ComEd 2006 Annual Report Download - page 30

At this time, Exelon can provide no assurance that new legislative and regulatory proposals, if
adopted, will not have a significant effect on Generation’s operations and cash flows.
Global Climate Change
The United States is currently not a party to the United Nations’ Kyoto Protocol (Protocol) that
became effective for signatories on February 16, 2005. The Protocol process generally requires
developed countries to cap greenhouse gas (GHG) emissions at certain levels during the 2008-2012
time period. Although it is not a signatory to the Protocol, the United States may adopt a national,
mandatory GHG program at some point in the future. At a regional level, on August 24, 2005, the
Regional Greenhouse Gas Initiative (RGGI), a cooperative effort by Northeastern and Mid-Atlantic
states to reduce carbon dioxide (CO2) emissions, one of the greenhouse gases, released a program
proposal. The RGGI Memorandum of Understanding (MOU) is an agreement to stabilize aggregate
carbon dioxide emissions from power plants in participating states at current levels from 2009 to 2015.
Further, reductions from current levels would be required to be phased in starting in 2016 such that by
2019 there would be a 10% reduction in participating state power plant emissions. As of December 31,
2006, states participating in the RGGI MOU include Connecticut, Delaware, Maine, New Hampshire,
New Jersey, New York and Vermont. Maryland, which had been an observer to the process, has also
committed to join RGGI based on state legislation passed in 2006. On August 15, 2006, the RGGI
model rule was finalized. RGGI member states will now be required to adopt state-level legislation and/
or regulation to implement the program starting in 2009. Massachusetts has also recently joined RGGI
as a result of legislation passed effective January 18, 2007. Further, the RGGI states will continue to
work on some as yet unresolved issues, such as how to address emissions leakage due to power
flows from non-RGGI states into RGGI states. Generation owns a small amount of affected generating
capacity in the RGGI region. At this time, Exelon is unable to predict the potential impacts of any future
mandatory governmental GHG legislative or regulatory requirements on its businesses.
As an integrated electric and gas utility, approximately 90% of Exelon’s GHG emissions result
from Generation’s combustion of fossil fuels to generate electricity, with CO2representing the largest
quantity of GHG emitted. The majority of Generation’s owned generation is comprised of nuclear and
hydroelectric assets that have negligible GHG emissions compared to fossil-based electric generation
alternatives. By virtue of Generation’s significant investment in these low-carbon intensity assets,
Generation’s owned-generation portfolio CO2emission intensity, or rate of CO2emitted per kilowatt-
hour of electricity generated, is among the lowest in the industry.
Exelon announced on May 6, 2005 that it has established a voluntary goal to reduce its
greenhouse gas (GHG) emissions by 8% from 2001 levels by the end of 2008. The 8% reduction goal
represents a decrease of an estimated 1.3 million metric tons of GHG emissions. Exelon will
incorporate recognition of GHG emissions and their potential cost into its business analyses as a
means to promote internal investment in climate-reducing activities. Exelon made this pledge under the
U.S. Environmental Protection Agency’s Climate Leaders program, a voluntary industry-government
partnership addressing climate change. Exelon believes that its planned greenhouse gas management
efforts, including increased use of renewable energy, its current energy efficiency initiatives and its
efforts in the areas of carbon sequestration, will allow it to achieve this goal. The anticipated cost of
achieving the voluntary GHG emissions reduction goal will not have a material effect on Exelon’s future
results of operations, financial condition or cash flows.
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