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42 Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXELON CORPORATION AND SUBSIDIARY COMPANIES
tion of SFAS No. 143 (see Note 13 of the Notes to Consolidated
Financial Statements). Decommissioning collections, which
are remitted to Generation, were previously recorded as
amortization expense and are recorded as purchased power
expense in 2003.
Other. Energy Delivery’s purchased power decreased due to
additional energy billed in 2002 under the purchased power
agreement (PPA) with Generation discussed in other operat-
ing revenues above.
Operating and Maintenance Expense. The changes in operat-
ing and maintenance expense for 2003 compared to 2002
consisted of the following:
Energy Delivery Variance
Severance, pension and postretirement benefit costs
associated with The Exelon Way $167
Charge recorded at ComEd in 2003 associated with a
regulatory settlement (a) 41
Increased storm costs 36
Increased employee fringe benefits primarily due to
increased health care costs 23
Decreased payroll expense due to fewer employees (93)
Decreased costs associated with the initial implementation
of automated meter reading services at PECO in 2002 (13)
Other 22
Increase in operating and maintenance expense $183
(a) For more information regarding the settlement, see Note 4 of the Notes to Con-
solidated Financial Statements.
Depreciation and Amortization Expense. The reduction in
depreciation and amortization expense was primarily due to
a change in the accounting for nuclear decommissioning at
ComEd, lower amortization of ComEd’s recoverable tran-
sition costs of $58 million and a $48 million reduction due to
changes in ComEd’s depreciation rates in 2002, partially off-
set by increased depreciation of $30 million due to capital
additions across Energy Delivery and increased competitive
transition charge amortization of $28 million at PECO.
Taxes Other Than Income. The reduction in taxes other than
income was primarily due to a reversal of real estate tax ac-
cruals recorded by PECO of $58 million during the third quar-
ter of 2003 and a favorable settlement of coal use tax at
ComEd of $25 million. See Note 19 of the Notes to Con-
solidated Financial Statements for further information re-
garding the reversal of real estate tax accruals recorded by
PECO.
Interest Expense. The reduction in interest expense was pri-
marily due to refinancing existing debt at lower rates and
the pay down of transitional trust notes.