Exelon 2008 Annual Report Download - page 29

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Net฀Income.฀Exelon’s฀net฀income฀for฀2008฀was฀consistent฀compared฀to฀2007.฀Increases฀were฀primarily฀due฀to฀higher฀average฀realized฀margins฀at฀Generation,฀reecting฀
higher฀realized฀prices฀on฀market฀sales;฀increased฀revenue฀from฀certain฀long฀options฀in฀Generation’s฀proprietary฀trading฀portfolio;฀net฀mark-to-market฀gains฀on฀economic฀
hedging฀activities;฀the฀impact฀of฀the฀settlement฀reached฀between฀Generation,฀ComEd฀and฀other฀generators฀and฀utilities฀in฀Illinois,฀and฀various฀representatives฀from฀the฀
State฀of฀Illinois฀in฀2007฀(Illinois฀Settlement);฀increased฀transmission฀and฀delivery฀service฀revenue฀at฀ComEd฀in฀2008฀resulting฀from฀the฀2007฀transmission฀and฀distribution฀
rate฀cases;฀the฀impact฀of฀a฀2007฀loss฀associated฀with฀Generation’s฀tolling฀agreement฀with฀Georgia฀Power฀related฀to฀the฀contract฀with฀Tenaska;฀the฀impact฀of฀a฀decreased฀
charitable฀contribution฀to฀the฀Exelon฀Foundation;฀and฀gains฀related฀to฀the฀settlement฀of฀claims฀related฀to฀uranium฀supply฀agreements.฀These฀increases฀were฀offset฀
by฀unrealized฀and฀realized฀losses฀associated฀with฀Generation’s฀nuclear฀decommissioning฀trust฀funds฀related฀to฀the฀former฀AmerGen฀nuclear฀generating฀units฀and฀its฀
unregulated฀portions฀of฀the฀Peach฀Bottom฀nuclear฀generating฀units฀(Unregulated฀Units);฀increased฀nuclear฀fuel฀costs;฀decreased฀nuclear฀output฀at฀Generation฀reecting฀
increased฀scheduled฀refueling฀outage฀days฀in฀2008;฀increased฀operating฀and฀maintenance฀expense฀related฀to฀the฀higher฀number฀of฀planned฀nuclear฀refueling฀outages;฀
unfavorable฀weather฀conditions฀in฀the฀ComEd฀and฀PECO฀service฀territories;฀increased฀allowance฀for฀uncollectible฀accounts฀expense฀at฀PECO฀and฀ComEd฀as฀well฀as฀the฀
establishment฀ of฀ a฀ reserve฀ related฀ to฀ Generation’s฀ accounts฀ receivable฀ from฀ Lehman฀ Brothers฀ Holdings,฀ Inc.฀ (Lehman);฀ labor-related฀ ination;฀ increased฀ scheduled฀
competitive฀transition฀charges฀(CTC)฀amortization฀expense฀at฀PECO;฀impact฀of฀a฀gain฀realized฀in฀2007฀on฀nuclear฀decommissioning฀trust฀fund฀investments฀related฀to฀the฀
Unregulated฀Units฀primarily฀associated฀with฀changes฀in฀Generation’s฀investment฀strategy;฀realized฀nuclear฀decommissioning฀trust฀fund฀losses฀related฀to฀a฀tax฀planning฀
strategy;฀the฀impact฀of฀the฀favorable฀2007฀PJM฀Interconnection,฀LLC฀(PJM)฀billing฀settlement฀with฀PPL฀Electric฀(PPL);฀the฀impact฀of฀the฀termination฀of฀Generation’s฀power฀
purchase฀agreement฀(PPA)฀with฀State฀Line฀in฀2007;฀and฀income฀associated฀with฀investments฀in฀synthetic฀fuel-producing฀facilities฀in฀2007.฀
฀
Operating฀Revenues.฀Operating฀revenues฀decreased฀due฀to฀lower฀nuclear฀output฀due฀to฀more฀planned฀refueling฀outage฀days฀in฀2008;฀unfavorable฀weather฀conditions฀in฀
the฀ComEd฀and฀PECO฀service฀territories;฀the฀impact฀of฀the฀Illinois฀Settlement;฀the฀reduction฀in฀PECO’s฀distribution฀rates฀made฀to฀refund฀the฀Pennsylvania฀Public฀Utility฀
Realty฀Tax฀Act฀(PURTA)฀tax฀settlement฀to฀customers฀(completely฀offset฀by฀the฀amortization฀of฀the฀regulatory฀liability฀reected฀in฀taxes฀other฀than฀income);฀and฀the฀impact฀
of฀the฀termination฀of฀Generation’s฀PPA฀with฀State฀Line฀in฀2007.฀These฀decreases฀were฀partially฀offset฀by฀higher฀realized฀prices฀on฀market฀sales฀at฀Generation;฀increased฀
transmission฀and฀delivery฀service฀revenue฀at฀ComEd฀resulting฀from฀the฀2007฀transmission฀and฀distribution฀rate฀cases;฀increased฀delivery฀volumes,฀excluding฀the฀effects฀
of฀weather,฀at฀PECO;฀and฀increased฀revenue฀from฀certain฀long฀options฀in฀Generation’s฀proprietary฀trading฀portfolio.฀
฀
Discussion฀of฀Financial฀Results฀-฀Exelon
27