ComEd 2006 Annual Report Download - page 8

merged with and into Exelon (Merger). On September 14, 2006, Exelon terminated the Merger
Agreement as a result of the failure to receive timely approval of the Merger from the New Jersey
Board of Public Utilities (NJBPU).
Federal and State Regulation
Exelon is subject to Federal and state regulation. ComEd is a public utility under the Illinois Public
Utilities Act subject to regulation by the Illinois Commerce Commission (ICC). PECO is a public utility
under the Pennsylvania Public Utility Code subject to regulation by the Pennsylvania Public Utility
Commission (PAPUC). Generation, ComEd and PECO are electric utilities under the Federal Power
Act subject to regulation by the Federal Energy Regulatory Commission (FERC). Specific operations of
the Registrants are also subject to the jurisdiction of various other Federal, state, regional and local
agencies, including the Nuclear Regulatory Commission (NRC).
Exelon was a registered holding company and subject to a number of restrictions under the Public
Utility Holding Company Act of 1935 (PUHCA) until the repeal of PUHCA, effective on February 8,
2006, pursuant to the Energy Policy Act of 2005 (Energy Policy Act). With the repeal of PUHCA, the
restrictions are no longer applicable to Exelon, and the SEC’s financing jurisdiction under PUHCA for
Generation’s financings and ComEd’s and PECO’s short-term financings transferred to FERC.
Exelon’s financings are not subject to FERC jurisdiction.
Under the Energy Policy Act, FERC was granted additional jurisdiction for review of mergers,
affiliate transactions, intercompany financings and cash management arrangements, certain internal
corporate reorganizations, and certain holding company acquisitions of public utility and holding
company securities. To the extent that the SEC’s jurisdiction under PUHCA preempted certain aspects
of state regulation, the repeal of PUHCA enhanced the authority of states to regulate Exelon and its
utility subsidiaries.
For additional information about Federal and state restrictions on Exelon and its subsidiaries, see
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation—
Exelon.
Generation
Generation is one of the largest competitive electric generation companies in the United States, as
measured by owned and controlled megawatts (MWs). Generation combines its large generation fleet
with an experienced wholesale energy marketing operation and a competitive retail sales operation.
At December 31, 2006, Generation owned generation assets with an aggregate net capacity of
25,543 MWs, including 16,945 MWs of nuclear capacity. In addition, Generation controlled another
7,691 MWs of capacity through long-term contracts.
Generation’s wholesale marketing unit, Power Team, a major wholesale marketer of energy,
draws upon Generation’s energy generation portfolio and logistical expertise to ensure delivery of
energy to Generation’s wholesale customers under long-term and short-term contracts, including a
power purchase agreement (PPA) with PECO and, beginning in 2007, ICC-approved standardized
supplier forward contracts with ComEd and Ameren Corporation (Ameren). In addition, Power Team
markets energy in the wholesale bilateral and spot markets.
Generation’s retail business provides retail electric and gas services as an unregulated retail
energy supplier in Illinois, Michigan and Ohio. Generation’s retail business is dependent upon
continued deregulation of retail electric and gas markets and its ability to obtain supplies of electricity
and gas at competitive prices in the wholesale market. The low-margin nature of the business makes it
important to service customers with higher volumes so as to manage costs.
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