Exelon 2011 Annual Report Download - page 35

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33
Discussion of Financial Results – PECO
Results of Operations—PECO
(Dollars in millions) 2011 2010
Favorable
(Unfavorable)
Variance
Operating revenues $ 3,720 $ 5,519 $ (1,799)
Purchased power and fuel expense 1,864 2,762 898
Revenue net of purchased power and fuel expense 1,856 2,757 (901)
Other operating expenses
Operating and maintenance 725 680 (45)
Operating and maintenance for regulatory required programs (a) 69 53 (16)
Depreciation and amortization 202 1,060 858
Taxes other than income 205 303 98
Total other operating expenses 1,201 2,096 895
Operating income 655 661 (6)
Other income and deductions
Interest expense, net (134) (193) 59
Loss in equity method investments — — —
Other, net 14 8 6
Total other income and deductions (120) (185) 65
Income before income taxes 535 476 59
Income taxes 146 152 6
Net income 389 324 65
Preferred security dividends 4 4 —
Net income on common stock $ 385 $ 320 $ 65
(a) Includes amounts for various legislative and/or regulatory programs that are recoverable from customers on a full and current basis through a reconcilable automatic adjustment clause. An equal
and offsetting amount has been reflected in operating revenues.
The increase in PECO’s net income was driven primarily by new distribution rates effective Jan. 1, 2011, as a result of the 2010 electric and natural gas rate case
settlements, decreased interest expense and decreased income tax expense. The increase in net income was partially offset by increased storm costs, increased
depreciation expense and the net impact of the 2010 CTC recoveries reflected in electric operating revenues net of purchased power expense and CTC amortization
expense, both of which ceased at the end of the transition period on Dec. 31, 2010. The decreased interest expense related to the retirement of PECO Energy
Transition Trust (PETT) transition bonds on Sept. 1, 2010, and the impact of the change in measurement of uncertain tax positions in the second quarter of
2010. The decrease in income tax expense was primarily associated with a transmission and distribution tax repairs deduction in accordance with newly elected
IRS guidance.