ComEd 2010 Annual Report Download - page 32

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Discussion of Financial Results - ComEd
30
Results of Operations – ComEd
Favorable
(Unfavorable)
(Dollars in millions) 2010 2009 Variance
Operating revenues $ 6,204 $ 5,774 $ 430
Purchased power expense 3,307 3,065 (242)
Revenue net of purchased power expense 2,897 2,709 188
Other operating expenses
Operating and maintenance 975 1,028 53
Operating and maintenance for regulatory required programs 94 63 (31)
Depreciation and amortization 516 494 (22)
Taxes other than income 256 281 25
Total other operating expenses 1,841 1,866 25
Operating income 1,056 843 213
Other income and deductions
Interest expense, net (386) (319) (67)
Other, net 24 79 (55)
Total other income and deductions (362) (240) (122)
Income before income taxes 694 603 91
Income taxes 357 229 (128)
Net income $ 337 $ 374 $ (37)
The decrease in ComEd’s net income was primarily due to the remeasurement of uncertain income tax positions in 2009 and 2010 related to the 1999 sale of ComEd’s
fossil generating assets. These remeasurements resulted in increased interest expense and income tax expense recorded in 2010, and increased interest income recorded
in 2009. Net income also was reduced by higher incremental storm costs, increased depreciation and amortization expense reflecting higher plant balances, and the
impact of federal health care legislation signed into law in March 2010. These reductions to net income were partially offset by higher revenue net of purchased power
expense primarily due to favorable weather conditions, a net decrease in operating and maintenance expense, and the accrual of estimated future refunds of the Illinois
utility distribution tax for the 2008 and 2009 tax years.
The decrease in operating and maintenance expense reflects the February 2010 approval by the Illinois Commerce Commission of ComEd’s uncollectible accounts expense
rider mechanism, the reduction of ComEd’s asset retirement obligation in 2010, and a charge in 2009 for severance expense incurred as a cost to achieve savings under
Exelon’s 2009 company-wide cost savings initiative.