Exelon 2003 Annual Report Download - page 99

97Notes to Consolidated Financial Statements
EXELON CORPORATION AND SUBSIDIARY COMPANIES
PECO is party to an agreement with a financial in-
stitution under which it can sell or finance with limited re-
course an undivided interest, adjusted daily, in up to $225
million of designated accounts receivable until November
2005. At December 31, 2003, PECO had sold a $225 million in-
terest in accounts receivable, consisting of a $176 million in-
terest in accounts receivable which PECO accounted for as a
sale under SFAS No. 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabili-
ties—a Replacement of FASB Statement No. 125,” (SFAS No.
140) and a $49 million interest in special-agreement ac-
counts receivable which was accounted for as a long-term
note payable. At December 31, 2002, PECO had sold a $225
million interest in accounts receivable, consisting of a $164
million interest in accounts receivable which PECO ac-
counted for as a sale under SFAS No. 140 and a $61 million
interest in special-agreement accounts receivable which was
accounted for as a long-term note payable (see Note 11—
Long-Term Debt). PECO retains the servicing responsibility
for these receivables. The agreement requires PECO to main-
tain the $225 million interest, which, if not met, requires
cash, which would otherwise be received by PECO under this
program, to be held in escrow until the requirement is met.
At December 31, 2003 and 2002, PECO met this requirement
and was not required to make any cash deposits.
NOTE 06 ‰PROPERTY, PLANT, AND EQUIPMENT
A summary of property, plant and equipment by asset cat-
egory as of December 31, 2003 and 2002 is as follows:
Asset Category 2003 2002
Electric–transmission and distribution $ 12,755 $ 11,940
Electric–generation 7,976 5,678
Gas–transmission and distribution 1,387 1,319
Common 376 370
Nuclear fuel 2,568 3,114
Construction work in progress 795 2,772
Asset retirement cost 173 –
Other property, plant and equipment 1,548 1,644
Total property, plant and equipment 27,578 26,837
Less accumulated depreciation (including
accumulated amortization of nuclear
fuel of $1,596 and $2,212 as of
December 31, 2003 and 2002,
respectively) 6,948 8,880
Property, plant and equipment, net $20,630 $ 17,957
Energy Delivery’s depreciation expense, which is included in
cost of service for rate purposes, includes an estimated cost
of dismantling and removing plant from service upon
retirement. Beginning in 2003, in accordance with regulatory
accounting practice, collections for future removal costs are
recorded as a regulatory liability. Prior periods have been re-
classified for comparative purposes. For more information,
see Note 20–Supplemental Financial Information.
In July 2002, ComEd decreased its depreciation rates
based on a new depreciation study reflecting its significant
construction program in recent years, changes in and devel-
opment of new technologies, and changes in estimated
plant service lives since the last depreciation study. The an-
nualized reduction in depreciation expense was $96 million.
In April 2001, Generation changed its accounting esti-
mates related to the depreciation and decommissioning of
certain generating stations. The estimated service lives were
extended by 20 years for three nuclear stations, by periods of
up to 20 years for certain fossil stations and by 50 years for a
pumped storage station. In July 2001, the estimated service
lives were extended by 20 years for the remainder of Exelon’s
operating nuclear stations. These changes were based on
engineering and economic feasibility studies performed by
Generation considering, among other things, future capital
and maintenance expenditures at the plants. The service life
extensions are subject to Nuclear Regulatory Commission
(NRC) approval of NRC operating licenses, which are gen-
erally 40 years. The annualized reduction in depreciation
expense from the change is $132 million.