ComEd 2002 Annual Report Download - page 100

DOE one mill ($.001) per kilowatt-hour of net nuclear genera-
tion for the cost of nuclear fuel long-term storage and disposal.
This fee may be adjusted prospectively in order to ensure full
cost recovery.The NWPA and the Standard Contractrequired the
DOE to begin taking possession of SNF generated by nuclear
generating units by no later than January 31, 1998. The DOE,
however, failed to meet that deadline and its performance will
be delayed significantly.The DOE’s current estimate for opening
a SNF facility is 2010.This extended delay in SNF acceptance by
the DOE has led to Exelon’s adoption of dry storage at its Dresden,
Quad Cities and Peach Bottom Units and its consideration of dry
storage at other units.
In July 1998, ComEd filed a complaint against the United
States Government (Government) in the United States Court of
Federal Claims (Court) seeking to recover damages caused by
the DOE’s failure to honor its contractual obligation to begin
disposing of SNF in January 1998. In August 2001, the Court
granted ComEd’s motion for partial summary judgment for
liability on ComEd’s breach of contract claim.In November 2001,
the Government filed two partial summary judgment motions
relating to certain damage issues in the case as well as two
motions to dismiss claims other than ComEd’s breach of con-
tract claim. On August 30, 2002, after taking certain damages
related to discovery, ComEd filed briefs in response to the DOE’s
motions. The Court has postponed the time for the DOE to file
reply briefs while it entertains additional DOE discovery
motions. This litigation was assumed by Generation in the
corporate restructuring.
In July 2000, PECO entered into an agreement with the DOE
relating to PECO’s Peach Bottom nuclear generating unit to
address the DOE’s failure to begin removal of SNF in January
1998 as required by the Standard Contract. Under that agree-
ment, the DOE agreed to provide PECO with credits against
PECO’s future contributions to the Nuclear Waste Fund over the
next ten years to compensate PECO for SNF storage costs
incurred as a result of the DOE’s breach of the contract. The
agreement also provides that, upon PECO’s request, the DOE
will take title to the SNF and the interim storage facility at
Peach Bottom provided certain conditions are met. Generation
assumed this contract in restructuring.
In November 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 inval-
idate that portion of the agreement providing for credits to
PECO against nuclear waste fund payments on the ground that
such provision is a violation of the NWPA. PECO intervened as a
defendant in that case, and Generation assumed the claim in
the 2001 corporate restructuring. On September 24, 2002, the
United States Court of Appeals for the Eleventh Circuit ruled
that the fee adjustment provision of the agreement violates the
NWPA and therefore is null and void.The Court did not hold that
the agreement as a whole is invalid. Article XVI(I) of the
Amendment provides that if any portion of the Amendment is
found to be void, the DOE and Generation agree to negotiate in
good faith and attempt to reach an enforceable agreement con-
sistent with the spirit and purpose of this Amendment. That
provision further provides that should a major term be declared
void, and the DOE and Generation cannot reach a subsequent
agreement,the entire Amendment would be rendered null and
void,the original Peach Bottom Standard Contract would remain
in effect and the parties would return to pre-Amendment sta-
tus. Pursuant to Article XIV(I), Generation has begun negotia-
tions with the DOE and those negotiations are ongoing. Under
the agreement,Generation has received approximately $40 mil-
lion in credits against contributions to the nuclear waste fund.
In April 2001, an individual filed suit against the DOE
with the United States District Court for the Middle District
of Pennsylvania seeking to invalidate the agreement on the
grounds that the DOE has violated the National Environmental
Policy Act and the Administrative Procedure Act. PECO inter-
vened as a defendant and moved to dismiss the complaint.
Generation assumed the defense in restructuring. On
September 30, 2002, the Court granted Generation’s motion
and dismissed the lawsuit on the ground that the Court did
not have jurisdiction over the matter.
The Standard Contract with the DOE also requires that PECO
and ComEd pay the DOE a one-time fee applicable to nuclear
generation through April 6, 1983. PECO’s fee has been paid.
Pursuant to the Standard Contract, ComEd elected to pay the
one-time fee of $277 million, with interest to the date of pay-
ment, just prior to the first delivery of SNF to the DOE. As of
December 31, 2002, the unfunded liability for the one-time fee
with interest was $858 million. The liabilities for spent nuclear
fuel disposal costs, including the one-time fee,were transferred
to Generation as part of the corporate restructuring.
note 12 • notes payable
2002 2001 2000
Average borrowings $337 $ 193 $ 186
Average interest rates,
computed on daily basis 1.94% 4.01% 6.62%
Maximum borrowings
outstanding $783 $599 $500
Average interest rates,
at December 31 1.88% 2.63% 7.18%
Exelon, ComEd, PECO and Generation entered into a $1.5 billion
unsecured revolving credit facility on November 22,2002 with a
group of banks. Under the credit facility, each borrower may
borrow up to a designated sublimit amount on a revolving credit
Notes To Consolidated Financial Statements
exelon corporation and subsidiary companies
98