Why are the retirement dates for some generating units being extended?

The retirement dates are being extended by PJM Interconnection LLC to accommodate the construction of transmission system reliability upgrades. PJM determined these upgrades are necessary to alleviate reliability impacts in the region before the units can be permanently retired.

What are the estimated costs associated with these plant retirements?

Exelon estimates total pre-tax costs of $220 million related to the retirement activities. This includes $18 million for severance, $5 million for plant shutdown costs, $180 million for accelerated depreciation, and $17 million for inventory write-downs.

Will the extended operation of these units impact Exelon's financial reporting?

Yes, the incremental charges associated with these retirement activities will be excluded from Exelon's adjusted (non-GAAP) operating earnings in the applicable reporting periods. The company expects to receive cost-based compensation for operating the units beyond their original planned retirement date.

Which specific generating units are affected by this filing?

The filing specifically addresses the retirement of Cromby Generating Station Units 1 and 2, and Eddystone Generating Station Units 1 and 2. Cromby Unit 1 and Eddystone Unit 1 are still set for retirement by May 31, 2011, while Cromby Unit 2 is extended to May 31, 2012, and Eddystone Unit 2 to December 31, 2013.

EXC 8-K: Financial Events & Regulation FD

Summary

This 8-K filing from Exelon Corporation on March 2, 2010, details the revised retirement schedule for several of its generating units, specifically Cromby Generating Station Units 1 & 2 and Eddystone Generating Station Units 1 & 2, all located in suburban Philadelphia. Initially planned for retirement by May 31, 2011, the PJM Interconnection LLC has determined that transmission system reliability upgrades necessitate an extended operational period for some of these units. This extension, driven by the need to alleviate reliability impacts, pushes back the retirement dates for Cromby Unit 2 to May 31, 2012, and Eddystone Unit 2 to December 31, 2013. While this extends the operational life of these older, less economic units, it is contingent upon Exelon receiving required environmental permits and adequate cost-based compensation for their continued operation. The company anticipates these changes will not materially alter expected savings from the shutdown, despite incurring additional costs related to severance, plant shutdown, accelerated depreciation, and inventory write-downs estimated at $220 million pre-tax over the revised timeline.

Key Highlights

1Revised retirement dates for Cromby Unit 2 (May 31, 2012) and Eddystone Unit 2 (December 31, 2013) due to transmission reliability needs.
2Cromby Unit 1 and Eddystone Unit 1 remain scheduled for retirement by May 31, 2011.
3Retirement decision was approved by Exelon's Board of Directors on December 1, 2009, citing economic non-viability and regional demand.
4Total estimated pre-tax costs associated with the retirements, including severance, shutdown costs, accelerated depreciation, and inventory write-downs, are projected at $220 million.
5The company expects to receive cost-based compensation for operating units beyond May 31, 2011.
6The extended operation of units is conditional on obtaining environmental permits and adequate compensation.
7Incremental charges related to these retirements will be excluded from adjusted (non-GAAP) operating earnings.

EXELON CORP 8-K Report, Exit or Disposal Costs (Mar 2, 2010)

Summary

Key Highlights

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