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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 - ------------------ Common Stock, without par value New York, Chicago and Pacific COMMONWEALTH EDISON COMPANY - --------------------------- (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.- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 ---- 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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