Business Context and Reporting Period
This Form 8-K Current Report, dated October 2, 2006, is filed jointly by Commonwealth Edison Company (ComEd) and Exelon Corporation. The filing addresses regulatory developments in Illinois concerning electric power rates for ComEd's fixed-price customers.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The report focuses exclusively on regulatory events and legislative actions rather than financial performance data.
Material Changes and Regulatory Events
- ICC Rate Approval: On September 14, 2006, the Illinois Commerce Commission (ICC) unanimously approved new electric rates resulting from the state's first power procurement auction. These rates represent the first general rate increase for ComEd since 1995 and are scheduled to take effect on January 2, 2007.
- Historical Context: Prior to this approval, ComEd had reduced rates by 15% for residential customers in 1998 and by an additional 5% in 2001.
- Legislative Challenge: On October 2, 2006, the Speaker of the Illinois House of Representatives requested a special legislative session to pass House Bill 5766. This bill would extend the current electric rate freeze until 2010, effectively blocking the ICC-approved rate increases.
- Governor's Response: The Governor of Illinois responded on October 2, 2006, stating an intent to work with legislative leaders to secure support for the Rate Freeze Legislation and promising to call a special session once sufficient votes were secured or if consensus could not be reached.
Outlook, Risks, and Management Commentary
ComEd Chairman and CEO Frank M. Clark issued a statement regarding the call for a special session on rate freeze legislation, which is attached as Exhibit 99. The filing includes standard forward-looking statements cautioning that actual results may differ due to risks outlined in Exelon's 2005 Form 10-K, specifically regarding regulatory and legislative uncertainties.
Investor Verification Checklist
- Verify the final outcome of the Illinois General Assembly's special session regarding House Bill 5766.
- Confirm whether the rate freeze legislation is enacted before the January 2, 2007, effective date of the ICC-approved rates.
- Review the full text of the ComEd Press Release (Exhibit 99) for detailed management commentary on the legislative threat.
- Monitor subsequent filings for updates on the status of the rate freeze versus the approved rate increase.