Summary
This 8-K filing from Exelon Corporation (EXC) on March 23, 2007, reports on significant legislative developments in Illinois that could impact its subsidiary, Commonwealth Edison Company (ComEd). The primary concern for investors is the potential enactment of legislation aimed at rolling back electricity rates for ComEd customers to December 29, 2006 levels. This legislation also proposes refunds for charges collected above these historical rates since January 2, 2007, and could limit future rate increases until 2010 for all bundled service customers. While the Illinois House approved similar legislation earlier, the more recent focus is on Senate Bill 1592. This bill has undergone amendments, most notably including ComEd in the rate rollback and refund provisions, and limiting rate increases. Although it has advanced out of committee, its ultimate passage and the Governor's signature are uncertain. Exelon and ComEd are actively engaged in discussions to explore alternatives, but there is no guarantee of the outcome. Investors should monitor this situation closely as it presents a material risk to ComEd's revenue and profitability.
Key Highlights
- 1Illinois legislation (House Bill 1750 and Senate Bill 1592) proposes rolling back electricity rates for Commonwealth Edison Company (ComEd) customers to December 29, 2006 levels.
- 2The proposed legislation includes provisions for refunds, with interest, on charges collected from residential customers above the rolled-back rates since January 2, 2007.
- 3Future rate increases for all bundled service customers could be generally limited until 2010 under House Bill 1750, and for at least one year under amended Senate Bill 1592.
- 4Senate Bill 1592, which now includes ComEd, has passed out of the Senate Environment and Energy Committee but has not yet reached the Senate floor.
- 5The ultimate enactment of this legislation is uncertain as it requires passage by both the House and Senate, and the Governor's signature.
- 6Exelon and ComEd are actively engaged in discussions to explore alternatives to rate freeze legislation.
- 7The company cannot provide assurances regarding the outcome of legislative discussions or the final content of any adopted legislation.