8-KOther Events

EXELON CORP 8-K Report (Aug 10, 2004)

Filed August 10, 2004For Securities:EXC

Summary

Exelon Corporation announced a significant settlement with the U.S. Department of Justice and the U.S. Department of Energy regarding the storage of spent nuclear fuel. This agreement provides for reimbursement of costs incurred by Exelon for storing spent fuel at its nuclear stations, pending the DOE fulfilling its contractual obligation to accept this fuel. Under the settlement, Exelon will receive an immediate gross reimbursement of $80 million, with ongoing annual reimbursements for future storage costs. The total potential gross reimbursement could reach approximately $300 million, contingent on the opening of a national repository by 2010 and the DOE's acceptance of spent fuel. This settlement is expected to positively impact Exelon's 2004 net income by approximately $0.05 per diluted share, with a smaller ongoing annual benefit of $0.01 to $0.02 per diluted share thereafter. Investors should note that reimbursements are subject to actual costs incurred and DOE delays.

Key Highlights

  • 1Exelon reached a settlement with the U.S. Department of Justice and the U.S. Department of Energy concerning spent nuclear fuel storage costs.
  • 2The settlement provides for immediate gross reimbursement of $80 million for past storage costs incurred.
  • 3Future annual reimbursements for ongoing storage costs are also part of the agreement.
  • 4Total potential gross reimbursement could reach approximately $300 million if a national repository opens by 2010 and DOE accepts spent fuel.
  • 5The settlement is projected to increase Exelon's 2004 net income by approximately $0.05 per diluted share.
  • 6Future annual net income is expected to increase by $0.01 to $0.02 per diluted share.
  • 7Reimbursements are contingent on DOE delays in accepting spent nuclear fuel and costs being incurred.

Frequently Asked Questions

The primary financial impact is an anticipated increase in net income. For 2004, the impact is estimated at $0.05 per diluted share. Going forward, it's expected to add $0.01 to $0.02 per diluted share annually. Additionally, Exelon will receive immediate reimbursement of $80 million for past costs and potential future reimbursements.

The filing indicates that Exelon will receive the $80 million immediately as a gross reimbursement for costs already incurred as of August 10, 2004.

The reimbursements are contingent on several conditions. Firstly, they are only made after costs are incurred. Secondly, they are only for costs resulting from DOE delays in accepting the spent nuclear fuel. The total potential reimbursement of $300 million is also dependent on a national repository opening by 2010 and DOE commencing acceptance of spent nuclear fuel.

The filing states that the $80 million is a gross reimbursement. After considering amounts due from Exelon to co-owners of certain nuclear stations, the net reimbursement for past costs is $53 million.