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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK
ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 19941997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
----------- ----------------------------------- ------------------
1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
TITLE OF EACH CLASS- --------------------------- ON WHICH REGISTERED
--------------------------- -------------------------
UNICOM CORPORATION
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Common Stock, without par value New York, Chicago and Pacific
COMMONWEALTH EDISON COMPANY
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(Listed on inside cover)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d)15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAVE BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X*X . No .
-------- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
*Unicom Corporation was formed in connection with the restructuring of
Commonwealth Edison Company into a holding company structure. Unicom
Corporation became subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, on August 30, 1994, when its Registration
Statement on Form 8-B was declared effective by the Securities and Exchange
Commission.- -------------------------------------------------------------------------------
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COMMONWEALTH EDISON COMPANY Securities Registered Pursuant to Section 12(b) of
the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH EXCHANGE EACH CLASS ON WHICH REGISTERED
-------------------------- -------------------------- --------------------------------------- ---------------------------
First Mortgage Bonds:
7 5/8% Series 25, due June 1, 2003 )
8% Series 26, due October 15, 2003 ) New York
8 1/8% Series 35, due January 15, 2007 New York
8 1/8% Series 36, due June 1, 2007
8 1/4% Series 37, due December 1, 2007)
Sinking Fund Debentures:
3%, due April 1, 1999 )
2 7/8%, due April 1, 2001 ) New York
7 5/8% Series 1, due February 15, 2003 )
2 3/4%, due April 1, 1999 New York and Chicago
Cumulative Preference Stock, without par
value:
$1.90; $2.00; $7.24; $8.40; $8.38; and
$8.40 Series B New York, Chicago and and $8.40 Series B Pacific
$2.425 New York
Company-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust Holding Solely the
Company's 8.48% Subordinated Debt
Securities New York
THE ESTIMATED AGGREGATE MARKET VALUE OF UNICOM CORPORATION'S 214,522,778216,683,743
shares of outstanding Common Stock, without par value, was approximately
$5,400,000,000$6,948 million as of February 28, 1995.1998. In excess of 99.93%99.9% of Unicom
Corporation's voting stock was owned by non-affiliates as of that date.
THE ESTIMATED AGGREGATE MARKET VALUE OF COMMONWEALTH EDISON COMPANY'S
outstanding $1.425 Convertible Preferred Stock, and Cumulative Preference Stock
and Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely the Company's Subordinated Debt Securities
was approximately $800,000,000$1,107 million as of February 28, 1995.1998. Unicom Corporation
held in excess of 99.99% of the 214,191,595214,231,528 shares of outstanding Common
Stock, $12.50 par value, of Commonwealth Edison Company as of that date.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of Unicom Corporation's Current Report on Form 8-K dated January
27,
199530, 1998 are incorporated by reference into Parts I, II and IV of the Unicom
Corporation Annual Report on Form 10-K and portions of its definitive Proxy
Statement to be filed prior to April 30, 1998, relating to its Annual Meeting
of shareholders to be held on May 24,
199528, 1998, are incorporated by reference into
Part III of the Unicom Corporation Annual Report on Form 10-K.
Portions of Commonwealth Edison Company's Current Report on Form 8-K/A-18-K dated
January 27, 199530, 1998 are incorporated by reference into Parts I, II and IV of the
Commonwealth Edison Company Annual Report on Form 10-K and portions of its
definitive Information Statement to be filed prior to April 30, 1998, relating
to its Annual Meeting of shareholders to be held on May 24, 199528, 1998, are
incorporated by reference into Part III of the Commonwealth Edison Company
Annual Report on Form 10-K.
UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 19941997
This document contains the Annual Reports on Form 10-K for the fiscal year
ended December 31, 19941997 for each of Unicom Corporation and Commonwealth Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, Commonwealth Edison Company makes no representation as to
information relating to Unicom Corporation or to any other companies affiliated
with Unicom Corporation.
TABLE OF CONTENTS
PAGE
----
Definitions............................................................... 1
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION:
Part I
Item 1. Business........................................................ 2
General...............................................................General......................................................... 2
Changes in the Electric Utility Industry........................ 3
Net Electric Generating Capability.................................... 3Capability.............................. 6
Construction Program.................................................. 4Program............................................ 6
Rate Proceedings...................................................... 6Matters.................................................... 8
Fuel Supply........................................................... 7
Regulation............................................................Supply..................................................... 8
Employees............................................................. 14
Interconnections...................................................... 15
Franchises............................................................ 15
Business and Competition.............................................. 15Regulation...................................................... 10
Employees....................................................... 16
Interconnections................................................ 16
Franchises...................................................... 16
Executive Officers of the Registrant.................................. 17Registrant............................ 18
Operating Statistics.................................................. 18Statistics............................................ 19
Year 2000 Conversion............................................ 20
Market Risks.................................................... 20
Forward-Looking Information..................................... 20
Item 2. Properties...................................................... 1920
Item 3. Legal Proceedings............................................... 2022
Item 4. Submission of Matters to a Vote of Security Holders............. 2023
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters................................................................ 21Matters......................................................... 23
Item 6. Selected Financial Data......................................... 2225
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 2225
Item 8. Financial Statements and Supplementary Data..................... 2225
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 2225
Part III
Item 10. Directors and Executive Officers of the Registrant............. 2325
Item 11. Executive Compensation......................................... 2325
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................... 2325
Item 13. Certain Relationships and Related Transactions................. 2325
i
UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 19941997
TABLE OF CONTENTS (CONCLUDED)
PAGE
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ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY:
Part I
Item 1. Business........................................................ 2426
Executive Officers of the Registrant............................... 26
Item 2. Properties...................................................... 2528
Item 3. Legal Proceedings............................................... 2528
Item 4. Submission of Matters to a Vote of Security Holders............. 2528
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters....................................................... 25Matters................................................................ 28
Item 6. Selected Financial Data......................................... 2528
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of
Operations......................................... 25Operations...................................................... 28
Item 8. Financial Statements and Supplementary Data..................... 2628
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.......................................... 26Disclosure............................................ 28
Part III
Item 10. Directors and Executive Officers of the Registrant............. 2628
Item 11. Executive Compensation......................................... 2629
Item 12. Security Ownership of Certain Beneficial Owners and Management. 2629
Item 13. Certain Relationships and Related Transactions................. 2629
ANNUAL REPORTS ON FORM 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY:
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................................................... 278-
K...................................................................... 30
(a) Financial Statements, Financial Statement Schedules and Exhib-
its............................................................... 30
(b) Reports on Form 8-K............................................ 37
Report of Independent Public Accountants on Supplemental Schedule to
Unicom
Corporation.................................................... 34Corporation............................................................ 38
Report of Independent Public Accountants on Supplemental Schedule to
Commonwealth Edison Company........................................... 35Company............................................ 39
Schedule II--Valuation and Qualifying Accounts.......................... 3640
Signature Page to Unicom Corporation Annual Report on Form 10-K......... 3741
Signature Page to Commonwealth Edison Company Annual Report on Form 10-K.................................................................. 3810-
K...................................................................... 42
ii
DEFINITIONS
The following terms are used in the text of this document with the following meanings:
TERM MEANING
----------------------- ---------------------------------------------------------------------------- -------------------------------------------------------
AFUDC Allowance for funds used during construction1997 Act The Illinois Electric Service Customer Choice and Rate
Relief Law of 1997
BWR Boiling water reactor
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended
CFC Chlorofluorocarbon
Circuit Court Circuit Court of Cook County, IllinoisCHA Chicago Housing Authority
Clean Air Amendments Clean Air Act Amendments of 1990
ComEd Commonwealth Edison Company
which is a majority-owned
subsidiary of Unicom.
Congress U.S. Congress
Cotter Cotter Corporation, which is a wholly-ownedComEd subsidiary
of ComEd.CTC Non-bypassable "competitive transition charge"
DOE U.S. Department of Energy
EMFs Electric and magnetic fields
FAC Fuel adjustment clause
FERC Federal Energy Regulatory Commission
Fuel Matters Settlement A settlement relating to the ICC fuel reconciliation
proceedings involving ComEd for the period from 1985
through 1988 and to future challenges by the settling
parties to the prudency of ComEd's western coal costs
for the period from 1989 through 1992.FERC Order FERC Open Access Order No. 888 issued in April 1996
IBEW International Brotherhood of Electrical Workers (AFL-CIO)(AFL-
CIO)
ICC Illinois Commerce Commission
IDNS Illinois Department of Nuclear Safety
IDR Illinois Department of Revenue
Illinois EPA Illinois Environmental Protection Agency
Indiana Company Commonwealth Edison Company of Indiana, Inc., which is
a wholly-ownedComEd
subsidiary
INPO Institute of ComEd.Nuclear Power Operations
IPCB Illinois Pollution Control Board
ISO Independent System Operator
January 30, 1998 Unicom's Current Report on Form 8-K including auditor's
Form 8-K Reports opinion dated January 30, 1998 and ComEd's Current
Report on Form 8-K including auditor's opinion dated
January 30, 1998
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NERC North American Electric Reliability Council
NPDES National Pollutant Discharge Elimination System
NPL National Priorities List
NRC Nuclear Regulatory Commission
PCBs Polychlorinated biphenyls
PRPs Potentially responsible parties under CERCLA
Rate Matters Settlement A settlement concerning the proceedings relating to
ComEd's 1985O&M Operation and 1991 ICC rate orders (which orders
relate to, among other things, the recovery of costs
associated with ComEd's four most recently completed
nuclear generating units), the proceedings relating
to the reduction in the difference between ComEd's
summer and non-summer residential rates that was
effected in the summer of 1988, outstanding issues
relating to the appropriate interest rate and rate
design to be applied to a refund made by ComEd during
1990 relating to a 1988 ICC rate order, and matters
related to a rider to ComEd's rates that it was
required to file as a result of the change in the
federal corporate tax rate made by the Tax Reform Act
of 1986.maintenance
Rate Order ICC rate order issued onin January 9, 1995, as
subsequently modified
Remand Order ICC rate order issued on January 6, 1993, as subsequently
modified
SEC Securities and Exchange Commission
S&P Standard & Poor's
Trust Securities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely ComEd's
subordinated debt securities
Unicom Unicom Corporation
Unicom Energy Services Unicom Energy Services Inc., a Unicom subsidiary
Unicom Enterprises Unicom Enterprises Inc., which is a wholly-ownedUnicom subsidiary
of Unicom.
Unicom Thermal Unicom Thermal TechnologiesUT Holdings UT Holdings Inc., which is a wholly-
ownedUnicom subsidiary of Unicom Enterprises.
Units ComEd's nuclear generating units known as Byron Unit 2
and Braidwood Units 1 and 2
U.S. EPA U.S. Environmental Protection Agency
Westinghouse Westinghouse Electric Corporation
1
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION
PART I
ITEM 1. BUSINESS.
GENERAL
Unicom was organizedincorporated in January 1994. ComEd, a regulated electric
utility, is the stateprincipal subsidiary of Illinois on January 28, 1994. On
September 1, 1994, a corporate restructuring took place in which Unicom became
the parent holding company of ComEd andUnicom. Unicom Enterprises is an
unregulated subsidiary of Unicom and is engaged, through a subsidiary,its subsidiaries, in
energy service activities. The
primary purpose of the restructuring was to permit Unicom Enterprises to engage
in energy service activities without the prior approval of, or being regulated
by, the ICC, in part to permit timely responses to competitive activities which
could adversely affect ComEd's utility business and in part to permit Unicom
Enterprises to take advantage of unregulated business opportunities. Unicom's principal executive offices are located at
10 South Dearborn Street, Post Office Box A-3005, Chicago, Illinois 60690-3005,60690-
3005, and its telephone number is 312/394-7399.
Notwithstanding the restructuring, ComEd will continue to representrepresents substantially all of the assets, revenues and net income
(loss) of Unicom; and Unicom's resources and results of operations will beare largely
dependent on, and will reflect, those of ComEd. Unicom Enterprises' sole subsidiary, Unicom
Thermal, is a development stage company and is not expected to make a material
contribution to the revenues or results of operations of Unicom in the near
future. Consequently, the descriptions that follow focusfollowing
discussion focuses on theComEd's utility operations of ComEd, although information is also
provided with respect to theabout Unicom's unregulated operations of Unicom Enterprises.operations.
Utility Operations
ComEd is engaged principally in the production, purchase, transmission,
distribution and sale of electricity to a diverse base of residential,
commercial, industrial and industrial customers in northern Illinois.wholesale customers. ComEd was organized in the
state of Illinois on October 17, 1913 as a result of the merger of
Cosmopolitan Electric Company into the original corporation named Commonwealth
Edison Company. The latter had been incorporated on September 17, 1907.
ComEd's electric service territory has an area of approximately 11,54011,300 square
miles and an estimated population of approximately 8.28 million as of December
31, 1992,
approximately 8.1 million as of December 31, 1993 and approximately 8.2 million
as of December 31, 1994.1997. It includes the city of Chicago, an area of about 225 square miles
with an estimated population of threeapproximately 3 million from which ComEd
derived approximately one-third of its ultimate consumer revenues in 1994.1997.
ComEd had approximately 3.33.4 million electric customers at December 31, 1994.1997. ComEd's
principal executive offices are located at 10 South Dearborn Street, Post
Office Box 767, Chicago, Illinois 60690-0767, and its telephone number is
312/394-4321.
ComEd's financial condition will continue to depend on its ability to
generate revenues to cover its costs and to maintain adequate debt and
preferred and preference stock coverages and common stock equity earnings.
ComEd has no significant revenues other than from the sale of electricity.
ComEd's management recognizes that competitive and regulatory circumstances in
Illinois may limit its ability to raise its rates. Consequently, ComEd's
financial condition will be affected by, and ComEd's management is addressing,
actions to maintain and increase sales, to control operating and capital
expenditures and to anticipate competitive activities. See "Rate Proceedings"
and "Business and Competition" below.
During the past several years, ComEd has instituted cost reduction plans
including various workforce reductions. ComEd reached agreement in August 1993
with its unions regarding certain cost reduction actions. The agreement
provided for a wage freeze until April 1, 1994, changes to reduce health care
plan costs, increased use of part-time employment and changes in holiday
provisions. The agreement also included a continuation of negotiations relative
to other issues.
2
ComEd and union representatives reached agreement in February 1994 and
announced an offer of a voluntary early retirement program. This program is
available to ComEd and the Indiana Company management, non-union and union
employees eligible to retire or who would become eligible to retire after
December 31, 1993 and before April 1, 1995. The period for most eligible
employees to elect to participate in the program expired on April 20, 1994. The
charge to income related to the program in 1994 was approximately $20 million
(net of income tax effects) related to employees who accepted the program
during 1994. ComEd estimates that, in total, approximately $21 million (net of
income tax effects) will be charged to income as a result of the program. See
"Regulation" below and Note 12 of Notes to Financial Statements in Unicom's
Current Report on Form 8-K dated January 27, 1995 and ComEd's Current Report on
Form 8-K/A-1 dated January 27, 1995 (the "January 27, 1995 Form 8-K Reports").
See "Fuel Supply," "Regulation" and "Item 3. Legal Proceedings" herein for
information concerning administrative and legal proceedings and certain other
matters involving ComEd, the Indiana Company and Cotter. The outcome of certain
of the proceedings or matters described or referred to therein, if not
favorable to ComEd and the Indiana Company, could have a material adverse
effect on the future business and operating results of Unicom, ComEd and the
Indiana Company.
Unregulated Operations
Unicom's wholly-owned subsidiary, Unicom Enterprises intends,is engaged, through subsidiaries, to engage in energy-related businessesenergy service
activities which willare not be subject to utility regulation by state or federal
agencies. AsOne of February 28, 1995,
Unicom Enterprises had only one subsidiary, Unicom Thermal, which will providethese subsidiaries, UT Holdings, provides district cooling,
heating and related services to officeoffices and other buildings fromin the central
locations
inbusiness district of the city of Chicago.Chicago under a non-exclusive use agreement
with the city of Chicago for an initial term expiring in 2014. District
cooling involves, in essence, the production of chilled water at aone or more
central locationlocations and its circulation from such location
to customers' buildings inthrough a closed
circuit of supply and return piping. Such water is circulated through
customers' premises primarily for air conditioning. This process is used to
chill airby
customers in customers' air conditioning systems without the uselieu of CFCs.self-generated cooling. As a result of the Clean Air
Amendments, the manufacture and use of CFCs will behas been curtailed commencing insince January 1996,
thereby creating an excellenta marketing opportunity for non-CFC based systems, such as UT
Holdings' district cooling. UT Holdings is involved in energy projects in
other cities, generally working with the local utilities in those cities.
Unicom ThermalEnergy Services, another subsidiary of Unicom Enterprises, is engaged
in providing energy services including gas services, performance contracting,
distributed energy and the city of Chicago haveactive energy management systems. In 1997, Unicom
Energy Services entered into a franchise agreement.joint venture with Sonat Marketing Company L.P.
to market natural gas and related services to large gas purchasers within
ComEd's service area in Northern Illinois and other Midwestern areas. As an
entry into the
2
distributed energy market, Unicom Thermal
is currentlyEnergy Services also entered into an
alliance with AlliedSignal Power Systems, Inc., a development stage enterprisesubsidiary of AlliedSignal
Inc., to market, install and service an electric energy generator developed by
AlliedSignal, known as such, has generated no
sales revenues.a TurboGenerator, in a 12-state region and the province
of Ontario, Canada. Unicom Thermal has secured several long-term contractsEnergy Services entered into an exclusive national
distributorship agreement with Engage Networks, Inc. to market active energy
management software and expects to begin serving customersrelated hardware and services.
CHANGES IN THE ELECTRIC UTILITY INDUSTRY
Unicom and its predominant business, electric energy generation,
transmission and distribution, are in a period of fundamental change in the
summermanner in which customers obtain, and energy suppliers provide, energy
services. These changes are attributable to changes in technology, the
relaxation of 1995. Unicom Thermal isregulatory barriers to utilities' respective service territories
as well as to efforts to change the manner in which electric utilities are
regulated. Federal law and regulations have been amended to provide for open
transmission system access, and various states, including Illinois, are
considering, or have adopted, new regulatory structures to allow access by
some or all customers to energy suppliers in addition to the local utility.
Electric Utility Industry. The electric utility industry has historically
consisted of vertically integrated companies which combine generation,
transmission and distribution assets; serve customers within relatively
defined service territories; and operate under extensive regulation with
respect to rates, operations and other matters. Utilities have operated under
a regulatory compact with the state, with a statutory obligation to serve all
of the electricity needs within their service territory in a nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon the utilities' respective assessment of the current and projected needs
of their customers. In view of this obligation, regulation has focused on
investment and operating costs, and rates have been based on a recovery of
some or all of such prudently incurred costs plus a return on invested
capital. Such rate regulation, and the ability of utilities to recover
investment and other costs through rates, have provided the basis for
recording certain costs as regulatory assets. These assets represent costs
which are allocated over future periods reflecting related regulatory
treatment, rather than expensed in the processcurrent period.
The 1997 Act. On December 16, 1997, the Governor of negotiatingIllinois signed into law
the 1997 Act, which established a phased-process to introduce competition into
the electric industry in Illinois under a less regulated structure. The 1997
Act, as it applies to ComEd, provides for, among other things, a 15%
residential base rate reduction commencing on August 1, 1998, an additional 5%
residential base rate reduction commencing on May 1, 2002, and customer access
to other electric suppliers in a phased-in process. Access for commercial and
industrial customers will occur over a period from October 1999 to December
2000, and access for residential customers will occur after May 1, 2002. The
15% residential base rate reduction, commencing on August 1, 1998, is expected
to reduce ComEd's operating revenues by approximately $160 million and $375
million in 1998 and 1999, respectively, compared to 1997 rate levels. ComEd is
engaged in certain pricing experiments contemplated by the 1997 Act, which are
expected to reduce ComEd's operating revenues by approximately $30 million and
$60 million in 1998 and 1999, respectively, compared to 1997 rate levels,
notwithstanding the effects of customer growth.
The 1997 Act also provides for the collection of a CTC from customers who
choose another electric service provider during a transition period that
extends through 2006, and can be extended through 2008 with ICC approval if
certain factors are met. The CTC will be established in accordance with a
formula defined in the 1997 Act. The CTC, which will be applied on a cents per
kilowatthour basis, considers the revenue which would have been collected from
a customer under tariffed rates, reduced by the revenue the utility will
receive for providing delivery services to the customer, the market price for
electricity and a defined mitigation factor which represents the utility's
opportunity to develop new revenue sources and achieve cost savings.
3
Notwithstanding these rate reductions, and subject to certain earnings
tests, a rate freeze will generally be in effect until at least January 1,
2005. During this period, utilities may reorganize, sell or assign assets,
retire or remove plants from service, and accelerate depreciation or
amortization of assets with limited ICC regulatory review. Under the earnings
provision of the 1997 Act, if the earned return on common equity of a utility
during this period exceeds an established threshold, a portion of the excess
earnings must be refunded to customers. A utility may request a rate increase
during the rate freeze period when necessary to ensure the utility's financial
viability, but not before January 1, 2000.
Under the 1997 Act, utilities are required to continue to offer delivery
services, including the transmission and distribution of electric energy, such
that customers who select an alternative energy supplier can receive electric
energy from that supplier using existing transmission and distribution
facilities. Such services will continue to be offered under cost-based
regulated rates. The 1997 Act also requires utilities to establish or join an
ISO that will independently manage and control utility transmission systems.
Additionally, the 1997 Act includes the option to eliminate the FAC, the
leveling of certain regulatory requirements to permit operational flexibility,
the leveling of certain regulatory and tax provisions as applied to various
electric suppliers and a new more stringent liability standard applicable to
ComEd in the event of a major outage.
The 1997 Act also allows ComEd to unbundle a portion of its future revenues,
including tariffed rates and CTC revenues, and issue securities backed by
these revenues. The proceeds from such security issuances must generally be
used to refinance outstanding debt or equity or for certain other limited
purposes. The total amount of such securities that ComEd may issue is
approximately $6.8 billion; approximately one-half of that amount can be
issued in the twelve-month period commencing on August 1, 1998.
As a result of the 1997 Act, prices for the supply of electric generation
are expected to transition from cost-based, regulated rates to rates
determined by competitive market forces. The CTC allows ComEd to recover a
portion of any of its costs which might otherwise be unrecoverable under
market-based rates. Nonetheless, ComEd will need to take steps to address the
portion of such costs which are not recoverable through the CTC. Such steps
include cost control efforts and developing new sources of revenue.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," subcaption "Changes in the Electric Utility Industry--
Accounting Effects Related to the 1997 Act" and Note 2 of Notes to Financial
Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for the accounting effects related to the 1997 Act.
Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered the FERC to introduce a greater level of competition into
the wholesale marketplace for electric energy. In April 1996, the FERC Order
was issued requiring utilities to file open access tariffs with regard to
their transmission systems. These tariffs set forth the terms, including
prices, under which other parties and the utility's wholesale marketing
function may use the utility's transmission system. ComEd has an approved open
access tariff with the FERC. The FERC Order requires the separation of the
transmission operations and wholesale marketing functions so as to ensure that
unaffiliated third parties have access to the same information as to system
availability and other requirements. The FERC Order further requires utilities
to operate an electronic bulletin board to make transmission price and access
data available to all potential users. A key feature of the FERC Order is that
it contemplates full recovery of a utility's costs "stranded" by competition.
These costs are "stranded" or "strandable" to the extent market-based rates
would be insufficient to allow for their full recovery. To recover stranded
costs, the utility must show that it had a reasonable expectation that it
would continue to serve the customer in question under its regulatory compact.
In addition, some governmental entities, such as cities, may elect to
"municipalize" a utility's distribution facilities
4
through condemnation proceedings. Such municipalities would then be able to
purchase electric power on a wholesale basis and resell it to customers over
the newly acquired facilities. The FERC Order provides for the recovery of a
utility's investment stranded by municipalization.
ComEd's Response to Regulatory Changes. ComEd is responding, and is
undertaking significant strategic planning efforts to respond further, to the
developments within the utility industry and the 1997 Act and its potential
for strandable investment. During the past several years, such efforts have
focused on cost reductions, including personnel reductions, efficiencies in
purchasing and inventory management, and an incentive compensation system
keyed to cost control and improvement in shareholder value. Notwithstanding
these efforts, ComEd's costs remain high in comparison to its neighboring
utilities. Although ComEd's operating results and financial condition have
historically been affected by various rate proceedings, ComEd expects that the
changes in the national and Illinois electric energy marketplace, and ComEd's
activities anticipating or responding to them, will directly impact its
operating results and financial condition over the next several years.
ComEd anticipates that the 1997 Act, and the resultant increasing
competition to supply energy in Illinois and elsewhere, will have significant
effects upon its revenues and assets as it takes steps to adjust its
operations and services to meet the changing market for electric energy. Both
Unicom and ComEd have been examining methods of positioning themselves and
their affiliates to deal with those effects and to address the developing
opportunities and challenges. ComEd has been engaged in a broad-based
examination of its assets and operations, particularly nuclear and fossil
generation and generation-related (i.e., fuel and inventory) assets, with a
view toward rationalizing their investment and operating costs against their
ability to contribute to the revenues of ComEd under various market scenarios.
Such an assessment involves the consideration of numerous factors, including
revenue contribution, operating costs, impacts on ComEd's service obligations,
purchase commitments and the impact of various options. Such options include
continued operation with accelerated depreciation, indefinite suspension from
operation, sale to a third party and retirement or closure. As discussed
below, ComEd recently ceased nuclear generation operations and retired
facilities at its Zion Station. If ComEd retired or closed one or more
additional potential customers.generating plants, particularly a nuclear plant, such retirement
would have a material impact on Unicom and ComEd's financial position and
results of operations. See "General--Unregulated Operations" above regarding
Unicom Energy Services' energy services activities.
On January 14, 1998, the Boards of Directors of Unicom and ComEd authorized
the permanent cessation of nuclear generation operations and retirement of
facilities at ComEd's 2,080 megawatt Zion nuclear generating station. Such
retirement resulted in a charge for 1997 of $523 million (after-tax) or $2.42
per common share. The decision to close Zion Station was a result of an
ongoing analysis, which ComEd performed regarding the economic value of its
generating assets in light of the expected changes in the manner in which
electric energy is marketed and sold. The passage of the 1997 Act provided a
clearer basis for evaluating the costs and benefits of alternative courses of
action. In reaching the decision to cease nuclear generation operations at
Zion Station, the Boards also considered the significant uncertainty
associated with continued operation of the station due to the degradation of
the steam generators, and the expected operating costs associated with
continued station operation.
Notwithstanding the closure of Zion Station as a nuclear generating
facility, a portion of the station will continue to be used to provide voltage
support in the transmission system that serves ComEd's northern region. Such
support will require capital expenditures at the station as well as upgrades
to the transmission system at various points, in order to improve the ability
to import and transport power through the system. See Note 5 of Notes to
Financial Statements in the January 30, 1998 Form 8-K Reports, which are
incorporated herein by reference, for additional information.
5
In April 1996, ComEd announced that it had finalized agreements to sell two
of its coal-fired generating stations, representing 1,598 megawatts of
generating capacity, and to enter into exclusive 15-year purchased power
agreements for the output of the stations. The sale of State Line Station was
completed in December 1997 and the sale of Kincaid Station was completed in
February 1998. The net proceeds of the sales, after income tax effects and
closing costs, were approximately $190 million. The proceeds will be used to
retire or redeem existing debt.
ComEd joined with eight Midwestern utilities to form a regional Midwest ISO
in January 1998. The Midwest ISO is a key element in accommodating the
restructuring of the electric industry and will promote enhanced reliability
of the transmission system, equal access to the transmission system and
increased competition. The Midwest ISO will establish an independent body that
will ultimately direct the management of the transmission system for the
utilities involved. ComEd will retain ownership of its transmission lines. The
formation of the Midwest ISO is subject to FERC approval.
NET ELECTRIC GENERATING CAPABILITY
As described under "Item 2. Properties," ComEd and the Indiana Company consider their owned (non-summer)considers its non-summer net
generating capability to be 22,522,000 kilowatts.20,736,000 kilowatts (including the recently sold
Kincaid and State Line generating stations, whose capability is committed to
ComEd pursuant to exclusive 15-year purchase power agreements, and after
giving effect to the closure of Zion Station and certain plant re-ratings).
After deducting summer limitations of 557,000538,000 kilowatts, ComEd and the Indiana Company consider theirconsiders its
net summer generating capability to be 21,965,00020,198,000 kilowatts. The net
generating capability available for operation at any time may be less due to
regulatory restrictions, fuel restrictions, efficiency of cooling facilities
and to generating units being temporarily out of service for inspection,
maintenance, refueling, repairs or modifications required by regulatory
authorities. See "Item 2.
Properties.""Regulation--Nuclear" below for information concerning
outages at certain of ComEd's nuclear generating stations.
ComEd's highest peak load experienced to date occurred on July 5, 1994August 14, 1995
and was 17,928,00019,212,000 kilowatts; and the highest peak load experienced to date
during a winter season occurred on January 18, 1994 and was 14,179,000
kilowatts. ComEd's kilowatthour sales and generation are generally higher,
(primarilyprimarily during the summer periods but also during the winter periods)periods, when
temperature extremes create demand for either summer cooling or winter
heating.
3
CONSTRUCTION PROGRAM
Utility Operations
ComEd and its electric utility subsidiary, the Indiana Company, havehas a construction program for the three-year period 1995-97year 1998, which consists
principally of improvements to ComEd's and the Indiana Company'sits existing nuclear and other electric
production, transmission and distribution facilities. It does not include
funds (other than for planning) to add new generating capacity to ComEd's system. The program, as
currently approved by Unicom and
ComEd, in December 1994, calls for electric plant and equipmentincludes the following estimated expenditures of
approximately $2,750 million
(excluding nuclear fuel expenditures of approximately $800$160 million).
It is estimated that such construction
expenditures, with cost escalation computed at 3.5% annually, will be as
follows:
THREE-YEAR
1995 1996 1997 TOTAL1998
---- ---- ---- ----------
(MILLIONS
OF DOLLARS)
Production................................. $415 $395 $360 $1,170Production................................................ $425
Transmission and Distribution.............. 410 445 455 1,310
General.................................... 95Distribution............................. 415
General................................................... 90
85 270
----
----$930
----
------
Total.................................. $920 $930 $900 $2,750
==== ==== ==== ======----
In October 1994, ComEd made a commitment to provide forSuch estimated expenditures include $130 million toward the replacement of
the steam generators at itsComEd's Braidwood Unit 1 and Byron Unit 1 nuclear
generating plants, for service in the years 1998 and 1999, respectively, at aunits by year-end 1998. The total replacement cost is estimated cost of approximately $470 million. Approximately $170to
be $455 million, of this estimated cost is includedwhich approximately $295 million has been incurred through
December 31, 1997 and $30 million will be incurred in the construction expenditures shown
above. See "Regulation," subcaption "Nuclear" below for additional information.1999.
ComEd and the Indiana Company's construction expenditures during 19941997 were
approximately $721$970 million.
6
ComEd's gross investment in nuclear generating capacity (excluding nuclear
fuel) is approximately $14$13.4 billion at December 31, 1994,1997 (after reflecting the closure of
Zion Station), and ComEd expects that investment to be approximately $14.5$13.9
billion by the end of 19971998 as a result of improvements. Gross additions to and
retirements from utility property, excluding nuclear fuel, of ComEd and the
Indiana Company for the five years ended December 31, 19941997 were $4,313$4,352 million
and $431$1,686 million, respectively.respectively (after reflecting the closure of Zion Station
and the sale of State Line Station).
ComEd periodically reviews its projection of probable future demand for
electricity in its service territory. It currently projects an average annual
growth of 2% in annual peak load and 1.75% in annual output through 1998;
thereafter, due in part to implementation of national energy efficiency
standards, ComEd projects long-term average annual
growth of 1.75% in annual peak load and 1.5% in total annual output.electricity
requirements, excluding sales to other utilities. ComEd's forecasts of peak
load indicate a need for additional resources to meet demand, either through
generating capacity, or through equivalent purchased power or the development of
additional demand-side management resources, in 19971998 and each year thereafter through the year 2000. The
projected resource needs reflect the current planning reserve margin
recommendations of MAIN, the reliability council of whichthereafter.
However, ComEd is a member.
ComEd's forecasts indicatebelieves that the need for additionaladequate resources, during this
period would exist only during the summer months. ComEd does not expect to make
expenditures for additional capacity to the extent the need for capacity can be
met through cost-effective demand-side management resources, non-utility
generation or other power purchases. To assess the market potential to provide
such cost-effective resources, ComEd solicited proposals in 1992 to supply it
withincluding cost-effective
demand-side management resources, non-utility generation resources and other-utilityother-
utility power purchases, sufficient to meet forecasted
requirements through the year 2000. The responses to the solicitation
suggested, at that time, that adequate resources to meet ComEd's needs could be obtained from those sources. Based on its most recent load forecast and the
current wholesale power market, ComEd cannot conclude that those sources
represent the most
4
economical alternative. If ComEd were to build additional capacityin sufficient quantities to meet
its
needs, it would need to make additional expenditures during the 1995-97 period.
ComEd's construction program will be reviewed and modified as necessary to
adapt to changing economic conditions, rate levels and other relevant factors
including changing business and legal needs and requirements. ComEd cannot
anticipate all such possible needs and requirements. ComEd has not budgeted for
a number of projects, particularly at generating stations, which could be
required, but which ComEd does not expect to be required during the budget
period. In particular, ComEd has not budgeted for the construction of scrubbers
at its Kincaid station or for the replacement of major amounts of piping at its
boiling water reactor nuclear stations. While regulatory needs in particular
are more likely, on balance, to require increases in construction expenditures
than decreases, financial constraints may require compensating or greater
reductions in other construction expenditures. See "Regulation" below for
additional information.forecasted needs.
The 1995-971998 construction program includes approximately $38$2 million for
environmental control facilities, of which approximately $6 million, $14
million and $18 million is budgeted for 1995, 1996 and 1997, respectively.facilities. Expenditures on such facilities were $22$18
million $28in 1997 and $16 million for each of the years 1996 and $24 million
during 1992, 1993 and 1994, respectively.1995.
Purchase commitments for ComEd, and the Indiana Company, principally related to construction and
nuclear fuel, approximated $1,210$286 million at December 31, 1994.1997. In addition,
ComEd has substantialComEd's estimated commitments for the purchase of coal are as indicated in the following table.follows:
CONTRACT PERIOD COMMITMENT(1)
-------- --------- -------------
Black Butte Coal Co..................................... 1995-2007 $1,119Co............................... 1998-2000 $ 679
Decker Coal Co. ........................................ 1995-2015 $ 822
Big Horn Coal Co. ........................................................................ 1998-2014 427
Other commitments ................................ 1998 $ 21
Other commitments....................................... 1995-1996 $ 3125
------
$1,131
======
--------
(1) Estimated costs inIn millions of dollars, FOB mine.excluding transportation costs. No
estimate of future cost
escalationcostescalation has been made.
For additional information concerning these coal contracts and ComEd's fuel
supply, see "Fuel Supply" below and Notes 1 and 1923 of Notes to Financial
Statements in the January 27, 199530, 1998 Form 8-K Reports.
ComEd has forecast that internal sources will provide more than three-fourths
of the funds required for ComEd's construction program and other capital
requirements, including nuclear fuel expenditures, contributions to nuclear
decommissioning funds, sinking fund obligations and refinancing of scheduled
debt maturities (the annual sinking fund requirements for ComEd preference
stock and for ComEd and the Indiana Company long-term debtReports, which are summarized in
Notes 7 and 8, respectively, of Notes to Financial Statements in the
January 27, 1995 Form 8-K Reports). The forecast assumes the rate levels
reflected in the Rate Order (described below) remain in effect.incorporated
herein by reference.
See "Rate
Proceedings" herein for additional information.
See Note 1 of Notes to Financial Statements and "Results of Operations"
subcaption "Other Items" in "Management's Discussion and Analysis of Financial Condition and Results
of Operations" subcaption "Liquidity and Capital Resources--Utility
Operations--Capital Resources" in the January 27, 199530, 1998 Form 8-K Reports, which
are incorporated herein by reference, for information concerning AFUDC.regarding the capital
resources of ComEd.
Unregulated Operations
Unicom Thermal has forecastedapproved capital expenditures for the years 1995-971998 of approximately $95$92
million for UT Holdings, primarily representing the construction costsrelated to an expansion of two of its four
Chicago district cooling facilities, the related distribution piping and
piping system. Construction of its first
district cooling facility is expected to be completed by May 1995 and is
expected to cost approximately $30 million.plants in other cities. As of December 31, 1994, Unicom
Thermal's1997, UT Holdings' purchase
commitments, principally related to construction, were approximately $24 million.$11
million and Unicom Thermal's construction expenditures during
1994Energy Services' purchase commitments were approximately $19$8
million.
5
Unicom expects to obtain funds to invest in Unicom Enterprises and its unregulated subsidiaries
principally from dividends that it receivesreceived on its ComEd common stock and from bank
borrowings by Unicom Enterprises. While the amount of
dividends on ComEd common stock is expected to be greater than the amount of
dividends on Unicom common stock, theborrowings. The availability of suchComEd's dividends to Unicom is dependent on
ComEd's financial performance and cash position. Other forms of financing by
ComEd ofto Unicom or its otherthe unregulated subsidiaries of Unicom, such as loans or
additional equity investments, (nonenone of which is expected),expected, would be subject to
the prior approval ofby the ICC.
7
Unicom Enterprises has a $200 million credit facility which will expire in
1997November 1999, of which $180$40 million was unused as of February 28, 1995.December 31, 1997. The
credit facility can be used by Unicom Enterprises to finance investments in
unregulated energy-related businesses and projects, including UT Holdings and Unicom Thermal,Energy
Services, and for general corporate purposes. The credit facility is
guaranteed by Unicom and includes certain covenants with respect to Unicom'sUnicom and
Unicom Enterprises' operations. Interest rates for borrowings under the credit
facility would beare set at the time of a borrowing and would beare based on either a prime
interest rate or a floating rate bank index plus a spread which will varyvaries with
the credit rating of ComEd's outstanding first mortgage bonds. See Note 913 of
Notes to Financial Statements in Unicom's January 27, 199530, 1998 Form 8-K Report,
which is incorporated herein by reference, for additional information
regarding certain covenants with respect to Unicom'sUnicom and Unicom Enterprises'
operations.
RATE PROCEEDINGS
ComEd's revenues, net income, cash flows and plant carrying costs have been
affected directly by various rate-related proceedings. During the periods
presented in the consolidated financial statements, ComEd was involved in a
number of proceedings concerning its rates. The uncertainties associated with
such proceedings and related issues, among other things, led to the Rate
Matters Settlement and the Fuel Matters Settlement (which are discussed below).
Settlements Relating to Certain Rate Matters
Under the Rate Matters Settlement, effective as of November 4, 1993, ComEd
reduced its rates by approximately $339 million annually and commenced
refunding approximately $1.26 billion (including revenue taxes), plus interest
at five percent on the unpaid balance, through temporarily reduced rates over
an initial refund period which ended in November 1994 (to be followed by a
reconciliation period of no more than five months). ComEd had previously
deferred the recognition of revenues during 1993 as a result of developments in
the proceedings related to the 1991 ICC rate order, which resulted in a
reduction to 1993 net income of approximately $160 million or $0.75 per common
share. The recording of the effects of the Rate Matters Settlement in October
1993 reduced 1993 net income by approximately $292 million or $1.37 per common
share, in addition to the approximately $160 million effect of the deferred
recognition of revenues and after the partially offsetting effect of recording
approximately $269 million or $1.26 per common share in deferred carrying
charges, net of income taxes, authorized in the Remand Order. The deferred
recognition of revenues was eliminated in October 1993 at the time the
provisions for revenue refunds related to the Rate Matters Settlement, which
reflected those deferred revenues, were recorded.
Under the Fuel Matters Settlement, effective as of December 2, 1993, ComEd
commenced paying approximately $108 million (including revenue taxes) to its
customers through temporarily reduced collections under its fuel adjustment
clause over a twelve-month period which ended in November 1994. The recording
of the effects of the Fuel Matters Settlement in October 1993 reduced 1993 net
income by approximately $62 million or $0.29 per common share.
Other Rate Matters
OnMATTERS
In January 9, 1995, the ICC issued theits Rate Order in the proceedings relating
to ComEd's February 10, 1994 rate increase request. The Rate Order provides,provided, among
other things, for (i) an
6
increase in ComEd's total revenues of approximately $301.8$302
million (excluding add-on revenue taxes) or 5.2%, on an annual basis, including a $303.2 million
increase in base rates, (ii) the collection of municipal franchise costs as an
adder to base rates until May 1, 1995, when such costs will be collected
prospectively on an individual municipality basis through a rider, and (iii)
the use of a rider, with annual review proceedings, to pass on to ratepayers
increases or decreases in estimated costs associated with the decommissioning
of ComEd's nuclear generating units. See "Depreciation and Decommissioning" in
Note 1 of Notes to Financial Statements in the January 27, 1995 Form 8-K
Reports for information related to the level of decommissioning cost
collections allowed in the Rate Order.basis. The rates
provided in the Rate Order became effective on January 14, 1995; however, they
are being collected subject to refund as a result of subsequent judicial
action. Intervenors and ComEd have
filed appealsAs a result of a May 30, 1997 decision of the Illinois Appellate
Court, the Rate Order withhas been remanded to the IllinoisICC for the purpose of
providing further analysis on two issues: (i) the manner in which certain
costs are recovered and which customers should pay those costs, and (ii) the
proper rate of return on common equity for ComEd. ComEd believes that the ICC
can satisfy the Appellate Court.
InCourt's remand directions on the basis of the
existing record from the ICC proceedings which led to the Rate Order. An ICC
Hearing Examiner issued a proposed order in January 1998 which, if adopted by
the ICC, would uphold the Rate Order and the ICC determined thatassociated $302 million revenue
increase on an annual basis. A decision is expected early in the Units were 100% "used and
useful" and thatsecond
quarter of 1998. See Note 4 of Notes to Financial Statements in the previously determined reasonable costs of such Units, as
depreciated, should be includedJanuary
30, 1998 Form 8-K Reports, which are incorporated herein by reference, for
additional information.
See "Changes in full in ComEd's rate base.the Electric Utility Industry--The 1997 Act" above for
information regarding the 1997 Act.
FUEL SUPPLY
The kilowatthour generation of ComEd and the Indiana Company for 19941997 was
provided from the following fuel sources: nuclear 71%57%, coal 25%, oil 1%39% and natural
gas 3%4%. The lower nuclear generation as a percentage of total generation for
1997, as compared to recent prior years, is primarily due to outages at
certain of ComEd's nuclear generating stations. See "Regulation--Nuclear"
below for information regarding outages at certain of ComEd's nuclear
generating stations.
Nuclear Fuel
ComEd has uranium concentrate inventory and supply contracts and subsidiary
resources sufficient to
meet the majorityall of its uranium concentrate requirements through 19951999 and portions of
its uranium concentrate requirements for periods beyond 1995.1999. ComEd's
contracted conversion services are sufficient to meet mostall of its uranium
conversion requirements through 1996.1998 and portions of 1999. All of ComEd's
enrichment requirements have been contracted through 2003 and portions of its
enrichment requirements for through 1999.periods beyond 2003. Commitments for fuel
fabrication have been obtained for ComEd's nuclear units at least through
1999.2005. ComEd does not anticipate that it will have any difficulty in
negotiating contracts for uranium concentrates, conversion, enrichment and
fuel fabrication services for its remaining requirements.
Under the Energy Policy Act of 1992, investor-owned electric utilities that
have purchased enrichment services from the DOE are being assessed amounts to
fund a portion of the cost for the decontamination and decommissioning of
uranium enrichment facilities owned and previously operated by the DOE.
ComEd's portion of such assessments is estimated to be approximately $16
million per
8
year (to be adjusted annually for inflation) to 2007. The Act provides that
such assessments are to be treated as a cost of fuel. See "Regulation," subcaption "Nuclear"Note 1 of Notes to
Financial Statements under "Nuclear Fuel" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for information related
to the accounting for such costs.
See "Regulation--Nuclear" below for information concerning the disposal of
radioactive waste.
Coal
ComEd burns low sulfur western coal at all of its coal-fired stations.
ComEd's present policy is to maintain a coal inventory of at least 30 to 45 days of
high utilization. As of February 28, 1995,1998, coal inventories approximated 3345
days. The average cost per ton of coal consumed by ComEd and the Indiana
Company for the years 1992, 19931997, 1996 and 1994,1995, including transportation charges,
was $52.57,
$49.42$38.47, $41.16 and $39.50,$41.72, respectively.
Compared to other utilities, ComEd has relatively low average fuel costs.
This results from ComEd'scosts as
a result of its reliance predominantly on lower cost nuclear generation.
ComEd's coal costs, however, are high compared to those of other utilities.
ComEd's western coal contracts and its rail contracts for the
delivery of the
western coal were renegotiated during 1992 effective as of
January 1, 1993, to provide, among other things, for significant reductions in
the delivered price of the coal over the duration of the contracts. However,
the renegotiated contracts provide for the purchase of certain coal at prices substantially
above currently prevailing market prices, and ComEd has significant purchase
commitments under its contracts. Coal costs (including
costsIn addition, as of reserve coal) which are not recoverableDecember 31, 1997, ComEd
had coal reserves of $282 million. In prior years, ComEd's commitments for the
purchase of coal exceeded its requirements. Rather than take all the coal it
was required to take, ComEd agreed to purchase the coal in rates, if any, will have to
be charged to income.place in the form
of coal reserves. For additional information concerning ComEd's coal purchase
commitments, see "Construction Program," subcaption "UtilityProgram--Utility Operations" above. For
additional information regarding ComEd's fuel
reconciliation proceedings and coal
7
reserves, see "Fuel Adjustment Clause" below and NotesNote 1 and 2 of Notes to
Financial Statements in the January 27, 199530, 1998 Form 8-K Reports.Reports, which are
incorporated herein by reference.
Oil and Gas
ComEd's fast-start peaking units use middle distillate oils. Approximately
half of this capacity can also be fueled with natural gas. ComEd's 2,698,000
kilowatt Collins stationStation is fueled with natural gas and residual oil. ComEd
purchases oil and gas in the spot market as needed. The conversion of threefour of
the five units at Collins stationStation to dual fuel capability (residual oil and
natural gas) was completed during 1994.1994 and 1996 and conversion of the fifth
unit was completed in 1997. ComEd has a contract for the delivery and storage
of natural gas from gas pipelines to Collins stationStation, which expires in 2003.
Fuel Adjustment Clause
Through itsThe FAC provided for the recovery of changes in fossil and nuclear fuel
adjustment clause, ComEd recovers from its customerscosts and the cost of the fuel used to generate electricity andenergy portion of purchased power costs as compared to the fuel
and purchased energy costs included in ComEd's base rates. The amounts collected under the
fuel adjustment clause are subject to reviewAs authorized by
the ICC, ComEd had recorded under or overrecoveries of allowable fuel and
energy costs which, under the Illinois Public UtilitiesFAC, were recoverable or refundable in
subsequent months. Pursuant to an option contained in the 1997 Act, is requiredComEd
filed a tariff on December 16, 1997 to hold annual public hearingseliminate its FAC as of January 1,
1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Changes in the Electric Utility Industry--
Accounting Effects Related to reconcile the collected amounts with the actual cost of fuel and power
prudently purchased. In the event that the collected amounts exceed such actual
cost, then the ICC can order that the excess be refunded.
For additional information concerning ComEd's fuel reconciliation proceedings
and coal reserves, see Notes 1 and 2 of Notes to Financial Statements1997 Act" in the January 27, 199530, 1998 Form 8-K
Reports.Reports, which are incorporated herein by reference, for additional
information regarding the effects of eliminating the FAC. Also see
"Regulation--Nuclear" below concerning FAC reconcililation proceedings for the
years 1994 and 1996.
9
REGULATION
ComEd and the Indiana Company are subject to state and federal regulation in
the conduct of their respective businesses, including the operations of
Cotter. Such regulation includes rates, securities issuance, nuclear
operations, environmental and other matters. Particularly in the cases of
nuclear operations and environmental matters, such regulation can and does
affect operational and capital expenditures. ComEd is subject to regulation by
the ICC as to rates and charges, issuance of most of its securities, (other than debt securities
maturing in not more than twelve months), service
and facilities, classification of accounts, transactions with affiliated
interests, as defined in the Illinois Public Utilities Act, and other matters.
In addition, the ICC in certain of its rate orders has exercised jurisdiction
over ComEd's environmental control program. See "Changes in the Electric
Utility Industry--The 1997 Act" above for information regarding the 1997 Act.
ComEd is subject to the jurisdiction of the FERC with respect to the
issuance of debt securities maturing in not more than twelve months.certain of its securities. ComEd is also subject to the
jurisdiction of the FERC and the DOE under the Federal Power Act with respect
to certain other matters, including the sale for resale of electric energy and
the transmission of electric energy in interstate commerce, and to the
jurisdiction of the DOE with respect to the disposal of spent nuclear fuel and
other radioactive wastes. On September 1, 1994, a corporate restructuring took placeSee "Changes in which Unicom
became the parent holding companyElectric Utility Industry--
Federal Regulation" above for information regarding the FERC Order and the
Federal Energy Policy Act of ComEd and Unicom Enterprises, an
unregulated subsidiary engaged, through a subsidiary, in energy service
activities. The primary purpose of the restructuring was to permit Unicom
Enterprises to engage in energy service activities without the prior approval
of, or being regulated by, the ICC, in part to permit timely responses to
competitive activities which could adversely affect ComEd's utility business
and in part to permit Unicom Enterprises to take advantage of unregulated
business opportunities.1992.
Unicom is a public utility holding company, as defined by the Public Utility
Holding Company Act of 1935, because of its majority ownership of ComEd's
common stock,
of ComEd, and ComEd is a public utility holding company as defined in such
Act because of its ownership of the Indiana Company. However, both Unicom and
ComEd are exempt from most provisions of such Act.
8
The Indiana Company, an "affiliated interest" of ComEd within the meaning of
the Illinois Public Utilities Act, is subject to regulation by the Indiana
Utility Regulatory Commission and to the jurisdiction of the FERC, the DOE and
federal and state of Indiana pollution control and other agencies.
Nuclear
Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the
selection and development of repositories for, and the disposal of, spent
nuclear fuel and high-level radioactive waste. ComEd, as required by that Act,
has signed a contract with the DOE to provide for the disposal of spent
nuclear fuel and high-level radioactive waste from ComEd's nuclear generating
stations. That contract provided for acceptance by the DOE of such materials
to begin in January 1998; however, that date was not met by the DOE and is
expected to be delayed significantly. The DOE's current estimate for opening a
facility to accept such waste is 2010. Extended delays in spent nuclear fuel
acceptance by the DOE would lead to ComEd's consideration of costly storage
alternatives. The contract with the DOE requires ComEd to pay the DOE a one-
time fee applicable to nuclear generation through April 6, 1983 of
approximately $277 million, with interest to date of payment, and a fee
payable quarterly equal to one mill per kilowatthour of nuclear-generated and
sold electricity after April 6, 1983. As provided for under the contract,
ComEd has elected to pay the one-time fee, with interest, just prior to the
first delivery of spent nuclear fuel to the DOE. The costs incurred by the DOE
for disposal activities will be paid out of fees charged to owners and
generators of spent nuclear fuel and high-level radioactive waste. ComEd has
primary responsibility for the interim storage of its spent nuclear fuel.
Dresden Station has spent fuel capacity through the year 2001, Zion Station
has capacity for all its spent fuel, Quad Cities Station has spent fuel
capacity through 2006 and all of the other stations have spent fuel capacity
through at least 2008. ComEd is developing on site dry cask spent fuel storage
for Dresden Unit 1, which is expected to be funded by the external
decommissioning trusts. See "Depreciation and Decommissioning" under Note 1 of
Notes to Financial
10
Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for information regarding the external decommissioning
trusts. The Dresden Unit 1 dry storage canisters will meet the federal
requirements for both storage and transportation of spent nuclear fuel. The
storage canisters could be used by 1999. Meeting spent fuel storage
requirements beyond the years stated above could require new and separate
storage facilities.
The federal Low-Level Radioactive Waste Policy Act of 1980 provides that
states may enter into compacts to provide for regional disposal facilities for
low-level radioactive waste and restrict use of such facilities to waste
generated within the region. Illinois has entered into a compact with the
state of Kentucky, which has been approved by Congress as required by the
Waste Policy Act. Neither Illinois nor Kentucky currently has an operational
site, and none is currently expected to be operational until after the year
2011. ComEd has temporary on-site storage capacity at its nuclear generating
stations for a limited amount of low-level radioactive waste and has been
shipping such waste to a low-level radioactive waste site in Barnwell, South
Carolina. ComEd anticipates the possibility of continuing difficulties in
disposing of low-level radioactive waste. ComEd continues to evaluate its
options relating to the disposal of low-level radioactive waste.
ComEd is subject to the jurisdiction of the NRC with respect to its nuclear
generating stations. The NRC regulations control the granting of permits and
licenses for the construction and operation of nuclear generating stations and
subject such stations to continuing review and regulation. The NRC review and
regulatory process covers, among other things, operations, maintenance, and
environmental and radiological aspects of such stations. The NRC may modify,
suspend or revoke licenses and impose civil penalties for failure to comply
with the Atomic Energy Act, the regulations under such Act or the terms of
such licenses.
Nuclear operations have been, and remain, an important focus of ComEd--given
the impact of such operations on overall O&M expenditures and the ability of
nuclear power plants to produce electric energy at a relatively low marginal
cost. ComEd operates a large number of nuclear plants, ranging from the older
Dresden and Quad Cities Stations to the more recently completed LaSalle, Byron
and Braidwood Stations, and is intent upon safe, reliable and efficient
operation. These plants were constructed over a period of time in which
technology, construction procedures and regulatory initiatives and oversight
have evolved, with the result that older plants generally require greater
attention and resources to meet regulatory requirements and expectations, as
well as to maintain operational reliability. As discussed in "Changes in the
Electric Utility Industry--ComEd's Response to Regulatory Changes" above,
ComEd has ceased nuclear generation operations at its Zion Station.
ComEd's Dresden, Zion and LaSalle nuclear generating stations are currently
on the NRC's list of plants that require increased regulatory scrutiny by the
NRC. Dresden Station has been on the list since 1992 and LaSalle and Zion
Stations were added in January 1997. On January 21, 1998, the NRC stated in a
public meeting that although Dresden Station has demonstrated sustained
improved performance that would warrant removal from the list, continued
evidence of cyclical and inconsistent performance at ComEd's other nuclear
generating stations indicated removal of Dresden Station from the list would
not be appropriate at that time. The NRC also acknowledged improvements at
LaSalle Station but concluded that a substantial amount of work remains and
the plant should remain on the list. The NRC also stated that, based on a
determination made prior to the announcement of the cessation of power
operations at the station, Zion should remain on the list. The listing of the
plants does not prevent ComEd from operating the generating units; however, it
does mean that the NRC will devote additional resources to monitoring ComEd's
operating performance and that ComEd will need to work to demonstrate to the
NRC the sustainability of improvements which it believes it has undertaken and
is continuing to implement. Also at the meeting, the NRC noted a declining
performance trend at Quad Cities Station. In a meeting on March 3, 1998, the
NRC stated that weaknesses were observed with respect to certain operations,
maintenance and engineering activities
11
at Quad Cities Station. The NRC has indicated that it is monitoring ComEd's
ability to manage its nuclear operations in their entirety and that the
performance at any one facility will be viewed by the NRC in context with the
performance of ComEd's nuclear generating group as a whole.
In January 1997, the NRC took the unusual step of requiring ComEd to submit
information to allow the NRC to determine what actions, if any, should be
taken to assure that ComEd can safely operate its six nuclear generating
stations (prior to the permanent cessation of nuclear generation operations at
Zion Station) while sustaining performance improvement at each site. The
request also required ComEd to submit information regarding the criteria that
it has established, or planned to establish, to measure performance and to
explain ComEd's proposed actions if the criteria were not met. The request
stated the NRC staff's concerns with the "cyclical safety performance of ComEd
nuclear stations," noting the presence on the list of plants that require
increased regulatory scrutiny by the NRC of Dresden, LaSalle and Zion Stations
at various times during the past 10 years. It also noted concerns regarding
"ComEd's ability to establish lasting and effective programs that result in
sustained performance improvement." The problems identified by the NRC are
consistent with weaknesses that had been identified in station self-
assessments initiated by ComEd, and management had already undertaken to
develop and implement programs designed to address these issues. ComEd
submitted a response to the NRC on March 28, 1997 and the NRC indicated in an
April 25, 1997 public meeting with representatives of ComEd management that
ComEd's response was generally adequate to demonstrate ComEd's ability to
operate its nuclear generating stations while sustaining performance
improvements. In a November 4, 1997 meeting with the NRC staff, the NRC
indicated that it believes ComEd's nuclear performance has shown improvement,
but that it is too early to conclude that lasting improvement has been
achieved. The NRC noted, as an exception to ComEd's general improving and
sustained performance in its nuclear operations, concerns regarding ComEd's
engineering efforts to resolve longstanding fire protection issues at the Quad
Cities Station. The NRC and representatives of ComEd's management have met and
will continue to meet periodically in the future, to follow-up on these
matters.
INPO, a nuclear power industry funded organization, also has been critical
of ComEd's nuclear operations and the progress made by ComEd at correcting
problems INPO previously identified. In the past, INPO has raised concerns
with respect to management and performance of ComEd's nuclear operations,
including accountability and the effectiveness of efforts aimed at engaging
the workforce in the improvement process. ComEd continues to address INPO's
concerns.
ComEd has devoted, and intends to continue to devote, significant resources
to the management and operations of its nuclear generating stations. Over the
past several years, it has increased and reinforced management with managers
drawn from other utilities which have resolved similar operational and
performance issues, including the appointment of a new Chief Nuclear Officer
in late 1997. It also has sought to identify, anticipate and address operating
and performance issues in a safe, cost-effective manner, while seeking to
improve the availability and capacity factors of its nuclear generating units.
ComEd's activities, with respect to its nuclear generating stations, have
included improvements in operating and personnel procedures and repair and
replacement of equipment and can result in longer unit outages. LaSalle Units
1 and 2 and Quad Cities Units 1 and 2 are currently not operating. It
currently is expected that LaSalle Unit 1 will restart by the end of the third
quarter of 1998 and LaSalle Unit 2 is expected to restart by the end of the
first quarter of 1999. Both units at Quad Cities Station are expected to
return to service by approximately the end of the second quarter of 1998. In
each case the restart of these units requires the resolution of issues with
the NRC.
The LaSalle Station outage and an outage at Zion Station were part of
several outages of nuclear and fossil generating stations that several
utilities operating in the Midwestern power grid (including ComEd) were
expecting and experienced during 1997. Although ComEd met its customers'
electricity
12
demands, the expectation of the NERC, prior to the beginning of the summer,
had been that there could have been electric energy shortages during summer
peak demand periods due to generating station outages in the Midwestern power
grid and transmission limitations on delivering power from neighboring
systems. In response to these regional circumstances and expectations, ComEd
increased the availability of its remaining nuclear and fossil generating
capacity, reinforced transmission capacity, negotiated the purchase of power
and related transmission service from third parties, and worked with a number
of customers to manage the use and demand for power. ComEd is evaluating and
the NERC will be analyzing electric reliability and the potential for electric
energy shortages for the summer of 1998 in light of the potential for
continued outages of nuclear plants operated by ComEd and other utilities in
the Midwestern power grid.
Generating station availability and performance during a year may be issues
in fuel reconciliation proceedings in assessing the prudence of fuel and
purchased power costs during such year. Final ICC orders have been issued in
fuel reconciliation proceedings for years prior to 1994 and for the year 1995.
In 1996, an intervenor filed testimony in the fuel reconciliation proceeding
for 1994 seeking a refund of approximately $90 million relating to nuclear
station performance. In March 1998, the ICC Staff also filed testimony in the
fuel reconciliation proceeding for 1994 proposing a refund of $36 million. The
1997 Act provides that the fuel reconciliation proceedings for 1994 and 1996
must be concluded by the end of 1998. If refunds are required in these
proceedings, the refunds could have a material adverse effect on results of
operations. The 1997 Act also provides that, because ComEd eliminated its FAC
effective January 1, 1997, the ICC shall not conduct a fuel reconciliation
proceeding for the year 1997 or any subsequent years. See "Changes in the
Electric Utility Industry" and "Fuel Supply--Fuel Adjustment Clause" above for
information regarding the elimination of ComEd's FAC.
ComEd has completed replacement of the steam generators at Byron Unit 1 and
is replacing the steam generators at Braidwood Unit 1. See "Construction
Program--Utility Operations" above for additional information.
Based on ComEd's most recent study approved by the ICC, decommissioning
costs, including the cost of decontamination and dismantling, are estimated to
aggregate $4.4 billion in current-year (1998) dollars, including a contingency
allowance. ComEd estimates it will expend approximately $11.6 billion,
including a contingency allowance, for decommissioning costs primarily during
the period from 2007 through 2032. Such costs are expected to be funded by
external decommissioning trusts which ComEd established in compliance with
Illinois law and into which ComEd has been making annual contributions. Future
decommissioning cost estimates may be significantly affected by the adoption
of or changes to NRC regulations, as well as changes in the assumptions used
in making such estimates, including changes in technology, available
alternatives for the disposal of nuclear waste, and inflation. See Note 1 of
Notes to Financial Statements under "Depreciation and Decommissioning" in the
January 30, 1998 Form 8-K Reports, which are incorporated herein by reference,
for additional information regarding decommissioning costs.
During the year 1997, civil penalties were imposed on ComEd on ten occasions
for violations of NRC regulations in amounts aggregating $1,390,000. Since
January 1, 1998, civil penalties were imposed on ComEd on three occasions for
violations of NRC regulations in amounts aggregating $495,000. To ComEd's
knowledge, there are two current enforcement issues outstanding and under
review by the NRC.
The IDNS has jurisdiction over certain activities in Illinois relating to
nuclear power and safety, and radioactive materials. Effective June 1, 1987,
the IDNS replaced the NRC as the regulator and licensor of certain source, by-
product and special nuclear material in quantities not sufficient to form a
critical mass, including such material contained in various measuring devices
used at fossil-fuel power plants. The IDNS does not regulate ComEd's nuclear
generating stations. The IDNS has promulgated
13
regulations which are substantially similar to the corresponding federal
regulations. The IDNS also has authority to license a low-level radioactive
waste disposal facility and to regulate alternative methods for disposing of
materials which contain only trace amounts of radioactivity.
Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the
selection and development of repositories for, and the disposal of, spent
nuclear fuel and high-level radioactive waste. ComEd, as required by that Act,
has signed a contract with the DOE to provide for the disposal of spent nuclear
fuel and high-level radioactive waste from ComEd's nuclear generating stations
beginning not later than January 1998; however, this delivery schedule is
expected to be delayed significantly. It is not certain when the DOE will
accept high-level radioactive waste from ComEd and other operators of nuclear
power plants. Extended delays or a default by the DOE would lead to
consideration of costly alternatives involving serious siting and environmental
issues. The contract with the DOE requires ComEd to pay the DOE a one-time fee
applicable to nuclear generation through April 6, 1983 of approximately $277
million, with interest to date of payment, and a fee payable quarterly equal to
one mill per kilowatthour of nuclear-generated and sold electricity after April
6, 1983. ComEd has elected to pay the one-time fee, with interest, just prior
to the first scheduled delivery of spent nuclear fuel to the DOE. The costs
incurred by the DOE for disposal activities will be paid out of fees charged to
owners and generators of spent nuclear fuel and high-level radioactive waste.
ComEd has primary responsibility for the interim storage of its spent nuclear
fuel. ComEd's capability to store spent fuel is more than adequate for some
years to come. All stations except Dresden and Zion stations will have spent
fuel capacity at least through the year 2009. Dresden station has capacity
through 2001. Zion station has capacity through 2005. Meeting spent fuel
storage requirements beyond the years described above could require new and
separate storage facilities, the costs for which have not been determined.
The federal Low-Level Radioactive Waste Policy Act of 1980 provides that
states may enter into compacts to provide for regional disposal facilities for
low-level radioactive waste and restrict use of such facilities to waste
generated within the region. Since July 1, 1994, there have been no commercial
operating sites in the United States for the disposal of low-level radioactive
waste available to ComEd. Illinois has entered into a compact with the state of
Kentucky, which has been approved by Congress as required by the Waste Policy
Act. Neither Illinois nor Kentucky currently has an operational site, and one
is currently not expected to be operational until after the year 2000. ComEd
has temporary on-site storage capacity at its nuclear generating stations for a
limited amount of low-level radioactive waste and is planning additional such
capacity pending development of disposal facilities by the state of Illinois.
ComEd anticipates the possibility of serious difficulties in disposing of low-
level radioactive waste.
ComEd is subject to the jurisdiction of the NRC with respect to its nuclear
generating stations. The NRC regulations control the granting of permits and
licenses for the construction and operation of nuclear generating stations and
subject such stations to continuing review and regulation. The
9
NRC review and regulatory process covers, among other things, operations,
maintenance, and environmental and radiological aspects of such stations. The
NRC may modify, suspend or revoke licenses and impose civil penalties for
failure to comply with the Atomic Energy Act, the regulations under such Act or
the terms of such licenses.
During the past several years, the NRC has placed two of ComEd's nuclear
generating stations, Zion station and Dresden station, on its list of plants to
be monitored closely. Although Zion station (which was placed on the list in
early 1991) was removed from that list in February 1993, Dresden station (which
was placed on the list in early 1992) remains on the list. The NRC concern with
Dresden station was that, although processes and programs were in place to make
improvements, the rate of improvement needed to accelerate. In February 1995,
the NRC reported that a sense of progress at Dresden is evident, but that more
time is needed to determine if the improving trend will continue. Because of
the age of the Zion, Dresden and Quad-Cities stations, ComEd anticipates
continued expenditures in order to improve reliability and to meet NRC
regulatory expectations. Beginning in late 1992, ComEd restructured its
management of its nuclear operations division and since that time has committed
additional resources to the stations' operations.
In January 1994, ComEd was notified by the NRC that ComEd's LaSalle County
and Quad-Cities stations were placed on the list of plants with adverse
performance trends. ComEd was informed that the NRC concerns about LaSalle
County station included, among other matters, deficient radiation worker
practices. The NRC concerns with Quad-Cities station included, among other
matters, deficiencies in the condition of certain station equipment and the
effectiveness of the operators of the units in identifying and responding to
certain operational problems. ComEd has provided written and verbal responses
to the NRC and is working to resolve the concerns. In the February 1995 report,
the NRC concluded that LaSalle County had arrested the adverse trends in most
areas and "normal" designation should be returned. Like Dresden and LaSalle
County, the NRC noted that positive developments had been observed at Quad-
Cities but additional time was required to determine if those developments had
been effective in arresting the adverse trends and thus Quad-Cities remains on
the list of plants with adverse performance trends. As noted above, ComEd
anticipates continued expenditures in order to improve reliability and to meet
NRC regulatory expectations in connection with the Zion, Dresden and Quad-
Cities stations. In addition, generating station availability and performance
during a year may be issues in fuel reconciliation proceedings in assessing the
prudence of fuel and power purchases during such year. Final ICC orders have
been issued in fuel reconciliation proceedings for years prior to 1993;
however, certain intervenors have appealed the ICC order in the 1989 fuel
reconciliation proceedings on issues relating to nuclear station performance.
In accordance with a commitment to the NRC, ComEd examined its operating
boiling water nuclear generating units in 1983 to determine the existence or
extent of inter-granular stress corrosion in certain of the large diameter
piping in those units. Inter-granular stress corrosion was discovered in the
Dresden and Quad-Cities units. ComEd replaced the stainless steel piping
susceptible to stress corrosion at Dresden Unit 3 and is taking alternative
remedial actions which are intended to minimize the need to replace such piping
at Dresden Unit 2, Quad-Cities Units 1 and 2 and LaSalle County Units 1 and 2.
If ComEd is required to replace all of such piping, the estimated construction
expenditures, in current-year (1995) dollars, would be approximately $645
million.
ComEd has studied the possibility of having to replace the steam generators
at its Zion station. The initial studies were completed in June 1991 and
additional follow-up studies are continuing. Based on the most recent findings
of these studies, it will not be necessary to replace the Zion steam generators
until at least the year 2005 and ComEd believes that the potential exists that
replacement will not be necessary during the original operating license life,
which expires in 2013. ComEd has also studied the replacement of the steam
generators at Byron Unit 1 and Braidwood Unit 1. The studies indicate that,
from a technical standpoint, the steam generators should be replaced and, from
10
an economic standpoint, the replacements should be performed at the earliest
possible time. The steam generator replacements are currently planned to be
completed in 1998 for Braidwood Unit 1 and in 1999 for Byron Unit 1. The
estimated replacement costs, including the costs of removal of the existing
steam generators, are approximately $235 million for each unit. Approximately
$170 million of expenditures are included in the current 1995-97 construction
program. See "Item 3. Legal Proceedings" herein concerning litigation by ComEd
against Westinghouse concerning steam generators.
During the year 1994, civil penalties were imposed on ComEd by the NRC on
eight occasions for violations of NRC regulations in amounts aggregating
$867,500. Since January 1, 1995, there have been no violations of NRC
regulations identified which have resulted in civil penalties. There are two
potentially enforceable issues currently outstanding and under review by the
NRC.
The uranium mining and milling operations of Cotter are subject to
regulation by the state of Colorado and the NRC.
Environmental
ComEd and the Indiana Company areis subject to regulation regarding environmental matters by the United
States and by the states of Illinois, Indiana, Iowa and, in the case of Cotter,
Colorado, and by local jurisdictions where ComEd and the Indiana Company operate theiroperates its facilities. The
IPCB has jurisdiction over environmental control in the state of Illinois,
which includes authority to regulate air, water and noise emissions and solid
waste disposal, together with the Illinois EPA, which enforces regulations of
the IPCB and issues permits in connection with environmental control. The
U.S. EPA administers certain federal statutes relating to such matters. The
IPCB has published a proposed rule under which it would have the power to
regulate radioactive air pollutants under the Illinois Environmental
Protection Act and the Federal Clean Air Act Amendments of 1977.
Air quality regulations, promulgated by the IPCB as well as the Indiana and
Hammond Departments of Environmental Management in accordance with federal
standards, impose restrictions on the emission of particulates, sulfur
dioxide, nitrogen oxides and other air pollutants and require permits from the
respective state and local environmental protection agencies for the operation
of emission sources. Permits authorizing operation of ComEd's fossil-fueledfossil fuel
generating facilities subject to this requirement have been obtained and,
where such permits are due to expire, ComEd has, in a timely manner, filed
applications for renewal or requested extensions of the existing permits.
Under the Federal Clean Water Act, NPDES permits for discharges into
waterways are required to be obtained from the U.S. EPA or from the state
environmental agency to which the permit program has been delegated. Those
permits must be renewed periodically. ComEd and the Indiana Company either havehas NPDES permits for all
of theirits generating stations or have filedhas pending applications for renewals of such permits under
the current delegation of the program to the Illinois EPA or the Indiana Department of Environmental Management.EPA. ComEd is also
subject to the jurisdiction of certain pollution control agencies of the state
of Iowa with respect to the discharge into the Mississippi River from the
Quad-Cities station. Reissued NPDES permits for several generating facilities
establish schedules by which the facilities must meet tighter discharge limits
when using certain biocides in condenser cooling water systems. ComEd has
embarked on a program to obtain compliance with the new permit requirements by
the April 1995 compliance date.
On August 10, 1990, the Sierra Club filed suit in the U.S. District Court
under Section 505 of the Federal Clean Water Act alleging violations of state
of Illinois water quality standards with respect to thermal effluents at
ComEd's Fisk, Crawford, Will County, Joliet and Dresden generating stations. In
July 1991, the Sierra Club and ComEd reached a settlement of this suit which
was approved by the Court on November 1, 1991. Under the settlement, ComEd has
agreed to perform an ecological
11
study of the thermal effluents discharged from the generating stations.
Ultimately, this study, which is currently underway, may determine whether the
installation of closed cycle cooling facilities or operational restrictions are
necessary at one or more of these stations.
The Great Lakes Critical Programs Act of 1990 requires that, following the
issuance of guidance by the U.S. EPA, the states of Illinois and Indiana, among
others, adopt water quality standards, policies and procedures to assure
protection of the water quality of the Great Lakes. Water quality standards and
procedures that the states would be required to adopt are to be based on the
U.S. EPA's final guidance issued on March 13, 1995. ComEd is presently
evaluating the final guidance to assess the extent to which it may impact
certain ComEd facilities. Ultimately, the new rules may require that ComEd
install additional pollution control equipment or restrict operations at its
facilities that discharge, either directly or indirectly, into Lake Michigan.Quad
Cities Station.
The Clean Air Amendments require reductions in sulfur dioxide emissions from
ComEd's Kincaid station. The Clean Air Amendments also bar future utility
sulfur dioxide emissions except to the extent utilities hold allowances for
their emissions. Allowances which authorize their holder to emit sulfur dioxide
have been issued by the U.S. EPA based largely on historical levels of sulfur
dioxide emissions. These allowances are transferable and marketable. ComEd's
ability to increase generation in the future to meet expected increased demand
for electricity will depend in part on ComEd and the Indiana Company's ability
to acquire additional allowances or to reduce emissions below otherwise
allowable levels from their existing generating plants. In addition, the Clean
Air Amendments require studies to determine what controls, if any, should be
imposed on utilities to control air toxic emissions, including mercury. ComEd's
Clean Air Compliance Plan for Kincaid station was approved by the ICC on July
8, 1993. In late 1993, however, a federal court declared the Illinois law under
which the approval was received to be unconstitutional and compliance plans
prepared and approved in reliance on the law to be void. In January 1995, the
federal court's decision was affirmed by the U.S. Court of Appeals. It is not
known whether a petition for rehearing or further appeals will be filed. Under
the Compliance Plan approved by the ICC, ComEd would have been allowed to burn
low sulfur Illinois coal at Kincaid station without the installation of
pollution control equipment for the years 1995 through 1999, and to purchase
any necessary emission allowances that are expected to be available under the
Clean Air Amendments during this period. Also, under the Plan, ComEd expected
to install pollution control equipment for Kincaid station by the year 2000.
ComEd is currently burning Utah coal at Kincaid station to meet Clean Air Act
Phase I requirements. When the final outcome of the federal litigation is
known, ComEd will determine whether any changes are required.
The Clean Air Amendments also require reductions in nitrogen oxide emissions from
ComEd and the Indiana Company'sComEd's fossil fuel generating units. The IllinoisIn January 1996, the U.S. EPA has proposed rules with respect to such emissions which would require
modifications to certain of ComEd's boilersissued a
final rule exempting existing sources inside the Chicago ozone non-
attainment area. On March 6, 1995,non-attainment
area from further nitrogen oxide emission reductions; however, this exemption
is limited pending the finalization of the U.S. EPA Clean Air Act, Section
110. The U.S. EPA issued a proposed rule exempting existingin late 1997 which would mandate
reductions in nitrogen oxide emissions to address ozone transport problems in
much of the eastern United States. In its current form, the proposed rule
would require electric utility sources from furtherin a 22-state region to meet a nitrogen
oxide emission reductions. The
Illinois EPA is now considering nitrogen oxide emission reductions at ComEd
generating stations outside the Chicago ozone non-attainment area due to ozone
transport.limitation of 0.15 lbs/MBtu. Under the Acid Rain program, the
U.S. EPA will prepareprepared nitrogen oxide emission regulations forthat apply to all of
ComEd's boilers with a compliance date of January 1, 2000. These regulations
include limits for cyclone and tangentially fired boilers of 0.86 and 0.40
lbs/mm Btu, respectively.
CERCLA provides for immediate response and removal actions coordinated by
the U.S. EPA to releases of hazardous substances into the environment and
authorizes the U.S. Government either to clean up sites at which hazardous
substances have created actual or potential environmental hazards
14
or to order persons responsible for the situation to do so. Under CERCLA,
generators and transporters of hazardous substances, as well as past and
present owners and operators of hazardous waste sites, are made strictly,
jointly and severally liable for the cleanup costs of waste at sites, most of
which are listed by the U.S. EPA on the NPL. These responsible parties can be
ordered to perform 12
a cleanup, can be sued for costs associated with a U.S. EPA
directed cleanup,
or may voluntarily settle with the U.S. Government concerning
their liability for cleanup costs, or may voluntarily begin a site
investigation and site remediation prior to listing on the NPL under state
oversight. Various states, including Illinois, have enacted statutes which
contain provisions substantially similar to CERCLA. ComEd and its subsidiaries
are or are likely to become parties to proceedings initiated by the U.S. EPA,
state agencies and/or other responsible parties under CERCLA with respect to a
number of sites, including MGP sites, or may voluntarily undertake to
investigate and remediate sites for which they may be liable under CERCLA.
MGPs manufactured gas in Illinois from approximately 1850 to 1950. ComEd
generally did not operate MGPs as a corporate entity but did, however, acquire
MGP sites as part of the absorption of smaller utilities. Approximately half
of these sites were transferred to Northern Illinois Gas Company as part of a
general conveyance in 1954. ComEd also acquired former MGP sites as vacant
real estate on which ComEd facilities have been constructed. To date, ComEd
has identified 44 former MGP sites for which it may be liable for remediation.
ComEd presently estimates that its costs of former MGP site investigation and
remediation will aggregate from $25 million to $150 million in current-year
(1995)(1998) dollars. It is expected that the costs associated with investigation
and remediation of former MGP sites will be incurred over a period of approximately
20not to
exceed 30 years. Because ComEd is not able to determine the most probable
liability for such MGP costs, in accordance with accounting standards, ComEda
reserve of $25 million has a reservebeen included in other noncurrent liabilities on
the Consolidated Balance Sheets in the January 30, 1998 Form 8-K Reports,
which are incorporated herein by reference, as of December 31, 1994 of approximately $25 million,1997 and 1996,
which reflects the low end of the range of itsComEd's estimate of the liability
associated with former MGP sites. In addition, as of December 31, 1994, ComEd has1997 and
1996, a reserve of $8 million has been included in other noncurrent
liabilities on the Consolidated Balance Sheets in the January 30, 1998 Form 8-
K Reports, which are incorporated herein by reference, representing itsComEd's
estimate of the liability associated with cleanup costs of remediation sites
other than former MGP sites. Approximately half of this reserve relates to
anticipated cleanup costs associated with a property formerly used as a
tannery which was purchased by ComEd in 1973. Unicom and ComEd presently
estimate that ComEd's costs of investigating and remediating the former MGP
and other remediation sites, pursuant to CERCLA and state environmental laws,
will not have a material impact on the financial position or results of
operations of Unicom or ComEd. These cost estimates are based on currently
available information regarding the responsible parties likely to share in the
costs of responding to site contamination, the extent of contamination at
sites for which the investigation has not yet been completed and the cleanup
levels to which sites are expected to have to be remediated.
On July 17, 1991, the U.S. Government filed a complaint in U.S. District
Court alleging that ComEd and four other defendants are PRPs for remediation
costs associated with surface, soil and groundwater contamination alleged to
have occurred from the disposal by other persons of hazardous wastes at a site
located near ComEd's Byron station in Byron, Illinois. The U.S. Government
alleges that a portion of the site is owned by ComEd. The U.S. Government is
presently seeking reimbursement from the PRPs for past study and response costs
associated with the site of approximately $7 million. ComEd is currently
pursuing a negotiated settlement and is not actively pursuing cost recovery
from other PRPs at this time.
On October 16, 1992, the U.S. EPA notified ComEd and four other companies,
including the site operator, that they were PRPs for the costs associated with
the investigation and removal of contaminated soil at the Elgin Salvage and
Supply site in Elgin, Illinois. On April 19, 1993, the U.S. EPA issued an order
under Section 106 of CERCLA to ComEd and the other parties to investigate and
remove the contamination from the site. ComEd sent substantial amounts of scrap
cable and other scrap metal to the site. The site investigation and remediation
is currently estimated to be approximately $8 to $9 million. The site operator
claims to be unable to fund more than a small share of the removal costs.
Consequently, the other parties have agreed to an interim allocation of the
removal costs. The interim agreement allocates 55% of the removal costs to
ComEd. ComEd and the other PRPs have filed a cost recovery action against the
site operator and the site owners to require that they provide their share of
the remediation costs. ComEd and the site owner are in litigation with several
insurance companies for claims. Additional PRPs are being sought.
13
In the operation of its electric distribution system, ComEd utilized
equipment containing PCBs. Such equipment included transformers located in
customer-owned buildings and in sidewalk vaults. Under regulations adopted by
the U.S. EPA, these transformers containing PCBs were required to be modified
(with non-PCB fluid) or be replaced. ComEd has completed the replacement of
over 2,000 PCB fluid transformers that were located in or near commercial
buildings and were subject to the federal regulations. The estimated cost to
ComEd of replacing or modifying these transformers and disposing of the PCB
fluid was approximately $120 million, which had been expended through the end
of 1993. Some of ComEd's electrical equipment containing PCBs was sent to scrap
and salvage facilities and, as a result, ComEd may be liable for penalties and
for the costs of cleanup of those facilities. An accident or spill involving
PCB oil-filled electrical equipment, resulting in exposure of persons or
property to PCBs or their by-products, could result in material liability
claims against ComEd.
In September 1990, the IPCB replaced existing landfill regulations with new,
more stringent design and performance standards. These regulations are expected
to increase the cost to ComEd for disposal of coal combustion by-products at
its Joliet station. At Joliet, an existing landfill utilized for disposal of
coal ash may require the installation by 1997 of engineered retrofits designed
to protect groundwater. ComEd intends to request exemptions from certain of the
new regulations from the IPCB. If its request is denied, then alternative
landfill siting, commercial disposal, or retrofitting of the existing facility
could result in significant increases in disposal expenditures.
The outcome of many of the regulatory proceedings referred to above, if not
favorable, could have a material adverse effect on Unicom and ComEd's future
business and operating results.
An unresolved issue is whether exposure to EMFs may result in adverse health
effects or damage to the environment. EMFs are produced by virtually all
devices carrying or utilizing electricity, including transmission and
distribution lines, as well as home appliances. If regulations are adopted
related to EMFs, they could affect the construction and operation of
electrical equipment, including transmission and distribution lines and the
cost of such equipment. ComEd cannot predict the effect on the cost of such
equipment or operations if new regulations related to EMFs are adopted. In the
absence of such regulations, EMFs have nonetheless become an issue in siting
facilities and in other land use contexts. Litigation has been filed in a
variety of locations against a variety of defendants, (including ComEd)including ComEd,
alleging that the presence or use of electrical equipment has had an adverse
effect on the health of persons.persons or has caused a diminution in property values
of land adjacent to these facilities. If plaintiffs are successful in
litigation of this type and it becomes widespread, the impact on ComEd and on
the electric utility industry is not predictable, but could be severe.
15
From time to time, Unicom and its subsidiaries are, or are claimed to be, in
violation of or in default under orders, statutes, rules or regulations
relating to environmental controls and other matters, compliance plans imposed
upon or agreed to by them or permits issued by various state and federal
agencies for the construction or operation of their facilities. Unicom and
ComEd do not believe, so far as they now foresee, that such violations or
defaults will have a material adverse effect on their future business and
operating results, except for events otherwise described in thisthese Annual
ReportReports on Form 10-K, which could have such an effect.
See "Item 3. Legal Proceedings" regarding Cotter.
EMPLOYEES
The total number of employees of
Unicom and its subsidiary companies washad approximately 18,460 (of16,704 employees as of
December 31, 1997. ComEd had approximately 16,663 employees as of December 31,
1997 of which 18,451approximately 9,140 ComEd employees were employed by ComEd and the
Indiana Company) at December 31, 1994. Of that amount, about 10,864 employees
of ComEd are represented by the IBEW
Local 15.
A new Collective Bargaining Agreement with Local 15 became effective August
25, 1997, and about 169provides, among other things, for a term expiring on March 31,
2001. A previously negotiated general wage increase of 1.5% was effective
April 1, 1997, for all employees covered by the Collective Bargaining
Agreement. Additionally, a general wage increase of 1.5% was effective October
13, 1997, and was applied on a retroactive basis to March 31, 1997. For each
of the Indiana Company are representedremaining three years, a 3% general wage increase will be granted to
employees covered by the United Steelworkers of America, Local
12502. Effective May 1, 1994,Collective Bargaining Agreement, effective the
17 local unionsbeginning of the IBEW reorganized into
one
14
local union. Collective bargainingpay period that includes April 1st of each such year.
The supplemental agreements with the unions are effective
through March 31, 1995. Supplemental agreements covering pension, life insurance, savings and investment
medical, dentalplan, and visionhealth care plans are effective through March 31, 1995. See "General," subcaption "Utility
Operations," above for information relating to certain changes to union
agreements during 1994.2001. The
supplemental agreement covering pension benefits is effective through
September 30, 1999.
INTERCONNECTIONS
ComEd has interconnections for the transmission of electricity with Central
Illinois Light Company, Central Illinois Public Service Company, Illinois
Power Company, Indiana Michigan Power Company (a subsidiary of American
Electric Power Company), Interstate Power Company, Iowa-Illinois Gas and ElectricMidAmerican Energy Company,
Northern Indiana Public Service Company, Wisconsin Electric Power Company and
Wisconsin Power and Light Company for the purpose of exchanging energy and for
other forms of mutual assistance.
ComEd and 1314 other Midwest power systems are regular members of MAIN, (whichwhich
also includes six23 associate members and one5 affiliate member).members. The members have
entered into an agreement to work together to ensure the reliability of
electric power production and transmission throughout the area they serve.
ComEd joined with eight Midwestern utilities to form a regional Midwest ISO
in January 1998. See "Changes in the Electric Utility Industry--ComEd's
Response to Regulatory Changes" for additional information.
FRANCHISES
ComEd's franchises are, in general, deemed adequate to permit it to engage
in the business it now conducts.
In the city of Chicago, ComEd operates under a nonexclusive electric
franchise ordinance, effective January 1, 1992, and continuing in force until
December 31, 2020. ComEd derives
16
approximately one-third of its ultimate consumer revenues from customers
located within the city of Chicago. See "Item 3. Legal Proceedings" regarding
an arbitration proceeding initiated by the City of Chicago under its franchise
agreement with ComEd.
The electric business outside of the city of Chicago is conducted in
municipalities under nonexclusive franchises and, where required, under
certificates of convenience and necessity granted by the ICC. The following
tabulation summarizes, as of December 31, 19941997, the expiration dates of the
electric franchises held in 395 of the 396 municipalities outside of the city of
Chicago capable of granting franchises and in which ComEd currently provides
electric service.
FRANCHISE ESTIMATED
EXPIRATION
NUMBER OF AGGREGATE
FRANCHISE EXPIRATION PERIODS MUNICIPALITIES POPULATION
----------- ---------------------------- -------------- ----------
1996-2006....... 4 108,000
2007-2017....... 13 111,000
2018-2028....... 4 5,000
FRANCHISE ESTIMATED
EXPIRATION NUMBER OF AGGREGATE
PERIODS MUNICIPALITIES POPULATION
---------- -------------- ----------
2029-2039.......1998-2006............................................. 3 89,000
2007-2017............................................. 10 95,000
2018-2028............................................. 3 4,000
2029-2039............................................. 1 *
2040 and subse-
quent years.... 369 3,997,000subsequent years............................. 376 4,127,000
No stated time limit.......... 4 71,000limit.................................. 3 61,000
- --------
*Less than one thousand1,000 people.
BUSINESS AND COMPETITION
The electric utility business has historically been characterized by retail
service monopolies in state or locally franchised service territories.
Investor-owned electric utilities have tended to be vertically integrated with
all aspects of their business subject to pervasive regulation. Although
customers have normally been free to supply their electric power needs through
self-generation, they have not had a choice of electric suppliers and self-
generation has not generally been economical.
15
The market in which electric utilities like ComEd operate has become more
competitive as a result of technological and regulatory changes and many
observers believe competition will intensify. Self-generation can be economical
for certain customers, depending on how and when they use electricity and other
customer-specific considerations. A number of competitors are currently seeking
to identify and do business with those customers. In addition, suppliers of
other forms of energy are increasingly competing to supply energy needs which
historically were supplied primarily or exclusively by electricity.
The Energy Policy Act of 1992 will likely have a significant effect on
companies engaged in the generation, transmission, distribution, purchase and
sale of electricity. This Act, among other things, expands the authority of the
FERC to order electric utilities to transmit or "wheel" wholesale power for
others, and facilitates the creation of non-utility electric generating
companies. Although ComEd cannot now predict the full impact of this Act, it
will likely create and increase competition to supply the power needs of large
users of electricity.
ComEd is facing increased competition from several non-utility businesses
which seek to provide energy services to users of electricity, especially
larger customers such as industrial, commercial and wholesale customers. Such
suppliers include independent power producers and unregulated energy services
companies. In this regard, natural gas utilities operating in ComEd's service
area have established subsidiary ventures to provide heating, ventilating and
air conditioning services, attempting to attract ComEd's customers. Also,
several utilities in the United States have established unregulated energy
services subsidiaries which pursue business opportunities wherever they exist.
In addition, cogeneration and energy services companies have begun soliciting
ComEd's customers to provide alternatives to using ComEd's electricity. In
October 1993, the ICC granted ComEd the authority to negotiate special discount
contract rates with new or existing industrial customers for up to a total of
400 megawatts of added load, where the customers would not have chosen service
from ComEd for the increased load in the absence of the discount rates. In
addition, in June 1994, the ICC granted ComEd the authority to negotiate
special discount contract rates with up to 25 of its largest existing
customers, where such contracts would be necessary to retain the customers'
existing load on ComEd's system.
ComEd recently negotiated amendments to existing contracts with three of its
wholesale municipal customers, which extended the contracts for an additional
ten-year period past the 1997 expiration dates. ComEd was one of a number of
bidders for providing service to these customers. The contracts became
effective upon FERC approval.
The ICC formed a task force for the purpose of conducting a broad-based and
open examination of the expanding presence of market components within the
electric utility industry. Participants from more than forty organizations,
including representatives from the electric utility industry, are meeting to
examine three broad issues: effects of regulation, competition and future
regulatory and legislative changes. A report examining all sides of the issues
is planned for release in the first half of 1995 to the ICC, the legislature,
the Governor and other Illinois constitutional officers.
There also exists the possibility of legislation being introduced in the
Illinois General Assembly suggesting changes in the regulatory framework under
which Illinois electric utilities operate. ComEd is aware of discussions
regarding proposals that include structures for forms of retail wheeling of
power and alternative rate regulation. ComEd cannot predict whether, or in what
form, any such proposals might be introduced or what, if anything, or when
something might be enacted. Retail wheeling, if enacted, could adversely affect
the ability of ComEd to recover certain of its investment in generation,
transmission and distribution equipment.
1617
EXECUTIVE OFFICERS OF THE REGISTRANT
The effective year of election of the officers to their present positions
and the prior positions they have held with Unicom or other companies, since
January 1, 1993, are described below.
EFFECTIVE DATE OF ELECTION
NAME AND AGE POSITION
TO PRESENT POSITION
----------------- --- ------------------------------------ --------------------------------------- -------------------------------------------------------------
James J. O'Connor 58*John W. Chairman, President and Chief Executive Officer January 28, 1994
Samuel K. Skinner 56of Unicom and
Rowe, 52 ComEd since March 1998; previously President January 28, 1994
John C. Bukovski 52and Chief Exec-
utive Officer of New England Electric System.
*Oliver D. Executive Vice President and President and Chief Nuclear Of-
Kingsley, ficer--Nuclear Generation Group of ComEd since October 1997;
Jr., 55 previously Chief Nuclear Officer at the Tennessee Valley Au-
thority.
*Robert J. Executive Vice President of ComEd since January 28, 1994
Roger F. Kovack1997 and
Manning, 55 President--Fossil Generation Group of ComEd since October
1997; previously Senior Vice President of ComEd.
*John C. Senior Vice President and Chief Financial Officer of Unicom
Bukovski, 55 and ComEd since October 1997; previously Vice President and
Chief Financial Officer of Unicom and ComEd.
*Paul D. Senior Vice President of ComEd since October 1997; previously
McCoy, 47 Vice President of ComEd.
Donald A. Senior Vice President of Unicom since 1995; President and
Petkus, 56 Chief Executive Officer of UT Holdings since 1997 and Unicom
Thermal Technologies Inc. since 1995, and Senior Vice Presi-
dent of ComEd.
*S. Gary Senior Vice President of Unicom and ComEd since October 1997;
Snodgrass, Vice President of Unicom and ComEd, September 1997 to Octo-
46 ber 1997; previously Vice President of USG Corporation.
*Pamela B. Senior Vice President and General Counsel of Unicom and ComEd
Strobel, 45 since October 1997; previously Vice President and General
Counsel of ComEd.
*Michael J. Senior Vice President of ComEd since 1993; previously Vice
Wallace, 50 President of ComEd.
John T. Vice President of Unicom and ComEd since 1996; previously
Costello, 49 Manager of Corporate Relations of ComEd, 1995 to 1996 and
Manager of Public Affairs of ComEd.
*William H. Vice President of ComEd.
Downey, 53
Ruth Ann M. Vice President and Treasurer of Unicom and ComEd since Sep-
Gillis, 43 tember 1997; previously Vice President, Chief Financial Of-
ficer and Treasurer of the University of Chicago Hospitals
and Health System from 1996 to 1997 and Senior Vice Presi-
dent and Chief Financial Officer of American National Bank
and Trust Company.
Thomas J. Vice President of Unicom and ComEd since 1996; previously
McCaffrey, Vice President of Mercer Management Consulting, 1995 to 1996
53 and Corporate Senior Vice President of First Chicago Corpo-
ration.
*Robert E. Comptroller January 28, 1994
Dennis F. O'Brien 49 Treasurer January 28, 1994of Unicom and ComEd since July 1997; previously
Berdelle, 42 held various financial reporting and analysis positions
within ComEd.
David A. Secretary of Unicom and ComEd since 1994 and 1989, respec-
Scholz, 53 Secretary January 28, 199456 tively.
--------
* Executive Officers for Section 16 reporting purposes.
The present term of office of each of the above executive officers extends
to the first meeting of Unicom's Board of Directors after the next annual
election of Directors scheduled to be held on May 24, 1995.
Each of the above executive officers has been employed by ComEd for more than
five years, except for Mr. Skinner, and by Unicom since January 28, 1994 in
executive or management positions. Since January 1, 1990 and prior to his
election as President of ComEd effective February 1, 1993, Mr. Skinner was
Secretary of the United States Department of Transportation prior to December
1991, Chief of Staff to the President of the United States from December 1991
to August 1992, and General Chairman of the Republican National Committee from
August 1992 to January 1993. Since January 1, 1990, the Unicom officers listed
above, except for Mr. Skinner, held and continue to hold the following present
positions at ComEd: Mr. O'Connor is Chairman and Chief Executive Officer; Mr.
Bukovski is Vice President; Mr. Kovack is Comptroller; Mr. O'Brien is
Treasurer; and Mr. Scholz is Secretary.1998.
There are no family relationships among the executive officers, directors
and nominees for director of Unicom.
1718
OPERATING STATISTICS
YEAR ENDED DECEMBER 31
----------------------------------
1994 1993 19921997 1996 1995
---------- ---------- ----------
Electric Operating Revenues (thousands of dollars)dol-
lars)(1):
Residential............................... $2,273,763 $2,341,155 $2,146,523Residential.............................. $2,552,742 $2,541,873 $2,621,038
Small commercial and industrial........... 1,917,084 1,962,662 1,874,393industrial.......... 2,153,113 2,113,716 2,073,998
Large commercial and industrial........... 1,381,251 1,437,680 1,373,939industrial.......... 1,467,574 1,445,708 1,425,784
Public authorities........................ 452,512 474,034 452,508authorities....................... 505,907 503,004 487,142
Electric railroads........................ 26,179 27,593 27,633railroads....................... 29,785 29,651 26,894
Provisions for revenue refunds--ultimate
consumers................................ (15,909) (1,281,788) (18,372)consumers............................... (45,470) -- --
Sales for resale (net of provisions for
revenue refunds)......................... 187,147 237,573 113,603resale......................... 336,480 235,041 207,256
Other revenues............................ 55,494 61,531 56,094revenues........................... 82,891 68,031 67,933
---------- ---------- ----------
Total.................................. $6,277,521 $5,260,440 $6,026,321Total................................. $7,083,022 $6,937,024 $6,910,045
========== ========== ==========
Sales (millions of kilowatthours):
Residential............................... 21,376 20,818 19,269Residential.............................. 22,151 22,310 23,303
Small commercial and industrial........... 24,320 23,463 22,662industrial.......... 25,860 25,131 25,313
Large commercial and industrial........... 23,450 22,917 22,163industrial.......... 24,074 23,896 23,777
Public authorities........................ 6,885 6,741 6,562authorities....................... 7,322 7,336 7,158
Electric railroads........................ 397 405 410railroads....................... 418 424 390
Sales for resale.......................... 8,743 13,417 4,614resale......................... 15,679 12,178 11,412
---------- ---------- ----------
Total.................................. 85,171 87,761 75,680Total................................. 95,504 91,275 91,353
========== ========== ==========
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear.................................. 63,795 70,403 66,683
Fossil................................... 26,361 23,839 13,188Nuclear................................. 49,136 62,610 70,261
Fossil.................................. 36,604 30,315 26,231
Fast-start peaking units................. 87 24 18units................ 121 123 116
---------- ---------- ----------
Net generation......................... 90,243 94,266 79,889generation........................ 85,861 93,048 96,608
Purchased power........................... 2,071 644 2,555power.......................... 16,672 6,129 2,475
Company use and losses.................... (7,143) (7,149) (6,764)losses................... (7,029) (7,902) (7,730)
---------- ---------- ----------
Total.................................. 85,171 87,761 75,680Total................................. 95,504 91,275 91,353
========== ========== ==========
Cost of Fuel Consumed (per million Btu):
Nuclear...................................Nuclear.................................. $0.57 $0.53 $0.52
$0.52
Coal...................................... $2.31 $2.89 $2.96
Oil....................................... $2.89 $3.03 $3.02Coal..................................... $2.28 $2.41 $2.43
Oil...................................... $3.90 $3.41 $3.06
Natural gas............................... $2.27 $2.70 $2.36gas.............................. $2.69 $2.75 $1.85
Average all fuels......................... $1.08 $1.15 $0.97fuels........................ $1.33 $1.17 $1.05
Peak Load (kilowatts)...................... 17,928,000 17,771,000 15,994,000..................... 18,497,000 18,916,000 19,212,000
Number of Customers (at end of year):
Residential............................... 3,047,354 3,009,508 2,981,141Residential.............................. 3,123,364 3,102,101 3,079,381
Small commercial and industrial........... 286,793 283,764 282,092industrial.......... 291,143 289,803 288,848
Large commercial and industrial........... 1,528 1,503 1,527industrial.......... 1,566 1,550 1,539
Public authorities........................ 12,059 12,023 11,886authorities....................... 12,180 12,142 12,039
Electric railroads and resale............. 20 19 18resale............ 53 46 26
---------- ---------- ----------
Total.................................. 3,347,754 3,306,817 3,276,664Total................................. 3,428,306 3,405,642 3,381,833
========== ========== ==========
Average Annual Revenue Per Residential
Customer
(excludes(excluding light bulb service).... $748.10 $779.54 $721.27........... $816.91 $819.52 $852.18
Average Use Per Residential Customer
(kilowatthours)........................... 7,056 6,954 6,497.......................... 7,108 7,213 7,598
Average Revenue Per Kilowatthour(2):Kilowatthour:
Residential (excludes(excluding light bulb service)................................. 10.60c 11.21c 11.10cserv-
ice).................................... 11.49c 11.36c 11.22c
Small commercial and industrial........... 7.88c 8.36c 8.27cindustrial.......... 8.33c 8.41c 8.19c
Large commercial and industrial........... 5.89c 6.27c 6.20cindustrial.......... 6.10c 6.05c 6.00c
- --------
(1) See "Rate Proceedings"Matters" above.
19
YEAR 2000 CONVERSION
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," subcaption "Liquidity and Capital Resources--Year 2000
Conversion" in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for information regarding Unicom and ComEd's Year 2000
conversion.
MARKET RISKS
ComEd is exposed to market risk due to changes in interest rates and changes
in the market price for electricity. Exposure for interest rate changes
relates to its long-term debt and preferred equity obligations. Exposure to
electricity market price risk relates to forward activities taken to
effectively manage the supply of, and demand for, the electric generation
capability of ComEd's generating plants. ComEd does not currently utilize
derivative commodity or financial instruments for trading or speculative
purposes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Liquidity and Capital Resources--Interest
Rate Exposure and Market Price Exposure" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for additional
information.
FORWARD-LOOKING INFORMATION
Except for historical data, the information contained in these Annual
Reports constitutes forward-looking statements. Forward-looking statements are
inherently uncertain and subject to risks. Such statements should be viewed
with caution. Actual results or experience could differ materially from the
forward-looking statements as a result of many factors. Forward-looking
statements in this report include, but are not limited to: (1) statements
regarding expectations of revenue reductions as a result of the 1997 Act in
"Item 1. Business," subcaption "Changes in the Electric Utility Industry--The
1997 Act" (2) Averagestatements regarding estimated capital expenditures in "Item 1.
Business," subcaption "Construction Program," (3) statements regarding the
estimated return to service of certain nuclear generating units and the costs
of purchased power in "Item 1. Business," subcaption "Regulation--Nuclear,"
(4) statements regarding the costs of decommissioning nuclear generating
stations in "Item 1. Business," subcaption "Regulation--Nuclear," (5)
statements regarding cleanup costs associated with MGPs and other remediation
sites in "Item 1. Business," subcaption "Regulation--Environmental" and (6)
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Item 8. Financial Statements and Supplementary
Data" which, in the case of Unicom, incorporate portions of Unicom's January
30, 1998 Form 8-K Report, which is incorporated herein by reference, which
contain forward-looking information as described therein, and in the case of
ComEd, incorporate portions of ComEd's January 30, 1998 Form 8-K Report, which
is incorporated herein by reference, which contain forward-looking information
as described therein. Management cannot predict the course of future events or
anticipate the interaction of multiple factors beyond management's control and
their effect on revenues, project timing and costs. The statements regarding
revenue per kilowatthourreductions are subject to unforeseen developments in the market for
electricity in Illinois resulting from regulatory changes. The statements
regarding estimated capital expenditures, estimated return to service of
nuclear generation units, decommissioning costs and cleanup costs are subject
to changes in the scope of work and manner in which the work is performed and
consequent changes in the timing and level of the projected expenditure, and
are also subject to changes in laws and regulations or their interpretation or
enforcement. The statements regarding the estimated return to service of
nuclear generating units are subject to the concurrence of the NRC with
proceeding to power operations. Unicom and ComEd make no commitment to
disclose any revisions to the forward-looking statements, or any facts, events
or circumstances after reflecting provisions for revenue
refunds and after reflecting revenue refunds and related interest credited
to customers in 1994, 1993 and 1992, respectively, were as follows:
1994 1993 1992
-------------------------------- -------------------------------- --------------------------------
AFTER DEDUCTIONS FOR AFTER DEDUCTIONS FOR AFTER DEDUCTIONS FOR
-------------------------------- -------------------------------- --------------------------------
PROVISIONS FOR REVENUE PROVISIONS FOR REVENUE PROVISIONS FOR REVENUE
REVENUE REFUNDS REFUNDS CREDITED REVENUE REFUNDS REFUNDS CREDITED REVENUE REFUNDS REFUNDS CREDITED
--------------- ---------------- --------------- ---------------- --------------- ----------------
Residential 10.57cent 8.22cent 8.61cent 10.78cent 10.90cent 10.45cent
Small commercial and
industrial 7.86cent 6.43cent 6.80cent 8.16cent 8.20cent 8.02cent
Large commercial and
industrial 5.88cent 4.76cent 5.07cent 6.10cent 6.13cent 5.97cent
18
the date hereof that may bear upon forward-looking
statements.
ITEM 2. PROPERTIES.
ComEd's electric properties are located in Illinois and the Indiana
Company's electric facilities are located in Indiana. In management's
opinion, ComEd and the Indiana Company's operating properties
20
are adequately maintained and are substantially in good operating condition.
The electric generating, transmission, distribution and general facilities of
ComEd and the Indiana Company represent approximately 68%64%, 9%10%, 20%22% and 3%4%,
respectively, of their gross investment in electric plant and equipment in
service.service (after reflecting the closure of Zion Station and the sale of State
Line Station).
The electric generating stations, substations and a portion of the
transmission rights of way of ComEd and the Indiana Company are owned in fee.
A significant portion of the electric transmission and distribution facilities
is located over or under highways, streets, other public places or property
owned by others, for which permits, grants, easements or licenses, (deemeddeemed
satisfactory by ComEd, but without examination of underlying land titles)titles, have
been obtained. The principal plants and properties of ComEd are subject to
the lien of ComEd's Mortgage dated July 1, 1923, as amended and supplemented,
under which ComEd's first mortgage bonds are issued.
The net generating capability of ComEd, and the Indiana Companyas of March 1, 1998, is derived from
the following electric generating facilities:
NET GENERATING CAPABILITY
STATION LOCATION (KILOWATTS)(1)
------- ---------------- -------------- -------------------------
Nuclear--
Zion Zion 2,080,000--(2)
Dresden Near Morris 1,588,000
Quad-CitiesQuad Cities Near Cordova 1,183,000(1)1,183,000(3)
LaSalle County Near Seneca 2,156,000
Byron Near Byron 2,240,000
Braidwood Near Braidwood 2,240,000
Fossil--
Collins Near Morris 2,698,000
Powerton Near Pekin 1,400,0001,538,000
Joliet 6 Near Joliet 302,000314,000
Joliet 7 & 8 Near Joliet 1,025,000
Kincaid Near Taylorville 1,108,000
Will County Near Lockport 1,092,000
Waukegan Waukegan 725,000789,000
Crawford Chicago 542,000
State Line Hammond, Indiana 490,000
Fisk Chicago 321,000326,000
Fast-Start Peaking Units(2)Units Various 1,332,0001,407,000(4)
----------
NetCompany owned net non-summer
generating capability 22,522,00019,138,000
Deduct--Summer limitations 557,000538,000
----------
Company owned net summer
generating capability 18,600,000
Add--Capability under long-term
purchase power agreements 1,598,000(5)
----------
Net summer generating capability 21,965,000
----------
----------20,198,000
==========
- --------
(1) Reflects a re-rating of certain generating stations as of February 1,
1998.
(2) On January 14, 1998, the Boards of Directors of Unicom and ComEd
authorized the permanent cessation of nuclear generation operations at
Zion Station.
(3) Excludes the 25% undivided interest of Iowa-Illinois Gas and ElectricMidAmerican Energy Company in the
Quad-Cities station.
(2) GeneratingQuad Cities Station.
(4) Such generating units are normally designed for use onlyprimarily during the
maximum load periodperiods of a designated time interval.the year or during system operating emergencies.
Such units are capable of starting and coming on-line quickly.
(5) ComEd sold its Kincaid and State Line generating stations in February 1998
and December 1997, respectively. Under the terms of the sales, ComEd
entered into exclusive 15-year purchase power agreements for the output of
the plants.
Major electric transmission lines owned and in service are as follows:
VOLTAGE CIRCUIT
(VOLTS) MILES
------- -------
765,000........................................................... 90
345,000........................................................... 2,5132,545
138,000........................................................... 2,7052,737
21
ComEd's electric distribution system includes 37,51838,630 pole line miles of
overhead lines and 30,49634,579 cable miles of underground lines. A total of
approximately 1,317,0591,334,930 poles are included in ComEd's distribution system, of
which about 590,307593,390 poles are owned jointly with telephone companies.
19
ITEM 3. LEGAL PROCEEDINGS.
During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and its subsidiary, Cotter seeking unspecified damages and injunctive
relief based on allegations that Cotter has permitted radioactive and other
hazardous material to be released from its mill into areas owned or occupied
by the plaintiffs resulting in property damage and potential adverse health
effects. In February 1994, a federal jury returned nominal dollar verdicts on eight
bellwether plaintiffs' claims in these cases.
Plaintiffsthe 1989 cases, which verdicts were upheld on
appeal. The remaining claims in the 1989 actions have appealed those judgments.been settled and
dismissed. Although the remaining1991 cases will necessarily involve the resolution of
numerous contested issues of fact and law, Unicom and ComEd's determination is
that these actions will not have a material impact on their financial position
or results of operations. In October 1990, ComEd filed a complaintA case relating to 14 of the plaintiffs in the Circuit Court against
Westinghouse1991
cases has been set for trial in June 1998.
In July 1995, the Chicago area experienced several consecutive days of
unusually high temperatures coupled with high humidity. Between July 12 and
14, 1995, ComEd experienced record demand for electricity. On July 14, 1995, a
fire in a substation caused a power outage to approximately 40,000 customers.
Other equipment failures in the same general area caused certain of its employees. The complaint alleges thatthese
customers to be without power for up to 48 hours. In the defendants knowingly concealed information regarding the durabilitywake of the
metal used in the steam generators (a major component of the nuclear steam
supply systems) at ComEd's Zion, Byron and Braidwood stations. The complaint
further alleges that the defects in the steam generators will prevent the
plants from maintaining their fullthese power
output through their forty-year design
life without costly remanufacture or replacement of the steam generators.
Damages, including punitive damages, in an unspecified amount are claimed.
Westinghouse has filed a counterclaim against ComEd which seeks recovery of
Westinghouse's costs of defense and damages of approximately $13 million.
Shareholder derivativeoutages, three class action lawsuits were filed against ComEd seeking recovery
of damages for property losses allegedly suffered. One suit seeks at least $10
million in damages; the others seek unspecified damages. One individual suit
was also filed seeking damages of less than $100,000 for property losses.
On March 11, 1998 the Illinois Supreme Court approved a settlement of
ComEd's dispute regarding property tax assessments for its Byron nuclear
generating station. Under the terms of the settlement agreement, the taxing
bodies in Ogle County have agreed that taxes in future years will not exceed
certain specified amounts. ComEd will receive $8.5 million in refunds and set
aside additional credits which will be available to enforce the provisions
regarding future levies. The settlement agreement continues in effect until
2004. Appeals are still pending for cases involving ComEd's Braidwood and
LaSalle Stations, as well as other properties. These proceedings seek refunds
and reduced valuations, resulting in lower property taxes for the challenged
and subsequent years.
On November 1, 1996, the city of Chicago, Illinois filed a demand for the
appointment of an Adjustment Board before the American Arbitration Association
under the provisions of its franchise agreement with ComEd. In its demand, the
city alleges, among other items, that ComEd has failed to carry out certain
commitments related to system reliability under the franchise agreement, which
requires ComEd to budget $1 billion in expenditures for transmission and
distribution enhancements within or for the benefit of Chicago over a ten-year
period that commenced in January 1992. ComEd is disputing the city's
allegations. During the six years since January 1992, ComEd has expended
approximately $499 million to enhance electric service reliability and energy
supply for the city, and it continues to review, and budget appropriately, for
needed projects.
On June 13, 1997, the IDR issued a Notice of Tax Liability to ComEd alleging
deficiencies in Illinois invested capital tax for the years 1988 through 1994
of $22 million, plus interest of $11 million and a penalty of $2 million. On
January 2, 1998, the IDR issued a second Notice of Tax Liability also alleging
deficiencies in Illinois invested capital tax for the years 1995 through 1996
of $7 million, plus interest of $1 million. ComEd has protested the notices,
and the matter is currently pending before the IDR's Office of Administrative
Hearings. Interest will continue to accrue on the alleged tax deficiencies at
9% per annum.
22
In November and December of 1997, Unicom and its directors were served with
several shareholder derivative lawsuits in state and federal court. All of the
suits assert identical claims that the directors breached fiduciary duties to
the shareholders by allegedly failing to properly supervise ComEd's nuclear
program. Each plaintiff alleges that this caused ComEd to violate NRC rules,
which has cost ComEd millions of dollars. Plaintiffs seek to have the
directors reimburse ComEd for these costs, and they seek attorneys' fees.
Unicom and ComEd's preliminary assessment of these claims is that they are
without merit.
In October 1, 19921997, six ComEd employees who were formerly located at ComEd's
nuclear station in Zion, Illinois brought state and on April
14, 1993 in the Circuit Courtfederal claims against current and former directors of
ComEd, alleging that they breachedwere relocated and demoted as the result of raising
nuclear safety concerns. They claimed retaliatory demotion, retaliatory
constructive discharge and intentional infliction of emotional distress. They
requested reinstatement in their fiduciary dutyformer positions, back pay, compensatory
damages, attorneys' fees and dutypunitive damages. The aggregate amount of
care to ComEd in
connectionpunitive damages requested equals $18 million. They also filed a claim with
the managementU.S. Department of Labor under the Energy Reorganization Act. Unicom and
ComEd do not believe that their exposure with respect to these claims is
material.
On April 28, 1997, Tower Leasing, Inc. ("Tower") and QST Energy, Inc.
("QST") filed a complaint with the ICC alleging that ComEd violated Illinois
law and its own tariffs by preventing Tower and QST from installing a
cogeneration facility at Sears Tower in Chicago, Illinois and interconnecting
such facility with ComEd's system in that building. Tower and QST have asked
the ICC to enter an order that would essentially require ComEd to assist in
the implementation of the activities associated withproposed facility. If Tower and QST are allowed to
pursue the constructioninstallation and interconnection of ComEd's four most recently completed nuclear generating units.
The lawsuits sought restitution totheir proposed facility, ComEd
by the defendants for unquantified and
undefined losses and costs alleged to have been incurred by ComEd. Both
lawsuits were dismissed by the Circuit Court; however, appeals are pending
before the Illinois Appellate Court.
A number of complaints have been filed by former employees with the Equal
Employment Opportunity Commission, and several lawsuits have been filed by
former employees in the U.S. District Court, alleging that the employees'
terminations (which occurred as part of ComEd's management workforce reductions
that were implemented in the second half of 1992) involved discrimination on
the basis of age, race, sex, national origin and/or disabilities, in violation
of applicable law. The complainants in these various cases are seeking, among
other things, awards of back pay and lost benefits, reinstatement, pecuniary
damages, and costs and attorneys' fees. Discovery in these cases is proceeding,
andcould lose customer revenue. ComEd does not view these cases as havingbelieve that it is obligated to
allow Tower and QST to implement their proposed facility. ComEd also believes
that the proposed facility would be inconsistent with Illinois law.
On November 14, 1997, the CHA filed an application with the FERC, seeking to
require ComEd to provide transmission service to some of CHA's buildings so
that those buildings may take electric service from an alternate electric
supplier. ComEd maintains that the CHA is a material impact on its
financial position or results of operations.retail customer ineligible for
transmission service. Should this proceeding be resolved adversely to ComEd,
ComEd could lose customer revenue. This revenue loss may be offset, however,
by a stranded cost obligation the CHA would owe ComEd under FERC Order.
See "Item 1. Business," subcaptions "Rate Proceedings," "Fuel Supply--Fuel
Adjustment Clause"Matters" and "Regulation" above
for information concerning other legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The current ratings of ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies are as follows:
STANDARD DUFF &
MOODY'S & POOR'S PHELPS
------- -------- ------
First mortgage and secured pollution control bonds.. Baa2 BBB BBB
Publicly-held debentures and unsecured pollution
control
obligations................................obligations........................................ Baa3 BBB- BBB-
Convertible preferred stock......................... baa3 BBB- BB+BBB-
Preference stock.................................... baa3 BBB- BB+BBB-
Trust Securities.................................... baa3 BBB- BBB-
Commercial paper.................................... P-2 A-2 Duff 2D-2
On October 27, 1993, Standard & Poor's changed its "outlook"23
As of January 1998, Moody's rating outlook on ComEd's ratings from stable to negative as part of its larger assessment of the
electric utility industry. In January 1995, following the issuance of the Rate
Order, Standard & Poor's affirmed its ratings of ComEd's securities with its
ratings "outlook" remaining negative. In March 1995, following an in-depth
review of ComEd's nuclear operations, Standard & Poor's again affirmed its
ratings of ComEd's securities with its ratings "outlook" remaining negative. In
December 1993, Moody'sis
"negative" and Duff & Phelps affirmed their ratings ofhas classified ComEd's securities and Moody'sas "Rating
Watch-Down." S&P changed its rating outlook on ComEd remained stable.from "stable" to
"positive" in November 1997.
The above ratings reflect only the views of such rating agencies and each
rating should be evaluated independently of any other rating. Generally,
rating agencies base their ratings on information furnished to them by the
issuing company and on investigations, studies and assumptions by the rating
agencies. There is no assurance that any particular rating will continue for
any given period of time or that it will not be changed or withdrawn entirely
if, in the judgment of the rating agency, circumstances so warrant. Such
ratings are not a recommendation to buy, sell or hold securities.
The following is a brief summary of the meanings of the above ratings and
the relative rank of the above ratings within each rating agency's
classification system.
Moody's top four long-term debt ratings (Aaa, Aa, A and Baa) are generally
considered "investment grade." Obligations rated Baa are considered as medium
grade obligations, neither highly protected nor poorly secured. Such
obligations lack outstanding investment characteristics and in fact have
speculative characteristics. (AA numerical modifier in Moody's system shows
relative standing within the principal rating category, with 1 indicating the
high end of that category, 2 the mid-range and 3 the low end.) Standard &
Poor's S&P's top four
bond ratings (AAA, AA, A and BBB) are generally considered to describe
obligations in which investment characteristics predominate. Obligations rated
BBB are regarded as having an adequate capacity to pay interest and repay
principal. Such obligations normally exhibit adequate protection parameters,
but adverse economic conditions or changing circumstances are more likely to
lead to weakened capacity to pay. (AA plus or minus sign in Standard & Poor'sS&P's system shows
relative standing within the majorits rating categories.)
Both Moody's and Standard & Poor'sS&P's preferred stock ratings represent relative security
of dividends. Moody's top four preferred stock ratings (aaa, aa, a and baa)
are generally considered "investment grade." Moody's baa rating describes a
medium grade preferred stock, neither highly protected nor poorly secured.
Standard & Poor'sS&P's top four preferred stock ratings (AAA, AA, A and BBB) are generally
considered "investment grade." Standard & Poor'sS&P's BBB rating applies to medium grade
preferred stock which is below A ("sound") and above BB ("lower grade").
21
Duff & Phelps' credit rating scale has 17 alphabetical categories, of which
ratings AAA through BBB (with AAA being the highest rating) represent
investment grade securities. Ratings of BBB+, BBB and BBB- represent the
lowest category of "investment grade" rating. This category describes
securities with below average protection factors but which are considered
sufficient for institutional investment. Considerable variability in risk
occurs during economic cycles.
Ratings of BB+, BB and BB- describe below
investment grade securities which are deemed likely to meet obligations when
due. Present or prospective financial protection factors of these securities
fluctuate according to industry conditions or company fortunes.
Moody's Prime-2 (P-2)P-2 rating of commercial paper is the second highest of three
possible ratings;ratings. P-2 describes a strong capacity for repayment of short-
termshort-term
promissory obligations. Standard & Poor'sS&P rates commercial paper in four basic categories
with A-2 being the second highest category. Duff & Phelps rates commercial
paper in three basic categories, with Duff 2D-2 indicating the middle category.
Further explanations of the significance of ratings may be obtained from the
rating agencies.
Additional information required by Item 5 is incorporated herein by
reference to the "Price Range and Cash Dividends Paid Per Share of Common
Stock" on page 163 of Unicom's January 27, 199530, 1998 Form 8-K Report.
24
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Items 6, 7 and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 16,3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 34 through 14,20, and the audited consolidated financial
statements and notes thereto on pages 15 and 1722 through 4354 of Unicom's January 27, 199530,
1998 Form 8-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Changes in the Electric Utility Industry," "Construction Program"
and "Regulation" for additional information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 relating to directors and nominees for
election as directors at Unicom's Annual Meeting of shareholders to be held on
May 24, 199528, 1998 is incorporated herein by reference to pages 2 and 3 and the last
two paragraphsinformation under the
heading "Security Ownership of Certain Beneficial Owners and Management" on page 6 ofin
Unicom's definitive Proxy Statement (1995("1998 Proxy Statement)Statement") to be filed with
the SEC prior to April 30, 1998, pursuant to Regulation 14A under the
Securities Exchange Act of 1934. The information required by Item 10 relating
to executive officers is set forth in Part I of Unicom's Annual Report on Form
10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and incorporated herein by reference to the last two paragraphs
under the heading "Security Ownership of Certain Beneficial
Owners and Management" on page 6 ofin Unicom's 19951998 Proxy Statement.Statement, which are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to
the paragraphinformation labelled "Compensation of Directors" on page 4 and the paragraphs under
the heading "Executive Compensation" on pages 7 through 10 (other than the paragraphs appearing on page 10 under the
heading "Compensation"Corporate Governance and Compensation Committee Report on Executive
Compensation") ofin Unicom's 19951998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security Ownership of
Certain Beneficial Owners and Management" on pages 5 and 6 ofin Unicom's 19951998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
2325
ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY
PART I
ITEM 1. BUSINESS.
See Unicom's "Item 1. Business" (other than the paragraphs under the
headings "General--Unregulated Operations," "Construction Program--Unregulated
Operations" and "Executive Officers of the Registrant"), which is incorporated
herein by this reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The effective year of election of the officers to their present positions
and the prior positions they have held with ComEd or other companies, since
January 1, 1993, are described below.
EFFECTIVE DATE OF ELECTION
NAME AND AGE POSITION
TO PRESENT POSITION
---------------------- --- ------------------------ ------------------------------------------------------ -----------------------------------------------
James J. O'Connor 58*John W. Rowe, 52 Chairman, President and Chief Executive Officer
of ComEd and Unicom since March 1, 1980
Samuel K. Skinner 561998; previ-
ously President February 1, 1993
Thomasand Chief Executive Officer of
New England Electric System.
*Oliver D. Kingsley, Jr., 55 Executive Vice President and President and
Chief Nuclear Officer--Nuclear Generation
Group of ComEd since October 1997; previously
Chief Nuclear Officer at the Tennessee Valley
Authority.
*Robert J. MaimanManning, 55 Executive Vice President of ComEd since January
1997 and President--Fossil Generation Group of
ComEd since October 1997; previously Senior
Vice President of ComEd.
*John C. Bukovski, 55 Senior Vice President and Chief Financial Offi-
cer of ComEd and Unicom since October 1997;
previously Vice President and Chief Financial
Officer of ComEd and Unicom.
*Paul D. McCoy, 47 Senior Vice President of ComEd since October
1997; previously Vice President of ComEd.
Donald A. Petkus, 56 Senior Vice President June 10,of ComEd since 1992 Robert J. Manning 52and
of Unicom since 1995; President and Chief Ex-
ecutive Officer of UT Holdings since 1997 and
Unicom Thermal Technologies Inc. since 1995.
*S. Gary Snodgrass, 46 Senior Vice President June 10, 1992
Donald A. Petkus 53 Seniorof ComEd and Unicom since
October 1997; Vice President June 10, 1992
Cordell Reed 57 Seniorof ComEd and
Unicom, September 1997 to October 1997; previ-
ously Vice President June 5, 1987
Michael J. Wallace 47 Senior Vice President December 9, 1993
John C. Bukovski 52 Vice President February 1, 1989
Louis O. DelGeorge 47 Vice President April 22, 1992
Harlan M. Dellsy 47 Vice President September 15, 1986
William H. Downey 50 Vice President June 10, 1992
William H. Dunbar, Jr. 54 Vice President May 10, 1994
J. Stanley Graves 58 Vice President June 5, 1987
Emerson W. Lacey 53 Vice President November 17, 1992
Paul D. McCoy 44 Vice President June 10, 1992
Robert A. Paul 51 Vice President January 26, 1994
J. Stephen Perry 56 Vice President May 10, 1994
James A. Small 51 Vice President July 1, 1993
Pamelaof USG Corporation.
*Pamela B. Strobel, 4245 Senior Vice President and General Counsel June 1, 1993
Roger F. Kovackof
ComEd and Unicom since October 1997; previ-
ously Vice President and General Counsel of
ComEd.
*Michael J. Wallace, 50 Senior Vice President of ComEd since 1993; pre-
viously Vice President of ComEd.
T. Oliver Butler, 46 Vice President of ComEd since July 1997; previ-
ously Purchasing Vice President of ComEd, 1994
to 1997 and European Acquisition Manager--Ge-
neva of Digital Corporation.
26
NAME AND AGE POSITION
----------------------- ----------------------------------------------------
Frank M. Clark, 52 Vice President of ComEd since January 1997; previ-
ously Governmental Affairs Vice President 1996 to
January 1997 and Governmental Affairs Manager.
John T. Costello, 49 Vice President of ComEd and Unicom since 1996; pre-
viously Manager of Corporate Relations of ComEd,
1995 to 1996 and Manager of Public Affairs of
ComEd.
Louis O. DelGeorge, 50 Vice President of ComEd.
*William H. Downey, 53 Vice President of ComEd.
Ruth Ann M. Gillis, 43 Vice President and Treasurer of ComEd and Unicom
since September 1997; previously Vice President,
Chief Financial Officer and Treasurer of the Uni-
versity of Chicago Hospitals and Health System from
1996 to 1997 and Senior Vice President and Chief
Financial Officer of American National Bank and
Trust Company.
David R. Helwig, 47 Vice President of ComEd since January 1998; previ-
ously General Manager of General Electric Company's
Nuclear Services Company, 1997 to January 1998 and
Vice President at PECO Energy.
Emerson W. Lacey, 56 Vice President of ComEd.
Andrew J. Lynch, 51 Vice President of ComEd since April 1997; previously
President of First Chicago Trust Company of New
York.
Thomas J. McCaffrey, 53 Vice President of ComEd and Unicom since 1996; pre-
viously Vice President of Mercer Management Con-
sulting, 1995 to 1996 and Corporate Senior Vice
President of First Chicago Corporation.
J. Stephen Perry, 59 Vice President of ComEd since 1994; previously Se-
nior Vice President of Illinois Power Company.
James A. Small, 54 Vice President of ComEd since 1993; previously Gen-
eral Manager of Fuel Services of Georgia Power Com-
pany.
Harold Gene Stanley, 57 Vice President of ComEd since September 1997; Site
Vice President at Braidwood Station, 1996 to 1997;
previously Vice President at Pennsylvania Power and
Light Company.
*Robert E. Berdelle, 42 Comptroller February 1, 1989
Dennis F. O'Brien 49 Treasurer February 1, 1989of ComEd and Unicom since July 1997;
previously held various financial reporting and
analysis positions within ComEd.
David A. Scholz, 5356 Secretary February 1,of ComEd and Unicom since 1989 and 1994,
respectively.
--------
* Executive Officers for Section 16 reporting purposes.
The present term of office of each of the above executive officers extends to
the first meeting of ComEd's Board of Directors after the next annual election
of Directors scheduled to be held on May 24, 1995.
Each of the above executive officers (except for Messrs. Skinner, Paul, Perry
and Small and Ms. Strobel) has been employed by ComEd for more than five years
in executive or management positions. Since January 1, 1990 and prior to his
election as President of ComEd, Mr. Skinner was Secretary of the United States
Department of Transportation prior to December 1991, Chief of Staff to the
President of the United States from December 1991 to August 1992, and General
Chairman of
2428, 1998.
27
the Republican National Committee from August 1992 to January 1993. Since
January 1, 1990 and prior to his election as Vice President, Mr. Paul was
employed at Digital Equipment Corporation in the following capacities: prior to
1992 as Corporate Technology and Business Acquisition Manager and from 1992 to
January 1994 as Corporate Purchasing Manager. Since January 1, 1990 and prior
to his election as Vice President, Mr. Perry was employed at Illinois Power
Company in the following capacities: prior to 1992 as Vice President of Nuclear
Operations and from 1992 to April 1994 as Senior Vice President. Since January
1, 1990 and prior to his election as Vice President, Mr. Small was General
Manager of Fuel Services at Georgia Power Company. Since January 1, 1990 and
prior to her election as Vice President and General Counsel, Ms. Strobel was a
partner in the law firm of Sidley & Austin. Since January 1, 1990 and prior to
election to the positions shown above, the following officers held other
positions in ComEd: Messrs. Maiman, Manning and Petkus were Vice Presidents;
Mr. Wallace was Manager of Engineering and Construction Services prior to July
1990 and Vice President thereafter; Mr. DelGeorge was Assistant Vice President;
Mr. Downey was Operating Manager prior to September 1990 and Manager of
Marketing and Customer Services thereafter; Mr. Dunbar was Division Vice
President--Chicago North prior to December 1992 and Manager of Quality
thereafter; Mr. Lacey was Fossil Engineering and Construction Manager; and Mr.
McCoy was Division Operating Manager--Northern prior to September 1990,
Operating Manager from September 1990 to September 1991 and Manager of
Transmission and Distribution Operations thereafter.
There are no family relationships among the executive officers, directors
and nominees for director of ComEd.
ITEM 2. PROPERTIES.
See Unicom's "Item 2. Properties," which is incorporated herein by this
reference.
ITEM 3. LEGAL PROCEEDINGS.
See Unicom's "Item 3. Legal Proceedings," which is incorporated herein by
this reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
See Unicom's "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" (other than the last paragraph thereof), which is
incorporated herein by reference.
Additional information required by Item 5 is incorporated herein by
reference to the "Price Range and"Cash Dividends Paid Per Share of Common Stock" on page 153 of
ComEd's January 27, 199530, 1998 Form 8-K/A-18-K Report.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Items 6, 7 and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 15,3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 34 through 13,19, and the audited consolidated financial
statements and notes thereto on pages 14 and 1621 through 4351 of ComEd's January 27, 199530,
1998 Form 8-K/A-18-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Changes in the Electric Utility Industry," "Construction Program"
and "Regulation" for additional information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 relating to directors and nominees for
election as directors at ComEd's Annual Meeting of shareholders to be held on
May 24, 199528, 1998 is incorporated herein by reference to pages 2 and 3 and the last
two paragraphsinformation under the
heading "Security Ownership of Certain Beneficial Owners and Management" on page 6 ofin
ComEd's definitive Information Statement (1995("1998 Information Statement)Statement") to be
filed with the SEC prior to April 30, 1998, pursuant to Regulation 14C under
the Securities Exchange Act of 1934. The information required by Item 10
relating to executive officers is set forth in Part I of ComEd's Annual Report
on Form 10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and incorporated herein by reference to the last two paragraphs
under the heading "Security Ownership of Certain Beneficial
Owners and Management" on page 6 ofin ComEd's 19951998 Information Statement.Statement, which are
incorporated herein by reference.
28
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to
the paragraph labelled "Compensation of Directors" on page 4 and the paragraphs under
the heading "Executive Compensation" on pages 7 through 10 (other than the paragraphs appearing on page 10 under the
heading "Compensation"Corporate Governance and Compensation Committee Report on Executive
Compensation") ofin ComEd's 19951998 Information Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security Ownership of
Certain Beneficial Owners and Management" on pages 5 and 6 ofin ComEd's 19951998 Information
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
2629
ANNUAL REPORTS ON FORM 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (A)FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS:
PAGE OF
JANUARY 27,
199530,
1998 FORM 8-K8-
K REPORT
------------
UNICOM COMED
------ -----
The following financial statements are incorporated into the
Unicom Annual Report on Form 10-K by reference to the indi-
cated page or pages of Unicom's January 27, 199530, 1998 Form 8-K
Re-
port,Report, and into the ComEd Annual Report on Form 10-K by
refer-
encereference to the indicated page or pages of ComEd's January
27,
199530, 1998 Form 8-K/A-18-K Report:
Report of Independent Public Accountants.................... 15 1421 20
Statements of Consolidated IncomeOperations for each of the three
years in the period ended December 31, 1994................ 17 161997,
1996 and 1995.............................................. 22 21
Consolidated Balance Sheets--December 31, 19941997 and December
31, 1993................................................... 18-19 17-181996..... 23-24 22-23
Statements of Consolidated Capitalization--December 31, 19941997
and December 31, 1993...................................... 20 191996................................................... 25 24
Statements of Consolidated Retained Earnings (Deficit) for
each of the three years in the period ended December 31, 1994.......... 21 20
Statements of Consolidated Premium on Common Stock1997, 1996 and Other
Paid-In Capital for each of the three years in the period
ended December 31, 1994.................................... NA 201995.............................. 26 25
Statements of Consolidated Cash Flows for each of the three
years in the period ended December 31, 1994................ 22 211997,
1996 and 1995.............................................. 27 26
Notes to Financial Statements............................... 23-43 22-4328-54 27-51
ANNUAL
REPORT ON
PAGE OF FORM 10-K
THIS ------------
DOCUMENT UNICOM COMED
-------- ------ -----
The following supplemental schedules are included in
the indicated Annual Report on Form 10-K:
Report of Independent Public Accountants on
Supplemental Schedule.............................. 3438 x
Report of Independent Public Accountants on
Supplemental Schedule.............................. 3539 x
Schedule II--Valuation and Qualifying Accounts for
each of the three years in the period
ended
December 31, 1994................ 361997........................ 40 x x
The following schedules are omitted as not applicable or not required
under rules of Regulation S-X: I, III, IV and V.
The individual financial statements and schedules of Unicom Enterprises
have been omitted from Unicom's Annual Report on Form 10-K because the
investment in Unicom Enterprises,
2730
included in Unicom's consolidated financial statements, is not material in
relation to Unicom's financial position or results of operations. As of
December 31, 1994, the assets of Unicom Enterprises in the aggregate were
less than 1% of Unicom's consolidated assets and for the year 1994 Unicom
Enterprises had no sales revenues.
The individual financial statements and schedules of ComEd's
nonconsolidated wholly-ownedwholly owned subsidiaries have been omitted from Unicom'sUnicom and
ComEd's Annual ReportReports on Form 10-K because the investments are not
material in relation to ComEd's financial position or results of
operations. As of December 31, 1994,1997, the assets of the nonconsolidated
subsidiaries, in the aggregate, approximatedwere less than 1% of ComEd's consolidated
assets and for the year 1994 annualassets. The 1997 revenues of the nonconsolidated subsidiaries, in the
aggregate, were less than 1% of ComEd's consolidated annual revenues.
The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an
asterisk (*) are incorporated by reference to the File No. indicated.
Documents indicated by a plus sign (+) identify management contracts or
compensatory plans or arrangements.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ---------------------------------------------------------------------------------------------- ------ -----
(3)*(3)-1 Articles of Incorporation of Unicom effective
January 28,
1994. (File No. 1-11375, Form 10-K for the
year ended
December 31, 1994, Exhibit (3)-1). x
(3)*(3)-2 Restated Articles of Incorporation of ComEd
ef-
fectiveeffective February 20, 1985, including
Statements of Resolution Establishing Series,Se-
ries, relating to the establishment of three
new series of ComEd preference stock known
as the "$9.00 Cumulative Preference Stock,"
the "$6.875 Cumulative Pref-
erencePreference Stock" and
the "$2.425 Cumulative Prefer-
encePreference Stock."
(File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective JanuaryJan-
uary 28, 1994 as amended through March 9, 1995.11,
1998. x
(3)-4 By-Laws of ComEd, effectiveCommonwealth Edison Company, ef-
fective September 2, 1988 as amended through
March 9, 1995.11, 1998. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Continental Illinois National(Harris Trust and Savings
Bank, and Trust Company of Chicago,as current successor Trustee), dated
July 1, 1923, Supplemental In-
dentureIndenture thereto
dated August 1, 1944, and amend-
mentsamendments and
supplements thereto dated, respective-
ly, Augustrespectively, Au-
gust 1, 1946, April 1, 1953, April 1,
1966, November 1, 1966, December 1, 1966, March 31, 1967,
April 1, 1967, February 1, 1968, July 1, 1968, October 1,
1968, February 28, 1969, May 29, 1970, JanuaryJanu-
ary 1, 1971, June 1, 1971, May 31, 1972,
June 1, 1973, June 15, 1973, October 15,
1973, May 31, 1974, July 1, 1974, June 13, 1975, May 28,
1976, January 15, 1977, June 1, 1977 and June 3, 1977
(File No. 2-60201, Form S-7, Ex-
hibitExhibit
2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, December 1, 1977, May 17,
1978, August 31, 1978, June 18, 1979, June
20, 1980, April 16, 1981, April 30, 1982,
April 15, 1983, April 13, 1984 March 1, 1985 and April 15,
1985 (File No. 2-99665, Form S-3, Ex-
hibitExhibit
(4)-3). x
*(4)-3 Supplemental IndenturesIndenture to Mortgage dated July
1, 1923 dated respectively, April 15, 1986 and May
1, 1986 (File No. 33-6879,33-
6879, Form S-3, Exhibit (4)-9). x
2831
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-4 Supplemental Indenture to Mortgage dated July
1, 1923 dated January 12, 1987 (File No. 33-
13193, Form S-3, Exhibit (4)-6). x
*(4)-5 Supplemental Indenture to Mortgage dated July
1, 1923 dated June 30, 1989 (File No. 33-
32929, Form S-3, Exhibit (4)-11). x
*(4)-6 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, February
15, 1990 and June 15, 1990 (File No. 33-
38232, Form S-3, Exhibits (4)-11 and (4)-
12). x
*(4)-7-5 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, June 1,
1991, October 1, 1991 and October 15, 1991
(File No. 33-44018, Form S-3, Exhibits (4)-
12, (4)-13 and (4)-14). x
*(4)-8-6 Supplemental Indenture to Mortgage dated July
1, 1923 dated February 1, 1992 (File No. 1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (4)-18). x
*(4)-9-7 Supplemental Indenture to Mortgage dated July
1, 1923 dated May 15, 1992 (File No. 33-
48542, Form S-3, Exhibit (4)-14). x
*(4)-10-8 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, July 15,
1992 and September 15, 1992 and October 1, 1992
(File No. 33-53766,33-
53766, Form S-3, Exhibits (4)-
13, (4)-14-13 and (4)-15)-
14). x
*(4)-11-9 Supplemental IndenturesIndenture to Mortgage dated July
1, 1923 dated respectively, February
1, 1993 and March 1, 1993 (File No. 1-1839,1-
1839, Form 10-K for the year ended December
31, 1992, ExhibitsExhibit (4)-14 and (4)-15)-14). x
*(4)-12-10 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, April 1,
1993 and April 15, 1993 (File No. 33-64028,
Form S-3, Exhibits (4)-12 and (4)-13). x
*(4)-13-11 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, June 15,
1993 and July 1, 1993 (File No. 1-1839, Form
8-K dated May 21, 1993, Exhibits (4)-1 and
(4)-2). x
*(4)-14-12 Supplemental Indenture to Mortgage dated July
1, 1923 dated July 15, 1993 (File No. 1-
1839, Form 10-Q for the quarter ended June
30, 1993, Exhibit (4)-1). x
*(4)-15-13 Supplemental Indenture to Mortgage dated July
1, 1923 dated January 15, 1994 (File No. 1-
1839, Form 10-K for the year ended December
31, 1993, Exhibit (4)-15). x
(4)-16*(4)-14 Supplemental Indenture to Mortgage dated July
1, 1923 dated December 1, 1994.1994 (File No. 1-
1839, Form 10-K for the year ended December
31, 1994, Exhibit (4)-16). x
*(4)-17-15 Supplemental Indenture to Mortgage dated July
1, 1923 dated June 1, 1996. (File No. 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (4)-16). x
*(4)-16 Instrument of Resignation, Appointment and
Acceptance dated January 31, 1996, under the
provisions of the Mortgage dated July 1,
1923, and Indentures of ComEd to The First National
Bank of Chicago, Trustee (Harris Trust and
Savings Bank, successor Trustee), dated
April 1, 1949, October 1, 1949, October 1,
1950, October 1, 1954, January 1, 1958, Jan-
uary 1, 1959 and December 1, 1961Supplemental thereto
(File No. 1-1839, Form 10-K for the year
ended Decem-
berDecember 31, 1982,1995, Exhibit (4)-20)-28). x
2932
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1,
1923 and Indentures Supplemental thereto
(File No. 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National
Bank of Chicago, Trustee (Amalgamated Bank
of Chicago, as current successor Trustee),
dated April 1, 1949, October 1, 1949, Octo-
ber 1, 1950, October 1, 1954, January 1,
1958, January 1, 1959 and December 1, 1961
(File No. 1-1839, Form 10-K for the year
ended December 31, 1982, Exhibit (4)-20). x
*(4)-19 Indenture of ComEd dated February 15, 1973 to
The First National Bank of Chicago, Trustee
(LaSalle National Bank, successor Trustee),
and Supplemental Indenture thereto dated
July 13, 1973 (File No. 2-66100, Form S-16,
Exhibit (b)-2). x
*(4)-19-20 Indenture dated as of September 1, 1987 be-
tween ComEd and Citibank, N.A., Trustee re-
lating to Notes (File No. 33-20619, Form S-3,S-
3, Exhibit (4)-13). x
*(4)-20 Supplemental Indenture to Indenture dated
September 1, 1987 dated September 15, 1987
(File No. 33-20619, Form S-3, Exhibit (4)-
14). x
*(4)-21 Supplemental Indenture to Indenture dated
September 1, 1987 dated May 18, 1988 (File
No. 33-23036, Form S-3, Exhibit (4)-14). x
*(4)-22 Supplemental Indenture to Indenture dated
September 1, 1987 dated July 14, 1989 (File
No. 33-32929, Form S-3, Exhibit (4)-16). x
*(4)-23(4)-22 Supplemental Indenture to Indenture dated
September 1, 1987 dated AprilJanuary 1, 1991 (File
No. 33-44018, Form S-3, Exhibit (4)-21).1997. x
*(4)-24 Supplemental Indenture to Indenture dated
September 1, 1987 dated April 15, 1992 (File
No. 33-48542, Form S-3, Exhibit (4)-22). x
*(4)-25 Supplemental Indenture to Indenture dated
September 1, 1987 dated July 15, 1992 (File
No. 33-53766, Form S-3, Exhibit (4)-24). x
*(4)-26 Supplemental Indenture to Indenture dated
September 1, 1987 dated October 15, 1993
(File No. 1-1839, Form 10-Q for the quarter
ended September 30, 1993, Exhibit (4)-1). x
*(4)-27 Supplemental Indenture to Indenture dated
September 1, 1987 dated April 1, 1994 (File
No. 1-1839, Form 10-Q for the quarter ended
March 31, 1994, Exhibit (4)-1). x
*(4)-28-23 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as bor-
rower,borrower, the Banks named
therein and the other Lenders from time to
time parties thereto, and Citibank, N.A.
(File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-27). x
*(4)-29-24 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as bor-
rower,borrower, the Banks named
therein and the other Lenders from time to
time parties thereto, and Citibank, N.A.
(File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-28). x
*(4)-30(4)-25 Letter Agreement dated as of October 4, 1993,September 29,
1997, among Commonwealth Edison CompanyComEd and cer-
taincertain of the Banks
party to the Credit Agree-
mentAgreement dated as of
October 1, 19911991. x
*(4)-26 Amended and Restated Credit Agreement dated
as of November 15, 1996, among Unicom
Enterprises, the Banks Named Therein and
Citibank, N.A. (File No. 1-1839,1-11375, Form 10-K
for the year ended Decem-
berDecember 31, 1993,1996,
Exhibit (4)-28)-31). x
*(4)-27 Amended and Restated Guaranty dated as of No-
vember 15, 1996, by Unicom in favor of the
Lenders and LC Banks parties to the afore-
mentioned Credit Agreement with Unicom En-
terprises (File No. 1-11375, Form 10-K for
the year ended December 31, 1996, Exhibit
(4)-32). x
3033
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-31 Term Loan Agreement-28 Indenture dated as of January 7,
1992,September 1, 1995 between
Commonwealth Edison Company,
as borrower,ComEd and The First National Bank of
Chicago, individually and as agentWilmington Trust Company. (File
No. 1-1839, Form 10-K for the year ended Decem-
berDe-
cember 31, 1992,1996, Exhibit (4)-28)-34). x
(4)-32*(4)-29 First AmendmentSupplemental Indenture dated September
19, 1995 to Term Loan AgreementIndenture dated as of January 9, 1995, by and among Common-
wealth Edison Company, The First National
Bank of Chicago, individually and as agent,
and the banks party thereto. x
*(4)-33 Term Loan Agreement dated as of January 15,
1992, between Commonwealth Edison Company,
as borrower, and Westpac Banking Corpora-
tion, Chicago Branch, individually and as
agentSeptember 1,
1995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1992,1996, Exhibit (4)-
29)35). x
*(4)-34 Term Loan Agreement-30 Second Supplemental Indenture dated as of January
16,
1992, between Commonwealth Edison Company,
as borrower, and The Bank of New York, indi-
vidually and as agent24, 1997 to Indenture dated September 1,
1995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1992,1996, Exhibit (4)-29)-
36). x
(4)-35 Credit*(4)-31 Rights Agreement dated as of November 22,
1994, among Unicom Enterprises Inc., the
Banks Named Therein and Citibank, N.A. x
(4)-36 Guaranty dated November 22, 1994, byFebruary 2, 1998
between Unicom Corporation in favorand First Chicago
Trust Company of New York, as Rights Agent,
which includes as Exhibit A the Lendersform of
Rights Certificate and LC
Banks partiesas Exhibit B, the
Summary of Rights to the aforementioned Credit
Agreement with Unicom Enterprises Inc. x
(4)-37 GuarantyPurchase Common Stock
(File No. 1-11375, Current Report on Form 8-
K dated November 22, 1994, by Unicom
Corporation in favor of Citibank, N.A.February 2, 1998, Exhibit 4). x
*(10)-1 Nuclear Fuel Lease Agreement dated as of No-
vember 23, 1993, between CommEd Fuel Compa-
ny, Inc., as Lessor, and Commonwealth Edison
Company,ComEd, as Lessee
(File No. 1-1839, Form 10-K for the year
ended December 31, 1993, Exhibit (10)-1). x
+*(10)-2- Unicom Corporation Amended and Restated Long-
2 Term Incentive Plan (File No. 1-11375,
Unicom Proxy Statement dated April 9, 1997,
Exhibit A). x
+*(10)- 1995 Long-Term Performance Unit Award for
3 Executive and Group Level Employees Payable
in 1998 under the Unicom Corporation Long-
Term Incentive Plan, as amended (File Nos.
1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (10)-6). x x
+*(10)- 1996 Long-Term Performance Unit Award for Ex-
4 ecutive and Group Level Employees Payable in
1999 under the Unicom Corporation Long-Term
Incentive Plan (File No. 1-1839, ComEd Proxy Statement
dated March 26, 1993, Exhibit A). x
+*(10)-3 Amendment to Unicom Corporation Long-Term In-
centive Plan, effective September 1, 1994
(File No. 33-56991, Form S-8, Exhibit (4)-
4). x
+*(10)-4 1994 Long-Term Performance Unit Award for Ex-
ecutiveNos. 1-11375 and Group Level Employes Payable in
1996 under the 1993 Long-Term Incentive Plan
(File No.
1-1839, Form 10-K/A-110-K for the year ended DecemberDecem-
ber 31, 1993,1995, Exhibit (10)-4). x x
31
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
-------- --------------------------------------------- ------ -----
+*(10)-5 1994 Long-Term Performance Unit Award for Ex-
ecutive and Group Level Employes Payable in
1997 under the 1993 Long-Term Incentive Plan
(File No. 1-1839, Form 10-K/A-1 for the year
ended December 31, 1993, Exhibit (10)-5)-9). x x
+ +*(10)-6 1995-5 1997 Long-Term Performance Unit Award for Ex-
ecutive and Group Level Employees Payable in
2000 under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-12). x x
+(10)-6 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable
in 2001 under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)-7 Unicom Corporation General Provisions Regard-
ing 1996 Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-9). x x
34
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
+*(10)-8 Unicom Corporation General Provisions Regard-
ing 1996B Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-11). x x
+(10)-9 Unicom Corporation General Provisions Regard-
ing Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x
+*(10)- 1997 Annual Incentive Award for Management
10 Employees under the Unicom Corporation Long-
Term Incentive Plan. (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended
December 31, 1996, Exhibit (10)-13). x x
+*(10)- 1997 Award to Mr. O'Connor, Mr. Mullin and
11 Mr. Skinner under the Unicom Corporation
Long-Term Incentive Plan. x x
+ (10)-7 1995 Variable Compensation+(10)- 1998 Annual Incentive Award for Manage-
mentManagement
12 Employees under the Unicom Corporation Long-TermLong-
Term Incentive Plan. x x
+ +*(10)-8 1995 Award to Mr. O'Connor and Mr. Skinner
under the Unicom Corporation Long-Term In-
centive Plan. x x
+ (10)-9- Unicom Corporation Deferred Compensation Unit
13 Plan, as amended.amended (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended Decem-
ber 31, 1995, Exhibit (10)-12). x x
+*(10)-10- Deferred Compensation Plan (included in Arti-
14 cle Five of Exhibit (3)-2 above). x
+*(10)-11- Management Incentive Compensation Plan, ef-
15 fective January 1, 1989 (File No. 1-1839,
Form 10-K for the year ended December 31,
1988, Exhibit (10)-4). x
+*(10)-12- Amendments to Management Incentive Compensa-
16 tion Plan, dated December 14, 1989 and March
21, 1990 (File No. 1-1839, Form 10-K for the
year ended December 31, 1989, Exhibit (10)-
5). x
+*(10)-13- Amendment to Management Incentive Compensa-
17 tion Plan, dated March 21, 1991 (File No. 1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (10)-6). x
+ +*(10)-14- Retirement Plan for Directors, effective Sep-
18 tember 1, 1994.1994, as amended through March 12,
1997. (File No. 1-11375, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
19). x
+*(10)-15- Retirement Plan for Directors, effective Jan-
19 uary 1, 1987, as amended through March 12,
1997. (File No. 1-1839 Form 10-K for the
year ended December 31, 1988,1996, Exhibit (10)-5)-
20) x
+*(10)- Unicom Corporation 1996 Directors' Fee Plan
20 (File No. 1-11375, Unicom Proxy Statement
dated April 8, 1996, Appendix A). x + (10)-16 Unicom Corporation Outside Director Stock
Award Plan. x
+*(10)-17- Executive Group Life Insurance Plan (File No.
21 1-1839, Form 10-K for the year ended Decem-
ber 31, 1980, Exhibit (10)-3). x
+*(10)-18- Amendment to the Executive Group Life Insur-
22 ance Plan (File No. 1-1839, Form 10-K for
the year ended December 31, 1981, Exhibit
(10)-4). x
+*(10)-19- Amendment to the Executive Group Life Insur-
23 ance Plan dated December 12, 1986 (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1986, Exhibit (10)-6). x
+*(10)-20 Amendment of Executive Group Life Insurance
Plan to implement program of "split dollar
life insurance" dated December 13, 1990 (File No.
1-1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1990,1986, Exhibit (10)-10)-6). x
3235
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
+*(10)-21- Amendment of Executive Group Life Insurance
24 Plan to implement program of "split dollar
life insurance" dated December 13, 1990
(File No. 1-1839, Form 10-K for the year
ended December 31, 1990, Exhibit (10)-10). x
+*(10)- Commonwealth Edison Company Supplemental Man-
25 agement Retirement Plan (File No. 1-1839,
Form 10-K for the year ended December 31,
1985, Exhibit (10)-6). x
+*(10)-22- Amendment of Executive Group Life Insurance
26 Plan to stabilize the death benefit applica-
ble to participants dated July 22, 1992
(File No. 1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (10)-13). x
+*(10)-23- Letter Agreement dated December 16, 1992 be-
27 tween Commonwealth Edison CompanyComEd and Samuel K. Skinner (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1992, Exhibit (10)-14). x
+*(10)- Amendment dated May 31, 1995 to Letter Agree-
28 ment dated December 16, 1992 between ComEd
and Samuel K. Skinner (File No. 1-1839, Form
10-K for the year ended December 31, 1992,1995,
Exhibit (10)-14)-27). x
+*(10)-24- Amendments dated December 11, 1996 and March
29 24, 1997 to Letter Agreement dated December
16, 1992 between ComEd and Samuel K. Skin-
ner. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
30). x
+*(10)- Letter Agreement dated November 14, 1995 be-
30 tween ComEd and Leo F. Mullin (File No.
1-1839, Form 10-K for the year ended
December 31, 1995, Exhibit (10)-28). x
+*(10)- Amendment dated March 24, 1997 to Letter
31 Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin. (File No. 1-1839,
Form 10-K for the year ended December 31,
1996, Exhibit (10)-32). x
+*(10)- Commonwealth Edison Company Excess Benefit
32 Savings Plan (File No. 1-1839, Form 10-Q for
the quarter ended June 30, 1994, Exhibit
(10)-2). x
+*(10)- Amendment No. 1 to Commonwealth Edison Com-
33 pany Excess Benefit Savings Plan dated May
24, 1995 (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit
(10)-30). x
+(10)-34 Amendment No. 2 to Commonwealth Edison Com-
pany Excess Benefit Savings Plan effective
as of September 1, 1997. x
+*(10)- Unicom Corporation Stock Bonus Deferral Plan
35 (File Nos. 1-11375 and 1-1839, Form 10-K for
the year ended December 31, 1995, Exhibit
(10)-31). x x
+(10)-36 Amendment No. 1 to Unicom Corporation Stock
Bonus Deferral Plan dated January 3, 1997. x x
+(10)-37 Form of Stock Award Agreement under the
Unicom Corporation Long-Term Incentive Plan. x x
36
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
(12) Statement re computation of ratios of earn-
ings to fixed charges and ratios of earnings
to fixed charges and preferred and prefer-
ence stock dividend requirements for ComEd. x
(18) Letter from independent public accountants
regarding change in accounting principle. x x
(21)-1 Subsidiaries of Unicom Corporation.Unicom. x
(21)-2 Subsidiaries of Commonwealth Edison Company.ComEd. x
(23)-1 Consent of experts for Unicom Corporation.Unicom. x
(23)-2 Consent of experts for Commonwealth Edison
Company.ComEd. x
(24)-1 Powers of attorney of Directors whose names
are signed to the Unicom Corporation Annual Report on
Form 10-K pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names
are signed to the Commonwealth Edison Com-
panyComEd Annual Report on
Form 10-K pursuant to such powers. x
(99)-1 Unicom Corporation'sUnicom's Current Report on Form 8-K dated
January 27, 1995.30, 1998. x
(99)-2 Commonwealth Edison Company'sComEd's Current Report on Form 8-K/A-18-K dated January 27, 1995.Jan-
uary 30, 1998. x
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd
hereby agree to furnish to the SEC, upon request, any instrument
defining the rights of holders of long-term debt of ComEd not filed as
an exhibit herein. No such instrument authorizes securities in excess
of 10% of the total assets of ComEd.
(B) REPORTS ON FORM 8-K:
None.
33A Current Report on Form 8-K dated October 9, 1997, was filed by
Unicom and ComEd to announce that James J. O'Connor, Chairman and Chief
Executive Officer of Unicom and ComEd intended to retire from the
companies.
A Current Report on Form 8-K dated December 16, 1997, was filed by
Unicom and ComEd to describe the 1997 Act and the related accounting
effects.
37
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Unicom Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Unicom Corporation and subsidiary
companies incorporated by reference in this Annual Report on Form 10-K, and
have issued our report thereon dated January 27, 1995. Our report on the
financial statements includes an explanatory paragraph that describes the
Company's change in its method of accounting for postretirement health care
benefits and income taxes as discussed in Notes 13 and 14, respectively, to the
financial statements.30, 1998.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed on page 27,in Item 14.(a), is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
January 27, 1995
3430, 1998
38
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Commonwealth Edison Company:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Commonwealth Edison Company and
subsidiary companies incorporated by reference in this Annual Report on Form
10-K, and have issued our report thereon dated January 27, 1995. Our report on the
financial statements includes an explanatory paragraph that describes the
Company's change in its method of accounting for postretirement health care
benefits and income taxes as discussed in Notes 13 and 14, respectively, to the
financial statements.30, 1998.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed on page 27,in Item 14.(a), is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
January 27, 1995
3530, 1998
39
SCHEDULE II
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- --------- ----------------------------------- ---------- --------
ADDITIONS
-----------------------------------
BALANCE CHARGED
AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
- ---------------------------- --------- -------- -------- ---------- --------
FOR THE YEAR ENDED DECEMBER
31, 19921995
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,720 $ 7,400 $ 5,5761,108 $ -- $ -- $12,976$11,828
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $13,690 $15,350 $ -- $(12,865)(b) $16,175
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $25,000$32,522 $ 2,271 $ -- $ -- $ (478)(b) $24,522(2,271)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $66,411 $18,390 $6,090 $(26,379)(c) $64,512$55,312 $21,135 $4,671 $(23,142)(d) $57,976
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 19931996
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $12,976 $(2,066)$11,828 $ 1,065 $ -- $ -- $10,910$12,893
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $16,175 $12,000 $ -- $(15,873)(b) $12,302
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $24,522$32,522 $ 6,0201,728 $ -- $ (1,020)(b) $29,522(1,728)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $64,512 $13,963 $7,795 $(29,536)(c) $56,734$57,976 $10,892 $5,713 $(20,609)(d) $53,972
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 19941997
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,910$12,893 $ (190)4,651 $ -- $ -- $10,720$17,544
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $12,302 $62,000 $ -- $(32,559)(b) $41,743
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $29,522$32,522 $ 5,0392,410 $ -- $ (2,039)(b) $32,522(2,910)(c) $32,022
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $56,734 $20,270 $7,802 $(29,494)(c) $55,312$53,972 $ 8,565 $4,939 $(18,213)(d) $49,263
======= ======= ====== ======== =======
Notes:
(a) Bad debt losses, net of recoveries, and provisions for uncollectible
accounts were charged to operating expense and amounted to $33,708, $28,867$50,574,000,
$41,846,000 and $25,287$26,278,000 in 1992, 19931997, 1996 and 1994,1995, respectively.
(b) Write-off of obsolete materials.
(c) Expenditures for site investigation and cleanup costs.
(c)(d) Payments of claims and related costs.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3640
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO AND STATE OF ILLINOIS ON THE 30TH27TH
DAY OF MARCH, 1995.1998.
UNICOM CORPORATION
James J. O'Connor
By_____________________________
James J. O'Connor,John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON THE 30TH27TH DAY OF
MARCH, 1995.1998.
SIGNATURE
- ----------------------------
TITLE
---------------------
John W. Rowe Chairman, President and
- ---------------------------- ---------------------
James J. O'Connor Chairman and Chief
---------------------------- Executive Officer
John W. Rowe and
James J. O'Connor Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Senior Vice President
John C. Bukovski (principalPresident(principal
financial officer)
Roger F. KovackRobert E. Berdelle Comptroller (principal
- ---------------------------- (principal accounting officer)
Roger F. Kovack
Jean Allard*Robert E. Berdelle
Edward A. Brennan* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director
George E. Johnson* Director
Harvey Kapnick* Director
Byron Lee, Jr.* Director
Edward A. Mason* Director
Frank A. Olson* Director
Samuel K. Skinner* President and Director
David A. Scholz
*By____________________________*By
--------------------------------
David A. Scholz, Attorney-in-factAttorney-in-
fact
[Signature page to Unicom Corporation Annual Report on Form 10-K]
3741
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO AND STATE OF ILLINOIS ON THE 30TH27TH
DAY OF MARCH, 1995.1998.
COMMONWEALTH EDISON COMPANY
James J. O'Connor
By_____________________________
James J. O'Connor,John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON THE 30TH27TH DAY OF
MARCH, 1995.1998.
SIGNATURE
- ----------------------------
TITLE
---------------------
John W. Rowe Chairman, President and
- ---------------------------- ---------------------
James J. O'Connor
---------------------------- Chairman and Chief
James J. O'Connor Executive Officer
John W. Rowe and Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Senior Vice President (principal
John C. Bukovski President(principal
financial officer)
Roger F. KovackRobert E. Berdelle Comptroller (principal
- ---------------------------- Comptroller
Roger F. Kovack (principal accounting officer)
Jean Allard*Robert E. Berdelle
Edward A. Brennan* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director
George E. Johnson* Director
Harvey Kapnick* Director
Byron Lee, Jr.* Director
Edward A. Mason* Director
Frank A. Olson* Director
Samuel K. Skinner* President and Director
David A. Scholz
*By____________________________*By
--------------------------------
David A. Scholz, Attorney-in-factAttorney-in-
fact
[Signature page to Commonwealth Edison Company Annual Report on Form 10-K]
3842
Unicom Corporation and
Commonwealth Edison Company
Form 10-K
File Nos. 1-11375 and 1-1839
EXHIBIT INDEX
The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an asterisk
(*) are incorporated by reference to the File No. indicated. Documents indicated
by a plus sign (+) identify management contracts or compensatory plans or
arrangements.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMEDExhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
(3)*(3)-1 Articles of Incorporation of Unicom effective
January 28, 1994. (File No. 1-11375, Form 10-K
for the year ended December 31, 1994, Exhibit
(3)-1). x
(3)*(3)-2 Restated Articles of Incorporation of ComEd ef-
fective February 20, 1985, including Statements
of Resolution Establishing Series, relating to
the establishment of three new series of ComEd
preference stock known as the "$9.00 Cumulative
Preference Stock," the "$6.875 Cumulative Pref-
erence Stock" and the "$2.425 Cumulative Prefer-
ence Stock." (File No. 1-1839, Form 10-K for the
year ended December 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective January
28, 1994 as amended through March 9, 1995.11, 1998. x
(3)-4 By-Laws of ComEd,Commonwealth Edison Company, effective
September 2, 1988 as amended through March 9, 1995.11,
1998. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Continental Illinois National(Harris Trust and Savings Bank,
and Trust Company of Chicago,as current successor Trustee), dated July 1,
1923, Supplemental In-
dentureIndenture thereto dated AugustAu-
gust 1, 1944, and amend-
mentsamendments and supplements
thereto dated, respective-
ly,respectively, August 1, 1946,
April 1, 1953, April 1,
1966, November 1, 1966, December 1, 1966, March 31, 1967, April 1, 1967, February 1, 1968,
July 1, 1968, October 1, 1968, February 28, 1969,
May 29, 1970, January 1, 1971, June 1, 1971,
May 31, 1972, June 1, 1973, June 15, 1973,
October 15, 1973, May 31, 1974, July 1, 1974, June 13, 1975,
May 28, 1976, January 15, 1977, June 1, 1977 and June 3, 1977
(File No. 2-60201, Form S-7, Ex-
hibitExhibit 2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, December 1, 1977, May 17, 1978, August
31, 1978, June 18, 1979, June 20, 1980, April
16, 1981, April 30, 1982, April 15, 1983, April
13, 1984 March 1, 1985 and April 15, 1985 (File No. 2-99665,
Form S-3, Ex-
hibitExhibit (4)-3). x
1
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-3 Supplemental IndenturesIndenture to Mortgage dated July 1,
1923 dated respectively, April 15, 1986 and May
1, 1986 (File No. 33-6879,
Form S-3, Exhibit (4)-9). x
*(4)-4 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 12, 1987 (File No. 33-13193,
Form S-3, Exhibit (4)-6). x
*(4)-5 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 30, 1989 (File No. 33-32929,
Form S-3, Exhibit (4)-11). x
*(4)-6 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 15, 1990 and
June 15, 1990 (File No. 33-38232, Form S-3, ExhibitsEx-
hibits (4)-11 and (4)-12). x
*(4)-7-5 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 1, 1991, October
1, 1991 and October 1,15, 1991 (File No. 33-44018,
Form S-3, Exhibits (4)-12, (4)-13 and October 15, 1991 (File No. 33-44018,
Form S-3, Exhibits (4)-12, (4)-13 and (4)-14). x
1
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
*(4)-8-6 Supplemental Indenture to Mortgage dated July 1,
1923 dated February 1, 1992 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (4)-18). x
*(4)-9-7 Supplemental Indenture to Mortgage dated July 1,
1923 dated May 15, 1992 (File No. 33-48542, Form
S-3, Exhibit (4)-14). x
*(4)-10-8 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, July 15, 1992 Septem-
berand
September 15, 1992 and October 1, 1992 (File No. 33-
53766,33-53766, Form S-3,
Exhibits (4)-13 (4)-14 and (4)-15)-14). x
*(4)-11-9 Supplemental IndenturesIndenture to Mortgage dated July 1,
1923 dated respectively, February 1, 1993 and
March 1, 1993 (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibits (4)-14 and (4)-15)-14). x
*(4)-12-10 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 1, 1993 and
April 15, 1993 (File No. 33-64028, Form S-3, Ex-
hibits (4)-12 and (4)-13). x
*(4)-13-11 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 15, 1993 and July
1, 1993 (File No. 1-1839, Form 8-K dated May 21,
1993, Exhibits (4)-1 and (4)-2). x
*(4)-14-12 Supplemental Indenture to Mortgage dated July 1,
1923 dated July 15, 1993 (File No. 1-1839, Form
10-Q for the quarter ended June 30, 1993, Ex-
hibit (4)-1). x
*(4)-15-13 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 15, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (4)-15). x
(4)-16*(4)-14 Supplemental Indenture to Mortgage dated July 1,
1923 dated December 1, 1994.1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-16). x
*(4)-15 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 1, 1996. (File No. 1-1839, Form
10-K for the year ended December 31, 1996, Ex-
hibit (4)-16). x
2
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-16 Instrument of Resignation, Appointment and Ac-
ceptance dated January 31, 1996, under the pro-
visions of the Mortgage dated July 1, 1923, and
Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-28). x
*(4)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1, 1923
and Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National Bank of
Chicago, Trustee (Harris Trust and Savings(Amalgamated Bank of Chicago,
as current successor Trustee), dated April 1,
1949, October 1, 1949, October 1, 1950, October
1, 1954, Janu-
aryJanuary 1, 1958, January 1, 1959 and
December 1, 1961 (File No. 1-1839, Form 10-K for
the year ended December 31, 1982, Exhibit (4)-20)-
20). x
*(4)-18-19 Indenture of ComEd dated February 15, 1973 to The
First National Bank of Chicago, Trustee (LaSalle
National Bank, successor Trustee), and Supple-
mental Indenture thereto dated July 13, 1973
(File No. 2-66100, Form S-16, Exhibit (b)-2). x
*(4)-19-20 Indenture dated as of September 1, 1987 between
ComEd and Citibank, N.A., Trustee relating to
Notes (File No. 33-20619, Form S-3, Exhibit (4)-
13). x
*(4)-20 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated September 15, 1987 (File No.
33-20619, Form S-3, Exhibit (4)-14). x
*(4)-21 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated May 18, 1988July 14, 1989 (File No. 33-
23036,32929, Form S-3, Exhibit (4)-14)-16). x
*(4)(4)-22 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 14, 1989 (File No. 33-
32929, Form S-3, Exhibit (4)-16).January 1, 1997. x
2
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
*(4)-23 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 1, 1991 (File No. 33-
44018, Form S-3, Exhibit (4)-21). x
*(4)-24 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 15, 1992 (File No. 33-
48542, Form S-3, Exhibit
(4)-22). x
*(4)-25 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 15, 1992 (File No. 33-
53766, Form S-3, Exhibit (4)-24). x
*(4)-26 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated October 15, 1993 (File No. 1-
1839, Form 10-Q for the quarter ended September
30, 1993, Exhibit (4)-1). x
*(4)-27 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 1, 1994 (File No. 1-
1839, Form 10-Q for the quarter ended March 31,
1994, Exhibit (4)-1). x
*(4)-28 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-1839,1-
1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-27). x
3
Exhibit
(4)-27). xNumber Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-29-24 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-1839,1-
1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-28). x
*(4)-30(4)-25 Letter Agreement dated as of October 4, 1993,September 29, 1997,
among Commonwealth Edison CompanyComEd and certain of the Banks party to
the Credit Agreement dated as of October 1,
19911991. x
*(4)-26 Amended and Restated Credit Agreement dated as of
November 15, 1996, among Unicom Enterprises, the
Banks Named Therein and Citibank, N.A. (File No.
1-1839,1-11375, Form 10-K for the year ended December
31, 1993,1996, Exhibit (4)-28)-31). x
*(4)-31 Term Loan Agreement-27 Amended and Restated Guaranty dated as of January 7, 1992,
between Commonwealth Edison Company, as borrow-
er, and The First National Bank of Chicago, in-
dividually and as agent (File No. 1-1839, Form
10-K for the year ended December 31, 1992, Ex-
hibit (4)-28). x
(4)-32 First Amendment to Term Loan Agreement dated as
of January 9, 1995,Novem-
ber 15, 1996, by and among Commonwealth
Edison Company, The First National Bank of Chi-
cago, individually and as agent, and the banks
party thereto. x
*(4)-33 Term Loan Agreement dated as of January 15, 1992,
between Commonwealth Edison Company, as borrow-
er, and Westpac Banking Corporation, Chicago
Branch, individually and as agent (File No. 1-
1839, Form 10-K for the year ended December 31,
1992, Exhibit (4)-29). x
*(4)-34 Term Loan Agreement dated as of January 16, 1992,
between Commonwealth Edison Company, as borrow-
er, and The Bank of New York, individually and
as agent (File No. 1-1839, Form 10-K for the
year ended December 31, 1992, Exhibit (4)-29). x
3
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
(4)-35 Credit Agreement dated as of November 22, 1994,
among Unicom Enterprises Inc., the Banks Named
Therein and Citibank, N.A. x
(4)-36 Guaranty dated November 22, 1994, by Unicom Cor-
poration in favor of the Lenders
and LC Banks parties to the aforementioned
Credit Agreement with Unicom Enterprises Inc.(File
No. 1-11375, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-32). x
(4)-37 Guaranty*(4)-28 Indenture dated November 22, 1994, bySeptember 1, 1995 between ComEd
and Wilmington Trust Company. (File No. 1-1839,
Form 10-K for the year ended December 31, 1996,
Exhibit (4)-34). x
*(4)-29 First Supplemental Indenture dated September 19,
1995 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-35). x
*(4)-30 Second Supplemental Indenture dated January 24,
1997 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-36). x
*(4)-31 Rights Agreement dated as of February 2, 1998
between Unicom Cor-
poration in favorCorporation and First Chicago
Trust Company of Citibank, N.A.New York, as Rights Agent, which
includes as Exhibit A the Form of Rights
Certificate and as Exhibit B, the Summary of
Rights to Purchase Common Stock (File No.
1-11375, Current Report on Form 8-K dated
February 2, 1998, Exhibit 4). x
*(10)-1 Nuclear Fuel Lease Agreement dated as of November
23, 1993, between CommEd Fuel Company, Inc., as
Lessor, and Commonwealth Edison Company,ComEd, as Les-
seeLessee (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (10)-1). x
+*(10)-2 Unicom Corporation Amended and Restated Long-Term
Incentive Plan (File No. 1-1839, ComEd1-11375, Unicom Proxy
Statement dated March
26, 1993,April 9, 1997, Exhibit A). x
+*(10)-3 Amendment to Unicom Corporation Long-Term Incen-
tive Plan, effective September 1, 1994 (File No.
33-56991, Form S-8, Exhibit (4)-4). x
+*(10)-4 19941995 Long-Term Performance Unit Award for
Execu-
tiveExecutive and Group Level EmployesEmployees Payable in
19961998 under the 1993Unicom Corporation Long-Term
Incentive Plan, as amended (File No.Nos. 1-11375 and
1-1839, Form 10-K/A-110-K for the year ended De-
cemberDecember
31, 1993,1995, Exhibit (10)-4)-6). x x x
4
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-5 1994 Long-Term Performance Unit Award for Execu-
tive and Group Level Employes Payable in 1997
under the 1993 Long-Term Incentive Plan (File
No. 1-1839, Form 10-K/A-1 for the year ended De-
cember 31, 1993, Exhibit (10)-5). x x
+ (10)-6 1995-4 1996 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 1999
under the Unicom Corporation Long-Term Incentive
Plan (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1995, Exhibit
(10)-9). x x
+*(10)-5 1997 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 2000
under the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1996, Exhibit
(10)-12). x x
+(10)-6 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable in
2001 under the Unicom Corporation Long-Term
Incentive Plan. x x
+ +*(10)-7 1995 Variable CompensationUnicom Corporation General Provisions Regarding
1996 Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan.
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-9). x x
+*(10)-8 Unicom Corporation General Provisions Regarding
1996B Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan.
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-11). x x
+(10)-9 Unicom Corporation General Provisions Regarding
Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x
+*(10)-10 1997 Annual Incentive Award for Managment
Employees under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1996,
Exhibit (10)-13). x x
+*(10)-11 1997 Award to Mr. O'Connor, Mr. Mullin and Mr.
Skinner under the Unicom Corporation Long-Term
Incentive Plan. x x
+(10)-12 1998 Annual Incentive Award for Management
Employees under the Unicom Corporation Long-Term
Incentive Plan. x x
+ +*(10)-8 1995 Award to Mr. O'Connor and Mr. Skinner under
the Unicom Corporation Long-Term Incentive Plan. x x
+ (10)-9-13 Unicom Corporation Deferred Compensation Unit
Plan, as amended.amended (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1995,
Exhibit (10)-12). x x
+*(10)-10-14 Deferred Compensation Plan (included in Article
Five of Exhibit (3)-2 above). x
+*(10)-11-15 Management Incentive Compensation Plan, effective
January 1, 1989 (File No. 1-1839, Form 10-K for
the year ended December 31, 1988, Exhibit (10)-
4). x
+*(10)-12-16 Amendments to Management Incentive Compensation
Plan, dated December 14, 1989 and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 14,31, 1989, and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 31, 1989,Exhibit (10)-5). x
5
Exhibit
(10)-5). xNumber Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-13-17 Amendment to Management Incentive Compensation
Plan, dated March 21, 1991 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (10)-6). x
+ +*(10)-14-18 Retirement Plan for Directors, effective Septem-
ber 1, 1994.1994, as amended through March 12, 1997.
(File No. 1-11375, Form 10-K for the year ended
December 31, 1996, Exhibit (10)-19). x
4
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
--------- ------------------------------------------------- ------ -----
+*(10)-15-19 Retirement Plan for Directors, effective January
1, 1987, as amended through March 12, 1997.
(File No. 1-1839, Form 10-K for the year ended
December 31, 1988,1996, Exhibit (10)-5)-20) x
+*(10)-20 Unicom Corporation 1996 Directors' Fee Plan (File
No. 1-11375, Unicom Proxy Statement dated April
8, 1996, Appendix A). x + (10)-16 Unicom Corporation Outside Director Stock Award
Plan. x
+*(10)-17-21 Executive Group Life Insurance Plan (File No. 1-
1839, Form 10-K for the year ended December 31,
1980, Exhibit (10)-3). x
+*(10)-18-22 Amendment to the Executive Group Life Insurance
Plan (File No. 1-1839, Form 10-K for the year
ended December 31, 1981, Exhibit (10)-4). x
+*(10)-19-23 Amendment to the Executive Group Life Insurance
Plan dated December 12, 1986 (File No. 1-1839,
Form 10-K for the year ended December 31, 1986,
Exhibit (10)-6). x
+*(10)-20-24 Amendment of Executive Group Life Insurance Plan
to implement program of "split dollar life in-
surance" dated December 13, 1990 (File No. 1-
1839, Form 10-K for the year ended December 31,
1990, Exhibit (10)-10). x
+*(10)-21-25 Commonwealth Edison Company Supplemental Manage-
ment Retirement Plan (File No. 1-1839, Form 10-K
for the year ended December 31, 1985, Exhibit
(10)-6). x
+*(10)-22-26 Amendment of Executive Group Life Insurance Plan
to stabilize the death benefit applicable to
participants dated July 22, 1992 (File No. 1-
1839, Form 10-K for the year ended December 31,
1992, Exhibit (10)-13). x
+*(10)-23-27 Letter Agreement dated December 16, 1992 between
Commonwealth Edison CompanyComEd and Samuel K. Skin-
nerSkinner (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibit (10)-14). x
+*(10)-24-28 Amendment dated May 31, 1995 to Letter Agreement
dated December 16, 1992 between ComEd and Samuel
K. Skinner (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit (10)-27). x
+*(10)-29 Amendments dated December 11, 1996 and March 24,
1997 to Letter Agreement dated December 16, 1992
between ComEd and Samuel K. Skinner. (File No.
1-1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-30). x
+*(10)-30 Letter Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin (File No. 1-1839, Form
10-K for the year ended December 31, 1995, Ex-
hibit (10)-28). x
6
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-31 Amendment dated March 24, 1997 to Letter Agree-
ment dated November 14, 1995 between ComEd and
Leo F. Mullin. (File No. 1-1839, Form 10-K for
the year ended December 31, 1996, Exhibit (10)-
32). x
+*(10)-32 Commonwealth Edison Company Excess Benefit Sav-
ings Plan (File No. 1-1839, Form 10-Q for the
quarter ended June 30, 1994, Exhibit (10)-2). x
+*(10)-33 Amendment No. 1 to Commonwealth Edison Company
Excess Benefit Savings Plan dated May 24, 1995
(File No. 1-1839, Form 10-K for the year ended
December 31, 1995, Exhibit (10)-30). x
+(10)-34 Amendment No. 2 to Commonwealth Edison Company
Excess Benefit Savings Plan effective as of
September 1, 1997. x
+*(10)-35 Unicom Corporation Stock Bonus Deferral Plan
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit (10)-31). x x
+(10)-36 Amendment No. 1 to Unicom Corporation Stock
Bonus Deferral Plan dated January 3, 1997. x x
+(10)-37 Form of Stock Award Agreement under the Unicom
Corporation Long-Term Incentive Plan. x x
(12) Statement re computation of ratios of earnings to
fixed charges and ratios of earnings to fixed
charges and preferred and preference stock divi-
dend requirements for ComEd. x
(18) Letter from independent public accountants
regarding change in accounting principle.
x x
(21)-1 Subsidiaries of Unicom Corporation.Unicom. x
(21)-2 Subsidiaries of Commonwealth Edison Company.ComEd. x
(23)-1 Consent of experts for Unicom Corporation.Unicom. x
(23)-2 Consent of experts for Commonwealth Edison
Company.ComEd. x
(24)-1 Powers of attorney of Directors whose names are
signed to the Unicom Corporation Annual Report on Form 10-K
pursuant to such powers. x
5
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
(24)-2 Powers of attorney of Directors whose names are
signed to the Commonwealth Edison CompanyComEd Annual Report on Form 10-K
pursuant to such powers. x
(99)-1 Unicom Corporation'sUnicom's Current Report on Form 8-K dated January
27, 1995.30, 1998. x
(99)-2 Commonwealth Edison Company'sComEd's Current Report on Form 8-K/A-18-K dated January
27, 1995.30, 1998. x
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd
hereby agree to furnish to the SEC, upon request, any instrument
defining the rights of holders of long-term debt of ComEd not filed as
an exhibit herein. No such instrument authorizes securities in excess
of 10% of the total assets of ComEd.
67