8-KOther Events

EXELON CORP 8-K Report, Corporate Update (May 24, 2007)

Filed May 24, 2007For Securities:EXC

Summary

This 8-K filing from Exelon Corporation and its subsidiaries, Commonwealth Edison Company (ComEd) and Exelon Generation Company, LLC, reports on significant legislative developments in Illinois. A key event is the introduction of Floor Amendment No. 3 to Senate Bill 1592, the "Electricity Rate Relief Act of 2007." If enacted, this bill would roll back electricity rates to 2006 levels for most generation, while allowing for approved delivery rate increases. It also mandates refunds to customers for overpayments in 2007, plus interest. Of major concern to Exelon is the proposed annual "generation tax" of $70,000 per megawatt of nameplate capacity on most Illinois generation facilities. This tax is estimated to cost Exelon Generation approximately $775 million annually, with the collected funds earmarked for customer refunds and rate reductions. Exelon explicitly states that the company, along with ComEd and other utilities, believes this legislation would have detrimental effects on Illinois, its utilities, and consumers. They intend to pursue all available legal remedies if the bill becomes law, deeming it unconstitutional.

Key Highlights

  • 1Introduction of "Electricity Rate Relief Act of 2007" (Senate Bill 1592, Floor Amendment No. 3) in Illinois.
  • 2Bill proposes rolling back electricity generation rates to 2006 levels.
  • 3Mandatory refunds to customers for amounts paid in excess of rolled-back rates in 2007, plus interest.
  • 4Imposition of an estimated $775 million annual 'generation tax' on Exelon Generation's capacity.
  • 5The generation tax revenue would fund customer refunds and rate reductions.
  • 6Exelon and ComEd believe the proposed legislation is unconstitutional and would harm Illinois, utilities, and consumers.
  • 7Exelon plans to pursue all available legal remedies if the bill is enacted.

Frequently Asked Questions

The Act, proposed through Floor Amendment No. 3 to Senate Bill 1592, aims to provide electricity rate relief in Illinois. Its primary provisions include rolling back electricity generation rates to 2006 levels (with exceptions for approved delivery rate increases), requiring utilities to refund customers for any 2007 charges exceeding these rolled-back rates plus interest, and imposing a new annual tax on generation capacity.

The bill proposes an annual 'generation tax' of $70,000 per megawatt of nameplate capacity. Exelon Generation estimates this tax would cost them approximately $775 million per year. The funds collected from this tax are intended to be used to finance the customer refunds and rate reductions mandated by the Act.

Exelon, along with ComEd and other Illinois utilities and generators, strongly opposes the bill. They believe that if enacted, the legislation would have serious detrimental effects on Illinois, the utilities, and electricity consumers. Exelon considers the proposed legislation unconstitutional and has stated its intention to pursue all available legal remedies if it becomes law.

The filing states that to become law, the bill needs to be passed by both the Illinois House and Senate and then signed by the Governor. Exelon and other utilities are engaged in discussions with legislators to address concerns through alternative measures. However, the outcome of these discussions and the legislative process remains uncertain at the time of this filing.