ComEd 2006 Annual Report Download - page 268

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)
(a) Represents the difference between the conditional ARO, net ARC and regulatory assets and liabilities recorded upon
adoption, net of income taxes.
(b) For Exelon, Generation, ComEd and PECO, represents capitalized ARC of $52 million, $22 million, $25 million and $5
million, respectively, as an increase to the carrying amount of the associated long-lived assets, net of accumulated
depreciation of $33 million, $10 million, $20 million and $3 million, respectively, on the ARC.
(c) Represents an increase to regulatory assets pursuant to SFAS No. 71 for amounts expected to be recovered from
customers.
(d) Represents a liability for existing conditional AROs adjusted for cumulative accretion to December 31, 2005.
(e) Represents removal costs within regulatory liabilities at ComEd that were reclassified to the asset retirement obligations
liability.
See Note 1—Significant Accounting Policies for net income and earnings per common share for
2005 and 2004, adjusted as if FIN 47 had been applied effective during the entirety of those years.
Accounting Methodology Under FIN 47
The liabilities associated with conditional AROs will be adjusted on an ongoing basis due to the
passage of time, new laws and regulations and revisions to either the timing or amount of the original
estimates of undiscounted cash flows. These adjustments could have a significant impact on Exelon’s,
Generation’s, ComEd’s and PECO’s Consolidated Statements of Operations and Consolidated
Balance Sheets, assuming the provisions of SFAS No. 71 continue to apply.
The liabilities recorded related to the conditional AROs of Exelon are being accreted to their full
estimated settlement amounts through the estimated ultimate settlement dates. For Generation, this
accretion charge is recorded as an operating and maintenance expense within the Consolidated
Statements of Operations. For ComEd and PECO, most of this accretion charge is recorded as an
increase to their regulatory assets due to the application of SFAS No. 71.
The net ARC of Exelon is being depreciated over the remaining lives of the related long-lived
assets. For Generation, this charge is recorded as depreciation and amortization expense within the
Consolidated Statements of Operations. For ComEd and PECO, most of this depreciation charge is
recorded as an increase to their regulatory assets due to the application of SFAS No. 71.
14. Retirement Benefits (Exelon, Generation, ComEd and PECO)
Defined Benefit Pension and Other Postretirement Benefits—Consolidated Plans
Exelon
Exelon sponsors defined benefit pension plans and postretirement benefit plans for essentially all
Generation, ComEd, PECO and BSC employees, except for those employees of Generation’s wholly
owned subsidiary, AmerGen, who participate in the separate AmerGen-sponsored defined benefit
pension plan and postretirement benefit plan. Substantially all Exelon non-union employees and
electing union employees hired on or after January 1, 2001 participate in Exelon-sponsored cash
balance pension plans. Substantially all Exelon non-union employees hired prior to January 1, 2001
were offered a choice to remain in Exelon’s traditional pension plan or transfer to a cash balance
pension plan for management employees. In 2005, AmerGen offered its employees a choice to remain
in their traditional benefit formula or convert to a cash balance formula.
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