ComEd 2006 Annual Report Download - page 32

February 2007. In the ICC’s December 20, 2006 order approving ComEd’s residential rate stabilization
program, the ICC also strongly encouraged, but did not require, ComEd to make contributions totaling
$30 million to environmental and customer assistance programs. ComEd is currently evaluating this
request. See Note 4 of the Combined Notes to Consolidated Financial Statements for further detail.
In addition to state level activity, RPS legislation has been considered and may be considered
again in the future by the United States Congress. Also, states that currently do not have RPS
requirements may determine to adopt such legislation in the future. Exelon is currently evaluating the
potential impacts of RPS legislation on its businesses.
Costs of Environmental Remediation
At December 31, 2006, Exelon, Generation, ComEd and PECO had accrued $119 million, $20
million, $58 million and $41 million, respectively, for various environmental investigation and
remediation. Exelon, ComEd and PECO have recorded regulatory assets of $73 million, $47 million
and $26 million, respectively, related to the recovery of MGP remediation costs. See Notes 18 and 19
of the Combined Notes to Consolidated Financial Statements for further detail.
The amounts to be expended in 2007 at Exelon, Generation, ComEd and PECO for compliance
with environmental requirements total approximately $41 million, $17 million, $15 million and $9 million,
respectively. In addition, Generation, ComEd and PECO may be required to make significant additional
expenditures not presently determinable.
Managing the Risks in the Business
Exelon, Generation, ComEd and PECO have considered the business challenges facing them and
have adopted certain risk management activities. The Registrants recognize that their risk
management activities address only certain of the challenges facing the Registrants and that those
activities may not be effective in all circumstances. A discussion of the risks to which the Registrants’
businesses are subject and the potential consequences of those risks are contained in ITEM 1A. Risk
Factors. On a continuing basis, the Registrants evaluate the challenges of their businesses and their
ability to identify and mitigate these risks.
Generation
Costs to meet contractual commitments. As the largest generator of nuclear power in the United
States, Generation can negotiate favorable terms for the materials and services that its business
requires. Generation’s nuclear plants have historically benefited from stable fuel costs, minimal
environmental impact from operations and a safe operating history.
Refueling outages. Generation continues to aggressively manage its scheduled refueling outages
to minimize their duration and to maintain high nuclear generating capacity factors, resulting in a stable
generation base for Generation’s short and long-term supply commitments and Power Team trading
activities.
Operating services arrangement. Effective in 2005, as a result of the OSC with PSEG Nuclear,
Generation is providing services to oversee daily plant operations at the Salem and Hope Creek
nuclear generating stations. Under the OSC, PSEG Nuclear remains as the license holder with
exclusive legal authority to operate and maintain the stations, retains responsibility for management
oversight and has full authority with respect to the marketing of its share of the output from the
facilities. As a result of the OSC, Generation has decreased certain exposures and increased revenues
from its share of Salem, which it co-owns with PSEG Nuclear. The initial two-year term of the OSC
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