ComEd 2006 Annual Report Download - page 129

Interest rates on advances under the credit facilities are based on either prime or the London
Interbank Offered Rate (LIBOR) plus an adder based on the credit rating of the borrower as well as the
total outstanding amounts under the agreement at the time of borrowing. In the cases of Exelon,
Generation and PECO, the maximum LIBOR adder is 65 basis points; and in the case of ComEd, it is
200 basis points.
The average interest rates on commercial paper in 2006 for Exelon, Generation, ComEd and
PECO were approximately 5.02%, 4.99%, 5.06% and 4.97%, respectively.
Each credit agreement requires the affected borrower to maintain a minimum cash from operations
to interest expense ratio for the twelve-month period ended on the last day of any quarter. The ratios
exclude revenues and interest expenses attributable to securitization debt, certain changes in working
capital, distributions on preferred securities of subsidiaries and, in the case of Exelon and Generation,
revenues from Sithe and interest on the debt of its project subsidiaries. The following table summarizes
the minimum thresholds reflected in the credit agreements for the year ended December 31, 2006:
Exelon Generation ComEd PECO
Credit agreement threshold ......................... 2.50 to 1 3.00 to 1 2.25 to 1 2.00 to 1
At December 31, 2006, the Registrants were in compliance with the foregoing thresholds.
The ComEd credit agreement is secured by first mortgage bonds and imposes a restriction on
future mortgage bond issuances by ComEd. It requires ComEd to maintain at least $1.75 billion of
issuance availability (ignoring any interest coverage test) in the form of “property additions” or
“bondable bond retirements” (previously issued, but now retired, bonds), most of which are required to
be maintained in the form of “bondable bond retirements.” In general, a dollar of bonds can be issued
under ComEd’s Mortgage on the basis of $1.50 of property additions, subject to an interest coverage
test, or $1 of bondable bond retirements, which may or may not be subject to an interest coverage test.
As of December 31, 2006, ComEd was in compliance with this requirement.
Capital Structure. At December 31, 2006, the capital structures of the Registrants consisted of
the following:
Exelon
Consolidated Generation ComEd PECO (a)
Long-term debt .................................... 40% 25% 33% 25%
Long-term debt to affiliates (b) ......................... 16 — 9 43
Common equity .................................... 43 — 57 29
Member’s equity ................................... — 75 — —
Preferred securities ................................. — — — 1
Commercial paper and notes payable .................. 1 — 1 2
(a) As of December 31, 2006, PECO’s capital structure, excluding the deduction from shareholders’ equity of the $1.1 billion
receivable from Exelon (which amount is deducted for GAAP purposes as reflected in the table, but is excluded from the
percentages in this footnote), consisted of 40% common equity, 1% preferred securities, 2% notes payable and 57% long-
term debt, including long-term debt to unconsolidated affiliates.
(b) Includes $3.6 billion, $1.0 billion and $2.6 billion owed to unconsolidated affiliates of Exelon, ComEd and PECO,
respectively, that qualify as special purpose entities under FIN 46-R. These special purpose entities were created for the
sole purpose of issuing debt obligations to securitize intangible transition property and CTCs of ComEd and PECO or
mandatorily redeemable preferred securities. See Note 1 of the Combined Notes to Consolidated Financial Statements for
further information regarding FIN 46-R.
Intercompany Money Pool
To provide an additional short-term borrowing option that will generally be more favorable to the
borrowing participants than the cost of external financing, Exelon operates an intercompany money
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