ComEd 2003 Annual Report Download - page 26

24 Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXELON CORPORATION AND SUBSIDIARY COMPANIES
(Dollars in millions, unless otherwise noted)
GENERAL BUSINESS
Exelon Corporation (Exelon) is a registered public utility hold-
ing company that, through its subsidiaries, operates in three
business segments—Energy Delivery, Generation and Enter-
prises—as described below. See Note 21 of the Notes to Con-
solidated Financial Statements for further segment
information. In addition to our three business segments,
Exelon Business Services Company (BSC) provides Exelon and
its subsidiaries with financial, human resource, legal, in-
formation technology, supply management and corporate
governance services.
Energy Delivery
Our energy delivery business consists of the regulated sale of
electricity and distribution and transmission services by
Commonwealth Edison Company (ComEd) in northern Illi-
nois and by PECO Energy Company (PECO) in southeastern
Pennsylvania and the regulated sale of natural gas and dis-
tribution services by PECO in the Pennsylvania counties sur-
rounding the City of Philadelphia.
ComEd. 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 regulated by the
Illinois Commerce Commission (ICC) as to rates, the issuance
of securities and certain other aspects of ComEd’s oper-
ations. ComEd is also subject to regulation by the Federal
Energy Regulatory Commission (FERC) as to transmission
rates and certain other aspects of its business.
ComEd’s retail service territory has an area of approx-
imately 11,300 square miles and an estimated population of
eight million. The service territory includes the City of
Chicago (Chicago), an area of about 225 square miles with an
estimated population of three million. ComEd has approx-
imately 3.6 million customers.
PECO. PECO is engaged principally in the purchase, trans-
mission, distribution and sale of electricity and in the pur-
chase, distribution and sale of natural gas to residential,
commercial and industrial customers. PECO is regulated by
the Pennsylvania Public Utility Commission (PUC) as to elec-
tric and gas rates, the issuances of securities and certain
other aspects of PECO’s operations. PECO is also subject to
regulation by the FERC as to transmission rates, gas pipelines
and certain other aspects of its business.
PECO’s retail service territory covers approximately 2,100
square miles in southeastern Pennsylvania. PECO provides
electric delivery service in an area of approximately 2,000
square miles, with a population of approximately 3.9 million,
including 1.5 million in the City of Philadelphia. Natural gas
service is supplied in an approximate 1,900 square mile area
in southeastern Pennsylvania adjacent to Philadelphia, with
a population of approximately 2.4 million. PECO delivers
electricity to approximately 1.5 million customers and natu-
ral gas to approximately 460,000 customers.
Generation
Our generation business consists of the owned and con-
tracted for electric generating facilities and energy market-
ing operations of Exelon Generation Company, LLC
(Generation) and a 50% interest in Sithe Energies Inc. (Sithe)
and, effective January 1, 2004, the competitive retail sales
business of Exelon Energy Company.
Generation is one of the largest competitive electric gen-
eration companies in the United States, as measured by
owned and controlled megawatts (MWs). Generation com-
bines its large generation fleet with an experienced whole-
sale power marketing operation. Generation owns
generation assets in the Northeast, Mid-Atlantic, Midwest
and Texas regions with a net capacity of 28,492 MWs, includ-
ing 16,959 MWs of nuclear capacity, and controls another
12,703 MWs of capacity in the Midwest, Southeast and South
Central regions through long-term contracts. Generation’s
ownership interests include 3,145 MWs of capacity owned by
Boston Generating, LLC (Boston Generating), a project sub-
sidiary of Exelon New England, formerly known as Exelon
Boston Generating, LLC. In July 2003, Generation commenced
the process of an orderly transition out of the ownership of
Boston Generating. This transition is anticipated to occur
in 2004.
In addition to its owned generating facilities, Generation
owns a 50% interest in Sithe with another entity, with put
and call options that could result in either party owning all
of Sithe outright. While Exelon’s intent is to fully divest Sithe,
the timing of the put and call options vary by acquirer and
can extend through March 2006. The pricing of the put and
call options is dependent on numerous factors, such as the
acquirer, date of acquisition and assets owned by Sithe at
the time of exercise (see further discussion of Sithe in Con-
tractual Obligations and Off-Balance Sheet Arrangements
section below and in Note 3 of the Notes to Consolidated
Financial Statements). Sithe develops, owns and operates 12
generation stations consisting of 15 units in North America.
Currently, Sithe has a total generating capacity of 1,097 MWs
in operation and 228 MWs under construction.
Generation’s wholesale marketing unit, Power Team, a
major wholesale marketer of energy, uses Generation’s en-
ergy generation portfolio, transmission rights and expertise
to ensure delivery of energy to Generation’s wholesale cus-
tomers under long-term and short-term contracts, including
the energy, or “load,” requirements of ComEd and PECO.