Exelon 2006 Annual Report Download - page 37

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Discussion of Financial Results – PECO
Results of Operations – PECO
2006 2005
Favorable
(Unfavorable)
Variance
Operating revenues $5,168 $4,910 $ 258
Operating expenses
Purchased power and fuel 2,702 2,515 (187)
Operating and maintenance 628 549 (79)
Depreciation and amortization 710 566 (144)
Taxes other than income 262 231 (31)
Total operating expense 4,302 3,861 (441)
Operating income 866 1,049 (183)
Other income and deductions
Interest expense, net (266) (279) 13
Equity in losses of unconsolidated affiliates (9) (16) 7
Other, net 30 13 17
Total other income and deductions (245) (282) 37
Income before income taxes and cumulative effect of a change in accounting principle 621 767 (146)
Income taxes 180 247 67
Income before cumulative effect of a change in accounting principle 441 520 (79)
Cumulative effect of a change in accounting principle – (3) 3
Net income 441 517 (76)
Preferred stock dividends 44 –
Net income on common stock $ 437 $ 513 $ (76)
PECO’s net income in 2006 decreased primarily due to higher CTC amortization and higher operating and maintenance
expense, which reflected higher storm costs. Partially offsetting these factors were higher revenues, net of purchased power
and fuel expense. Higher net revenues reflected certain authorized electric rate increases, including a scheduled CTC rate
increase, partially offset by lower net electric and gas revenues as a result of unfavorable weather relative to the prior year. The
increases in CTC amortization expense and CTC rates were in accordance with PECO’s 1998 restructuring settlement with the
Pennsylvania Public Utility Commission. The increase in CTC amortization expense exceeded the increase in CTC revenues.
EXELON CORPORATION AND SUBSIDIARY COMPANIES 35