8-KOther EventsExhibits & Filings

EXELON CORP 8-K Report, Corporate Update (Dec 22, 2006)

Filed December 22, 2006For Securities:EXC

Summary

This 8-K filing from Exelon Corporation provides an update on regulatory actions by the Illinois Commerce Commission (ICC) concerning its subsidiary, Commonwealth Edison Company (ComEd). The ICC has approved a rate stabilization program for ComEd's residential customers, allowing for a phased-in approach to rate increases initially set for January 2, 2007, and introducing a real-time pricing program. This initiative aims to mitigate the immediate impact of rate hikes on consumers. Furthermore, the ICC issued a rehearing order on ComEd's delivery service rate case, increasing the total approved rate increase to $82.6 million. Crucially, the order clarified the recovery of previously incurred severance costs, leading ComEd to anticipate recording a $158 million regulatory asset in Q4 2006. This asset reflects the recognized recovery of these costs, though it will not impact Exelon's adjusted operating earnings for 2006. Investors should note that the Illinois Attorney General has filed a motion to stay further rate increases, which ComEd intends to oppose.

Key Highlights

  • 1ICC approved a rate stabilization program for ComEd residential customers, phasing in rate increases.
  • 2A real-time pricing program for ComEd residential customers has been introduced.
  • 3ICC's rehearing order increased ComEd's delivery service rate increase by an additional $74.3 million, for a total of $82.6 million.
  • 4ICC order clarified recovery of $158 million in previously incurred severance costs.
  • 5ComEd will record a $158 million regulatory asset in Q4 2006 related to severance cost recovery.
  • 6The regulatory asset will not affect Exelon's adjusted (non-GAAP) operating earnings for 2006.
  • 7Illinois Attorney General filed a motion to stay rate increases pending appeal.

Frequently Asked Questions

The rate stabilization program allows residential customers to gradually absorb rate increases that were initially scheduled to take effect on January 2, 2007. This phased approach is intended to ease the financial burden on consumers by spreading out the cost over several years.

The rehearing order resulted in an additional $74.3 million rate increase, bringing the total approved increase to $82.6 million. More significantly, it clarified that ComEd can recover $158 million in previously incurred severance costs. This will lead to ComEd recording a $158 million regulatory asset in the fourth quarter of 2006, which represents the recognized value of these recoverable costs.

No, Exelon Corporation has stated that the impact of recording the $158 million regulatory asset will not be included in its adjusted (non-GAAP) operating earnings for 2006. This means the asset recognition is a regulatory accounting measure and does not directly alter the company's operational profitability as defined by its adjusted earnings metric for the year.

The Illinois Attorney General has filed a motion with the Illinois Appellate Court to halt scheduled rate increases related to energy procurement. This action is pending the outcome of her appeal. ComEd plans to actively oppose this motion, indicating a potential for further regulatory and legal challenges to the rate adjustments.