ComEd 2006 Annual Report Download - page 285

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)
power generation of specific generation plants and/or are dispatchable in nature. Generation enters
into power purchase agreements with the objective of obtaining low-cost energy supply sources to
meet its physical delivery obligations to its customers. Generation has also purchased firm
transmission rights to ensure that it has reliable transmission capacity to physically move its power
supplies to meet customer delivery needs. The primary intent and business objective for the use of its
capital assets and contracts is to provide Generation with physical power supply to enable it to deliver
energy to meet customer needs. Generation primarily uses financial contracts in its wholesale
marketing activities for hedging purposes. Generation also uses financial contracts to manage the risk
surrounding trading for profit activities.
Generation has entered into bilateral long-term contractual obligations for sales of energy to load-
serving entities, including electric utilities, municipalities, electric cooperatives and retail load
aggregators. Generation also enters into contractual obligations to deliver energy to wholesale market
participants who primarily focus on the resale of energy products for delivery. Generation provides
delivery of its energy to these customers through rights for firm transmission.
At December 31, 2006, Generation had long-term commitments, relating to the purchase from and
sale to unaffiliated utilities and others of energy, capacity and transmission rights as indicated in the
following tables:
Net Capacity
Purchases (a)
Power Only
Sales
Power Only
Purchases
Transmission Rights
Purchases (b)
2007 ................................. $ 468 $5,401 $1,499 $ 6
2008 ................................. 425 1,900 475 —
2009 ................................. 398 647 194 —
2010 ................................. 417 100 194 —
2011 ................................. 417 — 106 —
Thereafter ............................. 2,960 — 249 —
Total ................................. $5,085 $8,048 $2,717 $ 6
(a) Net capacity purchases include tolling agreements that are accounted for as operating leases. Amounts presented in the
commitments represent Generation’s expected payments under these arrangements at December 31, 2006. Expected
payments include certain capacity charges which are contingent on plant availability.
(b) Transmission rights purchases include estimated commitments in 2007 for additional transmission rights that will be required
to fulfill firm sales contracts.
Starting in 2007, as a result of the first reverse-auction competitive bidding process, ComEd will
procure substantially all of its supply under supplier forward contracts with various suppliers. See
Note 4—Regulatory Issues for further information.
PECO has a long-term PPA with Generation under which PECO obtains substantially all of its
electric supply from Generation through 2010. The price for this electricity is essentially equal to the
energy revenues earned from customers as specified by PECO’s 1998 settlement of its restructuring
case mandated by the Competition Act. Subsequent to 2010, PECO expects to procure all of its supply
from market sources, which could include Generation.
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