The paper utilized for the printing of this report is certified by the Forest Stewardship Council, which promotes environmentally appropriate,
socially beneficial and economically viable management of the world’s forests. All the paper utilized in the production of this annual report was
manufactured by Mohawk Fine Papers and contains 30% post-consumer recycled fiber. Mohawk Fine Papers purchases enough Green-e certified
renewable energy certificates (RECs) to match 100% of the electricity used in its operations. Mohawk has provided the calculations below on use
of 33,000 pounds of paper.
E
The savings derived from using this paper in lieu of virgin fiber paper is equivalent to:
95 trees
preserved for
the future
274 lbs.
waterborne
waste not created
40,372 gallons
wastewater
flow saved
4,467 lbs.
solid waste
not generated
8,795 lbs.
net greenhouse
gases prevented
67,320,000 BTUs
energy not
consumed
The savings derived from choosing a paper manufactured
using wind-generated electricity:
This amount of wind-generated electricity
is equivalent to:
14,883 lbs.
air emissions
not generated
16
barrels crude
oil unused
1
cars off the road
for one year
1,012
trees
planted
Exelon Corporation
P.O. Box 805398
Chicago, IL 60680-5398
www.exeloncorp.com
©2010 Exelon
Sustainable Performance
Exelon Corporation 2009 Summary Annual Report
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Introduction
Letter to Shareholders
Exelon’s Vision Statement
Our Goals and Values
Our Financial Discipline
Our Operational Excellence
Our Environmental Leadership
Our Superior Talent
Exelon at a Glance
Executive Committee
Board of Directors
Financial Section
On the cover: PECO has been displaying messages atop its headquarters since July 4, 1976. Since that time, the company has saluted local community and non-profit organizations with more
than 18,000 messages. On July 4, 2009, PECO unveiled its new Crown Lights, which comprise 2 million energy-efficient LED lights.
Forward-Looking Statements This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The factors
that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon’s 2009 Annual Report on Form 10-K in
(a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; and
(2) other factors discusssed in Exelon’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. Exelon
does not undertake any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this report.
corporate profile
Exelon Corporation is one of the nation’s largest electric utilities with approximately $17 billion in annual revenues. The company has one of the industry’s largest
portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately
5.4 million customers in northern Illinois and southeastern Pennsylvania and natural gas to approximately 485,000 customers in the Philadelphia area. Exelon is
headquartered in Chicago and trades on the NYSE under the ticker EXC.
Shareholder Inquiries
Exelon Corporation has appointed BNY Mellon Shareowner Services as its transfer agent, stock registrar, dividend disbursing agent
and dividend reinvestment agent. Should you have questions concerning your registered shareholder account or the payment
or reinvestment of your dividends, or if you wish to make a stock transaction or stock transfer, you may call shareholder services
at BNY Mellon at the toll-free number shown to the left or access their website at www.bnymellon.com/shareowner/isd.
Morgan Stanley Smith Barney administers the Employee Stock Purchase Plan (ESPP) and employee stock options. Should you
have any questions concerning your employee plan shares or wish to make a transaction, you may call the toll-free numbers
shown to the left or access their web site at www.benefitaccess.com.
The Company had approximately 135,000 holders of record of its common stock as of Dec. 31, 2009.
The 2009 Form 10-K Annual Report to the Securities and Exchange Commission was filed on Feb. 5, 2010. To obtain a copy
without charge, write to Bruce G. Wilson, Senior Vice President, Deputy General Counsel, and Corporate Secretary, Exelon
Corporation, Post Office Box 805398, Chicago, Illinois 60680-5398.
The Company maintains a telephone information service, which enables investors to obtain currently available information on
financial performance, company news and to access shareholder services at BNY Mellon. To use this service, please call our
toll-free number, 1.866.530.8108.
investor and general information
Corporate Headquarters
Exelon Corporation
P.O. Box 805398
Chicago, IL 60680-5398
Transfer Agent
BNY Mellon
800.626.8729
Employee Stock Purchase Plan
877.582.5113
Employee Stock Options
888.609.3534
Investor Relations Voice Mailbox
312.394.2345
Independent Public Accountants
PricewaterhouseCoopers LLP
Web site
www.exeloncorp.com
Stock Ticker
EXC
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©
Eighteen months ago, both presidential candidates were committed
to a cap-and-trade system to address the risks of climate change.
Now, that issue is caught in economic and political turmoil. So what
do we really know about energy policy? We know that our energy
supplies must continue to become cleaner and greener, and we
know that they must become more secure. Our program, Exelon
2020, remains uniquely adapted to achieving these goals in a
cost-effective way.
Beyond what Exelon is doing, or can do, this nation needs a comprehensive
energy policy that gives us cleaner energy, greater security and more
durable jobs, and does so at the lowest possible cost:
> We must reduce air pollution and the risk of climate change
> We must improve our energy efficiency
> We must pursue renewables and clean coal
> We must build the next generation nuclear fleet
> And we must do these things in a cost-effective way through the
discipline and innovation of competitive markets
John W. Rowe, Chairman and Chief Executive Officer
To Our Shareholders
In 2009, our economy struggled through one of the worst recessions
in memory. Though signs of recovery have begun to appear, Exelon
was challenged by the nation’s economic weakness – as was nearly
every major corporation. In our case, weak demand for electricity,
depressed power and commodity prices, and unfavorable weather
were the headwinds into which we sailed.
2
John W. Rowe
Chairman and Chief Executive Officer
We were very successful in controlling the elements we can control: our operations, costs and human
capital. As for the elements we could not control – the power markets, economy, weather and politics –
we have been strategic, thoughtful and disciplined. While 2009 was not as good as we once hoped it
would be, our results demonstrate Exelon’s ability to build sustainable performance.
OUR FINANCIAL PERFORMANCE
Our operating (non-GAAP) earnings* were $4.12 per diluted share, near the middle of the initial guidance
range we issued in late 2008 and above the revised range we offered in October 2009. The Exelon team
performed exceptionally well given the adverse economic forces that we faced. Our GAAP earnings were
$4.09 per diluted share compared to $4.13 in 2008.
Exelon’s stock market valuation continues to be higher than that of any other U.S. utility. Our year-end
market capitalization of $32.2 billion made us 20% larger than our next closest competitor. And since
the merger that created Exelon, our total return – measured as stock price appreciation plus reinvested
dividends – was 120.6%. This compares to total returns of 63.8% and -5.3% for the Philadelphia Utility
Index and S&P 500, respectively. Nevertheless, Exelon’s share price on December 31 was $48.87, down
12.1% from the year-end 2008 price of $55.61. In contrast, the Philadelphia Utility Index increased 4.9%
in 2009 and the S&P 500 increased 23.5%. This performance disappoints me as much as it does you,
and we have experienced further declines in the new year. The earnings of our largest subsidiary,
Exelon Generation, are driven by electricity demand and the prices of coal and natural gas, all of which
declined largely as a result of the recession. Exelon’s future earnings and share price appreciation are
dependent to a large extent on those factors. But as growth returns, markets tighten and various forms
of regulation impact our competitors, Exelon will be a superior investment.
Our achievements garnered the attention of a variety of stakeholders. We were one of three corporations
to be named by Forbes as one of “America’s Best Companies.” We were ranked seventh on BusinessWeek’s
“Top 50” companies, and Electric Light & Power named Exelon its “Utility of the Year.” For the fourth
straight year, we were named to the Dow Jones Sustainability North America Index in recognition of
* For a reconciliation of adjusted (non-GAAP) operating earnings to GAAP (accounting principles generally accepted in the United States),
see Exelon’s fourth quarter earnings release issued January 22, 2010, posted on the Investor Relations page at www.exeloncorp.com
and included in the 8-K filed with the SEC on that date.
3
our economic, social and environmental performance. In a year that found many in need, our employees
continued to demonstrate dedication to the communities we serve. Exelon’s “Energy for the Community”
program – through which our employees donated over 57,000 hours of their time – was recognized for
the second year in a row by VolunteerMatch as the Corporate Volunteer Program of the Year. Diversity Edge
magazine named us a top 10 company for diverse graduates, and GI Jobs magazine recognized us as a
top 50 military friendly employer. Our achievements, financial and otherwise, are due to the hard work
and focus of our employees amidst potential distractions. I am deeply appreciative of their efforts.
OUR OPERATING PERFORMANCE
There is no better example of sustainable performance than our operating results. Our first priority is
always safety, and I am very glad to report that Exelon turned in top-quartile safety performance in 2009.
Our nuclear fleet, led by Chip Pardee and Mike Pacilio, again ran at world-class levels. The fleet recorded
a capacity factor of 93.6%, the seventh straight year over 93%. We received license renewals for the
reactors at Oyster Creek and Three Mile Island, allowing them to generate zero-emissions electricity
for an additional 20 years. And we expanded the generating capacity of the fleet by approximately 70
megawatts through component replacements at Quad Cities, Dresden and Peach Bottom Stations, the
first of a wave of capacity uprates at our plants.
Exelon Power also performed well under the guidance of Doyle Beneby. The commercial availability of
our fossil units was 93.7%, exceeding last year’s mark of 89.1%. Falling electricity demand and declining
wholesale electricity prices pose a significant hurdle for our fossil units, particularly the older and less
efficient coal plants in Pennsylvania. As a result, we announced in December our intention to permanently
retire Cromby Station and the coal units at Eddystone Station. This decision will create between $165 million
and $200 million in present value savings in the form of avoided expense and capital expenditures. The
hydro facilities performed exceptionally once again, and Power added the 10-megawatt City Solar facility
on the South Side of Chicago.
In a year when power prices plummeted compared to the prior year, the value of Power Team’s risk
management was apparent. The contracts executed and overseen by Ken Cornew, Joe Glace and their
teams to hedge wholesale electricity price risk held average realized margins at Exelon Generation
4
almost flat to those in 2008, despite power prices 40% lower. Those hedges contributed to the $5.8
billion in cash from operations (non-GAAP) generated across the businesses and helped us to return
$1.4 billion to shareholders through our dividend.
Both PECO and ComEd continued to deliver superior operating and financial performance. Outage
frequency at both companies and outage duration at ComEd were the lowest ever recorded. Customer
satisfaction for both companies was also at or near record levels. While ComEd and PECO escaped the
excessive heat and powerful summer storms seen in years past, the improved performance metrics are
evidence that the reliability investments made by both companies are paying off. Denis O’Brien and
Craig Adams at PECO and Anne Pramaggiore and Terry Donnelly at ComEd are to be commended for
these accomplishments. Both delivery companies maintained their financial health through careful
management of costs. PECO reduced expenses below 2008 levels, allowing it to increase its net income
despite declining demand. At ComEd, Frank Clark’s diligent commitment to managing expenses,
increasing revenues and improving efficiency resulted in an increase in the earned return-on-equity
(ROE) from 5.5% in 2008 to 8.5% in 2009. ComEd is targeting an ROE of at least 10.0% in 2010.
The weak economy required even more financial discipline than usual. A company-wide effort led by
Chris Crane enabled us to not only meet our commitment to keep operating and maintenance expenses
flat to 2008 levels but also to realize an additional $200 million in savings. In 2009, we completed a
restructuring effort that involved the elimination of roughly 500 positions. That process was difficult for
me and for our employees, but it was necessary and created much-needed efficiencies. Our focus on costs
will continue in 2010. We also took steps to substantially increase our financial flexibility. The Finance
group, led by Bill Von Hoene and Matt Hilzinger, took advantage of favorable interest rates to refinance
$1.2 billion in debt maturing in 2011 and used $350 million in cash on hand to make a discretionary pension
contribution that will decrease expected 2011 mandatory contributions by $1 billion. The Exelon Business
Services Company (BSC) provided top-quality legal, information technology, supply and human resource
services to the operating companies while realizing significant cost savings. Ruth Ann Gillis, Andrea Zopp,
Dan Hill, Bridget Reidy, Sonny Garg and their groups performed superbly and were essential in helping to
keep the lights on and the gas flowing.
5
SUSTAINING OUR PERFORMANCE
We are constantly looking for ways to grow the market value of your company. At this time last year,
we believed the best means to that end was the acquisition of NRG Energy, Inc. Despite offering what
we viewed as a fair price for NRG, we were unable to convince its management and shareholders to
support our acquisition offer. Many analysts and investors told us the price it would take to close the
deal. That price would have sapped the value from the acquisition, and your board and I chose to walk
away rather than overpay. In the months since, the relative valuation of the two companies has validated
that decision. While I am frustrated that we did not prevail, my focus today is what it has always been –
shareholder value. And the NRG transaction was far from our only option for creating sustained value
for you. We are pursuing five opportunities:
• First, Exelon offers the industry’s most compelling plan to bring new nuclear generation to market.
Our uprate projects – up to 1,500 megawatts, 70 of which came online last year – would bring the
equivalent of one new nuclear reactor online by 2017. They would come at half the cost of a new plant
and with less risk because of the opportunity to defer expansion if power prices do not support it.
• Second, PECO’s and ComEd’s investments in smart grid infrastructure will help modernize the delivery
system while providing attractive regulated returns. The two companies plan to spend up to $725 million
on advanced metering smart grid infrastructure in the coming years. PECO was one of six utilities
selected to receive a $200 million federal stimulus grant. ComEd is moving forward with a pilot
program on Chicago’s West Side and adjacent suburbs.
• Third, we created the Exelon Transmission Company (ETC) to meet the growing need to invest in our
transmission infrastructure and improve reliability, reduce congestion and move renewable energy
to the country’s population centers. ETC gives us a means to operate outside our traditional footprint.
It will benefit from Ian McLean’s years of experience in power markets and regional transmission
organizations, Betsy Moler’s understanding of the regulatory process from her time as the head of
FERC and the knowledge of dozens of transmission employees throughout the company.
• Fourth, no company in our industry is better positioned to benefit from the economic recovery. Exelon
Generation’s nuclear fleet remains the lowest-cost producer in the industry. It will create considerable
value as the prices of natural gas and coal recover and electricity demand picks up.
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• Fifth, no company in our industry is better positioned to prosper in a carbon-constrained world.
Exelon has improved the performance of our nuclear fleet and increased its capacity. We have
divested or proposed to close relatively inefficient fossil-fired plants. We have developed a unique
resource plan in Exelon 2020 that would effectively eliminate our carbon footprint. As of 2009, we
were on track to achieve that goal and had accomplished one-third of it—removing the equivalent
of the carbon dioxide (CO2) emissions of 1 million cars.
Exelon has been a leading voice supporting an efficient U.S. response to the challenges created by climate
change. Accordingly, we have supported the creation of a cap-and-trade mechanism for controlling CO2
emissions. In this way, market forces would drive suppliers and customers to adopt the lowest-cost
responses to reduce CO2 emissions. The outcome of climate legislation remains uncertain, but what
is certain is that we are inexorably moving towards a lower-carbon society. If Congress does not act to
limit carbon emissions, the EPA is determined to do so, both through its carbon regulation powers and
through its other authorities with respect to air pollution. Thanks to foresight and planning, Exelon
and you, our shareholders, stand to benefit from either outcome.
Today’s Exelon is the combination of two large utility companies and one commodity-based generating
company. The current economic and commodity environments make it a difficult time to be either – a
fact reflected in our 2010 earnings forecast. We are confronted with great uncertainties about how the
future will unfold. But our performance in 2009 demonstrates our ability to deliver value to our customers,
employees, the communities we serve and you – our investors – in tough times as well as good ones.
That is what we mean by sustainable performance. And it is what we strive for in our quest to become
the best group of electric generation and electric and gas delivery companies in the United States.
John W. Rowe
Chairman and Chief Executive Officer
Exelon Corporation
March 8, 2010
7
Our Vision
Exelon will be the best group of electric generation and electric and
gas delivery companies in the United States –providing superior
value for our customers, employees, investors and the communities
we serve.
Exelon City Solar, the largest urban solar power
plant in the United States, is a 10-megawatt
installation located on a 41-acre brownfield in
Chicago’s West Pullman neighborhood. Its 32,292
solar photovoltaic panels generate 14,000
megawatt-hours of clean, reliable electricity per
year. The facility was built in 2009 and began
operating in early 2010.
our goals
> Keep the lights on and the gas flowing
> Run the nuclear fleet at world-class levels
> Capitalize on environmental leadership and clean nuclear energy
> Create a challenging and rewarding workplace
> Enhance the value of our generation
> Build value through disciplined financial management
our values
Safety – for our employees, our customers and our communities
Integrity – the highest ethical standards in what we say and what we do
Diversity – in ethnicity, gender, experience and thought
Respect – trust and teamwork through open and honest communication
Accountability – for our commitments, actions and results
Continuous improvement– stretch goals and measured results
Limerick Generating Station is a nuclear power
plant built on a 600-acre site located about 20
miles northwest of Philadelphia in Montgomery
County. Both of Limerick’s units are boiling water
reactors that together can produce enough clean,
greenhouse gas emission-free energy to power
more than 2 million average American homes.
10
Our Financial Discipline
2009 was again a year in which Exelon demonstrated its industry-leading
financial discipline, cash flow and risk management practices.
In June, the company announced an aggressive cost reduction program in
the face of the economic challenges confronting our entire economy and
reflecting the commodity-driven nature of Exelon Generation’s revenues.
The company significantly exceeded its 2009 cost reduction goals by
reducing positions and increasing efficiencies.
The hedging program managed by Power Team was again at the forefront
of Exelon’s ability to ensure stable cash flows despite historically low
commodity and power prices. These efforts and others allowed Exelon to
return approximately $1.4 billion in dividend payments to shareholders
while beating our cash goals by about $700 million.
We further demonstrated our discipline by walking away from our proposed
acquisition of NRG Energy, Inc. We seek long-term value, but not at any price.
11
Our Operational Excellence
The employees of Exelon kept the lights on and the gas flowing by delivering
best-in-class performance in our generation, delivery and service companies.
With the nuclear fleet performing at an industry-leading 93.6 percent capacity
factor and our fossil plants performing at their highest levels since we began
tracking their performance, our Generation group produced approximately
150 thousand gigawatts of power at the industry’s lowest carbon intensity.
ComEd and PECO, our distribution utilities, enjoyed similar successes, with
ComEd enjoying its best-ever safety performance while setting several
performance records in terms of decreasing customer interruptions per month
and the average duration of outages experienced by customers. PECO invested
approximately $400 million in infrastructure improvements and new
facilities last year and enjoyed its third-best year for outage frequencies.
And Exelon Business Services Company again provided excellent services
to our operating companies. Our Finance team completed its two-year
Financial Transformation Implementation Program on time and on budget.
Human Resources and Communications executed the complex details to
accomplish major organizational change, and Supply continued its efforts
to promote a more diverse supplier base throughout the Exelon family of
companies while at the same time realizing $150 million in savings from
renegotiated contracts.
12
In 2008, ComEd opened a state-of-the-art
substation in Chicago’s West Loop. This was part
of an eight-year, $350 million project that also
created multiple sources of supply for other
downtown Chicago substations and substantially
improved reliability for downtown businesses and
neighborhoods. ComEd serves 3.8 million customers
in a retail service area of 11,300 square miles.
13
Conowingo is a 570-megawatt hydroelectric
power plant located on the Susquehanna River in
northern Maryland. Exelon wishes to maintain this
virtually emissions-free generating capacity and
its electrical output, and on March 12, 2009, filed
a Notification of Intent with the Federal Energy
Regulatory Commission to relicense Conowingo
beyond its September 2014 expiration.
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Our Environmental Leadership
Exelon continued to make strong progress on Exelon 2020: a low-carbon
roadmap. Less than one year after our original announcement of what is
now our business and environmental plan, we announced greenhouse
gas emissions reductions of over 35 percent under the U.S. Environmental
Protection Agency’s Climate Leaders program. We are now one-third of the
way to our 2020 goal of effectively eliminating our carbon footprint.
Exelon was for the fourth consecutive year named to the Dow Jones
Sustainability North America Index and redoubled advocacy efforts on
climate legislation, with frequent visits to Capitol Hill and testimony
before key Congressional committees.
Exelon Business Services Company led the way toward a 16 percent reduction
in energy use across our commercial facilities. During 2009, the U.S.
Department of Energy annouced its intent to award PECO $200 million in
matching grant funds under the Smart Grid Investment Program. ComEd
completed year one of its consumer Smart Ideas energy efficiency program
and launched its Smart Grid pilot.
Exelon Nuclear announced a nuclear uprate program to expand its existing
reactor fleet by up to 1,500 megawatts (MW) of new zero-emissions output
and brought 70 MW on line in 2009. Exelon Power’s Chicago City Solar plant,
a 10-MW facility, began operations on a former industrial site in Chicago’s
West Pullman neighborhood. The plant is the largest urban solar installation
in the nation.
15
Our Superior Talent
The sustainable performance reported in these pages is thanks to the
hard work, dedication and diligence of our 19,300 employees, who keep
the lights on and the gas flowing 24 hours a day, seven days a week.
While much has changed since 2008, both in the global economy and in
our workforce, we have not wavered from our commitment to diversity and
inclusion. With the additional focus of Exelon’s Diverse Supplier Enablement
program, we are bringing our diversity and inclusion efforts to new levels
of success inside and outside the company, involving community banks and
minority-owned businesses at a higher level than at any point in our history.
That level of excellence extends beyond the tasks involved in generating,
transmitting and delivering power. Exelon’s “Energy for the Community”
volunteer program was named Corporate Volunteer Program of the Year
by VolunteerMatch, the second consecutive year our employees have
earned this honor, thanks to their 57,000 hours of volunteering in 2009.
16
At PECO’s Transmission System Operations center in
Philadelphia, operators keep close watch on the
regional electric grid. PECO will spend more than
$500 million on maintenance, system performance
and capacity expansion projects in 2010 to maintain
its reliable service to PECO customers. PECO serves
1.6 million electric customers and 485,000 natural
gas customers.
17
Exelon at a Glance
comed
ComEd set all-time bests for fewest customer interruptions and average outage
duration in 2009. ComEd customers experienced 1.2 million fewer interruptions
than in 2008 and service on average was restored nearly 50 minutes faster.
ComEd also continued its strong safety culture by achieving the company’s best
safety performance record ever.
In response to the economic downturn, ComEd reduced non-GAAP operating and
maintenance expenses by more than $80 million from 2008 spending levels through
cost management and efficiency initiatives. Capital expenditures in 2009 were
reduced by $99 million from 2008 levels by recalibrating new business spend and
system investment to align with decreased system demand.
The Illinois Commerce Commission (ICC) unanimously approved the deployment of
131,000 smart meters to assess how Smart Grid technology can enhance service,
help customers make informed decisions about energy use and contribute to
reduced carbon emissions. ComEd’s environmental programs exceeded first-year
targets with more than 160 gigawatt-hours of energy savings. These programs
are on track to make ComEd an industry leader in electricity savings through
energy efficiency.
ComEd created an Operational Strategy and Business Intelligence organization
that drove productivity and efficiency through a number of initiatives, including
an enhanced service suspension model and revenue protection efforts.
In July, Illinois Governor Pat Quinn signed assistance legislation that included
a provision for utilities to recover actual uncollectible account expenses on an
annual basis through a rider adjustment mechanism. On February 2, 2010, the ICC
issued an order approving ComEd’s proposed tariffs, with minor modifications.
With the ICC’s approval of the tariff, ComEd will begin collecting past due amounts
in April 2010. ComEd provides service to approximately 3.8 million customers in
northern Illinois.
peco
PECO’s continued focus on operational excellence led to record performance in
2009. Additionally, PECO achieved key milestones on regulatory fronts in the
transition to competitive market pricing for generation, supported the Exelon
2020 environmental initiative and met its financial goals.
18
In operations, PECO reduced customer interruptions of electric service by 6.5 percent,
experienced the fewest substation bus outages ever, and achieved the company’s
best reliability performance ever (as measured by IEEE SAIFI). As part of $388 million in
capital investments, PECO increased its distribution system automation, completed
its Tunnel electric substation serving University City, began work on a new $55 million
transmission substation in Worcester, Pa., and completed nearly 110 infrastructure
improvements on its gas delivery system. Furthermore, PECO reduced its bad debt
expense by $97 million compared with 2008. Also notable was a new five-year labor
agreement reached with IBEW Local 614.
PECO also continued to demonstrate its leadership to its regional community and
the environment and raised its customer satisfaction score higher than the four
previous years. In support of Exelon 2020, PECO exceeded its targets for reduction of
greenhouse gases, expanded its fleet of cleaner, alternative-fueled vehicles, and made
significant energy efficiency improvements at five service centers.
PECO’s smart grid proposal was one of only six in the nation to receive approval
of a $200 million federal stimulus grant. The company began to buy wholesale
energy as part of the transition to competitive markets beginning in 2011 and
secured renewable energy credits to comply with Pennsylvania’s Alternative
Energy Portfolio Standard. The Pennsylvania Public Utility Commission also
approved the company’s four-year “Smart Ideas” package of energy efficiency/
demand response programs to help consumers reduce peak demand and overall
energy consumption.
exelon generation
Exelon Nuclear, the nation’s largest operator of commercial nuclear reactors,
performed at world-class levels in 2009.
The company’s 8,700 nuclear professionals implemented industry best practices
to ensure safe, reliable operation throughout the fleet.
Exelon Nuclear’s 10 generating stations with 17 reactors in the Midwest and
Mid-Atlantic regions achieved an average capacity factor of 93.6 percent in 2009,
the seventh consecutive year capacity factor exceeded 93 percent, and produced
just over 131.3 million megawatt-hours of electricity. Exelon’s Three Mile Island
Unit 1 set a new world record for Pressurized Water Reactors with a 705 day
continuous run. The organization also improved its industrial safety record by
33 percent.
In 2009, Exelon Nuclear contributed to Exelon 2020: a low-carbon roadmap
through equipment upgrades at its Quad Cities, Dresden and Peach Bottom nuclear
stations. Combined, these improvements added approximately 70 megawatts of
zero-emissions electricity to the grid. The organization maintained Environmental
ISO 14001 certifications at its 10 sites and achieved LEED Silver certification for a
new administration building at Clinton Station.
The Oyster Creek and Three Mile Island reactors received 20-year operating
license extensions from the Nuclear Regulatory Commission. Exelon Nuclear
also announced its intent to apply for a 20-year license extension for its Limerick
Generating Station.
Exelon Power’s fleet of fossil and hydroelectric units in Illinois, Maryland, Massachusetts,
Pennsylvania and Texas provided over 10 million megawatt hours of reliable
generation in 2009. With 105 units at 23 different sites, Exelon Power’s fleet
consists of approximately 8,000 megawatts of base load, intermediate and peak
power generation. In 2009, Exelon Power’s fleet reported record performance levels
in unit availability, delivering on the commitment of continuous improvement and
performance optimization.
Exelon Power is committed to its role as an environmental leader. Efforts in 2009
included the dedication of the LEED Silver certified Renewable Energy Education
Center at Fairless Hills, the second-largest landfill gas generating station in the
U.S., which provides an opportunity for students and visitors to experience how
electricity is produced through various alternative renewable fuels; the construction
of a fish passageway at Black Rock Dam on the Schuylkill River as part of a river-wide
effort to restore American Shad to the Schuylkill River by enabling their migration;
and the opening of a new fishing wharf at the Conowingo Dam, which is accessible
to those with disabilities and increases the ability of visitors to enjoy fishing and
the ecosystem of the Lower Susquehanna River.
Exelon Power Team is the wholesale power marketing division of Exelon. Its role
is to manage the risk and maximize the economic value associated with Exelon’s
electric generating facilities, power purchase agreements, fuel requirements,
emission credits, transmission contracts and load obligations. Power Team’s
wholesale marketing and transaction efforts are focused on the competitive
electricity markets in several regions of the United States: the Mid-Atlantic, the
Midwest, the Northeast, the Southwest and Texas. Power Team’s trade floor and
headquarters are located in Kennett Square, Pa.
Exelon Energy is the retail marketing arm of Exelon. It markets electricity to
customers in Illinois and Pennsylvania, and natural gas to customers in Illinois,
Michigan and Ohio. Exelon Energy provides a valuable retail channel-to-market
for Exelon’s generation, while providing customers innovative products that can
help manage risk and earn the most from the competitive energy environment.
Exelon Energy’s locally-based sales representatives have a wealth of experience in
energy products and services and bring a depth of knowledge to the retail energy
markets it serves.
exelon business services company
Exelon Business Services Company, LLC (BSC), is a direct, wholly-owned subsidiary
of Exelon Corporation providing quality products and services in a cost-effective
manner to all Exelon companies. There are thirteen BSC practice areas: Audit and
Controls, Commercial Operations Group (which includes accounts payable and
payroll), Communications and Public Affairs, Corporate Strategy and Exelon 2020,
Corporate Security, Corporate Development, Finance, Government Affairs and
Public Policy, Human Resources, Information Technology, Legal and Governance,
Real Estate and Supply.
BSC’s approximately 2,200 employees in northern Illinois, Pennsylvania and other
Exelon business locations deliver value by providing coordinated, cost-efficient high-
quality services and developing enterprise-wide and organization-specific solutions.
In 2009, BSC initiated cost-reduction actions including budget and position
reductions. Service level commitments were met or exceeded across BSC even
with far-reaching cost management initiatives. Of particular note was the Supply
organization’s Rapid Resourcing effort, which resulted in $150 million in value to
Exelon and its companies.
exelon transmission company
Formed in October 2009, Exelon Transmission Company is a wholly-owned
subsidiary of Exelon that aims to capitalize on the growing national market for
new transmission capacity. U.S. companies are projected to spend $60 billion to
$100 billion on transmission development by 2020. Exelon Transmission Company
will partner with utilities, transmission developers, renewable developers, regulators
and others to build the next generation of reliable electric transmission in the
United States. Drawing on Exelon’s deep experience, broad resources and strategic
Illinois footprint, Exelon Transmission Company’s new transmission projects will
improve reliability, reduce congestion and facilitate movement of low-carbon
energy to markets nationwide.
19
Executive Committee
John W. Rowe
Chairman and Chief Executive Officer
Christopher M. Crane
President and Chief Operating Officer,
Exelon and President and Chief Operating Officer,
Exelon Generation
Ian P. McLean
Executive Vice President, Exelon and CEO,
Exelon Transmission Company
William A. Von Hoene, Jr.
Executive Vice President,
Finance and Legal, Exelon
Frank M. Clark
Chairman and Chief Executive Officer,
ComEd
Ruth Ann M. Gillis
Executive Vice President and Chief Administrative
and Diversity Officer, Exelon and President,
Exelon Business Services Company
Elizabeth A. Moler
Executive Vice President, Government Affairs
and Public Policy, Exelon
Andrea L. Zopp
Executive Vice President and
General Counsel, Exelon
Kenneth W. Cornew
Senior Vice President, Exelon
and President, Power Team
Matthew F. Hilzinger
Senior Vice President and
Chief Financial Officer, Exelon
Denis P. O’Brien
Executive Vice President,
Exelon and President and CEO, PECO
20
Board of Directors
John W. Rowe
Chairman and Chief Executive Officer
Bruce DeMars
Admiral (Retired), United States Navy
Paul L. Joskow
President, Alfred P. Sloan Foundation
Thomas J. Ridge
Former Secretary, Department of
Homeland Security, Former Governor
of Pennsylvania
John A. Canning, Jr.
Chairman, Madison Dearborn Partners, LLC
Nelson A. Diaz
Of Counsel, Cozen O’Connor
Richard W. Mies
President and Chief Executive Officer
The Mies Group, Ltd.
Admiral (Retired), United States Navy
John W. Rogers, Jr.
Chairman and Chief Executive Officer
Ariel Investments, LLC
M. Walter D’Alessio
Vice Chairman, NorthMarq Capital, Inc.
Sue L. Gin
Chairman and Chief Executive Officer,
Flying Food Group, LLC
John M. Palms, Ph.D.
Distinguished President Emeritus,
University of South Carolina
Stephen D. Steinour
Chairman, President and
Chief Executive Officer,
Huntington Bancshares Incorporated
Nicholas DeBenedictis
Chairman, Chief Executive Officer and President
Aqua America, Inc.
Rosemarie B. Greco
Senior Advisor to the Governor of Pennsylvania,
Health Care Reform
William C. Richardson, Ph.D.
President and Chief Executive Officer Emeritus,
W. K. Kellogg Foundation
Don Thompson
President and Chief Operating Officer
McDonald’s Corporation
21
Financial Section
23
25
26
28
29
30
31
32
Summary of Earnings and Financial Condition
Stock Performance Graph
Discussion of Financial Results – Exelon
Discussion of Financial Results – by Business Segment
Discussion of Financial Results – Generation
Discussion of Financial Results – ComEd
Discussion of Financial Results – PECO
Condensed Consolidated Financial Statements:
> Consolidated Statements of Operations
> Consolidated Statements of Cash Flows
> Consolidated Balance Sheets
> Consolidated Statements of Changes in Shareholders’ Equity
> Consolidated Statements of Comprehensive Income
40 Management’s Report on Internal Control Over Financial Reporting
in millions, except for per share data
Statement of Operations data:
Operating revenues
Operating income
Income from continuing operations
Income from discontinued operations
Income before cumulative effect of changes in accounting principles
Cumulative effect of changes in accounting principles
(net of income taxes)
Net income (a)
Earnings per average common share (diluted):
Income from continuing operations
Income from discontinued operations
Cumulative effect of changes in accounting principles
(net of income taxes)
Net income
Dividends per common share
Average shares of common stock outstanding – diluted
Summary Annual Report
Summary of Earnings and Financial Condition
2009
2008
For the Years Ended December 31,
2005
2006
2007
$
$
$
$
$
$
17,318
4,750
2,706
1
2,707
–
2,707
4.09
–
–
4.09
2.10
662
$
$
$
$
$
$
18,859
5,299
2,717
20
2,737
–
2,737
4.10
0.03
–
4.13
2.03
662
$
$
$
$
$
$
18,916
4,668
2,726
10
2,736
–
2,736
4.03
0.02
–
4.05
1.76
676
$
$
$
$
$
$
15,655
3,521
1,590
2
1,592
–
1,592
2.35
–
–
2.35
1.60
676
$
$
$
$
$
$
15,357
2,724
951
14
965
(42)
923
1.40
0.02
(0.06)
1.36
1.60
676
(a) The changes between 2007 and 2006, and 2006 and 2005, were primarily due to the impact of the goodwill impairment charges of $776 million and $1.2 billion in 2006 and 2005, respectively.
23
Summary Annual Report
Summary of Earnings and Financial Condition
in millions
Balance Sheet data:
Current assets
Property, plant and equipment, net
Noncurrent regulatory assets
Goodwill (a)
Other deferred debits and other assets
Total assets
Current liabilities
Long-term debt, including long-term debt to financing trusts
Noncurrent regulatory liabilities
Other deferred credits and other liabilities
Minority interest
Preferred securities of subsidiary
Shareholders’ equity
Total liabilities and shareholders’ equity
2009
2008(c)
2007(b),(c)
2006(b),(c)
2005(b),(c)
December 31,
$
5,441
27,341
4,872
2,625
8,901
$ 49,180
4,238
$
11,385
3,492
17,338
–
87
12,640
$ 49,180
$
5,130
25,813
5,940
2,625
8,038
$ 47,546
3,811
$
12,592
2,520
17,489
–
87
11,047
$ 47,546
$
4,416
24,153
5,133
2,625
8,760
$ 45,087
5,466
$
11,965
3,301
14,131
–
87
10,137
$ 45,087
$
4,130
22,775
5,808
2,694
7,933
$ 43,340
4,871
$
11,911
3,025
13,439
–
87
10,007
$ 43,340
$
3,808
21,981
4,734
3,475
7,858
$ 41,856
5,759
$
11,760
2,518
12,606
1
87
9,125
$ 41,856
(a) The changes between 2006 and 2005 were primarily due to the impact of the goodwill impairment charge of $776 million in 2006.
(b) Exelon and Generation retrospectively reclassified certain assets and liabilities in accordance with the applicable authoritative guidance for offsetting amounts related to qualifying derivative contracts.
(c) Exelon and Generation retrospectively reclassified certain asset and liabilities with respect to option premiums into the mark-to-market net asset and liability accounts to conform to the current year presentation.
24
The performance graph below illustrates a five year comparison of cumulative total returns based on an initial investment of $100 in Exelon Corporation common stock,
as compared with the Standard & Poor’s (S&P) 500 Stock Index and the S&P Utility Index for the period 2005 through 2009.
This performance chart assumes:
• $100 invested on December 31, 2004, in Exelon Corporation common stock, in the S&P 500 Stock Index and in the S&P Utility Index; and
• All dividends are reinvested.
Stock Performance Graph
Comparison of Five-Year Cumulative Return
$250
$200
$150
$100
$0
4
0
/
2
1
5
0
/
3
5
0
/
6
5
0
/
9
5
0
/
2
1
6
0
/
3
6
0
/
6
6
0
/
9
6
0
/
2
1
7
0
/
3
7
0
/
6
7
0
/
9
7
0
/
2
1
8
0
/
3
8
0
/
6
8
0
/
9
8
0
/
2
1
9
0
/
3
9
0
/
6
9
0
/
9
9
0
/
2
1
Exelon Corporation
S&P 500
S&P Utilities
Exelon Corporation
S&P 500
S&P Utilities
2004
$ 100.00
100.00
100.00
$
2005
124.43
104.90
116.71
$
2006
148.97
121.43
141.18
Value of Investment at December 31,
2009
2008
2007
$ 201.20
128.09
168.47
$
141.09
80.77
119.73
$
129.42
102.08
133.88
25
Discussion of Financial Results - Exelon
Results of Operations
(Dollars in millions, except for per share data, unless otherwise noted)
Operating revenues
Operating expenses
Purchased power and fuel
Operating and maintenance
Operating and maintenance for regulatory required programs
Depreciation and amortization
Taxes other than income
Total operating expenses
Operating income
Other income and deductions
Interest expense
Interest expense to affiliates, net
Equity in losses of unconsolidated affiliates
Other, net
Total other income and deductions
Income from continuing operations before income taxes
Income taxes
Income from continuing operations
Income from discontinued operations, net of income taxes
Net income
Diluted earnings per share
2009
2008
Favorable
(Unfavorable)
Variance
$
17,318
$
18,859
$
(1,541)
5,281
4,612
63
1,834
778
12,568
4,750
(654)
(77)
(27)
426
(332)
4,418
1,712
2,706
1
2,707
4.09
$
$
6,582
4,538
28
1,634
778
13,560
5,299
(699)
(133)
(26)
(407)
(1,265)
4,034
1,317
2,717
20
2,737
4.13
$
$
1,301
(74)
(35)
(200)
–
992
(549)
45
56
(1)
833
933
384
(395)
(11)
(19)
(30)
(0.04)
$
$
Exelon’s net income was $2,707 million in 2009 as compared to $2,737 million in 2008, and diluted earnings per average common share were $4.09 in 2009 as compared
to $4.13 in 2008. All amounts presented below are before the impact of income tax.
Exelon’s 2009 results were significantly affected by lower revenue net of purchased power and fuel expense at Generation of $411 million. This decrease was primarily due
to reduced net mark-to-market gains from its hedging activities of $271 million and unfavorable portfolio and market conditions of $206 million. Additionally, Generation
experienced higher nuclear fuel costs of $74 million. Partially offsetting these decreases were lower costs associated with the Illinois Settlement of $123 million.
ComEd experienced higher revenue net of purchased power expense of $155 million despite unfavorable weather conditions and reduced load. Distribution pricing
increased ComEd’s operating revenues by $214 million primarily due to the ICC’s September 2008 order in the 2007 distribution rate case. This increase was partially
offset by the impact of current economic conditions and unfavorable weather, which reduced ComEd’s load resulting in lower revenue net of purchased power expense
of $40 million and $45 million, respectively.
26
Discussion of Financial Results - Exelon
PECO had a slight increase of $16 million in its revenue net of purchased power and fuel expense primarily due to increased gas distribution rates effective January 1,
2009, resulting from the settlement of 2008 rate case, which provided $77 million of additional revenues in 2009. PECO’s increased revenues also reflected the impact of
lower electric distribution rates in 2008 of $22 million primarily due to the refund of the 2007 Pennsylvania Public Realty Tax Act settlement (which was completely offset
in charges recorded in taxes other than income). Similar to ComEd, these increases were partially offset by the impact of current economic conditions and unfavorable
weather, which reduced PECO’s load resulting in lower revenue net of purchased power and fuel expense of $69 million and $21 million, respectively.
Exelon’s 2009 results were also affected by higher operating and maintenance expense at Generation. In March 2009, Generation re-evaluated the fair value of the
Handley and Mountain Creek stations due to the continued decline in forward energy prices, which resulted in a $223 million impairment charge. In December 2009,
Generation announced that it had notified PJM of its intention to permanently retire four fossil-fired generation units in Pennsylvania because they are no longer
economic to operate and are not required to meet demand for electricity in the region. In connection with the announced retirements, Generation recorded a charge of
$24 million related to exit costs as well as $32 million of accelerated depreciation.
Additionally, Exelon’s pension and other postretirement benefits expense increased by $160 million in 2009 due to lower than expected pension and postretirement plan
asset returns in 2008. There was also a scheduled increase in Competitive Transition Charge (CTC) amortization expense at PECO of $90 million in accordance with its
1998 restructuring settlement and increased depreciation of $69 million across the Registrants due to ongoing capital expenditures.
In response to current market and economic conditions, Exelon implemented a cost savings program in 2009. This initiative included job reductions, for which Exelon
recorded a $34 million charge related to severance expenses, and a $350 million discretionary contribution to Exelon’s largest pension fund, which is expected to reduce
pension expense over the next ten years. PECO generated additional cost savings through enhancements to credit processes and increased collection and termination
activities initiated in 2008, which reduced uncollectible accounts expense by $97 million. In addition, ComEd’s and PECO’s incremental storm-related costs decreased
operating and maintenance expense by $40 million and $9 million, respectively.
Exelon’s interest expense decreased by $140 million primarily due to lower outstanding debt at ComEd and PECO and lower interest rates on Generation’s Spent Nuclear
Fuel obligation. Additionally, Exelon was able to capitalize on favorable capital market conditions in its refinancing of $1.2 billion of debt at Exelon and Generation
originally scheduled to mature in 2011. Although this debt offering resulted in $120 million in debt extinguishment costs, it decreased Exelon’s average cost of debt while
also extending the maturities of the debt.
Exelon’s 2009 results were also significantly affected by nuclear decommissioning trust fund (NDT) realized and unrealized gains of $256 million in 2009 compared to
realized and unrealized losses of $308 million in 2008 for the former AmerGen nuclear generating units and portions of the Peach Bottom nuclear generating units
(Non-Regulatory Agreement Units) as a result of improved market performance.
Finally, Exelon reassessed anticipated apportionment of its income, resulting in a change in state deferred income tax rates, and ComEd remeasured income tax
uncertainties related to its 1999 sale of fossil generating assets. These two actions resulted in an aggregate non cash gain of $83 million.
27
Discussion of Financial Results - by Business Segment
Results of Operations by Business Segment
The comparisons of 2009 and 2008 operating results and other statistical information set forth below include intercompany transactions, which are eliminated in
Exelon’s consolidated financial statements.
Net Income (Loss) from Continuing Operations by Business Segment
Generation
ComEd
PECO
Other (a)
Total
(a) Other primarily includes corporate operations, Exelon Business Service Company, LLC (BSC), investments in synthetic fuel-producing facilities and intersegment eliminations.
Net Income (Loss) by Business Segment
Generation
ComEd
PECO
Other (a)
Total
(a) Other primarily includes corporate operations, BSC, investments in synthetic fuel-producing facilities and intersegment eliminations.
2009
2,122
374
353
(143)
2,706
2009
2,122
374
353
(142)
2,707
$
$
$
$
$
$
$
$
Favorable
(Unfavorable)
Variance
$
$
(136)
173
28
(76)
(11)
2008
2,258
201
325
(67)
2,717
Favorable
(Unfavorable)
Variance
$
$
(156)
173
28
(75)
(30)
2008
2,278
201
325
(67)
2,737
28
Results of Operations – Generation
(Dollars in millions)
Operating revenues
Purchased power and fuel expense
Revenue net of purchased power and fuel expense
Other operating expenses
Operating and maintenance
Depreciation and amortization
Taxes other than income
Total operating expenses
Operating income
Other income and deductions
Interest expense
Equity in losses of unconsolidated affiliates
Other, net
Total other income and deductions
Income from continuing operations before income taxes
Income taxes
Income from continuing operations
Discontinued operations
Gain on disposal of discontinued operations
Income from discontinued operations
Net income
Discussion of Financial Results - Generation
Favorable
(Unfavorable)
Variance
$
$
(1,051)
640
(211)
(221)
(59)
(8)
(288)
(699)
23
(2)
845
866
167
(303)
(136)
(20)
(20)
(156)
$
2008
10,754
3,572
7,182
2,717
274
197
3,188
3,994
(136)
(1)
(469)
(606)
3,388
1,130
2,258
20
20
2,278
$
2009
9,703
2,392
6,771
2,938
333
205
3,476
3,295
(113)
(3)
376
260
3,555
1,433
2,122
–
–
2,122
$
$
Generation’s 2009 results compared to 2008 were significantly affected by lower revenue net of purchased power and fuel expense primarily due to unfavorable portfolio
and market conditions, including decreased net mark-to-market gains from its hedging activities, and revenue from certain long options in Generation’s proprietary
trading portfolio recorded in 2008. Additionally, Generation’s revenue net of purchased power and fuel expense was affected by gains related to the settlement of
uranium supply agreements in 2008 and higher nuclear fuel costs in 2009 due to rising nuclear fuel prices. The decrease in Generation’s revenues net of purchased power
and fuel expense was partially offset by lower costs related to the Illinois Settlement.
Generation’s 2009 results compared to 2008 were further affected by higher operating and maintenance expenses. Higher operating and maintenance expense was
primarily due to a $223 million charge associated with the impairment of the Handley and Mountain Creek stations and costs associated with the announced shut-down
of three coal-fired and one dual fossil-fired generation unit in Pennsylvania. These actions were a direct result of current and future expected market conditions. Market
conditions also contributed to lower than expected pension and postretirement plan asset returns in 2008, which resulted in higher pension and other postretirement
benefits expense in 2009. Operating and maintenance expense increases were partially offset by the favorable results of Exelon’s companywide cost savings initiative
and lower nuclear refueling outage costs.
Additionally, due to a significant rebound in the financial markets, Generation experienced strong performance in its NDT funds in 2009. As a result, Generation’s
earnings improved as its NDTs of the Non-Regulatory Agreement Units had significant net realized and unrealized gains in 2009 compared to significant net realized
and unrealized losses in 2008.
29
Discussion of Financial Results - ComEd
Results of Operations – ComEd
(Dollars in millions)
Operating revenues
Purchased power expense
Revenue net of purchased power expense
Other operating expenses
Operating and maintenance
Operating and maintenance for regulatory required programs
Depreciation and amortization
Taxes other than income
Total other operating expenses
Operating income
Other income and deductions
Interest expense, net
Equity in losses of unconsolidated affiliates
Other, net
Total other income and deductions
Income before income taxes
Income taxes
Net income
2009
5,774
3,065
2,709
1,028
63
494
281
1,866
843
(319)
–
79
(240)
603
229
374
$
$
2008
6,136
3,582
2,554
1,097
28
464
298
1,887
667
(348)
(8)
18
(338)
329
128
201
$
$
Favorable
(Unfavorable)
Variance
$
$
(362)
517
155
69
(35)
(30)
17
21
176
29
8
61
98
274
(101)
173
The increase in ComEd’s net income was driven primarily by higher revenue net of purchased power expense, reflecting increased distribution rates effective September
16, 2008, partially offset by a decline in electric deliveries, primarily resulting from unfavorable weather conditions and reduced load in 2009. In addition, ComEd’s
increase in net income reflects lower operating and maintenance expenses, lower interest expense, and higher interest income related to the 2009 remeasurement of
uncertain income tax positions.
The reduction in operating and maintenance expense reflects Exelon’s company-wide cost savings initiative in 2009. The initiative included job reductions, for which ComEd
recorded a charge for severance expense as a cost to achieve these savings. ComEd also benefited from decreased storm expenses. Operation and maintenance expense reflect
increased pension and other postretirement benefits expense due to lower than expected pension and postretirement plan asset returns in 2008. In the September 2008 rate
case ruling, the ICC mandated fixed asset disallowances while allowing certain regulatory assets, which were recorded as a net one-time charge in 2008.
Depreciation and amortization expenses increased due to higher plant balances and new depreciation rates effective January 1, 2009. ComEd experienced a decrease
in interest expense primarily due to lower outstanding debt in 2009. ComEd also recorded higher interest income related to the remeasurement in 2009 of uncertain
income tax positions.
30
Results of Operations – PECO
(Dollars in millions)
Operating revenues
Purchased power expense and fuel expense
Revenue net of purchased power expense and fuel expense
Other operating expenses
Operating and maintenance
Depreciation and amortization
Taxes other than income
Total other operating expenses
Operating income
Other income and deductions
Interest expense, net
Equity in losses of unconsolidated affiliates
Other, net
Total other income and deductions
Income before income taxes
Income taxes
Net income
Preferred stock dividends
Net income on common stock
Discussion of Financial Results - PECO
2009
5,311
2,746
2,565
640
952
276
1,868
697
(187)
(24)
13
(198)
499
146
353
4
349
$
$
2008
5,567
3,018
2,549
731
854
265
1,850
699
(226)
(16)
18
(224)
475
150
325
4
321
$
$
Favorable
(Unfavorable)
Variance
$
$
(256)
272
16
91
(98)
(11)
(18)
(2)
39
(8)
(5)
26
24
4
28
–
28
The increase in net income was driven primarily by increased operating revenue net of purchased power and fuel expense and decreased interest expense, which was
partially offset by increased operating expenses. The increase in revenue net of purchased power and fuel expense was primarily related to increased gas distribution
rates effective January 1, 2009, which were partially offset by reduced electric delivery volume and unfavorable weather conditions.
PECO’s operating expenses increased as a result of increased scheduled CTC amortization expense and pension and other postretirement benefits expense due to lower
than expected pension and postretirement plan asset returns in 2008. The increased operating expenses were partially offset by decreased allowance for uncollectible
accounts expense.
PECO also experienced a decrease in gross receipts tax expense primarily due to a rate reduction.
31
Consolidated Statements of Operations
Exelon Corporation and Subsidiary Companies
(in millions, except for per share data)
Operating revenues
Operating expenses
Purchased power
Fuel
Operating and maintenance
Operating and maintenance for regulatory required programs
Depreciation and amortization
Taxes other than income
Total operating expenses
Operating income
Other income and deductions
Interest expense
Interest expense to affiliates, net
Equity in losses of unconsolidated affiliates
Other, net
Total other income and deductions
Income from continuing operations before income taxes
Income taxes
Income from continuing operations
Discontinued operations
Income (loss) from discontinued operations (net of taxes of $0, $1 and $3,respectively)
Gain on disposal of discontinued operations (net of taxes of $0, $14 and $2,respectively)
Income from discontinued operations
Net income
For the Years Ended December 31,
2007
2008
2009
$
17,318
$
18,859
$
18,916
3,215
2,066
4,612
63
1,834
778
12,568
4,750
(654)
(77)
(27)
426
(332)
4,418
1,712
2,706
1
–
1
2,707
$
4,270
2,312
4,538
28
1,634
778
13,560
5,299
(699)
(133)
(26)
(407)
(1,265)
4,034
1,317
2,717
(1)
21
20
2,737
$
5,282
2,360
4,289
–
1,520
797
14,248
4,668
(647)
(203)
(106)
460
(496)
4,172
1,446
2,726
6
4
10
2,736
$
32
(in millions, except for per share data)
Average shares of common stock outstanding
Basic
Diluted
Earnings per average common share – basic:
Income from continuing operations
Income from discontinued operations
Net income
Earnings per average common share – diluted:
Income from continuing operations
Income from discontinued operations
Net income
Dividends per common share
Consolidated Statements of Operations
Exelon Corporation and Subsidiary Companies
For the Years Ended December 31,
2007
2008
2009
659
662
4.10
–
4.10
4.09
–
4.09
2.10
$
$
$
$
$
658
662
4.13
0.03
4.16
4.10
0.03
4.13
2.03
$
$
$
$
$
670
676
4.06
0.02
4.08
4.03
0.02
4.05
1.76
$
$
$
$
$
The information in the Consolidated Statements of Operations shown above is a replication of the information in the Consolidated Statements of Operations in Exelon’s 2009 Form 10-K. For complete consolidated financial statements,
including notes, please refer to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the Securities and Exchange Commission (SEC). See also management’s discussion and analysis of financial condition and results of operation, which
includes a discussion of critical accounting policies and estimates, on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
33
Consolidated Statements of Cash Flows
Exelon Corporation and Subsidiary Companies
(in millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion, including nuclear fuel amortization
Impairment of long-lived assets
Deferred income taxes and amortization of investment tax credits
Net fair value changes related to derivatives
Net realized and unrealized (gains) losses on nuclear decommissioning trust fund investments
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Inventories
Accounts payable, accrued expenses and other current liabilities
Option premiums (paid) received, net
Counterparty collateral received (posted), net
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Proceeds from nuclear decommissioning trust fund sales
Investment in nuclear decommissioning trust funds
Proceeds from sales of investments
Purchases of investments
Change in restricted cash
Other investing activities
Net cash flows used in investing activities
34
For the Years Ended December 31,
2007
2008
2009
$
2,707
$
2,737
$
2,736
2,601
223
756
(95)
(207)
652
234
51
(254)
(40)
196
(29)
(588)
(113)
6,094
(3,273)
22,905
(23,144)
41
(28)
35
6
(3,458)
2,308
–
374
(515)
363
870
67
(109)
(44)
(124)
1,027
(38)
(230)
(135)
6,551
(3,117)
17,202
(17,487)
–
–
29
(5)
(3,378)
2,183
–
(104)
102
(70)
734
(585)
9
146
27
(516)
160
(204)
(122)
4,496
(2,674)
7,312
(7,527)
95
–
(45)
(70)
(2,909)
(in millions)
Cash flows from financing activities
Change in short-term debt
Issuance of long-term debt
Retirement of long-term debt
Retirement of long-term debt to financing affiliates
Dividends paid on common stock
Proceeds from employee stock plans
Purchase of treasury stock
Purchase of forward contract in relation to certain treasury stock
Other financing activities
Net cash flows used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Consolidated Statements of Cash Flows
Exelon Corporation and Subsidiary Companies
For the Years Ended December 31,
2007
2008
2009
(56)
1,987
(1,773)
(709)
(1,385)
42
–
–
(3)
(1,897)
739
1,271
2,010
(405)
2,265
(1,398)
(1,038)
(1,335)
130
(436)
(64)
68
(2,213)
960
311
1,271
311
1,621
(262)
(1,020)
(1,180)
215
(1,208)
(79)
102
(1,500)
87
224
311
$
$
$
The information in the Consolidated Statements of Cash Flows shown above is a replication of the information in the Consolidated Statements of Cash Flows in Exelon’s 2009 Form 10-K. For complete consolidated financial statements,
including notes, please refer to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the SEC. See also management’s discussion and analysis of financial condition and results of operation, which includes a discussion of critical
accounting policies and estimates, on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
35
Consolidated Statements of Balance Sheets
Exelon Corporation and Subsidiary Companies
(in millions)
Assets
Current assets
Cash and cash equivalents
Restricted cash and investments
Accounts receivable, net
Customer
Other
Mark-to-market derivative assets
Inventories, net, at average cost
Fossil fuel
Materials and supplies
Other
Total current assets
Property, plant and equipment, net
Deferred debits and other assets
Regulatory assets
Nuclear decommissioning trust funds
Investments
Investments in affiliates
Goodwill
Mark-to-market derivative assets
Other
Total deferred debits and other assets
Total assets
2009
December 31,
2008
$
2,010
40
$
1,563
486
376
198
559
209
5,441
27,341
1,271
75
1,928
324
480
315
528
209
5,130
25,813
4,872
6,669
704
20
2,625
649
859
16,398
$ 49,180
5,940
5,500
670
45
2,625
679
1,144
16,603
$ 47,546
The information in the Consolidated Balance Sheets shown above is a replication of the information in the Consolidated Balance Sheets in Exelon’s 2009 Form 10-K. For complete consolidated financial statements, including notes, please refer
to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the SEC. See also management’s discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates,
on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
36
Consolidated Statements of Balance Sheets
Exelon Corporation and Subsidiary Companies
(in millions)
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings
Long-term debt due within one year
Long-term debt to PECO Energy Transition Trust due within one year
Accounts payable
Mark-to-market derivative liabilities
Accrued expenses
Deferred income taxes
Other
Total current liabilities
Long-term debt
Long-term debt due to PECO Energy Transition Trust
Long-term debt to other financing trusts
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Pension obligations
Non-pension postretirement benefit obligations
Spent nuclear fuel obligation
Regulatory liabilities
Mark-to-market derivative liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Preferred securities of subsidiary
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 660 and 658 shares outstanding at December 31, 2009 and 2008, respectively)
Treasury stock, at cost (35 and 35 shares held at December 31, 2009 and 2008, respectively)
Retained earnings
Accumulated other comprehensive loss, net
Total shareholders’ equity
Total liabilities and shareholders’ equity
2009
December 31,
2008
$
155
639
415
1,345
198
923
152
411
4,238
10,995
–
390
5,750
3,434
3,625
2,180
1,017
3,492
23
1,309
20,830
36,453
$
211
29
319
1,416
212
1,151
77
396
3,811
11,397
805
390
4,939
3,734
4,111
2,255
1,015
2,520
23
1,412
20,009
36,412
87
87
8,923
(2,328)
8,134
(2,089)
12,640
$ 49,180
8,816
(2,338)
6,820
(2,251)
11,047
$47,546
The information in the Consolidated Balance Sheets shown above is a replication of the information in the Consolidated Balance Sheets in Exelon’s 2009 Form 10-K. For complete consolidated financial statements, including notes, please refer
to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the SEC. See also management’s discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates,
on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
37
Consolidated Statements of Changes in Shareholders’ Equity
Exelon Corporation and Subsidiary Companies
(Dollars in millions, shares in thousands)
Balance, December 31, 2006
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Common stock purchases
Common stock dividends declared
Adoption of accounting for uncertain tax positions
Other comprehensive loss, net of income taxes of $(290)
Balance, December 31, 2007
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Common stock purchases
Common stock dividends declared
Adoption of the fair value option for financial assets and liabilities,
net of income taxes of $286
Other comprehensive loss, net of income taxes of $(354)
Balance, December 31, 2008
Net income
Long-term incentive plan activity
Common stock dividends
Other comprehensive income, net of income taxes of $119
Balance, December 31, 2009
Issues
Shares
Common
Stock
Treasury
Stock
Accumulated
Other
Retained Comprehensive
Loss
Earnings
Total
Shareholders’
Equity
682,474
–
6,455
254
–
–
–
–
689,183
–
3,452
318
–
–
–
–
692,953
–
1,612
–
–
694,565
$
$
$
$
8,314
–
328
16
(79)
–
–
–
8,579
–
217
19
1
–
–
–
8,816
–
107
–
–
8,923
$
$
$
$
(630)
–
–
–
(1,208)
–
–
–
(1,838)
–
–
–
(500)
–
–
–
(2,338)
–
10
–
–
(2,328)
$
$
3,426
2,736
–
–
–
(1,219)
(13)
–
4,930
2,737
–
–
–
(1,007)
160
–
$ 6,820
2,707
(5)
(1,388)
–
8,134
$
$
$
(1,103)
–
–
–
–
–
–
(431)
(1,534)
–
–
–
–
–
$
(160)
(557)
(2,251)
–
–
–
162
$ (2,089)
$
$
$
$
10,007
2,736
328
16
(1,287)
(1,219)
(13)
(431)
10,137
2,737
217
19
(499)
(1,007)
–
(557)
11,047
2,707
112
(1,388)
162
12,640
The information in the Consolidated Statements of Changes in Shareholders’ Equity shown above is a replication of the information in the Consolidated Statements of Changes in Shareholders’ Equity in Exelon’s 2009 Form 10-K. For complete
consolidated financial statements, including notes, please refer to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the SEC. See also management’s discussion and analysis of financial condition and results of operation, which
includes a discussion of critical accounting policies and estimates, on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
38
Consolidated Statements of Comprehensive Income
Exelon Corporation and Subsidiary Companies
(in millions)
Net income
Other comprehensive income (loss)
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost, net of income taxes of $(6), $(6) and $(4), respectively
Actuarial loss reclassified to periodic cost, net of income taxes of $74, $52 and $57, respectively
Transition obligation reclassified to periodic cost, net of income taxes of $2, $2 and $2, respectively
Pension and non-pension postretirement benefit plan valuation, net of income taxes of $47, $(959) and $1, respectively
Change in unrealized (loss) gain on cash flow hedges, net of income taxes of $(2), $563 and $(345), respectively
Change in unrealized (loss) gain on marketable securities, net of income taxes of $3, $(6) and $(1), respectively
Other comprehensive income (loss)
Comprehensive income
For the Years Ended December 31,
2007
2008
2009
$
2,707
$
2,737
$
2,736
(13)
93
3
86
(12)
5
162
2,869
(9)
60
3
(1,459)
855
(7)
(557)
2,180
$
$
(9)
74
3
19
(513)
(5)
(431)
2.305
$
The information in the Consolidated Statements of Comprehensive Income shown above is a replication of the information in the Consolidated Statements of Comprehensive Income in Exelon’s 2009 Form 10-K. For complete consolidated
financial statements, including notes, please refer to pages 152 through 342 of Exelon’s 2009 Form 10-K filed with the SEC. See also management’s discussion and analysis of financial condition and results of operation, which includes a
discussion of critical accounting policies and estimates, on pages 63 through 130 of Exelon’s 2009 Form 10-K filed with the SEC.
39
Management’s Report on Internal Control Over Financial Reporting
The management of Exelon Corporation (Exelon) is responsible for establishing and maintaining adequate internal control over financial reporting. Exelon’s internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Exelon’s management conducted an assessment of the effectiveness of Exelon’s internal control over financial reporting as of December 31, 2009. In making this
assessment, management used the criteria in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on this assessment, Exelon’s management concluded that, as of December 31, 2009, Exelon’s internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report.
February 5, 2010
Information Derived from 2009 Form 10-K
We have presented a condensed discussion of financial results, excerpts from our consolidated financial statements and a copy of our Management’s Report on Internal
Control Over Financial Reporting in this summary annual report. A complete discussion of our financial results and our complete consolidated financial statements, including
notes, appears on pages 63 through 342 of our Form 10-K annual report for the year ended December 31, 2009. That annual report was filed with the Securities and Exchange
Commission on February 5, 2010, and can be viewed and retrieved through the Commission’s web site at www.sec.gov or our web site at www.exeloncorp.com.
Our independent registered public accounting firm, PricewaterhouseCoopers LLP, issued a report dated February 5, 2010, on their integrated audit of our consolidated
financial statements and our internal controls over financial reporting. In their report they expressed an unqualified opinion that those consolidated financial statements
present fairly, in all material respects, the financial position of Exelon Corporation and its subsidiaries at December 31, 2009, and 2008 and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States
of America. Furthermore, they expressed an unqualified opinion that Exelon maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2009, based on criteria established in Internal Control – Integrated Framework issued by the COSO. The full text of PricewaterhouseCoopers LLP’s report can
be found on page 156 of our 2009 Form 10-K.
Certifications
The CEO of Exelon has made the required annual certifications for 2009 to the New York Stock Exchange and the Philadelphia Stock Exchange that Exelon is in compliance
with the listing standards of those exchanges. The CEO and CFO have filed with the SEC all required certifications under section 302 of the Sarbanes-Oxley Act of 2002.
These certifications are filed as Exhibits 31-1 and 31-2 to Exelon’s 2009 Form 10-K.
40
01
02
08
09
10
12
14
16
18
20
21
22
Introduction
Letter to Shareholders
Exelon’s Vision Statement
Our Goals and Values
Our Financial Discipline
Our Operational Excellence
Our Environmental Leadership
Our Superior Talent
Exelon at a Glance
Executive Committee
Board of Directors
Financial Section
On the cover: PECO has been displaying messages atop its headquarters since July 4, 1976. Since that time, the company has saluted local community and non-profit organizations with more
than 18,000 messages. On July 4, 2009, PECO unveiled its new Crown Lights, which comprise 2 million energy-efficient LED lights.
Forward-Looking Statements This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The factors
that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon’s 2009 Annual Report on Form 10-K in
(a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; and
(2) other factors discusssed in Exelon’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. Exelon
does not undertake any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this report.
corporate profile
Exelon Corporation is one of the nation’s largest electric utilities with approximately $17 billion in annual revenues. The company has one of the industry’s largest
portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately
5.4 million customers in northern Illinois and southeastern Pennsylvania and natural gas to approximately 485,000 customers in the Philadelphia area. Exelon is
headquartered in Chicago and trades on the NYSE under the ticker EXC.
Shareholder Inquiries
Exelon Corporation has appointed BNY Mellon Shareowner Services as its transfer agent, stock registrar, dividend disbursing agent
and dividend reinvestment agent. Should you have questions concerning your registered shareholder account or the payment
or reinvestment of your dividends, or if you wish to make a stock transaction or stock transfer, you may call shareholder services
at BNY Mellon at the toll-free number shown to the left or access their website at www.bnymellon.com/shareowner/isd.
Morgan Stanley Smith Barney administers the Employee Stock Purchase Plan (ESPP) and employee stock options. Should you
have any questions concerning your employee plan shares or wish to make a transaction, you may call the toll-free numbers
shown to the left or access their web site at www.benefitaccess.com.
The Company had approximately 135,000 holders of record of its common stock as of Dec. 31, 2009.
The 2009 Form 10-K Annual Report to the Securities and Exchange Commission was filed on Feb. 5, 2010. To obtain a copy
without charge, write to Bruce G. Wilson, Senior Vice President, Deputy General Counsel, and Corporate Secretary, Exelon
Corporation, Post Office Box 805398, Chicago, Illinois 60680-5398.
The Company maintains a telephone information service, which enables investors to obtain currently available information on
financial performance, company news and to access shareholder services at BNY Mellon. To use this service, please call our
toll-free number, 1.866.530.8108.
investor and general information
Corporate Headquarters
Exelon Corporation
P.O. Box 805398
Chicago, IL 60680-5398
Transfer Agent
BNY Mellon
800.626.8729
Employee Stock Purchase Plan
877.582.5113
Employee Stock Options
888.609.3534
Investor Relations Voice Mailbox
312.394.2345
Independent Public Accountants
PricewaterhouseCoopers LLP
Web site
www.exeloncorp.com
Stock Ticker
EXC
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©
The paper utilized for the printing of this report is certified by the Forest Stewardship Council, which promotes environmentally appropriate,
socially beneficial and economically viable management of the world’s forests. All the paper utilized in the production of this annual report was
manufactured by Mohawk Fine Papers and contains 30% post-consumer recycled fiber. Mohawk Fine Papers purchases enough Green-e certified
renewable energy certificates (RECs) to match 100% of the electricity used in its operations. Mohawk has provided the calculations below on use
of 33,000 pounds of paper.
E
The savings derived from using this paper in lieu of virgin fiber paper is equivalent to:
95 trees
preserved for
the future
274 lbs.
waterborne
waste not created
40,372 gallons
wastewater
flow saved
4,467 lbs.
solid waste
not generated
8,795 lbs.
net greenhouse
gases prevented
67,320,000 BTUs
energy not
consumed
The savings derived from choosing a paper manufactured
using wind-generated electricity:
This amount of wind-generated electricity
is equivalent to:
14,883 lbs.
air emissions
not generated
16
barrels crude
oil unused
1
cars off the road
for one year
1,012
trees
planted
Exelon Corporation
P.O. Box 805398
Chicago, IL 60680-5398
www.exeloncorp.com
©2010 Exelon
Sustainable Performance
Exelon Corporation 2009 Summary Annual Report