financial condition. Generation participates in the following established, realtime energy markets, which...

  • Page 76
    ... Accounting Estimates section for information regarding the pension and other postretirement benefit trust assets. new accounting pronouncements In 2001, the FASB issued SFAS No. 143. SFAS No. 143 provides accounting requirements for retirement obligations associated with tangible long-lived...

  • Page 77
    ... Currently, Generation records the obligation for decommissioning ratably over the lives of the plants. Based on the current information and the credit-adjusted risk-free rate, we estimate the increase in 2003 non-cash expense to impact earnings before the cumulative effect of a change in accounting...

  • Page 78
    ... consolidated balance sheets and the related consolidated statements of income, cash flows and changes in shareholders' equity and comprehensive income present fairly, in all material respects, the financial position of Exelon Corporation and Subsidiary Companies (Exelon) at December 31, 2002...

  • Page 79
    ... Statements of Income exelon corporation and subsidiary companies in millions, except per share data 2002 For the Years Ended December 31, 2001 2000 Operating Revenues Operating Expenses Purchased Power Purchased Power from Unconsolidated Affiliate Fuel Operating and Maintenance Merger-Related...

  • Page 80
    ... Taxes Merger-Related Costs Employee Severance Costs Deferred Energy Costs Equity in (Earnings) Losses of Unconsolidated Affiliates, net Write-down of Investments Net Realized Losses on Nuclear Decommissioning Trust Funds Other Operating Activities Changes in Working Capital: Accounts Receivable...

  • Page 81
    ...Year Accounts Payable Accrued Expenses Other Total Current Liabilities Long-Term Debt Deferred Credits and Other Liabilities Deferred Income Taxes Unamortized Investment Tax Credits Nuclear Decommissioning Liability for Retired Plants Pension Obligation Non-Pension Postretirement Benefits Obligation...

  • Page 82
    ... income taxes of $(7) Balance, December 31, 2001 Net Income Long-Term Incentive Plan Activity Employee Stock Purchase Plan Issuances Amortization of Deferred Compensation Common Stock Dividends Declared Other Comprehensive Income (Loss), net of income taxes of $(850) Balance, December 31, 2002 225...

  • Page 83
    ... accounting for derivatives, nuclear decommissioning liabilities, asset impairment analyses, environmental costs and pension costs. Revenues Operating revenues are generally recorded as service is rendered or energy is delivered to customers. At the end of each month, Exelon accrues an estimate for...

  • Page 84
    ...To Consolidated Financial Statements exelon corporation and subsidiary companies (see Note 8-Accounts Receivable). Exelon recognizes contract revenues and profits on certain long-term fixed-price contracts from its services businesses under the percentage-of-completion method of accounting based on...

  • Page 85
    ... of New Accounting Pronouncements and Accounting Changes for information on service life extensions for certain nuclear generating stations and Energy Delivery's change in depreciation rates. Asset Category 2002 2001 2000 Electric-Transmission and Distribution Electric-Generation Gas Common-Gas and...

  • Page 86
    ... accounts plus the financial activity reflected in Nuclear Decommissioning Trust Funds in Exelon's Consolidated Balance Sheets will, over time, establish a corresponding liability in accumulated depreciation reflecting the cost to decommission the nuclear generating stations previously owned by PECO...

  • Page 87
    ... Currently, Generation records the obligation for decommissioning ratably over the lives of the plants. Based on the current information and the credit-adjusted risk-free rate, we estimate the increase in 2003 non-cash expense to impact earnings before the cumulative effect of a change in accounting...

  • Page 88
    ... To Consolidated Financial Statements exelon corporation and subsidiary companies assumptions and interpretation at the time of adopting the standard, including the determination of the credit-adjusted risk-free rate. Under SFAS No. 143, the fair value of the nuclear decommissioning obligation will...

  • Page 89
    ... As of December 31, 2002, a liability of $4 million is reflected on Exelon's consolidated balance sheet for payment of these benefits, of which $1 million is reflected on PECO's balance sheet and $1 million is reflected on Generation's balance sheet. A total of 960 PECO positions were expected to be...

  • Page 90
    ... To Consolidated Financial Statements exelon corporation and subsidiary companies Original Estimate 2001 Adjustments 2002 Adjusted Liabilities Employee severance payments Other benefits Employee severance payments and other benefits Actuarially determined pension and postretirement costs Total...

  • Page 91
    ... months of May through September from 2002 through 2006. During the periods covered by the purchased power agreement, TXU will make fixed capacity payments, variable expense payments, and will provide fuel to Exelon in return for exclusive rights to the energy and capacity of the generation plants...

  • Page 92
    ... of 2002. The changes in the carrying amount of goodwill by reportable segment (see Note 20-Segment Information) for the year ended December 31, 2002 are as follows: Energy Delivery Enterprises Total the resolution of future rate proceedings for ComEd; and customer base and construction back logs...

  • Page 93
    ... 1, 2002, ComEd decreased its depreciation rates based on a new depreciation study reflecting its significant construction program in recent years, changes in and development of new technologies, and changes in estimated plant service lives since the last depreciation study. The annualized reduction...

  • Page 94
    ... power purchase option. Customers who receive energy from an alternative supplier continue to pay a delivery charge. ComEd is unable to predict the long-term impact of customer choice on results of operations. note 05 • regulatory issues ComEd Delivery Service Rates. On June 1, 2001, ComEd filed...

  • Page 95
    ...December 2002, the PUC approved the inclusion of the RNR factor in PECO's base rates eliminating the need for an annual filing to obtain approval for recovery. Customer Choice. The PUC's Final Electric Restructuring Order provided for the phase-in of customer choice of electric generation suppliers...

  • Page 96
    ...To Consolidated Financial Statements exelon corporation and subsidiary companies Rate Reductions and Caps. Under the Final Restructuring Order, retail electric rates were capped at year-end 1996 levels (systemwide average of 9.96 cents/kilowatt hour (kWh)) through June 2005. The Final Restructuring...

  • Page 97
    ...with the securitization of PECO's stranded cost recovery. These charges are being amortized through December 31, 2010 with a return on the unamortized balance of 10.75%. - Nuclear decommissioning costs for retired plants-recovery is provided through ComEd's current regulated rates and is expected to...

  • Page 98
    ...and 2001 is as follows: Asset Category 2002 2001 Electric-Transmission and Distribution Electric-Generation Gas Common Nuclear Fuel Construction Work in Progress Other Property, Plant and Equipment Total Property, Plant and Equipment Less Accumulated Depreciation (including accumulated amortization...

  • Page 99
    ...Financial Statements exelon corporation and subsidiary companies note 11 • nuclear decommissioning and spent fuel storage Exelon has an obligation to decommission its nuclear power plants. Exelon's current estimate of its nuclear facilities' decommissioning cost for its owned nuclear power plants...

  • Page 100
    ... 2000, eight utilities with nuclear power plants filed a Joint Petition for Review against the DOE with the United States Court of Appeals for the Eleventh Circuit seeking to invalidate that portion of the agreement providing for credits to PECO against nuclear waste fund payments on the ground that...

  • Page 101
    ...First and Refunding Mortgage Bonds(b) (c): Fixed rates Floating rates Notes payable and other SBG Facility Pollution control notes: Fixed rates Floating rates Notes payable-accounts receivable agreement Sinking fund debentures Commercial Paper(e) Total Long-Term Debt(g) Unamortized debt discount and...

  • Page 102
    Notes To Consolidated Financial Statements exelon corporation and subsidiary companies In 2002, ComEd issued $700 million of long-term debt primarily consisting of the issuance of $600 million of 6.15% First Mortgage Bonds, Series 98, due March 15, 2012 and the issuance of $100 million of Illinois ...

  • Page 103
    ... 31, 2002, a deferred tax liability of approximately $860 million related to the fossil plant sale is reflected in Deferred Income Taxes on Exelon's Consolidated Balance Sheets. ComEd's management believes an adequate reserve for interest has been established in the event that such positions are not...

  • Page 104
    ... Unicom and PECO pension plans on December 31, 2000, and remained employed by Exelon on January 1, 2002 elected to transfer to the cash balance plan. Benefits under Exelon's pension plans generally reflect each employee's compensation, years of service and age at retirement. Funding is based upon...

  • Page 105
    ...Consolidated Financial Statements exelon corporation and subsidiary companies 2002 2001 Pension Benefits 2000 2002 Other Postretirement Benefits 2001 2000 Weighted-average assumptions as of December 31, Discount rate Expected return on plan assets Rate of compensation increase Health care cost...

  • Page 106
    ...To Consolidated Financial Statements exelon corporation and subsidiary companies enhancement benefits of $96 million and ComEd's accelerated liability increase of $121 million inclusive of $96 million for separation benefits and $25 million for plan enhancements. Exelon provides certain health care...

  • Page 107
    ...agreement, PECO received $1 million in accumulated dividends on the repurchased shares and paid $6 million of interest. Stock-Based Compensation Plans Exelon maintains a Long-Term Incentive Plan (LTIP) for certain full-time salaried employees and previously maintained a broad-based incentive program...

  • Page 108
    Notes To Consolidated Financial Statements exelon corporation and subsidiary companies Shares 2002 Weighted Average Exercise Price (per share) 2002 Shares 2001 Weighted Average Exercise Price (per share) 2001 Shares 2000 Weighted Average Exercise Price (per share) 2000 Balance at January 1 ...

  • Page 109
    ... in fair market value in any plan year. Employees purchased 257,455 and 137,648 shares of Exelon common stock under the ESPP in 2002 and 2001, respectively. Fund Transfer Restrictions Under PUHCA Under PUHCA, Exelon is precluded from borrowing or receiving any extension of credit or indemnity from...

  • Page 110
    ... the trust accounts for decommissioning nuclear plants, long-term debt and preferred securities of subsidiaries are estimated based on quoted market prices for the same or similar issues. The fair value of Exelon's interest rate swaps and power purchase and sale contracts is determined using quoted...

  • Page 111
    ...sale contracts are reported in fuel and purchased power and markto-market adjustments on trading activities are reported as Operating Revenues in the Consolidated Statements of Income. During 2002 and 2001, Generation recognized net losses aggregating $9 million ($6 million, net of income taxes) and...

  • Page 112
    ... nuclear plants as available-for-sale. The following tables show the fair values, gross unrealized gains and losses and amortized costs bases for the securities held in these trust accounts. Amortized Cost Gross Unrealized Gains December 31, 2002 Gross Unrealized Estimated Losses Fair Value...

  • Page 113
    .... This assessment is subject to inflation and state premium taxes. In addition, the U.S. Congress could impose revenue-raising measures on the nuclear industry to pay claims. The Price-Anderson Act expired on August 1, 2002 but existing facilities, including those owned and operated by Generation...

  • Page 114
    ... of Massachusetts, LLC to guarantee physical gas supply to its New England generating units. Under the agreement, prices are indexed to New England gas markets. At December 31, 2002, Exelon had long-term commitments, relating to the purchase and sale of energy, capacity and transmission rights from...

  • Page 115
    ...2008 2006-2007 and beyond Total 2003 2004-2005 Credit Facility(a) Letters of Credit (non-debt)(b) Letters of Credit (Long-Term Debt)(c) Insured Long-Term Debt(d) Guarantees of Letters of Credit(e) Performance Guarantees(f) Surety Bonds(g) Energy Marketing Contract Guarantees(h) Nuclear Insurance...

  • Page 116
    ...Financial Statements exelon corporation and subsidiary companies Service, Inc., a stock purchase agreement between Exelon and Apollo being executed and subsequently terminated, or the occurence of any event of default, other than a change of control, under certain Exelon or Apollo credit agreements...

  • Page 117
    ...Consolidated Financial Statements exelon corporation and subsidiary companies Litigation Securities Litigation. Between May 8 and June 14, 2002, several class action lawsuits were filed in the Federal District Court in Chicago asserting nearly identical securities law claims on behalf of purchasers...

  • Page 118
    ... station, a 1,040-MW gas-fired qualified facility that has an energy-only long-term tolling agreement with Dynegy, with a related financial swap arrangement. As of December 31, 2002, Sithe had recognized an asset on its balance sheet related to the fair market value of the financial swap agreement...

  • Page 119
    ... Financial Statements exelon corporation and subsidiary companies note 20 • segment information Exelon evaluates the performance of its business segments based on Net Income. Energy Delivery consists of the retail electricity distribution and transmission businesses of ComEd in northern Illinois...

  • Page 120
    ..., Generation agreed to purchase from AmerGen all of the residual energy from Clinton Nuclear Power Station (Clinton) through December 31, 2002. Currently, the residual output is approximately 31% of the total output of Clinton. In accordance with the terms of the AmerGen partnership agreement, the...

  • Page 121
    Notes To Consolidated Financial Statements exelon corporation and subsidiary companies note 22 • quarterly data (unaudited) The data shown below include all reclassifications, including those required upon the adoption of EITF 02-3, which Exelon considers necessary for a fair presentation of such...

  • Page 122
    ... years and be relieved of a requirement, originally transferred to Midwest Generation upon the sale of ComEd's fossil stations in 1999, to build a 500-MW generation facility. Under the terms of the Midwest Agreement, ComEd will receive from Midwest Generation $36 million over ten years, $22 million...

  • Page 123
    ... stock as of December 31, 2002. The 2002 Form 10-K Annual Report to the Securities and Exchange Commission will be available in April. To obtain a copy without charge, write to Katherine K. Combs, Vice President and Corporate Secretary, Exelon Corporation, Post Office Box 805398, Chicago, Illinois...

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    Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 www.exeloncorp.com