ComEd 2006 Annual Report Download - page 21

PECO’s gas sales are generally higher during the winter periods when cold temperatures create
demand for winter heating. PECO’s highest daily gas send out occurred on January 17, 2000 and was
718 million cubic feet (mmcf).
Retail Electric Services
Electric utility restructuring legislation was adopted in Pennsylvania in December 1996 and in Illinois
in December 1997. Both Illinois and Pennsylvania permit competition by competitive electric generation
suppliers for the supply of retail electricity while transmission and distribution service remains regulated.
The legislation and related regulatory orders in both states allowed customers to choose a competitive
electric generation supplier; required rate reductions and imposed freezes or caps on rates during a
transition period following the adoption of the legislation; and allowed the collection of competitive
transition charges (CTCs) from customers to recover a portion of the costs that might not otherwise be
recovered in a competitive market (stranded costs) during the transition period.
Under Illinois and Pennsylvania legislation, ComEd and PECO are required to provide generation
services to customers, except for certain large customers of ComEd, who do not or cannot choose a
competitive electric generation supplier or who choose to return to the utility after taking service from a
competitive electric generation supplier. These requirements are referred to as provider of last resort
(POLR) obligations.
ComEd. As more fully described below, ComEd’s transition period has ended and new unbundled
rates for service became effective January 2007. All of ComEd’s customers are eligible to choose a
competitive electric generation supplier, and most non-residential customers also have a power
purchase option (PPO) that is based on market-based rates. As of December 31, 2006, one
competitive electric generation supplier had been granted approval by the ICC to serve residential
customers in Illinois; however, it is not currently supplying electricity to any of ComEd’s residential
customers. All of ComEd’s customers are eligible to choose a competitive electric generation supplier
or may purchase electricity from ComEd at rates, including the PPO option, that are based on a
reverse-auction process. At December 31, 2006, approximately 20,300 non-residential customers,
representing approximately 28% of ComEd’s annual retail kWh sales, had elected to purchase their
electricity from a competitive electric generation supplier or had chosen the PPO. Customers who
receive electricity from a competitive electric generation supplier and customers who have elected the
PPO continue to pay a delivery charge to ComEd.
Illinois Procurement Case and Initial ComEd Auction. On January 24, 2006, the ICC, by a
unanimous vote, approved a reverse-auction competitive bidding process for procurement of electricity
by ComEd after the end of the transition period. This approval, currently under appeal before the
Illinois Appellate Court, should provide ComEd with stability and greater certainty that it will be able to
procure energy through the auction process and pass through the costs of that energy to ComEd’s
customers through a transparent market mechanism. The first procurement auction for ComEd’s entire
load took place during September 2006, for electricity to be delivered beginning in January 2007.
Auction participants bid on several different products including 17-, 29- and 41-month contracts that will
be “blended” together and used to serve residential and small commercial customers, a 17-month
“annual” product that will be used to serve larger non-residential customers, and a variably priced
“hourly” product that would be used to serve customers who either select hourly service or are not
eligible to receive fixed price service. The ICC accepted the auction results related to the blended and
annual products but rejected the auction results for the hourly product. Under ComEd’s tariffs,
electricity that would have been procured through the hourly auction is currently being purchased in the
PJM-administered wholesale electricity markets. See Note 4 of the Combined Notes to Consolidated
Financial Statements for further detail.
Rate Freeze Extension Proposal. In 2006 and 2007, various bills, amendments and “compromise”
legislation were separately passed by the Illinois House and the Illinois Senate in a legislative session
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