Exelon 2010 Annual Report Download - page 31

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Discussion of Financial Results - Generation
Results of Operations – Generation
Favorable
(Unfavorable)
(Dollars in millions) 2010 2009 Variance
Operating revenues $ 10,025 $ 9,703 $ 322
Purchased power and fuel expense 3,463 2,932 (531)
Revenue net of purchased power and fuel expense 6,562 6,771 (209)
Other operating expenses
Operating and maintenance 2,812 2,938 126
Depreciation and amortization 474 333 (141)
Taxes other than income 230 205 (25)
Total other operating expenses 3,516 3,476 (40)
Operating income 3,046 3,295 (249)
Other income and deductions
Interest expense (153) (113) (40)
Loss in equity method investments – (3) 3
Other, net 257 376 (119)
Total other income and deductions 104 260 (156)
Income before income taxes 3,150 3,555 (405)
Income taxes 1,178 1,433 255
Net income $ 1,972 $ 2,122 $ (150)
The decrease in Generation’s net income was primarily due to decreased revenue net of purchased power and fuel expense as a result of lower margins realized on market
and affiliate power sales primarily due to unfavorable market conditions, lower mark-to-market gains on economic hedging activities and increased nuclear fuel costs.
These were partially offset by higher capacity revenues, including under the Reliability Pricing Model, in the Midwest and Mid-Atlantic regions, favorable settlements on
the ComEd swap and decreased operating and maintenance expense.
The decrease in operating and maintenance expense was primarily due to the impact of the $223 million impairment of the Handley and Mountain Creek stations
recorded in 2009. Lower operating and maintenance expense was partially offset by higher expense due to the absence of asset retirement obligation reductions that
occurred in 2009; higher wages and benefits costs; and higher nuclear refueling outage costs in 2010. Additionally, Generation’s earnings decreased due to lower net
nuclear decommissioning trust gains for the Non-Regulatory Agreement Units in 2010 compared to 2009.
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