Exelon 2002 Annual Report Download - page 57

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We have a long-term supply agreement through December
2022 with Distrigas to guarantee physical gas supply to our
New England generating units.Under the agreement,prices are
indexed to New England gas markets.
Generation has an obligation to decommission its nuclear
power plants.Our current estimate of decommissioning costs for
the nuclear plants owned by Generation is $7.4 billion in current
year (2003) dollars. Nuclear decommissioning activity occurs
primarily after a plant is retired. Based on the extended license
lives of our nuclear plants, we will begin decommissioning our
plants from 2014 through 2056, with expenditures primarily
occurring when our operating plants are decommissioned,dur-
ing the period from 2029 through 2056. At December 31, 2002,
the decommissioning liability, which is recognized over the life
of the plant, was recorded in our Consolidated Balance Sheets
as Accumulated Depreciation and Deferred Credits and Other
Liabilities in the amounts of $2.8 billion and $1.4 billion, respec-
tively. To fund future decommissioning costs, Generation held
$3.1 billion of investments in trust funds, including net unreal-
ized gains and losses, at December 31,2002.
Our commercial commitments as of December 31, 2002,
representing commitments not recorded on the balance sheet
but potentially triggered by future events,including obligations
to make payment on behalf of other parties and financing
arrangements to secure our obligations,are as follows:
Management’s Discussion and Analysis of Financial Condition and Results of Operations
exelon corporation and subsidiary companies
Expiration within
2008
Total 2003 2004–2005 2006–2007 and beyond
Credit Facility(a) $ 1,500 $ 1,500 $ – $ – $ –
Letters of Credit (non-debt)(b) 111 106 5 – –
Letters of Credit (Long-Term Debt)(c) 456 305 151 – –
Insured Long-Term Debt(d) 254 – – – 254
Guarantees of Letters of Credit(e) 226 226 – – –
Performance Guarantees(f) 101 – – – 101
Surety Bonds(g) 521 329 57 4 131
Energy Marketing Contract Guarantees(h) 124 114 10 – –
Nuclear Insurance Guarantees(i) 1,380 – – – 1,380
Lease Guarantees(j) 13 – – 2 11
Preferred Securities(k) 128 – – – 128
Sithe New England Equity Guarantee(l) 38 38 – – –
Guarantees of Long-Term Debt(m) 41 2 – – 39
Total Commercial Commitments $ 4,893 $ 2,620 $ 223 $ 6 $ 2,044
(a) Credit Facility—Exelon,along with ComEd, PECO,and Generation, maintain a $1.5 billion 364-day credit facility to support commercial paper issuances. At December 31, 2002, there were
no borrowings against the credit facility. Additionally, at December 31, 2002, there was $948 million of commercial paper outstanding.
(b) Letters of Credit (non-debt)—Exelon and certain of its subsidiaries maintain non-debt letters of credit to provide credit support for certain transactions as requested by third parties.
(c) Letters of Credit (Long-Term Debt)—Direct-pay letters of credit issued in connection with variable-rate debt in order to provide liquidity in the event that it is not possible to remarket
all of the debt as required following specific events,including changes in the basis of determining the interest rate on the debt.
(d) Insured Long-Term Debt—Borrowings that have been credit-enhanced through the purchase of insurance coverage equal to the amount of principal outstanding plus interest.
(e) Guarantees of letters of credit—Guarantees issued to provide support for letters of credit as required by third parties. These guarantees could be called upon only in the event of
non-payment by a subsidiary.
(f) Performance Guarantees—Guarantees issued to ensure execution under specific contracts.
(g) Surety Bonds—Guarantees issued related to contract and commercial surety bonds, excluding bid bonds.
(h) Energy Marketing Contract Guarantees—Guarantees issued to ensure performance under energy commodity contracts.
(i) Nuclear Insurance Guarantees—Guarantees of nuclear insurance required under the Price-Anderson Act. $1.1 billion of this total exposure is exempt from the $4.5 billion PUHCA
guarantee limit by SEC rule.
(j) Lease Guarantees—Guarantees issued to ensure payments on building leases.
(k) Preferred Securities—Guarantees issued to guarantee the preferred securities of the subsidiary trusts of PECO. See Note 16 of the Notes to Consolidated Financial Statements for further
information.
(l) Sithe New England Equity Guarantee—See Note 3 of the Notes to Consolidated Financial Statements for further information on the $38 million guarantee.After construction of the SBG
facilities is complete, Exelon could be required to guarantee up to an additional $42 million in order to ensure that the SBG facilities have adequate funds available for potential outage
and other operating costs and requirements.
(m) Guarantees of Long-Term Debt—Issued to guarantee payment of subsidiary debt.