Exelon 2003 Annual Report Download - page 98

96 Notes to Consolidated Financial Statements
EXELON CORPORATION AND SUBSIDIARY COMPANIES
trigger the earnings sharing provision in 2001, 2002 or 2003
and does not currently expect to trigger the earnings sharing
provisions in the years 2004 through 2006.
Nuclear Decommissioning Costs. In connection with the
transfer of ComEd’s nuclear generating stations to Gen-
eration, the ICC permitted ComEd to recover $73 million per
year from retail customers for decommissioning for the
years 2001 through 2004 and, depending upon the portion
of the output from those stations taken by ComEd, up to $73
million annually in 2005 and 2006. These amounts are re-
mitted to Generation. Subsequent to 2006, there will be no
further recoveries of decommissioning costs from custom-
ers. Any surplus funds after a nuclear station is decom-
missioned must be refunded to ComEd’s customers. See
Note 13—Nuclear Decommissioning and Spent Fuel Storage.
Open Access Transmission Tariff. On November 10, 2003, the
FERC issued an order allowing ComEd to put into effect be-
ginning April 12, 2004, subject to refund and rehearing, new
transmission rates designed to reflect nearly $500 million of
infrastructure investments made since 1998. However, be-
cause of the Illinois retail rate freeze and the method for cal-
culating CTCs, the increase is not expected to significantly
increase operating revenues. Exelon is unable to predict the
ultimate outcome of the associated rehearing or settlement
negotiations.
PECO
In 2003, the phased process to implement competition in the
electric industry continued as mandated by the require-
ments of the PUC’s Final Restructuring Order as further dis-
cussed below.
Rate limitations. PECO is subject to agreed-upon rate reduc-
tions of $80 million, in aggregate, for the years 2004 and
2005 and caps (subject to limited exceptions for significant
increases in Federal or state income taxes or other sig-
nificant changes in law or regulation that do not allow PECO
to earn a fair rate of return) on its transmission and dis-
tribution rates through December 31, 2006, and on its energy
rates through December 31, 2010, as a result of settlements
previously reached with the PUC.
Nuclear Decommissioning Cost Adjustment Clause.OnJuly25,
2003, the PUC approved an adjustment to PECO’s nuclear
decommissioning cost adjustment clause. Effective January
1, 2004, PECO will be permitted to recover an additional $3.6
million annually, or $33 million compared to $29 million pre-
viously. These amounts are remitted by PECO to Generation
upon collection.
Customer Choice. The 1998 Electric Restructuring Settlement
approved by the PUC established market share thresholds
(MST) to promote competition. The MST requirements pro-
vided that if, as of January 1, 2003, less than 50% of resi-
dential and commercial customers have chosen an alter-
native electric generation supplier, the number of customers
sufficient to meet the MST shall be randomly selected and
assigned to an alternative electric generation supplier
through a PUC-determined process. On January 1, 2003, the
number of customers choosing an alternative electric gen-
eration supplier did not meet the MST. As a result of a PUC-
approved auction process, approximately 64,000 small
commercial and industrial customers and 267,000 resi-
dential customers were selected to participate in the MST
program of which approximately 50,000 and 194,000 cus-
tomers enrolled with alternative electric generation suppli-
ers in May 2003 and December 2003, respectively. Any
customer transferred has the right to return to PECO at any
time. Exelon does not expect the transfer of PECO customers
pursuant to the MST plan to have a material impact on its
results of operations, financial position or cash flows.
See Note 20—Supplemental Financial Information for fur-
ther discussion of the regulatory assets and liabilities of
ComEd and PECO.
NOTE 05 ‰ACCOUNTS RECEIVABLE
Customer accounts receivable at December 31, 2003 and
2002 included unbilled operating revenues related to unread
meters at Energy Delivery and Exelon Energy Company, the
competitive retail energy sales business of Enterprises, of
$452 million and $442 million, respectively. Also included in
customer accounts receivable was $366 million and $394
million at December 31, 2003 and 2002, respectively, related
to Generation’s unbilled revenues for amounts of energy de-
livered to customers in the month of December. The allow-
ance for uncollectible accounts at December 31, 2003 and
2002 was $110 million and $132 million, respectively.
In April 2002, ComEd changed its accounting estimate
related to the allowance for uncollectible accounts based on
an independently prepared evaluation of the risk profile of
ComEd’s customer accounts receivable. As a result of the
new evaluation, the allowance for uncollectible accounts
reserve was reduced by $11 million in the second quarter of
2002. PECO performed a similar evaluation which resulted in
changes to its accounting estimate processes related to the
allowance for uncollectible accounts. As a result, the allow-
ance for uncollectible accounts reserve was reduced by $17
million in the fourth quarter of 2002.
In December 2002, Generation increased its allowance
for uncollectible accounts by $6 million based on an in-
dependently prepared evaluation of the risk profile of Power
Team’s counterparties. Power Team is the unit within Gen-
eration that manages the output of Generation’s assets and
energy sales.