Exelon 2014 Annual Report Download - page 82

Results of Operations—ComEd
2014 2013
Favorable
(Unfavorable)
2014 vs. 2013
Variance 2012
Favorable
(Unfavorable)
2013 vs. 2012
Variance
Operating revenue .............................................. $4,564 $4,464 $ 100 $5,443 $ (979)
Purchased power expense ....................................... 1,177 1,174 (3) 2,307 1,133
Revenue net of purchased power expense (a) ....................... 3,387 3,290 97 3,136 154
Other operating expenses
Operating and maintenance .................................... 1,429 1,368 (61) 1,345 (23)
Depreciation and amortization .................................. 687 669 (18) 610 (59)
Taxes other than income ....................................... 293 299 6 295 (4)
Total other operating expenses ............................. 2,409 2,336 (73) 2,250 (86)
Gain on sales of assets .......................................... 2 — 2 — —
Operating income ............................................... 980 954 26 886 68
Other income and (deductions)
Interest expense, net .......................................... (321) (579) 258 (307) (272)
Other, net ................................................... 17 26 (9) 39 (13)
Total other income and (deductions) ......................... (304) (553) 249 (268) (285)
Income before income taxes ...................................... 676 401 275 618 (217)
Income taxes ................................................... 268 152 (116) 239 87
Net income ..................................................... $ 408 $ 249 $159 $ 379 $ (130)
(a) ComEd evaluates its operating performance using the measure of revenue net of purchased power expense. ComEd believes that revenue net of purchased power
expense is a useful measurement because it provides information that can be used to evaluate its operational performance. In general, ComEd only earns margin
based on the delivery and transmission of electricity. ComEd has included its discussion of revenue net of purchased power expense below as a complement to the
financial information provided in accordance with GAAP. However, revenue net of purchased power expense is not a presentation defined under GAAP and may not
be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.
Net Income
Year Ended December 31, 2014, Compared to Year Ended December 31, 2013. ComEd’s Net income for the year ended
December 31, 2014, was higher than the same period in 2013, primarily due to the 2013 remeasurement of Exelon’s like-kind
exchange tax position, and increased electric distribution and transmission earnings resulting from increased capital investment,
partially offset by unfavorable weather.
Year Ended December 31, 2013, Compared to Year Ended December 31, 2012. ComEd’s Net income for the year ended
December 31, 2013, was lower than the same period in 2012, primarily due to the remeasurement of Exelon’s like-kind exchange tax
position and unfavorable weather, partially offset by increased electric distribution and transmission earnings resulting from
increased costs and capital investments and higher allowed ROE. See Note 3—Regulatory Matters and Note 14—Income Taxes of
the Combined Notes to Consolidated Financial Statements in the 2013 10-K for additional information.
Operating Revenue Net of Purchased Power Expense
There are certain drivers of Operating revenue that are fully offset by their impact on Purchased power expense, such as commodity
procurement costs and participation in customer choice programs. ComEd is permitted to recover electricity procurement costs from
retail customers without mark-up. Therefore, fluctuations in electricity procurement costs have no impact on Revenue net of
purchased power expense. See Note 3—Regulatory Matters of the Combined Notes to Consolidated Financial Statements for
additional information on ComEd’s electricity procurement process.
All ComEd customers have the choice to purchase electricity from a competitive electric generation supplier. Customer choice
programs do not impact ComEd’s volume of deliveries, but do affect ComEd’s Operating revenue related to supplied energy, which
is fully offset in Purchased power expense. Therefore, customer choice programs have no impact on Revenue net of purchased
power expense.
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