ComEd 2006 Annual Report Download - page 221

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—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Earnings for purposes of ComEd’s threshold include ComEd’s net income calculated in accordance
with GAAP and reflect the amortization of regulatory assets. Under Illinois statute, any impairment of
goodwill would have no impact on the determination of the cap on ComEd’s allowed equity return
during the transition period. ComEd has not triggered the earnings sharing provision through 2006.
Beginning in 2007, this provision is no longer applicable to ComEd.
Delivery Service Rates (Exelon and ComEd). On March 3, 2003, ComEd entered into, and the
ICC subsequently entered orders that implemented, an agreement (Agreement) with various Illinois
retail market participants and other interested parties that settled, among other things, delivery service
rates and the market value index proceeding and facilitated competitive service declarations for large-
load customers and an extension of ComEd’s PPA with Generation. The effect of the Agreement was
to lower competitive transition charge (CTC) collections that ComEd received from customers who took
electricity from a competitive electric generation supplier or under the purchase power option (PPO)
through 2006. The Agreement also allowed customers to lock in current CTCs for multiple years.
ComEd collected $40 million, $105 million and $169 million in CTC revenues during 2006, 2005 and
2004, respectively. CTC collections ended with the transition on January 1, 2007.
Open Access Transmission Tariff (Exelon and ComEd).On November 10, 2003, FERC issued
an order allowing ComEd to put into effect, subject to refund and rehearing, new transmission rates
designed to reflect nearly $500 million of infrastructure investments made since 1998; however,
because of the Illinois retail rate freeze and the method for calculating CTCs, the increase has not
significantly increased operating revenues. As noted, both the rate freeze and CTCs ended in January
2007. During the third quarter of 2004, a settlement agreement was reached, which was approved by
FERC during the fourth quarter of 2004, which established new rates that became effective May 1,
2004.
Partial Settlement before the PAPUC (Exelon and PECO).As a result of the termination of the
Merger Agreement, the provisions of the PAPUC order and partial settlement approving the Merger will
not become effective and will not be applicable to PECO or the other parties to the settlement.
Rate Limitations (Exelon and PECO).Pursuant to a settlement agreement with the PAPUC
related to the merger of Exelon, Unicom Corporation and PECO on October 20, 2000 (PECO/Unicom
Merger), PECO was subject to agreed-upon electric service rate reductions of $200 million, in
aggregate, for the period January 1, 2002 through December 31, 2005. As required by the 1998
electric restructuring settlement and as modified by the PECO/Unicom Merger-related settlement
agreement, PECO is subject to rate caps (subject to limited exceptions for significant increases in
Federal or state income taxes or other significant changes in law or regulation that do not allow PECO
to earn a fair rate of return) on its transmission and distribution rates through December 31, 2006, and
is subject to rate caps on its energy rates through December 31, 2010.
Through and Out (T&O) Rates and Seams Elimination Charge/Cost Adjustment/Assignment
(SECA) (Exelon, ComEd and PECO). In November 2004, FERC issued two orders authorizing
ComEd and PECO to recover amounts for a limited time during a specified transitional period as a
result of the elimination of T&O rates for transmission service scheduled out of, or across, their
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