ComEd 2006 Annual Report Download - page 262

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)
Impact on the Statements of Other Comprehensive Income
Generation does not reflect any net activity within the statement of other comprehensive income
related to the unrealized gains for the trust funds established to fund the decommissioning liabilities of
the former PECO units as these unrealized gains are not anticipated to ultimately be included in the
statement of operations as a result of the current accounting discussed above. Unrealized gains (after
applicable taxes) related to the former ComEd units are also offset within Generation’s statement of
other comprehensive income. The gross unrealized gains in the trust funds of the former ComEd and
PECO units are tax-effected at the applicable tax rates, so that the associated deferred tax liabilities
can be appropriately calculated and recorded.
The net unrealized gains associated with AmerGen are included in the statement of other
comprehensive income, since the accounting treatment described above does not apply to AmerGen.
Impact on the Balance Sheet
The decommissioning liabilities associated with the former ComEd, former PECO and AmerGen
units are reflected as an ARO in the long-term liability section of Generation’s balance sheet. AROs
represent legal obligations associated with the retirement of tangible long-lived assets. Changes in the
ARO resulting from revisions to the timing or amount of future undiscounted cash flows are generally
recognized through a corresponding increase or decrease to the carrying value of that plant. This
adjustment is reflected in property, plant and equipment as an asset retirement cost (ARC), and is
amortized on a straight-line basis over the life of that plant. The noncurrent affiliate payables from
Generation to ComEd and PECO represent the difference between the decommissioning-related
assets and decommissioning-related liabilities, which are required to be refunded to ComEd’s or
PECO’s customers as appropriate. ComEd and PECO have recorded corresponding noncurrent
affiliate receivables from Generation and corresponding regulatory liabilities to the applicable
customers.
At December 31, 2006 and 2005, ComEd recorded a regulatory liability for the amount of
decommissioning-related assets in excess of the ARO totaling $1.8 billion and $1.4 billion,
respectively. At December 31, 2006 and 2005, PECO recorded a regulatory liability for the amount of
decommissioning-related assets in excess of the ARO totaling $151 million and $68 million,
respectively.
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