ComEd 2006 Annual Report Download - page 76

determined by developing a spot rate curve based on the yield to maturity of more than 400 Aa graded
non-callable (or callable with make whole provisions) bonds with similar maturities to the related
pension and other postretirement benefit obligations. The spot rates are used to discount the estimated
distributions under the pension and other postretirement benefit plans. The discount rate is the single
level rate that produces the same result as the spot rate curve.
Exelon will use a discount rate and EROA of 5.90% and 8.75%, respectively, for estimating its
2007 pension costs. Additionally, Exelon will use a discount rate and expected return on plan assets of
5.85% and 7.87%, respectively, for estimating its 2007 other postretirement benefit costs.
The following tables illustrate the effects of changing the major actuarial assumptions discussed
above (dollars in millions):
Change in Actuarial Assumption
Impact on
Projected Benefit
Obligation at
December 31, 2006
Impact on
Pension Liability at
December 31, 2006
Impact on
2007
Pension Cost
Pension benefits
Decrease discount rate by 0.5% ............. $720 $720 $57
Decrease rate of return on plan assets by
0.5% .................................. — — 47
Change in Actuarial Assumption
Impact on
Other
Postretirement
Benefit Obligation
at December 31, 2006
Impact on
Postretirement
Benefit Liability at
December 31, 2006
Impact on 2007
Postretirement
Benefit Cost
Postretirement benefits
Decrease discount rate by 0.5% ............. $225 $225 $26
Decrease rate of return on plan assets by
0.5% .................................. — — 7
Assumed health care cost trend rates also have a significant effect on the costs reported for
Exelon’s and AmerGen’s postretirement benefit plans. A one-percentage point change in assumed
health care cost trend rates would have had the following effects on the December 31, 2006
postretirement benefit obligation and estimated 2006 costs (dollars in millions):
Change in Actuarial Assumption
Impact on
Other
Postretirement
Benefit
Obligation at
December 31, 2006
Impact on
2006
Total
Service and
Interest Cost
Components
Increase assumed health care cost trend by 1% ................... $45 $418
Decrease assumed health care cost trend by 1% .................. (37) (345)
Extending the year at which the ultimate health care trend rate of 5% is forecasted to be reached
from 2012 to 2017 would have had the following effects on the December 31, 2006 postretirement
benefit obligation and estimated 2006 costs (dollars in millions):
Change in Actuarial Assumption
Impact on
Other
Postretirement
Benefit
Obligation at
December 31, 2006
Impact on
2006
Total Service
and
Interest Cost
Components
Increase the year at which the ultimate health care trend rate of 5% is
forecasted to be reached from 2012 to 2017 .................... $234 $22
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