ComEd 2006 Annual Report Download - page 10

on January 16, 2007. However, PSEG Nuclear has exercised its right to require Generation to continue
services under the OSC for an additional two-year termination transition period. Under the OSC, PSEG
Nuclear has a right to extend the termination transition period for an additional year and PSEG Nuclear
has reserved its right to do so.
In 2006 and 2005, electric supply generated from the nuclear generating facilities was 73% and
71%, respectively, of Generation’s total electric supply which also includes MWs purchased for resale
and fossil and hydroelectric generation. During 2006 and 2005, the nuclear generating facilities
operated by Generation achieved a 93.9% and 93.5% capacity factor, respectively.
Regulation of Nuclear Power Generation. Generation is subject to the jurisdiction of the NRC
with respect to the operation of its nuclear generating stations, including the licensing of operation of
each station. The NRC subjects nuclear generating stations to continuing review and regulation
covering, among other things, operations, maintenance, emergency planning, security and
environmental and radiological aspects of those stations. The NRC may modify, suspend or revoke
operating licenses and impose civil penalties for failure to comply with the Atomic Energy Act, the
regulations under such Act or the terms of the licenses. Changes in regulations by the NRC may
require a substantial increase in capital expenditures for nuclear generating facilities and/or increased
operating costs of nuclear generating units.
NRC reactor oversight results, as of December 31, 2006, indicate that the performance indicators
for the nuclear plants operated by Generation are all in the highest performance band, with the
exception of one indicator for Dresden Unit 2, and one indicator for Byron Unit 2, both of which are still
considered to be in an acceptable performance band within that indicator by the NRC.
Licenses.Generation has 40-year operating licenses from the NRC for each of its nuclear units
and has received 20-year operating license renewals for Peach Bottom Units 2 and 3, Dresden Units 2
and 3, and Quad Cities Units 1 and 2. In December 2004, the NRC issued an order that will permit
Oyster Creek to operate beyond its license expiration in April 2009 if the NRC has not completed
reviewing Generation’s application for renewal. The application for Oyster Creek’s license renewal was
filed July 22, 2005, in compliance with this order. Generation expects to apply for and obtain approval
of license renewals for the remaining facilities. The operating license renewal process takes
approximately four to five years from the commencement of the project until completion of the NRC’s
review. The NRC review process takes approximately two years from the docketing of an application.
Each requested license renewal is expected to be for 20 years beyond the current license expiration.
Depreciation provisions are based on the estimated useful lives of the stations, which assume the
renewal of the operating licenses for all of Generation’s operating nuclear generating stations. In the
first quarter of 2005, Generation applied the same depreciation estimated useful life assumption to its
ownership share in the Salem Generating Station.
In 2004, Generation joined NuStart Energy Development, LLC (NuStart), a consortium of eleven
companies that was formed for the purpose of seeking a license to build a new nuclear facility under
the NRC’s new permitting process. As of December 31, 2006, Generation’s investment in NuStart was
$1 million.
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