ComEd 2006 Annual Report Download - page 184

Exelon Corporation and Subsidiary Companies
Exelon Generation Company, LLC and Subsidiary Companies
Commonwealth Edison Company and Subsidiary Companies
PECO Energy Company and Subsidiary Companies
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
1. Significant Accounting Policies
Description of Business (Exelon, Generation, ComEd and PECO)
Exelon Corporation (Exelon) is a utility services holding company engaged, through its
subsidiaries, in the generation, energy delivery and other businesses discussed below. The generation
business consists of the electric generating facilities, the wholesale energy marketing operations and
competitive retail sales operations of Exelon Generation Company, LLC (Generation). The energy
delivery businesses include the purchase and regulated retail and wholesale sale of electricity and the
provision of distribution and transmission services by Commonwealth Edison Company (ComEd) in
northern Illinois, including the City of Chicago, and by PECO Energy Company (PECO) in southeastern
Pennsylvania, including the City of Philadelphia, and the purchase and regulated retail sale of natural
gas and the provision of distribution services by PECO in the Pennsylvania counties surrounding the
City of Philadelphia. Exelon sold or wound down substantially all components of Exelon Enterprises
Company, LLC (Enterprises) in 2004 and 2003. As a result, as of January 1, 2005, Enterprises is no
longer reported as a segment. See Note 2—Acquisitions and Dispositions for information regarding the
disposition of businesses within the Enterprises segment and Note 20—Segment Information for
information regarding Exelon’s operating segments.
Basis of Presentation (Exelon, Generation, ComEd and PECO)
Exelon’s consolidated financial statements include the accounts of entities in which Exelon has a
controlling financial interest, other than certain financing trusts of ComEd and PECO described below,
and Generation’s and PECO’s proportionate interests in jointly owned electric utility property, after the
elimination of intercompany transactions. A controlling financial interest is evidenced by either a voting
interest greater than 50% or a risk and rewards model that identifies Exelon or one of its subsidiaries
as the primary beneficiary of the variable interest entity. Investments and joint ventures in which Exelon
does not have a controlling financial interest and certain financing trusts of ComEd and PECO are
accounted for under the equity or cost methods of accounting.
Exelon owns 100% of all significant consolidated subsidiaries, either directly or indirectly, except
for ComEd, of which Exelon owns more than 99%; PECO, of which Exelon owns 100% of the common
stock but none of PECO’s preferred stock; and Southeast Chicago Energy Project, LLC (SCEP), of
which Exelon and Generation owned 72% through the second quarter of 2006 when they purchased
the remaining interest in SCEP. Exelon has reflected the third-party interests in the above majority-
owned investments as minority interests in its consolidated financial statements.
Generation’s consolidated financial statements include the accounts of its subsidiaries, including
AmerGen Energy Company, LLC, and Exelon Energy Company, LLC. All intercompany transactions
have been eliminated.
ComEd’s consolidated financial statements include the accounts of ComEd and Commonwealth
Edison Company of Indiana, Inc. Edison Development Canada Inc. (EDCAN) and Edison Finance
Partnership (EFP) were consolidated prior to their accounting liquidation in 2005 and are pending legal
dissolution, which is expected in 2007. All intercompany transactions have been eliminated.
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