Summary
This 8-K filing from Exelon Corporation (EXC) and its subsidiary Commonwealth Edison Company (ComEd) details the financial impacts of recent Illinois Commerce Commission (ICC) rate orders issued on May 29 and October 3, 2012. While a key ruling allowing recovery on a pension asset was favorable, the aggregate of other ICC decisions is projected to create a significant annual revenue shortfall for ComEd, estimated at approximately $100 million per year starting in 2014 and continuing thereafter. These adverse decisions, which ComEd is appealing, stem from the ICC's treatment of short-term debt rates on reconciliation balances, the use of an average rate base instead of a year-end rate base, and various disallowances related to operating expenses and tax adjustments. The resulting lower revenues also negatively impact ComEd's capital structure, potentially limiting its ability to fund investments. Consequently, ComEd has been forced to delay certain Energy Infrastructure Modernization Act (EIMA) investments, such as smart meter deployment, pending the outcome of its appeal.
Key Highlights
- 1Commonwealth Edison Company (ComEd) disclosed negative financial impacts from Illinois Commerce Commission (ICC) rate orders.
- 2The ICC's decisions are projected to cause an annual revenue deficit of approximately $100 million for ComEd starting in 2014.
- 3Key adverse rulings include unfavorable treatment of short-term debt rates on reconciliation balances and the use of an average rate base.
- 4ComEd is appealing specific ICC findings it believes are contrary to the Energy Infrastructure Modernization Act (EIMA).
- 5The projected revenue shortfall will negatively affect ComEd's capital structure, potentially impacting its ability to fund investments.
- 6ComEd has delayed some EIMA investments, including smart meter deployment, due to funding concerns stemming from the ICC decisions.