ComEd 2006 Annual Report Download - page 22

that ended on January 9, 2007, including, in the Illinois House, an extension of the Illinois transition
period rate freeze with a rollback of rates to 2006 levels. However in order to take effect, any legislation
would need to be passed by both the Illinois House and Illinois Senate and be signed by the Governor of
Illinois. The legislative session ended on January 9, 2007 without any legislation having passed both the
Illinois House and the Illinois Senate. All legislation pending at the close of the legislative session on
January 9, 2007 expired. A new session is underway and legislation similar to previously proposed
legislation has been reintroduced. ComEd is unable to predict the final disposition of any legislation that
may be presented during 2007 to rollback rates, change the end of the mandated transition and rate
freeze period in Illinois, or otherwise. ComEd believes a rate rollback and freeze, if enacted into law,
would have serious detrimental effects on Illinois, ComEd and consumers of electricity. ComEd believes
such legislation, if enacted into law, will violate Federal law and the U.S. Constitution, and ComEd is
prepared to vigorously challenge any such legislation in court. If legislation similar to the “compromise” bill
previously passed by the Illinois Senate to phase-in the rate increases is enacted, there would be
material adverse effects on Exelon’s and ComEd’s results of operations and cash flows as the
“compromise” bill did not provide for the recovery of carrying charges. See Note 4 of the Combined Notes
to Consolidated Financial Statements for further detail.
Illinois Rate Case. On August 31, 2005, ComEd filed a rate case with the ICC to comprehensively
review its tariff and to adjust ComEd’s rates for delivering electricity effective January 2007 (Rate
Case). On July 26, 2006, the ICC issued its order in the Rate Case which approved a delivery services
revenue increase of approximately $8 million of the $317 million proposed revenue increase requested
by ComEd. The ICC subsequently granted in part requests for rehearing of ComEd and various other
parties. On December 20, 2006, the ICC issued an order on rehearing that increased the amount
previously approved by approximately $74 million, including a partial return on the pension asset, for a
total rate increase of $83 million. ComEd and various other parties have appealed the rate order to the
courts. It is unlikely the appeal will be resolved until the second half of 2007 at the earliest. In the event
the order is ultimately changed, the changes should be prospective only. See Note 4 of the Combined
Notes to Consolidated Financial Statements for further detail.
Residential Rate Stabilization Program. To mitigate the impact on its residential customers of
ComEd’s transition to a reverse-auction competitive bidding process for the procurement of electricity,
the ICC approved a program, proposed by ComEd, which offers residential customers the choice to
elect to defer electric rate increases greater than 10% in each of the years from 2007 to 2009. ComEd
will recover the deferred balances over three years from 2010 to 2012. Deferred balances will be
assessed an annual carrying charge of 3.25%. See Note 4 of the Combined Notes to Consolidated
Financial Statements for further detail.
Original Cost Audit. In the Rate Case, the ICC, ordered an “original cost” audit of ComEd’s
distribution assets. The original cost audit report is expected to be finalized in 2007 with an ICC
proceeding to follow the issuance of the report. This proceeding may extend into 2008. See Note 4 of
the Combined Notes to Consolidated Financial Statements for further detail.
Other. Illinois law provides that an electric utility, such as ComEd, will be liable for actual damages
suffered by customers in the event of a continuous electricity outage of four hours or more affecting
30,000 or more customers and provides for reimbursement of governmental emergency and
contingency expenses incurred in connection with any such outage. Recovery of consequential
damages is barred and the affected utility may seek relief from these provisions from the ICC when the
utility can show that the cause of the outage was unpreventable due to weather events or conditions,
customer tampering or third-party causes. During the years 2006, 2005 and 2004, ComEd did not have
any outages that triggered the reimbursement requirement.
PECO. Under the Pennsylvania Electricity Generation Customer Choice and Competition Act
(Competition Act), all of PECO’s retail electric customers have the right to choose their generation
suppliers. At December 31, 2006, less than 1% of each of PECO’s residential and large commercial
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