Smart Investment
Exelon Corporation 2010 Summary Annual Report
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Introduction
Letter to Shareholders
Exelon’s Vision, Goals and Values
Financial Discipline
Operating Excellence
Environmental Leadership
Talented Employees
Exelon at a Glance
Executive Committee
Board of Directors
Financial Section
On the cover: A view through the Quad Cities Unit 2 generator during that nuclear power station’s low-pressure turbine replacement and refueling outage. This work at Quad
Cities, along with improvements at Clinton, Dresden and LaSalle Generating Stations, led to 59 megawatts of clean electricity being added to the regional grid in 2010.
Adjusted (non-GAAP) operating earnings: This report includes a discussion of adjusted (non-GAAP) operating earnings. For a reconciliation of adjusted (non-GAAP) operating earnings to GAAP
(accounting principles generally accepted in the United States), please see Exelon’s fourth quarter earnings release issued on Jan. 26, 2011, posted on the Investor Relations page at
www.exeloncorp.com and included in the 8-K filed with the SEC on that date.
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 2010 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.
Exelon is committed to building the nation’s leading clean energy portfolio around our core of more
than 17,000 megawatts of nuclear generation. We are pursuing this goal, guided by our annually
updated Exelon 2020 plan, by increasing the capacity of our nuclear fleet, complying with Illinois
and Pennsylvania renewable energy standards, purchasing John Deere’s wind power company and
conducting some of the largest energy efficiency programs in the nation.
While the cap and trade-based carbon legislation that Exelon supported has failed, both political parties
continue to pursue cleaner energy, each through its own favorite technologies and sometimes with
little regard to the cost to consumers or public deficits. Exelon 2020 teaches us, and we hope others,
that the kind and quantity of cleaner power we buy makes a big difference to consumers, taxpayers
and utility shareholders. In times of economic stress, neither Exelon nor the nation can afford to ignore
fundamental economics.
Exelon believes in and advocates for market-based solutions to energy supply issues. With U.S. EPA air
quality regulations tightening and natural gas in plentiful supply, markets can guide us to efficient
supplies of cleaner energy. Exelon will be at the table, protecting the electricity markets and seeking to
capitalize on the nation’s cleanest large-scale generation fleet.
John W. Rowe, Chairman and Chief Executive Officer
To Our Shareholders
In 2010 we witnessed the beginnings of an economic
recovery, but electricity demand remained flat and
electricity prices remained low. Nonetheless, Exelon
delivered another strong year, with operating
earnings of $2.7 billion. We are acting to protect
and grow our future upside, and we are committed
to enhancing your investment in difficult economic
times as well as in the better ones that will follow.
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John W. Rowe
Chairman and Chief Executive Officer
3
FINANCIAL PERFORMANCE
The Exelon team performed superbly despite the unfavorable
However, Exelon’s share price on Dec. 31, 2010, was $41.64, down
market conditions that existed in 2010. Our GAAP earnings were
14.8 percent from the year-end 2009 price of $48.87. Our stock
$3.87 per diluted share, compared to $4.09 in 2009. On an adjusted
performance frustrates me as much as it does you. Exelon’s stock
(non-GAAP) basis, our operating earnings were $4.06 per diluted
price is correlated to the forward prices of natural gas. Spot gas
share, handily beating our original expectations, but lower than
prices have dropped 70 percent, and forward prices 50 percent,
the $4.12 per diluted share that we earned in 2009. The difference
since their peak in mid-2008. These natural gas prices along with
was largely due to lower market prices for electricity, caused by
electricity demand are the principal drivers of the wholesale market
low natural gas prices and reduced demand, and higher nuclear
price of electricity, which in turn drives the earnings of our largest
fuel costs. Those negative factors were offset to a large extent by
subsidiary, Exelon Generation. Demand for electricity is returning
increases in the capacity revenues we earned on our generating
very slowly to pre-recession levels. Despite these market conditions,
units as part of PJM.
“ We delivered the highest average operating net
income in the industry over the past three years
and, as of the end of 2010, offered a 5 percent
dividend yield.”
we delivered the highest average operating net income in the
industry over the past three years and, as of the end of 2010,
offered a 5 percent dividend yield, better than the 4.5 percent and
4.7 percent averages offered by our competitive integrated and
regulated peers respectively. We retain more upside than either
group from an increase in natural gas or power prices and the
coming economic recovery. Since the merger that created Exelon, our
total return – measured as stock price appreciation plus reinvested
dividends – has been 97.5 percent. This compares to total returns
of 73.1 percent and 9 percent for the Philadelphia Utility Index and
S&P 500 respectively.
4
OPERATING PERFORMANCE
Our nuclear fleet continued to run at world-class levels with a
In the face of challenging weather, both ComEd and PECO kept the
capacity factor of 93.9 percent, the eighth consecutive year of
lights on and the gas flowing. In addition to high temperatures
capacity factors above 93 percent. The work and management
in the summer, ComEd faced 25 storms in 2010, including a storm
focus that goes into delivering these consistent results is a clear
on June 5 that produced seven tornadoes. ComEd’s storm recovery
competitive advantage for Exelon. At Exelon Power, the commercial
team performed exceptionally well, restoring power to more than
availability of our fossil units was 95.3 percent and the hydro facilities
1 million customers interrupted due to storms throughout June, with
performed at an equivalent availability factor of 96.8 percent for
90 percent of those customers restored within 24 hours of losing
the year.
Power Team’s financial results beat our expectations even with
power prices in PJM down approximately 30 percent from 2008
levels. Our hedging program has again proven successful by
allowing us to secure our earnings and cash flow and protect our
investment-grade credit ratings. We realized average margins at
Exelon Generation of $37.62 per megawatt-hour in 2010 despite
lower power prices. Our hedges contributed to the $5.24 billion
we generated in cash from operations across the businesses in
2010, and helped us to return $1.4 billion to our shareholders
through dividends.
power. The weather was no better in Philadelphia: PECO successfully
managed a highly volatile summer with extreme heat, damaging
storms and high winds, including one storm that left more than
337,000 customers without power. We thank the management teams
of both companies and their dedicated employees for these efforts.
“ Our nuclear fleet continued to run at world-class
levels with a capacity factor of 93.9 percent, the
eighth consecutive year of capacity factors above
93 percent. The work and management focus
that goes into delivering these consistent results
is a clear competitive advantage for Exelon.”
5
Chris Crane continues to lead Exelon’s ongoing commitment to
In 2010, we continued to execute our multi-year nuclear uprate
cost management, which kept our operating and maintenance
strategy, expanding the capacity of the fleet by 59 megawatts by
expenses below 2008 levels. The Finance group took steps to
making improvements at our Clinton, Dresden, LaSalle and Quad
increase our financial flexibility: early in 2011, we made a $2.1 billion
Cities stations. We have added a total of 101 megawatts since
contribution to the Exelon pension plans. This strengthens our
2009. When this initiative is complete, we expect to have added
balance sheet, improves our cash flow and reduces the size of future
as much as 1,500 megawatts of new generation, the equivalent of
pension fund contributions. In addition, the Finance team closed a
a new reactor at a much lower cost. In December, we completed the
$1 billion credit facility for ComEd – the first of its size in the industry
acquisition of John Deere Renewables – now Exelon Wind – adding
since the credit crisis – and executed $94 million in new credit
735 megawatts of clean generation to our fleet. Since the value is
agreements with minority and community banks that increased the
largely backed by sales contracts, this deal meets our dual objectives
company’s business with local and diverse banks in our key markets.
of securing a strategic position in the renewables business and
Exelon Business Services Company continued to provide best-in-class
enhancing shareholder value by investing in a disciplined manner.
professional services, including legal, information technology,
supply and human resources, adding great value to Exelon’s
operating companies.
SMART INVESTMENT FOR THE FUTURE
Roughly two-thirds of our business is commodity price-driven; the
rest is regulated transmission and distribution. Because of that
makeup, our business is part of a commodity cycle. While we are
suffering through a period of depressed energy prices, no company
in this industry is better able to benefit from the drive for clean
energy and its eventual upside. As we wait for better prices, we
work tirelessly to sustain our earnings and make smart investments
in our companies.
6
We also took steps to capture value from the transmission system
and prepare it for a clean energy future. ComEd is moving forward
with transmission upgrades in the City of Chicago, which we expect
to complete in 2011. Exelon Generation is taking steps to limit
congestion around our units through projects like the transformer
replacement at Clinton. And we are working with American
Electric Power and Electric Transmission America, a joint venture
of American Electric Power and MidAmerican Energy Holdings
Company, for high-voltage transmission development across the
Midwest to move renewable energy to where it is needed most.
“ No company in this industry is better able to
benefit from the drive for clean energy and its
eventual upside. As we wait for better prices, we
work tirelessly to sustain our earnings and make
smart investments in our companies.”
These investments position us favorably even without the climate
legislation for which we advocated. The Environmental Protection
Agency is working to issue rules under its existing statutory and
court-ordered obligations under the Clean Air Act. These rules
address criteria and hazardous pollutants such as sulfur dioxide
and nitrogen oxide, mercury, hydrochloric acid, arsenic and other
harmful gases. Exelon believes that these rules will enable the
transition to a clean energy future without sacrificing the
reliability of the electric power grid.
are most costly. The Exelon 2020 business strategy cements
Exelon’s value as the premier low-emission company in the U.S.
utility industry.
In sum, Exelon produced strong financial results for its shareholders
in 2010 despite the challenges of the slow economic recovery and
poor electricity market conditions. We served our customers and
communities well. Exelon remains directed toward long-term
success with our upside from economic and power market recovery,
our continued healthy dividend yield and our strong balance sheet.
These factors, along with our disciplined financial management
and persistent hunt for investments, ensure that our company will
provide enhanced value over the long-term.
Exelon 2020, which is available on our website, serves as our
John W. Rowe
resource plan, as a guide to our investment decisions and as a
framework for our public policy advocacy. It tells us which actions
provide our customers with reliable, clean energy at the lowest
cost while also delivering the highest returns for our shareholders.
It tells us which investments are economic and which investments
Chairman and Chief Executive Officer
Exelon Corporation
March 7, 2011
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Through the acquisition of John Deere Renewables in 2010 Exelon added 36 wind projects
with 735 megawatts of clean generation to its portfolio, including this site in Tiskilwa, Ill.
Exelon Wind, a division of Exelon Power, manages the company’s newly acquired wind
assets; approximately 75 percent of Exelon’s owned wind output is contracted through
long-term power purchase agreements.
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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.
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
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Financial Discipline
Maintaining our dividend, which yielded 5 percent at year-end, is a
top priority, and in 2010 Exelon delivered approximately $1.4 billion
in dividends to shareholders on the heels of strong earnings and free
cash flow. Our success in generating favorable 2010 results can be
credited to a number of factors: the hedging program managed so
effectively by Power Team, favorable weather, our superior operating
performance, prudent cost management and efficient use of capital.
Exelon’s financial discipline and commitment to long-term shareholder
value also are evident in several critical areas of our business. Our
nuclear uprates program has already netted the company 101
additional megawatts of power from our existing nuclear fleet.
This approach gives us new clean energy at a fraction of the cost of
building a new nuclear plant.
In addition, our recent $2.1 billion contribution to our pension funds
improves the company’s overall financial flexibility through a period
of low commodity and power prices, while increasing the assets to
meet our pension obligations.
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From the trade floor in Kennett Square, Pa., Power Team manages the interaction between the generation
portfolio and the wholesale and retail markets in order to reduce risk, create opportunity and optimize
the value of Exelon’s generation.
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Operating Excellence
ComEd, PECO and Exelon Generation demonstrated their commitment
to our customers through record-setting storm recovery efforts and
successful refueling outages.
With our Chicago- and Philadelphia-area customers experiencing
wind, rain and snow storms of unusual severity, our crews worked
around the clock to restore power to hundreds of thousands of
customers and replace thousands of poles and miles of wire safely
and quickly. We are proud of their tireless efforts and teamwork and,
most importantly, their commitment to safety.
On the generation side of the business, our nuclear fleet maintained
a capacity factor of 93.9 percent in 2010 and completed nine refueling
outages, including the replacement of three low-pressure turbines
at Quad Cities Unit 2. Our fossil and renewable fleets also performed
well, with a fossil plant commercial availability of 95.3 percent and
an equivalent availability factor for the hydroelectric facilities of
96.8 percent.
Exelon Business Services Company provided world-class, cost-effective
support to our operating companies, including the launch of myHR,
which includes a website and service center that have dramatically
improved human resources service levels for our employees and retirees
while reducing costs.
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Both ComEd and PECO kept the lights on and the gas flowing despite numerous severe storms throughout
the year. This PECO line employee works to safely remove fallen branches from power lines after a
summer storm.
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Environmental Leadership
A clean energy portfolio based on sound economics creates compelling
value. However, in the absence of a clear federal energy policy the
United States is moving toward a lower-carbon, less-polluting society
in uneconomic fits and starts. Selecting generation technology based
on short-term perspectives does not benefit consumers and does not
work for utilities. Pursuing the most economical options first offers the
greatest benefit for our customers, shareholders and the economy –
and that is why we are following this advice ourselves.
Exelon is now nearly three years into Exelon 2020: a low-carbon roadmap,
our plan to reduce, offset or displace our company’s 2001 carbon footprint.
By following this business strategy, Exelon has achieved more than half
of that goal, reducing more than 8 million metric tons of greenhouse
gas emissions.
Through our acquisition of John Deere Renewables, which added 36
economic wind projects to Exelon’s clean energy portfolio, our ongoing
nuclear uprates program, customer energy efficiency efforts, 10 LEED-
certified facilities and planned retirement of four fossil units, Exelon
is proving that significant reductions in greenhouse gas emissions
can be achieved without adverse effects on reliability or the economy.
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Exelon Power’s Handley Station is a natural gas-burning generating facility in Ft. Worth, Texas, with
three units capable of generating 1,265 megawatts when needed. New natural gas discoveries promise
a more abundant supply of this critical low-carbon fuel. The cheapest way to meet new demand for
electricity – when that demand materializes – is currently natural gas combined-cycle units.
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Talented Employees
None of the successes captured in this report, from our nuclear
performance to the PECO rate cases described on page 19, would
have been possible without our hard-working employees.
The work our employees do is complex and sometimes dangerous,
and it is relied upon by millions of families and businesses in the
regions where we operate. ComEd and PECO together cover more
than 13,000 square miles and serve nearly 6 million electricity and
gas customers – a tremendous responsibility that our people take
very seriously.
For that reason, the safety of our employees and our customers is
paramount. In 2010, we mourned the loss of our colleague Bill Boseo
in a workplace accident. In honor of Bill and others we have lost over
the years we constantly dedicate ourselves to safety in every work
environment, from the plants and offices to warehouses and vehicles,
with the goal of every employee returning home safely every day.
We will continue to improve in this area, ever mindful that even one
mishap is too many.
Beyond their successes within Exelon, our employees exhibit
extraordinary leadership in our communities, volunteering nearly
66,000 hours in 2010, a 15 percent increase over 2009. We are proud
of their efforts.
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In helicopters and bucket trucks, at power plants and warehouses, at substations and in commercial
locations, employees like this ComEd underground cable splicer perform tasks requiring skill,
collaboration, excellence and a commitment to safety.
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Exelon at a Glance
exelon generation
Exelon Nuclear’s approximately 8,700 professionals operated its 17 nuclear reactors,
the nation’s largest commercial nuclear fleet, in a safe and reliable manner that
helped position Exelon for long-term financial success.
In 2010, Exelon Nuclear was recognized for its commitment to safety with the
2010 National Safety Council Green Cross for Safety Award, the first time a
utility has received the honor. In addition, Exelon Nuclear’s plants achieved
an average capacity factor of 93.9 percent in 2010, the eighth consecutive
year capacity factor exceeded 93 percent, and produced just over 140 million
megawatt-hours of electricity. Quad Cities Generating Station Unit 2 set a
station continuous-run record of 446 days, while Peach Bottom Atomic Power
Station’s Unit 2 set its own record of 691 days.
Exelon Nuclear continued executing several important projects within its nuclear
uprates program. Uprate projects take advantage of digital technology, new
equipment and modern production techniques to add clean megawatts to a
plant’s output at cost and risk levels far lower than those associated with new
plant construction. In 2010, uprates at Clinton, Dresden, LaSalle and Quad Cities
generating stations led to 59 megawatts of clean electricity being added to the
regional grid.
The company also announced its decision to retire Oyster Creek Generating Station by
Dec. 31, 2019, instead of 2029. This decision was the result of a unique set of economic
conditions and changing environmental regulations facing the plant that make
ending operations in 2019 the best option for the company and its shareholders.
Exelon Power’s fleet provided more than 10.7 million megawatt-hours of reliable
generation in 2010 and achieved record performance levels in unit availability,
delivering on the commitment of continuous improvement and performance
optimization. Power performed at distinguished levels in 2010 on three key
operational metrics: equivalent forced outage rate (demand), hydro equivalent
availability and event-free clock resets.
Exelon Power furthered its role as an environmental leader in 2010. Successes
included the awarding of LEED-Gold certification to the Conowingo Visitor
Center in Maryland and the July 2010 dedication of Exelon City Solar, the
nation’s largest urban solar plant. City Solar is a 10-megawatt solar facility
located on a former brownfield in the West Pullman neighborhood of Chicago.
In December, Exelon Power added 735 megawatts of wind generation to its
portfolio through the acquisition of John Deere Renewables, which marked
Exelon’s entry into owning and operating wind projects. Exelon Wind, a
division of Exelon Power, manages the company’s wind operations.
Exelon Power’s fleet now comprises 105 fossil (coal, oil and natural gas), landfill
gas and hydroelectric units, 36 wind projects and a solar plant, located in 11 states
and capable of generating more than 8,500 megawatts of electricity.
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,
emissions credits, transmission contracts and load obligations. Power Team’s
wholesale marketing and transaction efforts are focused on the competitive
electricity markets in many regions of the United States. The Power Team 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 channel to market for
Exelon’s generation, while providing customers innovative products that can help
them manage risk and gain 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 in-depth knowledge to the retail energy
customers they serve.
comed
ComEd had strong reliability performance in 2010, despite weathering the
second-highest number of storm-related service interruptions in a decade,
with a SAIFI (outage frequency) rate of 0.94 that was one of the best in ComEd’s
history. ComEd experienced a decline in safety performance in 2010 after posting
best-on-record performance the previous year. While still solidly in the top
quartile of industry performance, safety is a key focus area in 2011.
In response to continuing economic challenges, ComEd’s Operational Strategy and
Business Intelligence group collaborated with ComEd business units to offset cost
increases through ongoing efficiency and productivity improvements.
ComEd moved forward with its smart meter pilot and smart grid “innovation
corridor” technology study despite an Illinois Appellate Court ruling that struck
down the company’s mechanism for cost recovery. The company received Illinois
Commerce Commission approval to recover some of these costs through a
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general rate case. The smart meter pilot is designed 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 Smart Ideassm portfolio of energy efficiency programs exceeded second-
year targets by 51 percent, helping customers achieve 472,132 megawatt-hours
of energy savings – the equivalent of the energy required to power nearly 50,000
homes for one year.
In addition, ComEd restructured key business areas to improve system reliability
and operational efficiency, and enhance customer service. Changes include
a new regional reporting structure for Distribution Operations, an improved
centralized structure for Transmission and Substation Operations and a new
structure for Customer Operations to focus on long-term strategy, business
transformation and revenue growth.
peco
Despite one of the most active storm seasons in its history, PECO kept the
lights on and the gas flowing for customers while establishing a new OSHA
recordable safety record for the company. PECO also achieved a year-end ACSI
(customer satisfaction) score of 73.2, the highest on record, and showed a
15-point improvement in the J.D. Power customer satisfaction study, moving
the company to fourth place in overall satisfaction among large Eastern utilities.
PECO faced a year of significant change in 2010 with the expiration of generation
rate caps, the transition to market-based pricing and state mandates to install
advanced metering technology and conduct energy efficiency programs. The year
proved successful, with the approval of simultaneous electric and gas rate cases
and full launch of the award-winning PECO Smart Ideassm marketing campaign.
The company successfully migrated customers to market-based pricing and
instituted new electric and natural gas delivery rates, resulting in overall average
price increases of 5.1 percent for residential electric customers and 1 percent for
residential gas customers.
In 2010, PECO also reached a final funding agreement with the U.S. Department
of Energy to advance the company’s smart metering technology initiative as
part of a $200 million federal stimulus grant award. PECO’s $650 million project
is being designed to improve local electric service reliability, build a platform for
new technologies and energy-saving products, and promote renewable energy
sources in support of Exelon 2020.
An active corporate citizen across the Greater Philadelphia region, PECO continued
to drive forward its five-year, $15.3 million environmental initiative in 2010,
resulting in LEED certification for five existing buildings, the awarding of $150,000
in PECO Green Region Grants to 23 local municipalities and ISO 14011 certification.
exelon transmission company
Exelon Transmission Company was established in October 2009 to capitalize
on the growing national need for, and potential value of, new transmission
capacity. Exelon Transmission Company harnesses the transmission strengths
and capabilities of Exelon’s generation and utility businesses, and creates
partnerships with other utilities, transmission developers, renewable developers,
regulators and others in creating the next generation of reliable electric
transmission in the United States. Drawing on Exelon’s deep experience, broad
resources and strategic Illinois footprint, these transmission projects will
improve reliability, reduce congestion and facilitate movement of low-carbon
energy to markets where it is needed.
exelon business services company
Exelon Business Services Company (EBSC) is a direct, wholly-owned subsidiary of
Exelon Corporation that provides quality products and services in a cost-effective
manner to all Exelon companies.
There are 12 EBSC practice areas: Audit and Controls, Commercial Operations
Group (which includes accounts payable and payroll), Communications and
Public Affairs, Corporate Strategy and Exelon 2020, Development, Finance,
Government Affairs and Public Policy, Human Resources, Information Technology
(which includes Cyber & Physical Security), Investments, Legal and Governance,
and Supply.
In 2010, EBSC continued to focus on meeting service and cost commitments
in the changing business climate in which the Exelon businesses operate. Of
particular note was combining Information Technology Security and Corporate
Security to allow better focus and tighter coordination on a nationally important
issue that could potentially affect all of our operating companies.
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Executive Committee
John W. Rowe
Chairman and Chief Executive Officer
Christopher M. Crane
President and Chief Operating Officer,
Exelon and President, Exelon Generation
Frank M. Clark
Chairman and Chief Executive Officer,
ComEd
Kenneth W. Cornew
Senior Vice President, Exelon
and President, Power Team
Joseph Dominguez
Senior Vice President, Federal Regulatory Affairs,
Public Policy and Communications, Exelon and
Senior Vice President, State Governmental Affairs,
Exelon Generation
Ruth Ann M. Gillis
Executive Vice President and Chief Administrative
and Diversity Officer, Exelon and President,
Exelon Business Services Company
Matthew F. Hilzinger
Senior Vice President, Chief Financial Officer
and Treasurer, Exelon
Denis P. O’Brien
Executive Vice President,
Exelon and President and CEO, PECO
Anne R. Pramaggiore
President and Chief Operating Officer, ComEd
William A. Von Hoene Jr.
Executive Vice President,
Finance and Legal, Exelon
Former Executive Committee members Ian P. McLean, Elizabeth A. Moler and Andrea L. Zopp retired from the company in 2010.
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Board of Directors
John W. Rowe
Chairman and Chief Executive Officer
John A. Canning Jr.
Chairman, Madison Dearborn Partners, LLC
M. Walter D’Alessio
Vice Chairman, NorthMarq Capital, Inc.
Nicholas DeBenedictis
Chairman, Chief Executive Officer and
President, Aqua America, Inc.
Bruce DeMars*
Admiral (Retired), United States Navy
Nelson A. Diaz
Of Counsel, Cozen O’Connor
Sue L. Gin
Chairman and Chief Executive Officer,
Flying Food Group, LLC
Rosemarie B. Greco
Principal, GRECOVentures
Former Senior Advisor to the Governor
of Pennsylvania, Health Care Reform
Paul L. Joskow
President, Alfred P. Sloan Foundation
Richard W. Mies
President and Chief Executive Officer,
The Mies Group, Ltd.
Admiral (Retired), United States Navy
John M. Palms, Ph.D.
Distinguished President Emeritus,
University of South Carolina
William C. Richardson, Ph.D.
President and Chief Executive Officer Emeritus,
W. K. Kellogg Foundation
Thomas J. Ridge
Former Secretary, Department of
Homeland Security, Former Governor
of Pennsylvania
John W. Rogers Jr.
Chairman and Chief Executive Officer,
Ariel Investments, LLC
* Admiral DeMars retired from the Exelon board effective Dec. 31, 2010.
Stephen D. Steinour
Chairman, President and
Chief Executive Officer,
Huntington Bancshares Incorporated
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 and Comprehensive Income
> Consolidated Statements of Cash Flows
> Consolidated Balance Sheets
> Consolidated Statements of Changes in Shareholders’ Equity
39 Management’s Report on Internal Control Over Financial Reporting
(Dollars in millions, except for per share data)
Statement of operations data:
Operating revenues
Operating income
Income from continuing operations
Income from discontinued operations
Net income (a)
Earnings per average common share (diluted):
Income from continuing operations
Income from discontinued operations
Net income
Dividends per common share
Average shares of common stock outstanding – diluted
(a) The year 2006 reflects the impact of a goodwill impairment charge of $776 million.
Summary Annual Report
Summary of Earnings and Financial Condition
2010
2009
2008
For the years ended Dec. 31,
2006
2007
$
$
$
$
$
18,644
4,726
2,563
–
2,563
3.87
–
3.87
2.10
663
$
$
$
$
$
17,318
4,750
2,707
–
2,707
4.09
–
4.09
2.10
662
$
$
$
$
$
18,859
5,299
2,717
20
2,737
4.10
0.03
4.13
2.03
662
$
$
$
$
$
18,916
4,668
2,726
10
2,736
4.03
0.02
4.05
1.76
676
$
$
$
$
$
15,655
3,521
1,590
2
1,592
2.35
–
2.35
1.60
676
23
Summary Annual Report
Summary of Earnings and Financial Condition
(Dollars in millions)
Balance sheet data:
Current assets
Property, plant and equipment, net
Noncurrent regulatory assets
Goodwill
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
Preferred securities of subsidiary
Noncontrolling interest
Shareholders’ equity
Total liabilities and shareholders’ equity
2010
2009
2008(a)
2007(a),(b)
2006(a),(b)
For the years ended Dec. 31,
$ 6,398
29,941
4,140
2,625
9,136
$ 52,240
4,240
$
12,004
3,555
18,791
87
3
13,560
$ 52,240
$
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
(a) Exelon retrospectively reclassified certain assets and liabilities with respect to option premiums into the mark-to-market net asset and liability accounts to conform to the current-year presentation.
(b) Exelon retrospectively reclassified certain assets and liabilities in accordance with the applicable authoritative guidance for offsetting amounts related to qualifying derivative contracts.
24
The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in Exelon common stock, as compared
with the S&P 500 Stock Index and the S&P Utility Index for the period 2006 through 2010.
This performance chart assumes:
• $100 invested on Dec. 31, 2005, in Exelon 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
$200
$150
$100
$0
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
0
1
/
3
0
1
/
6
0
1
/
9
0
1
/
2
1
Exelon Corporation
S&P 500
S&P Utilities
Exelon Corporation
S&P 500
S&P Utilities
Source: Bloomberg
2005
$ 100.00
100.00
100.00
$
2006
119.72
115.76
120.96
$
2007
161.70
122.11
144.35
$
2008
113.39
77.00
102.59
Value of investment at Dec. 31,
2010
2009
$
104.02
97.31
114.71
$
93.21
111.95
120.95
25
Discussion of Financial Results - Exelon
Results of Operations
(Dollars in millions, except for per share data)
Operating revenues
Operating expenses
Purchased power and fuel expense
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, net
Interest expense to affiliates, net
Loss in equity method investments
Other, net
Total other income and deductions
Income before income taxes
Income taxes
Net income
Diluted earnings per share
26
2010
2009
Favorable
(Unfavorable)
Variance
$
18,644
$
17,318
$
1,326
6,435
4,453
147
2,075
808
13,918
4,726
(792)
(25)
–
312
(505)
4,221
1,658
2,563
3.87
5,281
4,612
63
1,834
778
12,568
4,750
(654)
(77)
(27)
427
(331)
4,419
1,712
2,707
4.09
$
$
$
$
(1,154)
159
(84)
(241)
(30)
(1,350)
(24)
(138)
52
27
(115)
(174)
(198)
(54)
(144)
(0.22)
$
$
Discussion of Financial Results - Exelon
Exelon’s net income was $2,563 million for the 12 months ended Dec. 31, 2010, as compared to $2,707 million for the 12 months ended Dec. 31, 2009, and diluted earnings
per average common share were $3.87 for the 12 months ended Dec. 31, 2010, as compared to $4.09 for the 12 months ended Dec. 31, 2009. All amounts presented below
are before the impact of income taxes, except as noted.
Exelon and its subsidiaries evaluate their operating performance using the measure of revenue net of purchased power and fuel expense. Exelon and its subsidiaries
believe that revenue net of purchased power and fuel expense is a useful measurement because it provides information that can be used to evaluate its operational
performance. Revenue net of purchased power and fuel expense is not a presentation defined under GAAP and may not be comparable to other companies’ presentations
or deemed more useful than the GAAP information provided elsewhere in this report.
Revenue net of purchased power and fuel expense increased by $172 million primarily due to increased revenues of $201 million at Generation largely related to favorable
capacity revenues, including under the Reliability Pricing Model, in the Midwest and Mid-Atlantic regions. Exelon’s results also were affected by the impact of favorable
weather conditions of $168 million in the ComEd and PECO service territories and a decrease in costs of $84 million associated with the Illinois Settlement Legislation,
primarily at Generation. Further, revenues at the utility companies increased by $92 million to recover the costs of regulatory required programs, which are offset in
operating expenses, and ComEd recognized recovery of $59 million from customers associated with its uncollectible accounts rider mechanism. Offsetting these favorable
impacts were unfavorable market and portfolio conditions of $174 million, increased nuclear fuel costs of $115 million, a reduction of $95 million in mark-to-market gains
from Generation’s hedging activities in 2010 compared to 2009 and a $57 million impairment of SO2 emissions allowances related to the U.S. Environmental Protection
Agency’s proposed Transport Rule.
Operating and maintenance expense decreased by $75 million primarily due to the impact of 2009 activities, including the $223 million impairment of the Handley
and Mountain Creek stations recorded in 2009 and reduced stock compensation costs in 2010 of $40 million across the operating companies. Decreased operating and
maintenance expense was partially offset by higher costs at the utility companies associated with regulatory required programs of $84 million, a 2009 reduction in
Generation’s asset retirement obligation of $51 million and incremental costs of $42 million related to storms in the ComEd and PECO service territories. The costs of the
utilities’ regulatory required programs are offset in revenue net of purchased power and fuel expense.
Depreciation and amortization expense increased by $241 million primarily due to increased depreciation expense of $144 million related to ongoing capital expenditures
and the change in estimated useful lives associated with the plants subject to shutdowns announced in December 2009 and increased scheduled amortization of
competitive transition charges at PECO of $98 million, which were fully amortized as of Dec. 31, 2010, corresponding with the end of the transition period in accordance
with PECO’s 1998 restructuring settlement. Exelon’s results were also significantly affected by $120 million in 2009 expenses related to debt extinguishment costs
resulting from a 2009 debt refinancing, and by lower net nuclear decommissioning trust gains of $102 million in 2010 for Non-Regulatory Agreement Units as a result of
less favorable market performance.
Exelon’s results for the 12 months ended Dec. 31, 2010, were negatively affected by certain income tax-related matters. Exelon recorded a non-cash charge of $65 million
(after tax) in 2010 and a non-cash gain of $66 million (after tax) in 2009 for the remeasurement of income tax uncertainties. Exelon also recorded a $65 million (after tax)
charge to income tax expense as a result of health care legislation passed in March 2010, which includes a provision that reduces the deductibility of retiree prescription
drug benefits for federal income tax purposes.
27
Discussion of Financial Results - by Business Segment
Results of Operations by Business Segment
The comparisons of 2010 and 2009 operating results and other statistical information set forth below include intercompany transactions, which are eliminated in
Exelon’s consolidated financial statements.
Net Income (Loss) by Business Segment
(Dollars in millions)
Generation
ComEd
PECO
Other (a)
Total
(a) Other primarily includes corporate operations, Exelon Business Service Company, LLC (EBSC) and intersegment eliminations.
2010
1,972
337
324
(70)
2,563
$
$
2009
2,122
374
353
(142)
2,707
$
$
Favorable
(Unfavorable)
2010 vs. 2009
Variance
$
$
(150)
(37)
(29)
72
(144)
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 other operating expenses
Operating income
Other income and deductions
Interest expense
Loss in equity method investments
Other, net
Total other income and deductions
Income before income taxes
Income taxes
Net income
Discussion of Financial Results - Generation
$
2010
10,025
3,463
6,562
$
2,812
474
230
3,516
3,046
(153)
–
257
104
3,150
1,178
1,972
$
$
Favorable
(Unfavorable)
Variance
$
$
322
(531)
(209)
126
(141)
(25)
(40)
(249)
(40)
3
(119)
(156)
(405)
255
(150)
2009
9,703
2,932
6,771
2,938
333
205
3,476
3,295
(113)
(3)
376
260
3,555
1,433
2,122
The decrease in Generation’s net income was primarily due to decreased revenue net of purchased power and fuel expense as a result of lower margins realized on market
and affiliate power sales primarily due to unfavorable market conditions, lower mark-to-market gains on economic hedging activities and increased nuclear fuel costs.
These were partially offset by higher capacity revenues, including under the Reliability Pricing Model, in the Midwest and Mid-Atlantic regions, favorable settlements on
the ComEd swap and decreased operating and maintenance expense.
The decrease in operating and maintenance expense was primarily due to the impact of the $223 million impairment of the Handley and Mountain Creek stations
recorded in 2009. Lower operating and maintenance expense was partially offset by higher expense due to the absence of asset retirement obligation reductions that
occurred in 2009; higher wages and benefits costs; and higher nuclear refueling outage costs in 2010. Additionally, Generation’s earnings decreased due to lower net
nuclear decommissioning trust gains for the Non-Regulatory Agreement Units in 2010 compared to 2009.
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
Other, net
Total other income and deductions
Income before income taxes
Income taxes
Net income
2010
$ 6,204
3,307
2,897
$
975
94
516
256
1,841
1,056
(386)
24
(362)
694
357
337
$
$
Favorable
(Unfavorable)
Variance
$
$
430
(242)
188
53
(31)
(22)
25
25
213
(67)
(55)
(122)
91
(128)
(37)
2009
5,774
3,065
2,709
1,028
63
494
281
1,866
843
(319)
79
(240)
603
229
374
The decrease in ComEd’s net income was primarily due to the remeasurement of uncertain income tax positions in 2009 and 2010 related to the 1999 sale of ComEd’s
fossil generating assets. These remeasurements resulted in increased interest expense and income tax expense recorded in 2010, and increased interest income recorded
in 2009. Net income also was reduced by higher incremental storm costs, increased depreciation and amortization expense reflecting higher plant balances, and the
impact of federal health care legislation signed into law in March 2010. These reductions to net income were partially offset by higher revenue net of purchased power
expense primarily due to favorable weather conditions, a net decrease in operating and maintenance expense, and the accrual of estimated future refunds of the Illinois
utility distribution tax for the 2008 and 2009 tax years.
The decrease in operating and maintenance expense reflects the February 2010 approval by the Illinois Commerce Commission of ComEd’s uncollectible accounts expense
rider mechanism, the reduction of ComEd’s asset retirement obligation in 2010, and a charge in 2009 for severance expense incurred as a cost to achieve savings under
Exelon’s 2009 company-wide cost savings initiative.
30
Results of Operations – PECO
(Dollars in millions)
Operating revenues
Purchased power and fuel expense
Revenue net of purchased power and fuel 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
Loss in equity method investments
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
2010
5,519
2,762
2,757
680
53
1,060
303
2,096
661
(193)
–
8
(185)
476
152
324
4
320
$
$
2009
5,311
2,746
2,565
640
–
952
276
1,868
697
(187)
(24)
13
(198)
499
146
353
4
349
$
$
Favorable
(Unfavorable)
Variance
$
$
208
(16)
192
(40)
(53)
(108)
(27)
(228)
(36)
(6)
24
(5)
13
(23)
(6)
(29)
–
(29)
The decrease in PECO’s net income was primarily driven by increased operating expense partially offset by increased electric revenues net of purchased power expense.
The increase in operating expense reflected higher incremental storm costs and increased scheduled amortization of competitive transition charges. Electric revenues net
of purchased power expense increased as a result of favorable weather conditions and increased competitive transition charge recoveries.
31
Consolidated Statements of Operations and Comprehensive Income
Exelon Corporation and Subsidiary Companies
(Dollars 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, net
Interest expense to affiliates, net
Loss in equity method investments
Other, net
Total other income and deductions
Income from continuing operations before income taxes
Income taxes
Income from continuing operations
Discontinued operations
Loss from discontinued operations, net of taxes of $0, $0 and $1, respectively
Gain on disposal of discontinued operations, net of taxes of $0, $0 and $14, respectively
Income from discontinued operations
Net income
2010
For the years ended Dec. 31,
2008
2009
$
18,644
$
17,318
$
18,859
4,425
2,010
4,453
147
2,075
808
13,918
4,726
(792)
(25)
–
312
(505)
4,221
1,658
2,563
–
–
–
2,563
3,215
2,066
4,612
63
1,834
778
12,568
4,750
(654)
(77)
(27)
427
(331)
4,419
1,712
2,707
–
–
–
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
$
$
32
Consolidated Statements of Operations and Comprehensive Income
Exelon Corporation and Subsidiary Companies
(Dollars in millions, except for per share data)
Other comprehensive income (loss)
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic costs, net of taxes of $(7), $(6) and $(6), respectively
Actuarial loss reclassified to periodic cost, net of taxes of $79, $74 and $52, respectively
Transition obligation reclassified to periodic cost, net of taxes of $2, $2 and $2, respectively
Pension and non-pension postretirement benefit plan valuation adjustment,
net of taxes of $(188), $47 and $(959), respectively
Change in unrealized gain (loss) on cash flow hedges, net of taxes of $(107), $(2) and $563, respectively
Change in unrealized gain (loss) on marketable securities, net of taxes of $0, $3 and $(6), respectively
Other comprehensive income (loss)
Comprehensive income
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
2010
For the years ended Dec. 31,
2008
2009
(11)
114
3
(288)
(151)
(1)
(334)
2,229
661
663
3.88
–
3.88
3.87
–
3.87
2.10
$
$
$
$
$
$
(13)
93
3
86
(12)
5
162
2,869
659
662
4.10
–
4.10
4.09
–
4.09
2.10
$
$
$
$
$
$
(9)
60
3
(1,459)
855
(7)
(557)
2,180
658
662
4.13
0.03
4.16
4.10
0.03
4.13
2.03
$
$
$
$
$
$
The information in the Consolidated Statements of Operations and Comprehensive Income shown above is a replication of the information in the Consolidated Statements of Operations in Exelon’s 2010 Form 10-K. For complete consolidated
financial statements, including notes, please refer to pages 150 through 331 of Exelon’s 2010 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 133 of Exelon’s 2010 Form 10-K filed with the SEC.
33
Consolidated Statements of Cash Flows
Exelon Corporation and Subsidiary Companies
(Dollars 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, 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
Acquisition of Exelon Wind
Proceeds from sales of investments
Purchases of investments
Change in restricted cash
Other investing activities
Net cash flows used in investing activities
34
2010
For the years ended Dec. 31,
2008
2009
$
2,563
$
2,707
$
2,737
2,943
–
981
(88)
(105)
609
(232)
(62)
472
(124)
(155)
(543)
(959)
(56)
5,244
(3,326)
3,764
(3,907)
(893)
28
(22)
423
39
(3,894)
2,601
223
756
(95)
(207)
652
234
51
(254)
(40)
196
(29)
(588)
(113)
6,094
(3,273)
4,292
(4,531)
–
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)
10,657
(10,942)
–
–
–
29
(5)
(3,378)
(Dollars 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 of variable interest entity
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 (decrease) 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
2010
For the years ended Dec. 31,
2008
2009
(155)
1,398
(828)
(806)
–
(1,389)
48
–
–
(16)
(1,748)
(398)
2,010
1,612
$
(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
$
$
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 2010 Form 10-K. For complete consolidated financial statements, including
notes, please refer to pages 150 through 331 of Exelon’s 2010 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 133 of Exelon’s 2010 Form 10-K filed with the SEC.
35
Consolidated Balance Sheets
Exelon Corporation and Subsidiary Companies
(Dollars in millions)
Assets
Current assets
Cash and cash equivalents
Restricted cash and investments
Accounts receivable, net
Customer ($346 gross accounts receivable pledged as collateral as of Dec. 31, 2010)
Other
Mark-to-market derivative assets
Inventories, net
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
Pledged assets for Zion Station decommissioning
Other
Total deferred debits and other assets
Total assets
36
For the years ended Dec. 31,
2009
2010
$
1,612
30
1,932
1,196
487
216
590
335
6,398
29,941
4,140
6,408
717
15
2,625
409
824
763
15,901
$ 52,240
$
2,010
40
1,563
486
376
198
559
209
5,441
27,341
4,872
6,669
704
20
2,625
649
–
859
16,398
$ 49,180
(Dollars in millions)
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings
Short-term notes payable—accounts receivable agreement
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 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
Payable for Zion Station decommissioning
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, 662 and 660 shares outstanding
at Dec. 31, 2010, and Dec. 31, 2009, respectively)
Treasury stock, at cost (35 shares held at Dec. 31, 2010, and Dec. 31, 2009, respectively)
Retained earnings
Accumulated other comprehensive loss, net
Total shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and shareholders’ equity
Consolidated Balance Sheets
Exelon Corporation and Subsidiary Companies
For the years ended Dec. 31,
2009
2010
$
–
225
599
–
1,373
38
1,040
85
880
4,240
11,614
390
6,621
3,494
3,658
2,218
1,018
3,555
21
659
1,102
22,346
38,590
$
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
87
87
9,006
(2,327)
9,304
(2,423)
13,560
3
13,563
$ 52,240
8,923
(2,328)
8,134
(2,089)
12,640
–
12,640
$ 49,180
The information in the Consolidated Balance Sheets shown above is a replication of the information in the Consolidated Balance Sheets in Exelon’s 2010 Form 10-K. For complete consolidated financial statements, including notes, please refer to
pages 150 through 331 of Exelon’s 2010 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 133 of Exelon’s 2010 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, Dec. 31, 2007
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Common stock purchases
Common stock dividends
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 $(290)
Balance, Dec. 31, 2008
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Common stock dividends
Other comprehensive income, net of income taxes of $119
Balance, Dec. 31, 2009
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Common stock dividends
Acquisition of Exelon Wind
Other comprehensive loss, net of income taxes of $(221)
Balance, Dec. 31, 2010
Issued
Shares
Common
Stock
Treasury
Stock
Retained Comprehensive Noncontrolling
Interest
Earnings
Loss
Accumulated
Other
689,183
–
3,452
318
–
–
–
–
692,953
–
1,088
524
–
–
694,565
–
1,380
644
–
–
–
696,589
$
8,579
–
217
19
1
–
$
–
–
8,816
–
85
22
–
–
8,923
–
60
23
–
–
–
$ 9,006
$
$
$
$
$
(1,838)
–
–
–
(500)
–
–
–
(2,338)
–
10
–
–
–
(2,328)
–
1
–
–
–
–
(2,327)
$
4,930
2,737
–
–
–
(1,007)
160
–
$ 6,820
2,707
(5)
–
(1,388)
–
8,134
2,563
(1)
–
(1,392)
–
–
$ 9,304
$
$
(1,534)
–
–
–
–
–
$
(160)
(557)
(2,251)
–
–
–
–
162
$ (2,089)
–
–
–
–
–
(334)
(2,423)
$
$
$
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3
–
3
Total
Shareholders’
Equity
$
$
$
$
10,137
2,737
217
19
(499)
(1,007)
–
(557)
11,047
2,707
90
22
(1,388)
162
12,640
2,563
60
23
(1,392)
3
(334)
13,563
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 2010 Form 10-K. For complete
consolidated financial statements, including notes, please refer to pages 150 through 331 of Exelon’s 2010 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 133 of Exelon’s 2010 Form 10-K filed with the SEC.
38
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 Dec. 31, 2010. In making this assessment,
management used the criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Based on this assessment, Exelon’s management concluded that, as of Dec. 31, 2010, Exelon’s internal control over financial reporting was effective.
The effectiveness of the company’s internal control over financial reporting as of Dec. 31, 2010, has been audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report.
Feb. 10, 2011
Information Derived from 2010 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 331 of our Form 10-K annual report for the year ended Dec. 31, 2010. That annual report was filed with the Securities and
Exchange Commission on Feb. 10, 2011, and can be viewed and retrieved through the Commission’s website at www.sec.gov or our website at www.exeloncorp.com.
Our independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), issued a report dated Feb. 10, 2011, on its integrated audit of our consolidated financial
statements and our internal control over financial reporting. In its report PwC 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 Dec. 31, 2010, and 2009 and the results of their operations and their cash flows for each
of the three years in the period ended Dec. 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Furthermore, PwC expressed
an unqualified opinion that Exelon maintained, in all material respects, effective internal control over financial reporting as of Dec. 31, 2010, based on criteria established in
Internal Control – Integrated Framework issued by the COSO. The full text of PwC’s report can be found on page 154 of our 2010 Form 10-K.
39
Corporate Profile
Exelon Corporation is one of the nation’s largest electric utilities with more than $18 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 486,000 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 Wells Fargo 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 shareowner services at
Wells Fargo at the toll-free number shown to the left or access its website at www.shareowneronline.com.
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 its website at www.benefitaccess.com.
The company had approximately 130,000 holders of record of its common stock as of Dec. 31, 2010.
The 2010 Form 10-K Annual Report to the Securities and Exchange Commission was filed on Feb. 10, 2011. 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 805379, Chicago, Illinois 60680-5379.
The company maintains a telephone information service that enables investors to obtain currently available information on
financial performance, company news and to access shareholder services at Wells Fargo. To use this service, please call our
toll-free number: 866.530.8108.
investor and general information
Corporate Headquarters
Exelon Corporation
P.O. Box 805379
Chicago, IL 60680-5379
Transfer Agent
Wells Fargo
800.626.8729
Employee Stock Purchase Plan
877.582.5113
Employee Stock Options
888.609.3534
Investor Relations Voice Mailbox
312.394.2345
Shareholder Services Voice Mailbox
312.394.8811
Independent Public Accountants
PricewaterhouseCoopers LLP
Website
www.exeloncorp.com
Stock Ticker
EXC
40
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©
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Exelon Corporation
P.O. Box 805379
Chicago, IL 60680-5379
www.exeloncorp.com
©2011 Exelon