ComEd 2011 Annual Report Download - page 34

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32
Discussion of Financial Results – ComEd
Results of Operations—ComEd
(Dollars in millions) 2011 2010
Favorable
(Unfavorable)
Variance
Operating revenues $ 6,056 $ 6,204 $ (148)
Purchased power expense 3,035 3,307 272
Revenue net of purchased power expense 3,021 2,897 124
Other operating expenses
Operating and maintenance 1,086 975 (111)
Operating and maintenance for regulatory required programs (a) 115 94 (21)
Depreciation and amortization 542 516 (26)
Taxes other than income 296 256 (40)
Total other operating expenses 2,039 1,841 (198)
Operating income 982 1,056 (74)
Other income and deductions
Interest expense, net (345) (386) 41
Other, net 29 24 5
Total other income and deductions (316) (362) 46
Income before income taxes 666 694 (28)
Income taxes 250 357 107
Net income $ 416 $ 337 $ 79
(a) Includes amounts for various legislative and/or regulatory programs that are recoverable from customers on a full and current basis through a reconcilable automatic adjustment clause. An equal
and offsetting amount has been reflected in operating revenues.
The increase in ComEd’s net income was primarily due to higher electric distribution rates, effective June 1, 2011, pursuant to the ICC order in the 2010 Rate Case, and
increased revenues resulting from the annual reconciliation of ComEd’s distribution revenue requirement pursuant to EIMA, which became effective in the fourth
quarter of 2011. Net income was higher also due to the remeasurement of uncertain income tax positions in 2010 related to the 1999 sale of ComEd’s fossil generating
assets. The remeasurement resulted in increased interest expense and income tax expense recorded in 2010. These increases to net income were partially offset by
higher operating and maintenance expense and taxes other than income.
The increase in operating and maintenance expense reflects the benefit recorded in 2010 resulting from the ICC’s approval of ComEd’s uncollectible accounts expense
rider mechanism, a reduction in ComEd’s asset retirement obligation reserve in 2010, and higher labor and contracting expenses incurred in 2011. These increases to
operating and maintenance expense were partially offset by one-time net benefits recognized pursuant to the ICC order in ComEd’s 2010 rate case.