ComEd 2006 Annual Report Download - page 69

Regulatory and Environmental Developments. The following significant regulatory and
environmental developments occurred during 2006. See Notes 4 and 18 of the Combined Notes to
Consolidated Financial Statements for further information.
• ComEd Procurement Case—On January 24, 2006, the ICC approved ComEd’s procurement
case, authorizing ComEd to procure electricity after 2006 through a “reverse-auction” competitive
bidding process and to recover the costs from retail customers with no markup. The first auction
took place in September 2006. As a result of the auction, ComEd has entered into supplier
forward contracts with various suppliers including Generation. The ICC order is under appeal.
• Illinois Rate Freeze Extension Proposal—In 2006 and 2007, various bills, amendments and
“compromise” legislation were separately passed by the Illinois House and the Illinois Senate
including, in the Illinois House, an extension of the Illinois transition period rate freeze with a
rollback of rates to 2006 levels. However, the Illinois General Assembly adjourned on
January 9, 2007 without taking further action on such bills. As a result, all pending legislation
expired. ComEd believes any rate rollback and freeze legislation, if proposed again and
enacted into law, would have serious detrimental effects on Illinois, ComEd and consumers of
electricity. ComEd believes such legislation would violate Federal law and the U.S.
Constitution, and ComEd is prepared to vigorously challenge any such legislation in court.
• ComEd Residential Rate Stabilization—On December 20, 2006, the ICC approved a residential
rate stabilization program that allows residential customers the choice to limit the impact of any
rate increase over the next three years. For customers choosing to participate in the program,
electric rate increases would be capped at 10% in each of 2007, 2008 and 2009. Costs that
exceed the caps would be deferred and recovered over three years from 2010 to 2012. Deferred
balances will be assessed an annual carrying charge of 3.25%. If ComEd’s rate increases are
less than the caps in 2008 and 2009, ComEd would begin to recover deferred amounts up to the
caps with carrying costs. This order 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. This order is subject to rehearing and appeal.
• ComEd Rate Case—On July 26, 2006, the ICC issued its order in the Rate Case approving a
revenue increase of approximately $8 million and the recovery of several items that previously
were recorded as expense. On December 20, 2006, the ICC approved an amended order on
the rehearing of the Rate Case allowing an additional revenue increase of approximately $74
million, including a partial return on the pension asset, for a total rate increase of $83 million.
ComEd and various other parties have appealed the rate order to the courts. As a result of the
July 26, 2006 ICC rate order, ComEd recorded an after-tax impairment charge of $776 million
associated with the write-off of goodwill.
• Nuclear Fleet Inspection—In February 2006, Exelon and Generation launched an initiative
across its nuclear fleet to systematically assess systems that handle tritium and take the
necessary actions to minimize the risk of inadvertent discharge of tritium into the environment.
The initiative was in response to the detection of tritium in water samples taken related to leaks
at the Braidwood, Byron and Dresden nuclear generating stations in Illinois. On September 28,
2006, Generation announced the final results of the assessment, concluding that no active
leaks had been identified at any of Generation’s 11 nuclear plants and no detectable tritium
had been identified beyond any of the plants’ boundaries other than from permitted discharges,
with the exception of Braidwood where past accidental tritiated water spills have been
identified and state-approved cleanup work continues. The assessment further concluded that
none of the tritium concentrations identified in the assessment pose a health or safety threat to
the public or to Generation’s employees or contractors.
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