ComEd 2006 Annual Report Download - page 138

Generation is self-insured to the extent that losses are within the policy deductible or exceed the
amount of insurance maintained. Such losses could have a material adverse effect on Exelon and
Generation’s financial condition and their results of operations and cash flows.
PECO Accounts Receivable Agreement
PECO is party to an agreement with a financial institution under which it can sell or finance with
limited recourse an undivided interest, adjusted daily, in up to $225 million of designated accounts
receivable through November 2010. At December 31, 2006, PECO had sold a $225 million interest in
accounts receivable, consisting of a $208 million interest in accounts receivable, which PECO
accounted for as a sale under SFAS No. 140, “Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities—a Replacement of FASB Statement No. 125,” (SFAS
No. 140), and a $17 million interest in special-agreement accounts receivable which was accounted for
as a long-term note payable. At December 31, 2005, PECO had sold a $225 million interest in
accounts receivable, consisting of a $195 million interest in accounts receivable, which PECO
accounted for as a sale under SFAS No. 140, and a $30 million interest in special-agreement accounts
receivable, which was accounted for as a long-term note payable. PECO retains the servicing
responsibility for these receivables. The agreement requires PECO to maintain the $225 million
interest, which, if not met, requires cash, which would otherwise be received by PECO under this
program, to be held in escrow until the requirement is met. At December 31, 2006 and 2005, PECO
met this requirement and was not required to make any cash deposits.
Beginning in 2007, this agreement will be subject to the provisions of SFAS No. 156, “Accounting
for Servicing of Financial Assets, amendment of FASB Statement No. 140,” which is not expected to
have a material impact to PECO.
New Accounting Pronouncements
See Note 1 of the Combined Notes to Consolidated Financial Statements for information regarding
new accounting pronouncements.
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