ComEd 2006 Annual Report Download - page 263

Exelon Corporation and Subsidiary Companies
Exelon Generation Company, LLC and Subsidiary Companies
Commonwealth Edison Company and Subsidiary Companies
PECO Energy Company and Subsidiary Companies
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
The following table provides a roll forward of the nuclear decommissioning ARO reflected on
Exelon’s and Generation’s Consolidated Balance Sheets, from January 1, 2005 to December 31, 2006:
Exelon Generation
Asset retirement obligation at January 1, 2005 (a) ............................ $3,981 $3,980
Net decrease resulting from updates to estimated future cash flows ............ (281) (281)
Accretion expense ..................................................... 243 243
Liability reclassified and disposed (b) ...................................... (8) (7)
Payments to decommission retired plants .................................. (14) (14)
Asset retirement obligation at December 31, 2005 (a) ........................ 3,921 3,921
Net decrease resulting from updates to estimated future cash flows ............ (604) (604)
Accretion expense ..................................................... 230 230
Payments to decommission retired plants .................................. (14) (14)
Asset retirement obligation at December 31, 2006 ........................... $3,533 $3,533
(a) Includes amounts not related to nuclear decommissioning.
(b) Represents the reclassification of $(5) million and $(4) million for Exelon and Generation, respectively, primarily related to
fossil and hydroelectric generating facilities and $(3) million related to liabilities disposed as a result of the sale of Sithe on
January 31, 2005.
2006 and 2005 ARO Updates
During the second quarter of 2006, Generation recorded a net decrease in the ARO of
approximately $604 million and pre-tax income of $149 million resulting from revisions to estimated
future nuclear decommissioning cash flows, primarily due to the following:
• Revised management assumptions concerning an increased likelihood of successful nuclear
license renewal efforts due to an increasingly favorable environment for nuclear power and,
therefore, an increased likelihood of operating the nuclear plants through a full license
extension period; and
• A change in management’s expectation of when the U.S. Department of Energy (DOE) will
establish a repository for and begin accepting spent nuclear fuel.
The impact of the above items was to effectively push the estimated future nuclear
decommissioning cash flows further into the future and, therefore, reduce the present value of the
ARO. This decrease in the ARO resulted in the following corresponding impacts:
• A decrease in Generation’s ARC, which is included in property, plant and equipment in
Exelon’s and Generation’s Consolidated Balance Sheets, of approximately $393 million;
• An increase in Generation’s noncurrent payable to ComEd and PECO, which is included in
noncurrent payable to affiliates in Generation’s Consolidated Balance Sheets, of approximately
$62 million;
• An increase in ComEd’s and PECO’s intercompany receivables from Generation, which are
included in noncurrent receivables from affiliates in ComEd’s and PECO’s Consolidated
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