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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) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 19961997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 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) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
- --------------------------- ON WHICH REGISTERED
-------------------------
UNICOM CORPORATION
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Common Stock, without par value New York, Chicago and Pacific
COMMONWEALTH EDISON COMPANY
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(Listed on inside cover)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) 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 . No .
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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. [X][ ]
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COMMONWEALTH EDISON COMPANY Securities Registered Pursuant to Section 12(b) of
the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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First Mortgage Bonds:
7 5/8% Series 25, due June 1, 2003 )
8% Series 26, due October 15, 2003 ) New York
2003
8 1/8% Series 35, due January 15, 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 Pacific
$2.425 New York
8.48% ComEd-ObligatedCompany-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 216,108,691216,683,743
shares of outstanding Common Stock, without par value, was approximately
$4,800,000,000$6,948 million as of February 28, 1997.1998. In excess of 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, Cumulative Preference Stock
and Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely the Company's Subordinated Debt Securities
was approximately $970,000,000$1,107 million as of February 28, 1997.1998. Unicom Corporation
held in excess of 99.99% of the 214,218,990214,231,528 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
31, 199730, 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, 19971998, relating to its Annual Meeting
of shareholders to be held on May 29, 199728, 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 dated
January 31, 199730, 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, 19971998, relating
to its Annual Meeting of shareholders to be held on May 29, 199728, 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, 19961997
This document contains the Annual Reports on Form 10-K for the fiscal year
ended December 31, 19961997 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..............................Industry........................ 3
Net Electric Generating Capability....................................Capability.............................. 6
Construction Program..................................................Program............................................ 6
Rate Matters.......................................................... 9Matters.................................................... 8
Fuel Supply...........................................................Supply..................................................... 8
Regulation...................................................... 10
Regulation............................................................ 11
Employees............................................................. 18
Interconnections...................................................... 18
Franchises............................................................ 18Employees....................................................... 16
Interconnections................................................ 16
Franchises...................................................... 16
Executive Officers of the Registrant..................................Registrant............................ 18
Operating Statistics............................................ 19
Operating Statistics..................................................Year 2000 Conversion............................................ 20
Forward Looking Information........................................... 21Market Risks.................................................... 20
Forward-Looking Information..................................... 20
Item 2. Properties...................................................... 2120
Item 3. Legal Proceedings............................................... 22
Item 4. Submission of Matters to a Vote of Security Holders............. 23
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters................................................................Matters......................................................... 23
Item 6. Selected Financial Data......................................... 2425
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... 24Operations........................................... 25
Item 8. Financial Statements and Supplementary Data..................... 2425
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 2425
Part III
Item 10. Directors and Executive Officers of the Registrant............. 2425
Item 11. Executive Compensation......................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and
Manage-
ment...................................................................Management..................................................... 25
Item 13. Certain Relationships and Related Transactions................. 25
i
UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 19961997
TABLE OF CONTENTS (CONCLUDED)
PAGE
----
ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY:
Part I
Item 1. Business........................................................ 26
Executive Officers of the Registrant............................... 26
Item 2. Properties...................................................... 2728
Item 3. Legal Proceedings............................................... 2728
Item 4. Submission of Matters to a Vote of Security Holders............. 2728
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters................................................................ 28
Item 6. Selected Financial Data......................................... 28
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of
Operations...........................................Operations...................................................... 28
Item 8. Financial Statements and Supplementary Data..................... 28
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 28
Part III
Item 10. Directors and Executive Officers of the Registrant............. 28
Item 11. Executive Compensation......................................... 2829
Item 12. Security Ownership of Certain Beneficial Owners and Management. 2829
Item 13. Certain Relationships and Related Transactions................. 2829
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............................................................... 298-
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..................................................... 37Corporation............................................................ 38
Report of Independent Public Accountants on Supplemental Schedule to
Commonwealth Edison Company............................................ 3839
Schedule II--Valuation and Qualifying Accounts.......................... 3940
Signature Page to Unicom Corporation Annual Report on Form 10-K......... 4041
Signature Page to Commonwealth Edison Company Annual Report on Form 10-K.............................................................. 4110-
K...................................................................... 42
ii
DEFINITIONS
The following terms are used in this document with the following meanings:
TERM MEANING
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1997 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
CHA Chicago Housing Authority
Clean Air Amendments Clean Air Act Amendments of 1990
ComEd Commonwealth Edison Company
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
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 31, 199730, 1998 Unicom's Current Report on Form 8-K including auditor's
Form 8-K Reports opinion dated January 31, 199730, 1998 and ComEd's Current
Report on Form 8-K including auditor's opinion dated
January 31, 199730, 1998
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NLRB National Labor Relations BoardNERC North American Electric Reliability Council
NPDES National Pollutant Discharge Elimination System
NPL National Priorities List
NRC Nuclear Regulatory Commission
PRPs Potentially responsible parties under CERCLA
PTAB Property Tax Appeals BoardO&M Operation and maintenance
Rate Order ICC rate order issued in January 1995, as subsequently
modified
Remand Order ICC rate order issued in January 1993, as subsequently
modified
SEC Securities and Exchange Commission
S&P Standard & Poor's
Trust ComEd Financing I, which is a wholly-ownedSecurities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trust of ComEd.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
1
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION
PART I
ITEM 1. BUSINESS.
GENERAL
Unicom was incorporated in January 1994 and became the parent holding
company of ComEd and Unicom Enterprises in a corporate restructuring that
became effective on September 1, 1994. ComEd, ana regulated electric
utility, is the principal subsidiary of Unicom. Unicom Enterprises is an
unregulated subsidiary of Unicom and is engaged, through its subsidiaries, in
energy service
activities. Unicom also has one other subsidiary that was formed to engage in
unregulated activities. 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.
ComEd continues to representrepresents substantially all of the assets, revenues and net income
(loss) of Unicom; and Unicom's resources and results of operations are largely
dependent on, and reflect, those of ComEd. Consequently, the following
discussion focuses on ComEd's utility operations although information is also
provided about Unicom's unregulated 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 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 11,300 square
miles and an estimated population of approximately eight8 million as of December
31, 1996.1997. It includes the city of Chicago, an area of about 225 square miles
with an estimated population of approximately three3 million from which ComEd
derived approximately one-third of its ultimate consumer revenues in 1996.1997.
ComEd had approximately 3.4 million electric customers at December 31, 1996.1997. 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.
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 Enterprises is engaged, through its subsidiaries, in energy service
activities which are not subject to utility regulation by state or federal
agencies. Its principal subsidiary, Unicom Thermal, currentlyOne of these subsidiaries, UT Holdings, provides district cooling,
heating and related services to officeoffices and other buildings in the central
business district of the city of 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 location(s)locations and its circulation to customers' buildings through a closed
circuit of supply and return piping. Such water is circulated through
customers' premises primarily for air conditioning. This process is used by
customers in lieu of self-generated cooling. As a result of the Clean Air
Amendments, the manufacture of CFCs has been curtailed commencing insince January 1996,
thereby creating an excellenta marketing opportunity for non-CFC based systems, such as Unicom Thermal'sUT
Holdings' district cooling. Unicom ThermalUT Holdings is involved in or
considering district coolingenergy projects in
other cities, generally working with the local utilities in those cities.
Unicom Energy Services, another subsidiary of Unicom Enterprises, is engaged
in providing energy services including gas services, performance contracting,
distributed energy and active energy management systems. In 1997, Unicom
Energy Services entered into a 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
other cities, including a project in Bostondistributed energy market, Unicom Energy Services also entered into an
alliance with Boston Edison Technologies
Group,AlliedSignal Power Systems, Inc., a projectsubsidiary of AlliedSignal
Inc., to market, install and service an electric energy generator developed by
AlliedSignal, known as a TurboGenerator, in Windsor,a 12-state region and the province
of Ontario, Canada with Ontario Hydro and a
project in Houston, Texas with Houston Light and PowerCanada. Unicom Energy Services Company.entered into an exclusive national
distributorship agreement with Engage Networks, Inc. to market active energy
management software and related 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
manner in which customers obtain, and energy suppliers provide, energy
services. These changes are attributable to changes in technology, the
relaxation of regulatory 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.
ComEd and other energy suppliers, energy customers and other interested
parties have been active participants in the discussions related to the
economic and technical issues associated with reform. As a result of these
efforts, legislation was introduced in Illinois during January 1997 which is
intended to provide both electric service providers and their customers with
an orderly transition to a less regulated market for electric service. Under
the legislative proposal, utilities would be granted a period in which to
offer direct access experiments that would allow them and customers to gain
experience with the effects of such access, with a requirement to provide such
access starting in 2000. Such a requirement would be phased-in to customers
over several years, starting with larger load customers. The legislation would
provide utilities with an opportunity to recover costs, which might not
otherwise be recoverable, in charges for electric service in a less regulated
market through, among other things, cost savings and a transition charge for
customers who use alternate suppliers of electric power and energy. The
legislation would provide for a leveling of certain regulatory oversight and
tax provisions among electric service providers in Illinois and would also
allow certain restructurings of utility operations in order to facilitate
their response to a competitive environment. The legislation would also
provide for annual base rate decreases of 1.5 percent, starting in 2000 and
continuing through 2004. ComEd supports the proposed legislation and believes
there is support among a number of constituencies for its provisions. Other
legislative proposals have also been introduced for consideration, which
contain different provisions with respect to timing and cost recovery. The
Governor of Illinois has formed a three-person advisory committee to advise
with respect to electric utility deregulation issues. No assurance can be
given as to when any such legislation may be adopted or in what form it may be
adopted.
In response to changes in the industry, ComEd has implemented certain
customer initiatives designed to improve and strengthen customer relationships
and is undertaking an evaluation of its operations and assets, particularly
generating assets, with a view toward positioning itself for market and
industry changes. As discussed below, ComEd's actions to date have included a
five-year base rate cap, efforts to control expenditure growth through
personnel reductions, operational efficiencies and sales of generating plants.
Although ComEd's operating results and financial condition have historically
been affected by various rate proceedings, ComEd expects that these industry
changes, and ComEd's activities anticipating or responding to them, will
directly impact its operating results and financial condition over the next
several years.
Electric Utility Industry. The electric utility industry has historically
consisted of vertically integrated companies which combine generation,
transmission and distribution assets; servingserve customers within relatively
defined service territories; and operatingoperate 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 3
nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon the utilities' respective assessment of thosethe current and projected needs
of itstheir 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, hashave 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 current period.
As noted previously,The 1997 Act. On December 16, 1997, the United StatesGovernor of Illinois signed into law
the 1997 Act, which established a phased-process to introduce competition into
the electric utility industry isin 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 processphased-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 fundamental change as state legislators and regulators re-examine
their approach to regulation and its objectives and considercustomer 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 competitivedefined 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 market-based systemassign assets,
retire or remove plants from service, and accelerate depreciation or
amortization of pricing for electric energy. Althoughassets with limited ICC regulatory review. Under the process and approach have varied from state to state in termsearnings
provision of the elements1997 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 timingdistribution of implementation, itelectric 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
evidentapproximately $6.8 billion; approximately one-half of that amount can be
issued in the question is no
longer if, but rather howtwelve-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 when there will be a more competitive
electricity market.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 filed 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.
An important element of reform proposals under consideration is the ability
of other suppliers to provide energy in competition with a utility within its
service territory. This element generally has included consideration of some
future form of "retail wheeling," whereby a utility's transmission and
distribution system is made available to other energy suppliers for delivery
of their services to retail customers. 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.
While
municipalization is possible under the present regulatory system, ComEd is not
requiredComEd's Response to grant alternative electric suppliers access to its distribution
system through any type of "retail wheeling."
Presumably, under such a modified regulatory structure, customers will base
energy purchase decisions on a combination of factors, including price,
reliability and service. In addition to the potential effects on revenues and
marketing and sales efforts, such changes can raise the question as to whether
an affected utility's rates are based on cost-based regulation, allowing
recovery of incurred costs, or are based on something else, i.e., the
marketplace. Under generally accepted accounting principles, the latter
determination would require the write off of regulatory assets and liabilities
and would require an examination as to the recoverability in revenues of other
incurred costs, with any portion determined to be unrecoverable being subject
to write off. Various approaches have been proposed to deal with such
strandable costs, from full recovery, as provided in the FERC Order, to no
recovery, as proposed by at least some of the participants in virtually all
legislative debates on regulatory reform proposals. For additional
information, see "Regulatory Assets and Liabilities" in Note 1 of Notes to
Financial Statements in the January 31, 1997 Form 8-K Reports.
4
Retail wheeling and municipalization are significant issues for electric
utility companies, including ComEd, because of their potential to strand a
utility's costs. Without the development of a more fully competitive
marketplace, it is not possible to develop an estimate of strandable costs
with any degree of accuracy. Any calculation of potentially strandable costs
requires that a set of assumptions be made, including the timing of open
access (customer choice), the extent of open access allowed, potential market
prices over time, sales and load growth forecasts, operating performance over
time, allowed rates over time, cost structure over time, mitigation
opportunities and strandable cost recoveries. The calculation of strandable
costs is extremely sensitive to the assumptions made, and the resulting
estimates are potentially misleading if removed from the context in which they
were calculated. At this point in time, ComEd does not subscribe to a certain
set of assumptions or a particular estimate. The proposed legislation
described above, which ComEd supports, would provide utilities the opportunity
to recover their stranded costs, if any. However, ComEd believes the amount of
its strandable costs could be material without allowance for recovery of costs
and investments it incurred under its regulatory compact, including its duty
to serve. Most reform proposals anticipating increased competition include
some form of stranded cost recovery. ComEd is taking steps, such as cost-
control measures, improving generating station reliability and additional
depreciation, to minimize its potential stranded investment. See "Rate
Matters" for additional information.
ComEd.Regulatory Changes. ComEd is responding, and is
undertaking a significant strategic planning effort
with respectefforts to respond further, responses, to the
developments within the utility industry.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 reductioncontrol and control.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 isexpects 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 generatingnuclear 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 remaining assets, 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 aone or more
additional generating plant,plants, particularly a nuclear plant, without regulatory
or legislative provision for continued recovery of its investment, such retirement
couldwould have a material impact on ComEd'sUnicom and Unicom'sComEd'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 17, 1996, ComEd announced that it had finalized agreements to sell two
of its coal-fired generating stations, representing approximately 1,6001,598 megawatts of
generating capacity. Under the agreements, State Linecapacity, and Kincaid
stations would be sold for a total of $250 million, which approximates the
book value of the stations. The net proceeds, after income tax effects, would
be approximately $200 million, which would be used to retire or redeem
existing debt. Under the terms of the sales, ComEd would enter into exclusive 15-year purchased power
agreements for the output of the plants.stations. The agreements aresale 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 regulatory approval, and proceedings have been
pending before the ICC since May 1996 to obtain those approvals. Numerous
parties have intervened in the proceedings, including various governmental and
consumer groups and ComEd's principal union. Although the Administrative Law
Judges have entered a proposed order recommending approval of the
transactions, the ICC continues to debate various aspects of the proposed
order and has not yet voted on it. ComEd's union has also filed a lawsuit in
state court alleging that the labor provisions of the Kincaid agreement are
violative of state law and are seeking to enjoin the ICC proceedings. ComEd
had previously filed an action in federal court seeking confirmation that the
state law is preempted by federal labor law, and ComEd believes that the
union's allegations are without merit. These actions were consolidated in
federal court, which has since ruled in favor of ComEd. The Union has appealed
and also has filed a grievance under its collective bargaining agreement with
ComEd claiming that ComEd is required by that agreement to require the Kincaid
purchaser to assume the terms of that agreement. The Union has also filed an
unfair labor practice charge with the NLRB
5
against the Kincaid purchaser regarding the purchaser's alleged failure to
bargain in good faith with the Union. The State Line and Kincaid agreements
give the purchasers the right to terminate the agreements if a closing has not
occurred prior to December 31, 1996 for State Line and June 30, 1997 for
Kincaid. Such closing has not occurred as of February 28, 1997.
With respect to its transmission assets, ComEd is participating with
approximately 20 other electric utility companies in an effort to form an ISO
for the midwest United States. Under the structure currently contemplated, the
ISO would set standard transmission rates and facilitate compliance with the
FERC Order. In addition, while individual utility companies would continue to
own their transmission lines, the ISO would oversee regional planning to avoid
transmission constraints. Creation of the ISO will be subject to further
negotiations among the parties as well as federal and state regulatory
approval.
ComEd is also taking actions to strengthen its relationship with its
customers. On December 11, 1995, ComEd instituted a five-year base rate cap for
all of its customers. The base rate cap does not affect ComEd's fuel cost or
nuclear decommissioning cost recovery provisions. See "Rate Matters" for
additional information about ComEd's base rate cap and other initiatives
intended to give customers more choice and control over the services they seek
and the price they pay.
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 22,511,000 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 21,954,00020,198,000 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 generating units being temporarily out of service for inspection,
maintenance, refueling, repairs or modifications required by regulatory
authorities. See "Regulation," subcaption
"Nuclear" and "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 August 14, 1995
and was 19,212,000 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.
CONSTRUCTION PROGRAM
Utility Operations
ComEd and the Indiana Company havehas a construction program for the year 1997,1998, which consists
principally of improvements to theirits existing nuclear and other electric
production, transmission and distribution facilities. It does not include
funds to add new generating capacity to ComEd's system. The program, as
currently approved by ComEd, calls for electric plant and equipmentincludes the following estimated expenditures of approximately $982 million
(excluding nuclear fuel expenditures of approximately $322$160 million).
It is estimated that such construction
expenditures will be as follows:
19971998
----
(MILLIONS
OF DOLLARS)
Production............................................... $420
Production................................................ $425
Transmission and Distribution............................ 421
General.................................................. 141Distribution............................. 415
General................................................... 90
----
Total................................................... $982$930
----
----
6
Such construction program includesestimated expenditures include $130 million toward the replacement of
the steam generators at ComEd's Braidwood Unit 1 and Byron Unit 1 nuclear
generating units expected
to be placed in service prior toby year-end 1998. The estimatedtotal replacement cost is approximately $460 million, including approximately $80 million for the
cost of removal of the existing steam generators. Approximately $130estimated to
be $455 million, of this estimated cost is included in the construction expenditures shown
above. Approximately $140which approximately $295 million has been incurred through
December 31, 1996.
In addition, ComEd has continued to monitor the degradation of the steam
generators at its Zion nuclear generating station. Recent studies indicate
that the degradation is continuing1997 and that replacement may$30 million will be required sooner
than 2005. No amount has been includedincurred in ComEd's construction budget for
replacement of these steam generators, since ComEd has not decided whether or
when to effect a replacement. Based upon its experience with the replacement
activities at Braidwood and Byron, and depending on the timing of any
replacement at Zion, ComEd believes such cost could be approximately $435
million if a decision to replace is made. See "Regulation," subcaption
"Nuclear" for additional information relating to the replacement of the steam
generators and ComEd's evaluation of the need to make additional expenditures
to supplement generating capacity in light of generating outages expected in
the midwestern power grid during 1997.1999.
ComEd and the Indiana Company's construction expenditures during 19961997 were
$950$970 million.
6
ComEd's gross investment in nuclear generating capacity (excluding nuclear
fuel) is $14.3$13.4 billion at December 31, 1996,1997 (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, 19961997 were $4,407$4,352 million
and $469$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 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, through equivalent purchased power or through the development of
additional demand-side management resources, in 1998 and each year thereafter.
However, itComEd believes that adequate resources, including cost-effective
demand-side management resources, non-utility generation resources and other-utilityother-
utility power purchases, could be obtained in sufficient quantities to meet
such forecasted needs.
If ComEd instead were to
build additional capacity to meet its needs, it would need to make additional
capital expenditures during 1997.
The 19971998 construction program includes approximately $6$2 million for
environmental control facilities. Expenditures on such facilities were $18
million in 1997 and $16 million $16 millionfor each of the years 1996 and $24 million during 1996, 1995 and 1994, respectively.1995.
Purchase commitments for ComEd, and the Indiana Company, principally related to construction and
nuclear fuel, approximated $1,018$286 million at December 31, 1996.1997. In addition,
ComEd's estimated commitments for the purchase of coal are indicated in the following table.as follows:
CONTRACT PERIOD COMMITMENT(1)
-------- --------- -------------
Black Butte Coal Co............................... 1997-2000 $8071998-2000 $ 679
Decker Coal Co. .................................. 1997-2014 $582
Big Horn Coal Co.1998-2014 427
Other commitments ................................ 1998 $ 2225
------
$1,131
======
--------
(1) In millions of dollars, 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 2123 of Notes to Financial
Statements in the January 31, 199730, 1998 Form 8-K Reports.
7
ComEd forecasts that internal sources will provide more than three-fourthsReports, which are incorporated
herein by reference.
See "Management's Discussion and Analysis of the funds required for ComEd's construction programFinancial Condition and other capital
requirements, including nuclear fuel expenditures, contributions to nuclear
decommissioning funds, sinking fund obligationsResults
of Operations" subcaption "Liquidity and refinancing of scheduled
debt maturities. See Notes 7 and 9 of Notes to Financial StatementsCapital Resources--Utility
Operations--Capital Resources" in the January 31, 199730, 1998 Form 8-K Reports, for the summaries of the annual sinking fund
requirements and scheduled maturities for ComEd preference stock and long-term
debt, respectively. The forecast assumes the rate levels reflected in the Rate
Order (which is the subject of a pending appeal before the Illinois Appellate
Court) remain in effect. See "Rate Matters"which
are incorporated herein for additional information.
The type and amount of external financing will depend on financial market
conditions and the needs and capital structure of ComEd at the time of such
financing. A portion of ComEd's financing is expected to be provided through
the continued sale and leaseback of nuclear fuel through ComEd's existing
nuclear fuel lease facility. See Note 18 of Notes to Financial Statements in
the January 31, 1997 Form 8-K Reports for more information concerning ComEd's
nuclear fuel lease facility. ComEd has approximately $906 million of unused
bank lines of credit at December 31, 1996 which may be borrowed at various
interest rates and which may be secured or unsecured. The interest rate is set
at the time of a borrowing and is based on several floating rate bank indices
plus a spread which is dependent upon the credit ratings of ComEd's
outstanding first mortgage bonds or on a prime interest rate. Collateral, if
required for the borrowings, would consist of first mortgage bonds issued
under and in accordance with the provisions of ComEd's mortgage. See Note 10
of Notes to Financial Statements in the January 31, 1997 Form 8-K Reports for
information concerning lines of credit. See the Statements of Consolidated
Cash Flows in the January 31, 1997 Form 8-K Reports for the construction
expenditures and cash flow from operating activities for the years 1996, 1995
and 1994.
During 1996, ComEd sold and leased back approximately $317 million of
nuclear fuel through its existing nuclear fuel lease facility. In addition,
ComEd issued $199 million of pollution control obligations, the proceeds of
which were used to redeem an equivalent amount of other pollution control
obligations. In January 1997, ComEd issued $150 million principal amount of
7.375% Notes due January 15, 2004, $150 million principal amount of 7.625%
Notes due January 15, 2007 and $150 million principal amount of 8.50% Company-
obligated preferred securities of subsidiary trust due January 15, 2027, the
proceeds of which were used to discharge current maturities of long-term debt
and to redeem on March 11, 1997 $200 million principal amount of First
Mortgage 9 1/2% Bonds, Series 57, due May 1, 2016. See the Statements of
Consolidated Cash Flows and Note 4 of Notes to Financial Statements in the
January 31, 1997 Form 8-K Reportsby reference, for information regarding common stock
activity.
Asthe capital
resources of February 28, 1997, ComEd has an effective "shelf" registration
statement with the SEC for the future sale of up to an additional $505 million
of debt securities and cumulative preference stock for general corporate
purposes of ComEd, including the discharge or refund of other outstanding
securities.ComEd.
Unregulated Operations
Unicom has approved capital expenditures for 19971998 of approximately $56$92
million for Unicom Thermal,UT Holdings, primarily representing the construction costsrelated to an expansion of two of its four
Chicago district cooling facilities, the related distribution piping and
plants in Chicago and its share of construction costs
in Boston and Windsor. Unicom Thermal's first two district cooling facilities
in Chicago began serving customers in May 1995 and July 1996. Its third
district cooling facility in Chicago is scheduled to be completed in 1997.other cities. As of December 31, 1996, Unicom Thermal's1997, UT Holdings' purchase
commitments, principally related to construction, were approximately $42$11
million and Unicom Energy Services' purchase commitments were approximately $8
million.
Unicom expects to obtain funds to invest in its unregulated subsidiaries
principally from dividends received on its ComEd common stock and from bank
borrowings. The availability of ComEd's dividends to Unicom is dependent on
ComEd's financial performance and cash position. Other forms of financing by
ComEd to Unicom or the unregulated subsidiaries of Unicom, such as loans or
additional equity investments, none of which is expected, would be subject to
prior approval by the ICC.
87
Unicom Enterprises has a $200 million credit facility which will expire in
November 1999, of which $105$40 million was unused as of December 31, 1996.1997. The
credit facility can be used by Unicom Enterprises to finance investments in
unregulated 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 are set at the time of a borrowing and are based on either a prime
interest rate or a floating rate bank index plus a spread which varies with
the credit rating of ComEd's outstanding first mortgage bonds. See Note 1013 of
Notes to Financial Statements in Unicom's January 31, 199730, 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.
The foregoing paragraphs in this "Construction Program" section include
forward-looking statements with respect to the future levels of capital
expenditures which are necessarily based upon assumptions regarding estimated
costs and availability of materials and services as well as contingencies.
Unforeseen events or conditions may require changes in the scope of work with
consequent changes in the timing and level of the projected expenditures. In
addition, changes in laws and regulations, or their interpretation and
enforcement, can affect the scope of certain projects, the manner in which
they are undertaken and the costs associated therewith. While ComEd and Unicom
Thermal give consideration to such factors in developing their respective
budgets, such consideration cannot predict the course of future events or
anticipate the interaction of multiple factors beyond management's control
upon project timing and cost. Consequently, actual results could differ
materially from those described.
RATE MATTERS
OnIn January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 1994 rate increase request. The Rate Order provided, among
other things, for (i) an 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 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 31, 1997 Form 8-K Reports for additional information related to
the level of decommissioning cost collections. The ICC also determined that
the Units were 100% "used and useful" and that the previously determined
reasonable costs of such Units, as depreciated, should be included in full in
ComEd's rate base.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. As a result of December 31, 1996, electric
operating revenuesa May 30, 1997 decision of approximately $651 million (excluding revenue taxes) are
subject to refund. Intervenors and ComEd have filed appeals of the Rate Order
with the Illinois Appellate
Court, the Rate Order has been remanded to the ICC for the purpose of
providing further analysis on two issues: (i) the manner in which certain
costs are recovered and oral argument was heardwhich 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'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 28,
1997.
On December 11, 1995, ComEd announced a series of customer initiatives as
part of its larger ongoing effort to address1998 which, if adopted by
the need to give all customer
classesICC, would uphold the opportunity to benefit from increased competitionRate Order and the associated $302 million revenue
increase on an annual basis. A decision is expected early in the electric
utility business, while retaining the benefits (such as reliability)second
quarter of current regulation and ensuring utilities' cost recovery for commitments made
under the obligation to serve customers. The initiatives include a five-year
cap on base electric rates at current levels and various customer service and
incentive pricing programs designed to allow customers more choice and control
over the services they seek and the prices they pay. These initiatives are in
addition to previously implemented special discount contract rate programs for
new or existing industrial customers. ComEd anticipates the initiatives will
be fully implemented in 1997 and will reduce its revenues by approximately $40
million annually (including the effects of previously implemented
9
initiatives and before income tax effects) primarily through changes in energy
utilization. Additionally in September 1996, the ICC approved ComEd's
additional depreciation initiative for 1996. ComEd's costs increased by $30
million in 1996 (before income tax effects), through the increase in
depreciation charges on its nuclear generating units. ComEd also continues to
consider the possibility of additional depreciation options. ComEd expects the
effects of these initiatives will be offset through increased revenues by
growth in its sales.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Likewise, nuclear
decommissioning costs will continue to be collected as described in1998. See Note 14 of Notes to Financial Statements under "Depreciation and Decommissioning" in the January
31, 199730, 1998 Form 8-K Reports.Reports, which are incorporated herein by reference, for
additional information.
See "Changes in the Electric Utility Industry" hereinIndustry--The 1997 Act" above for
information regarding the legislative proposal supported by ComEd.1997 Act.
FUEL SUPPLY
The kilowatthour generation of ComEd and the Indiana Company for 19961997 was
provided from the following fuel sources: nuclear 67%57%, coal 30%, oil 1%39% and natural
gas 2%4%. The lower nuclear generation as a percentage of total generation for
19961997, as compared to recent prior years, is primarily due to scheduled and non-scheduled outages at
certain of ComEd's nuclear generating stations. See "Regulation," subcaption "Nuclear.""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 all of its uranium concentrate requirements through 19971999 and portions of
its uranium concentrate requirements for periods beyond 1997.1999. ComEd's
contracted conversion services are sufficient to meet all of its uranium
conversion requirements through 1998.1998 and portions of 1999. All of ComEd's
enrichment requirements have been contracted through September 19992003 and portions of its
enrichment requirements for periods beyond 1999.2003. Commitments for fuel
fabrication have been obtained for ComEd's nuclear units at least through
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 $15$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 Note 1 of Notes to
Financial Statements under "Deferred Unrecovered Energy Costs""Nuclear Fuel" in the Janaury 31, 1997January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for information related
to the accounting for such costs.
See "Regulation," subcaption "Nuclear" herein"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, 1997,1998, coal inventories approximated 3545
days. The average cost per ton of coal consumed by ComEd and the Indiana
Company for the years 1994,1997, 1996 and 1995, and 1996, including transportation charges,
was $39.50,$38.47, $41.16 and $41.72, and $41.16, respectively.
10
Compared to other utilities, ComEd has relatively low average fuel costs 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 delivery of the
western coal provide for the purchase of certain coal at prices substantially
above currently prevailing market prices, and ComEd has significant purchase
commitments under its contracts. In addition, as of December 31, 1996,1997, ComEd
had unrecovered fuel costs in the form of coal reserves of approximately $364$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 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 reserves, see "Fuel Adjustment Clause" below and Note 1 of Notes to
Financial Statements in the January 31, 199730, 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 four of
the five units at Collins stationStation to dual fuel capability (residual oil and
natural gas) was completed during 1994 and 1996 and aconversion of the fifth
unit is currently
being converted.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 costenergy portion of the fuel used to generate electricity and 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 Note 1 of Notes to Financial Statements1997 Act" in the January 31, 199730, 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 within 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 within 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. 11
See "Changes in the Electric Utility Industry--
Federal Regulation" above for information regarding the FERC Order and the
Federal Energy Policy Act of 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.
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
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 has promulgated 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. Thestations. That contract provided for acceptance by the DOE advised ComEd in
December 1996 that it anticipates it will be unableof such materials
to begin acceptance of
spent nuclear fuelin January 1998; however, that date was not met by January 1998. Itthe DOE and is
expected this delivery schedule willto 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-timeone-
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.
ComEd's capability to store
spent fuel is adequate for some years to come. Dresden stationStation has spent fuel capacity through the year 2001, Zion stationStation
has capacity through 2004,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, at a budgeted costwhich is expected to be funded by the external
decommissioning trusts. See "Depreciation and Decommissioning" under Note 1 of
$21 million.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 facilitydry storage canisters will use existing technology procured to meet the federal
requirements for both storage and transportation of spent nuclear fuel. The
facility is expected tostorage canisters could be used by 1999. Meeting other spent fuel storage
requirements beyond the years stated above could require new and separate
storage facilities. The full costs for ComEd's other nuclear units 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. Between July 1, 1994 and July 1, 1995, there were
no commercial operating sites in the United States for the disposal of low-
level radioactive waste available to ComEd. However, the Barnwell, South
Carolina low-level radioactive waste site was reopened on July 1, 1995 and is
available to ComEd. ComEd entered into an agreement with the Barnwell site
operator and began shipping waste to Barnwell on August 17, 1995. Illinois has entered into a compact with the
state of Kentucky, which has been approved by Congress as required by the
12
Waste Policy Act. Neither Illinois nor Kentucky currently has an operational
site, and onenone is currently not expected to be operational until after the year
2000.2011. ComEd has temporary on-site storage capacity at its nuclear generating
stations for a limited amount of low-level radioactive waste.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-
levellow-level radioactive waste. Since the reopening and availability of the Barnwell
site, ComEd continues to reevaluateevaluate its
options.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 operating and maintenanceO&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
Zion, Dresden and Quad Cities stationsStations to the more recently completed LaSalle, Byron
and Braidwood stations,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. On January 29, 1997,As discussed in "Changes in the
NRC determined thatElectric 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 station should remainstations are currently
on the NRC's list of plants to be monitored
closely, where itthat require increased regulatory scrutiny by the
NRC. Dresden Station has been on the list since being placed on1992 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, in 1992.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 determinedacknowledged improvements at
LaSalle Station but concluded that ComEd's LaSallea 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 nuclear generating stations
should be added to thatremain on the list. Although in each case the NRC recognized that
ComEd had undertaken significant management changes and had accomplished a
number of performance improvements, it expressed concern with specific issues
at each station and expressed a general concern with the sustainability of
improvements as the basis for its determination. 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. In addition, an operational event occurred inAlso at the Zion station control room during February 1997. As a result,meeting, the NRC Regional
staffnoted 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 issuedindicated 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 letter confirming ComEd's commitment to conduct a
comprehensive assessment of the event and to develop and implement a program
to ensure adequate personnel performance in the future, including upgraded
operator training. ComEd must brief the staff on the results of its
investigation, its proposed corrective actions and other matters prior to
restarting either Zion unit, both of which are currently out of service.whole.
In late January 1997, the NRC also took the unusual additional 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 requiresrequired ComEd to submit information regarding the criteria that
it has established, or plansplanned to establish, to measure performance and to
explain ComEd's proposed actions if the criteria arewere not met. The request
statesstated the NRC staff's concerns with the "cyclical safety performance of ComEd
nuclear stations," noting the presence on the list of plants to be monitored closelythat require
increased regulatory scrutiny by the NRC of Dresden, LaSalle and Zion stationsStations
at various times during the past ten10 years. It also noted concerns regarding
"ComEd's ability to establish lasting and effective programs that result in
sustained performance improvement." The request does acknowledge the
management and organizational changes implemented by ComEd, including the
"additional focus placed on management
13
and leadership, accountability, the problem identification and corrective
action processes, material condition improvement, work control, and radiation
protection." It also acknowledges improvements seen at Dresden and Quad Cities
stations; but indicated at the same time performance declines were observed at
both LaSalle and Zion stations. The problems identified by the NRC are
consistent with weaknesses that had been identified in station self-
assessments initiated by ComEd;ComEd, and management had already undertaken to
develop and implement programs designed to address these issues. ComEd
has
preparedsubmitted a response to the NRC whichon March 28, 1997 and the NRC indicated in an
April 25, 1997 public meeting with representatives of ComEd management that
ComEd's management believes provides
sufficient informationresponse was generally adequate to demonstrate itsComEd's ability to
operate its nuclear generating stations while sustaining performance
improvements. ComEd expects
to submit this response toIn 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 March 28, 1997.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 station management with managers
drawn from other utilities which have resolved similar operational and
performance issues.issues, including the appointment of a new Chief Nuclear Officer
in late 1997. It also has also 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. In this
regard, ComEd's management decided to continueLaSalle 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 present unit outages at itsend of the third
quarter of 1998 and LaSalle station until the identified performance issues have been
appropriately addressed. Zion station is also presently out of service. ComEd
presently expects the LaSalle outage to extend into the fall of 1997.
Similarly, the current Zion Unit 2 outage is expected to extend into and
likely beyondrestart by the summerend of 1997, and Zion Unit 1 isthe
first quarter of 1999. Both units at Quad Cities Station are expected to
be outreturn to service by approximately the end of service until earlythe second quarter of 1998. As noted above,In
each case the Company must briefrestart of these units requires the NRC
regional staff as to certain matters before restarting either Zion unit.resolution of issues with
the NRC.
The LaSalle Station outage and an outage at Zion outages areStation were part of
several outages of nuclear and fossil generating stations that several
utilities operating in the Midwestern power grid (including ComEd) arewere
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 the need for reinforcement of its available generating and transmission
capacity and
the availabilityNERC will be analyzing electric reliability and the potential for electric
energy shortages for the summer of power from third parties1998 in light of these
regional circumstances. Such evaluation includes considerationthe potential for
continued outages of additional
expenditures of approximately $50 million, a portion of which is capital,
relating to enhancing generating station availability, transmission
reinforcementnuclear plants operated by ComEd and purchasing power from other utilities as well as
consideration of methods of managing customer demand for power. Such
expenditures could include demand charges for purchasedin
the Midwestern power which are not
recoverable through the fuel adjustment clause under these circumstances, but
do not reflect the related energy costs for such purchased 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 purchasescosts during such year. Final ICC orders have been issued in
fuel reconciliation proceedings for years prior to 1994.1994 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 accordance with a commitment toMarch 1998, 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 discoveredICC Staff also filed testimony in the
Dresdenfuel reconciliation proceeding for 1994 proposing a refund of $36 million. The
1997 Act provides that the fuel reconciliation proceedings for 1994 and Quad Cities units.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 replacedeliminated its FAC
effective January 1, 1997, the stainless steel piping
susceptible to stress corrosion at Dresden Unit 3. ComEd believesICC shall not conduct a fuel reconciliation
proceeding for the remedial
actions taken to minimizeyear 1997 or any subsequent years. See "Changes in the
impact of stress corrosion cracking on BWR
stainless steel reactor coolant piping have been successfully completed on
Dresden Units 2Electric Utility Industry" and 3, Quad Cities Units 1 and 2 and LaSalle Units 1 and 2.
Future work on this piping will consist of routine inspections and repairs. As
a result"Fuel Supply--Fuel Adjustment Clause" above for
information regarding the elimination of ComEd's experience with the effectsFAC.
ComEd has completed replacement of inter-granular stress
corrosion of stainless steel materials in BWRs, an inspection,
14
repair and mitigation program of reactor vessel internals has been
implemented. This effort is intended to prevent non-budgeted costs and
refueling outage extensions resulting from unanticipated repairs occurring
during a refueling outage. For 1997, estimated expenditures for installation
of mitigation systems for LaSalle and Dresden stations are $1.7 million and
$9.4 million, respectively.
ComEd is replacing the steam generators at Byron Unit 1 and
Braidwood Unit
1. The steam generator replacements are currently expected to be placed in
service prior to year-end 1998. The estimated replacement cost is approximately $460 million, including approximately $80 million for the cost
of removal of the existing steam generators. Approximately $130 million of
this estimated cost is included in the 1997 construction program.
Approximately $140 million has been incurred through December 31, 1996. In
addition, ComEd has continued to monitor the degradation ofreplacing the steam generators at its Zion nuclear generating station. Recent studies indicate
thatBraidwood Unit 1. See "Construction
Program--Utility Operations" above for additional information.
Based on ComEd's most recent study approved by the degradation is continuingICC, decommissioning
costs, including the cost of decontamination and that replacement may be required sooner
than 2005. No amount has been includeddismantling, are estimated to
aggregate $4.4 billion in ComEd's construction budget for
replacement of these steam generators, sincecurrent-year (1998) dollars, including a contingency
allowance. ComEd has not decided whether or
when to effect a replacement. Based upon its experience with the replacement
activities at Braidwood and Byron, and depending on the timing of any
replacement at Zion, ComEd believes such cost could be approximately $435
million if a decision to replace is made.
As of December 31, 1996, ComEd estimated thatestimates it will expend approximately $15.5$11.6 billion,
excluding anyincluding a contingency allowance, for decommissioning costs primarily during
the period from 2007 through 2032. Such costs estimated at
December 31, 1996 to aggregate $3.9 billion in current-year (1997) dollars, 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 31, 199730, 1998 Form 8-K Reports, which are incorporated herein by reference,
for additional information regarding decommissioning costs.
During the year 1996,1997, civil penalties were imposed on ComEd on seventen occasions
for violations of NRC regulations in amounts aggregating $450,000.$1,390,000. Since
January 1, 1997,1998, civil penalties were imposed on ComEd on three occasions for
violations of NRC regulations in amounts aggregating $850,000.$495,000. To ComEd's
knowledge, there are fourtwo 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.
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
15
emission sources. Permits authorizing operation of ComEd's fossil 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 havehas pending applications for 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 Quad
Cities station.
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 in March 1995. ComEd is presently
following state activities to promulgate rules implementing the final
guidance, and assessing the extent to which such 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.Station.
The Clean Air Amendments require reductions in nitrogen oxide emissions from
ComEd's and the Indiana Company's fossil fuel generating units. In January 1996, the U.S. EPA issued a
final rule exempting existing sources inside the Chicago ozone non-attainment
area from further nitrogen oxide emission reductions; however, this exemption
is limited pending further studythe finalization of the U.S. EPA Clean Air Act, Section
110. The U.S. EPA issued a proposed rule in late 1997 which would mandate
reductions in nitrogen oxide emissions to address ozone transport. The Illinois EPA is also consideringtransport problems in
much of the eastern United States. In its current form, the proposed rule
would require electric utility sources in a 22-state region to meet a nitrogen
oxide emission reductions at ComEd generating stations outside the Chicago ozone non-
attainment area also 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 that would apply to all of
ComEd's boilers with a compliance date of January 1, 2000. These regulations were finalized on December 19, 1996 and
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 a cleanup, can be sued for costs associated with a U.S. EPA
directed cleanup, 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 16
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
(1997)(1998) dollars. It is expected that the costs associated with investigation
and remediation of former MGP sites will be incurred over a period ofnot to
exceed 30 years. Because ComEd is not able to determine the most probable
liability for such MGP costs, in accordance with accounting standards, a
reserve of approximately $25 million has been included in other noncurrent liabilities on
the Consolidated Balance Sheets in the January 31, 199730, 1998 Form 8-K Reports,
which are incorporated herein by reference, as of December 31, 1997 and 1996,
which reflects the low end of the range of ComEd's estimate of the liability
associated with former MGP sites. In addition, as of December 31, 1997 and
1996, a reserve of $8 million has been included in other noncurrent
liabilities on the Consolidated Balance Sheets in the January 31, 199730, 1998 Form 8-K8-
K Reports, which are incorporated herein by reference, representing ComEd'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.
In 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 near 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. On or about
October 31, 1996, ComEd and the U.S. Government filed with the Court a joint
statement indicating that they had reached an agreement in principle to settle
ComEd's total liability for a total payment of $1.35 million in cash and
services.
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 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, 17
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
Unicom and its subsidiary companies employed 16,871 people athad approximately 16,704 employees as of
December 31, 1996.1997. ComEd and the Indiana Company had approximately 16,84516,663 employees atas of December 31,
1996,1997 of which approximately 9,2709,140 ComEd employees were represented by IBEW
Local 15 of the IBEW and 131 Indiana Company employees were
represented by Local 12502 of the United Steelworkers of America. The existing
collective bargaining agreement15.
A new Collective Bargaining Agreement with Local 15 became effective August
25, 1997, and provides, among other things, for a term expiring on September 30, 1997, a retroactive wage increase to
April 1, 1995 (substantially all of which had been accrued on ComEd's books as
of DecemberMarch 31,
1995), a further2001. A previously negotiated general wage increase of approximately 2.7%1.5% was effective
on
April 1, 1996 and1997, for all employees covered by the Collective Bargaining
Agreement. Additionally, a 1.5%general wage increase of 1.5% was effective October
13, 1997, and was applied on April 1,a retroactive basis to March 31, 1997. In
addition,For each
of the agreement provides that union employees are eligible to receive
1995 and 1996 incentive payments dependent upon the achievement of certain
corporate and individual goals and reflectsremaining three years, a previously implemented voluntary
separation offer3% general wage increase will be granted to
employees who accepted and left ComEd's employcovered by year-end
1995. For the termCollective Bargaining Agreement, effective the
beginning of the agreement, a revision to the provision relative to
contracting work was negotiated which will give ComEd the flexibility needed
to deal with personnel relocations and repositioning following the voluntary
separation employee reduction, as well as to smooth out the peaks and valleys
in the labor requirementspay period that includes April 1st of the business. This flexibility will provide a
stable work environment for ComEd's employees.each such year.
The supplemental agreements covering life insurance, savings and investment
plan, healthcare coverage for medical, dental and visionhealth care plans are effective through September 30, 1997.March 31, 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, MidAmerican 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 14 other Midwest power systems are regular members of MAIN, (whichwhich
also includes 23 associate members and five5 affiliate members).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. 18
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, 19961997, the expiration dates of the
electric franchises held in the 396 municipalities outside of the city of
Chicago capable of granting franchises and in which ComEd currently provides
electric service.
ESTIMATED
NUMBER OF AGGREGATE
FRANCHISE EXPIRATION PERIODS MUNICIPALITIES POPULATION
- ---------------------------- -------------- ----------
1997-2006.............................................1998-2006............................................. 3 89,000
2007-2017............................................. 11 97,00010 95,000
2018-2028............................................. 3 4,000
2029-2039............................................. 1 *
2040 and subsequent years............................. 375 4,032,000376 4,127,000
No stated time limit.................................. 3 61,000
- --------
*Less than 1,000 people.
17
EXECUTIVE OFFICERS OF THE REGISTRANT
The effective year of election of the executive officers to their present positions
and the prior positions they have held with Unicom or other companies, since
January 1, 19921993, are described below.
NAME AND AGE POSITION
-------------- ------------------------------------------------------------------------- -------------------------------------------------------------
James J. Chairman and Chief Executive Officer of Unicom since 1994
O'Connor, 60 and Chairman and Chief Executive Officer of ComEd since
1980.
Leo F. Mullin, Vice Chairman of Unicom since 1995; Vice Chairman of ComEd
54 since 1995; President and Chief Operating Officer of First
Chicago Corporation, 1993 to 1995 and*John W. Chairman, President and Chief Executive Officer of American National BankUnicom and
Trust CompanyRowe, 52 ComEd since March 1998; previously President and Chief Exec-
utive Officer of Chicago, 1992 to 1993.
Samuel K.New England Electric System.
*Oliver D. Executive Vice President and President and Chief Nuclear Of-
Kingsley, ficer--Nuclear Generation Group of UnicomComEd since 1994;October 1997;
Jr., 55 previously Chief Nuclear Officer at the Tennessee Valley Au-
thority.
*Robert J. Executive Vice President of ComEd since Skinner, 58 1993; General ChairmanJanuary 1997 and
Manning, 55 President--Fossil Generation Group of Republican National Committee,
1992 to 1993ComEd since October
1997; previously Senior Vice President of ComEd.
*John C. Senior Vice President and Chief Financial Officer of Staff toUnicom
Bukovski, 55 and ComEd since October 1997; previously Vice President and
Chief Financial Officer of Unicom and ComEd.
*Paul D. Senior Vice President of the United
States, 1992.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 Petkus, 55UT Holdings since 1997 and Unicom
Thermal Technologies Inc. since 1995;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 1992 and1993; previously Vice
Wallace, 50 President of ComEd, 1992.
John C. Vice President of Unicom since 1994 and Vice President of
Bukovski, 54 ComEd since 1989.ComEd.
John T. Vice President of Unicom and ComEd since 1996; Vice President of ComEdpreviously
Costello, 48 since 1996;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 1992since 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 1995.1997 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; Vice President of ComEdpreviously
McCaffrey, 52 since 1996; Vice President of Mercer Management Consulting, 1995 to 1996
53 and Corporate Senior Vice President of First Chicago Corporation, 1992 to 1994.
Roger F.Corpo-
ration.
*Robert E. Comptroller of Unicom since 1994 and Comptroller of ComEd
Kovack, 48 since 1989.
Dennis F. Treasurer of Unicom since 1994 and Treasurer of ComEd since O'Brien, 51 1989.July 1997; previously
Berdelle, 42 held various financial reporting and analysis positions
within ComEd.
David A. Secretary of Unicom and ComEd since 1994 and Secretary of ComEd since1989, respec-
Scholz, 55 1989.56 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 29, 1997.28, 1998.
There are no family relationships among the executive officers, directors
and nominees for director of Unicom.
1918
OPERATING STATISTICS
YEAR ENDED DECEMBER 31
----------------------------------
1997 1996 1995 1994
---------- ---------- ----------
Operating Revenues (thousands of dol-
lars)(1):
Residential...............................Residential.............................. $2,552,742 $2,541,873 $2,621,038 $2,273,763
Small commercial and industrial...........industrial.......... 2,153,113 2,113,716 2,073,998 1,917,084
Large commercial and industrial...........industrial.......... 1,467,574 1,445,708 1,425,784
1,381,251
Public authorities........................authorities....................... 505,907 503,004 487,142
452,512
Electric railroads........................railroads....................... 29,785 29,651 26,894 26,179
Provisions for revenue refunds--ultimate
consumers................................consumers............................... (45,470) -- --
(15,909)
Sales for resale (net of provisions for
revenue refunds).........................resale......................... 336,480 235,041 207,256
187,147
Other revenues............................revenues........................... 82,891 68,031 67,933 55,494
---------- ---------- ----------
Total..................................Total................................. $7,083,022 $6,937,024 $6,910,045
$6,277,521
---------- ---------- ----------
---------- ---------- ----------========== ========== ==========
Sales (millions of kilowatthours):
Residential...............................Residential.............................. 22,151 22,310 23,303 21,376
Small commercial and industrial...........industrial.......... 25,860 25,131 25,313 24,320
Large commercial and industrial...........industrial.......... 24,074 23,896 23,777
23,450
Public authorities........................authorities....................... 7,322 7,336 7,158
6,885
Electric railroads........................railroads....................... 418 424 390
397
Sales for resale..........................resale......................... 15,679 12,178 11,412 8,743
---------- ---------- ----------
Total..................................Total................................. 95,504 91,275 91,353
85,171
---------- ---------- ----------
---------- ---------- ----------========== ========== ==========
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear..................................Nuclear................................. 49,136 62,610 70,261
63,795
Fossil...................................Fossil.................................. 36,604 30,315 26,231
26,361
Fast-start peaking units.................units................ 121 123 116 87
---------- ---------- ----------
Net generation.........................generation........................ 85,861 93,048 96,608
90,243
Purchased power...........................power.......................... 16,672 6,129 2,475 2,071
Company use and losses....................losses................... (7,029) (7,902) (7,730) (7,143)
---------- ---------- ----------
Total..................................Total................................. 95,504 91,275 91,353
85,171
---------- ---------- ----------
---------- ---------- ----------========== ========== ==========
Cost of Fuel Consumed (per million Btu):
Nuclear...................................Nuclear.................................. $0.57 $0.53 $0.52
$0.53
Coal......................................Coal..................................... $2.28 $2.41 $2.43
$2.31
Oil.......................................Oil...................................... $3.90 $3.41 $3.06
$2.89
Natural gas...............................gas.............................. $2.69 $2.75 $1.85
$2.27
Average all fuels.........................fuels........................ $1.33 $1.17 $1.05 $1.08
Peak Load (kilowatts)........................................... 18,497,000 18,916,000 19,212,000 17,928,000
Number of Customers (at end of year):
Residential...............................Residential.............................. 3,123,364 3,102,101 3,079,381 3,047,354
Small commercial and industrial...........industrial.......... 291,143 289,803 288,848 286,793
Large commercial and industrial...........industrial.......... 1,566 1,550 1,539
1,528
Public authorities........................authorities....................... 12,180 12,142 12,039 12,059
Electric railroads and resale.............resale............ 53 46 26 20
---------- ---------- ----------
Total..................................Total................................. 3,428,306 3,405,642 3,381,833
3,347,754
---------- ---------- ----------
---------- ---------- ----------========== ========== ==========
Average Annual Revenue Per Residential
Cus-
tomerCustomer
(excluding light bulb service)....................... $816.91 $819.52 $852.18 $748.10
Average Use Per Residential Customer
(kilowatthours)..................................................... 7,108 7,213 7,598 7,056
Average Revenue Per Kilowatthour(2):Kilowatthour:
Residential (excluding light bulb serv-
ice)......................................................................... 11.49c 11.36c 11.22c 10.60c
Small commercial and industrial...........industrial.......... 8.33c 8.41c 8.19c 7.88c
Large commercial and industrial...........industrial.......... 6.10c 6.05c 6.00c 5.89c
- --------
(1) See "Rate Matters" above.
(2) Average revenue per kilowatthour after reflecting provisions19
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 revenue
refundsinformation regarding Unicom and after reflecting revenue refundsComEd's Year 2000
conversion.
MARKET RISKS
ComEd is exposed to market risk due to changes in interest rates and relatedchanges
in the market price for electricity. Exposure for interest creditedrate changes
relates to customersits 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 1994 was as follows:
1994
--------------------------------
AFTER DEDUCTIONS FOR
--------------------------------
PROVISIONS FOR REVENUE
REVENUE REFUNDS REFUNDS CREDITED
--------------- ----------------
Residential 10.57c 8.22c
Small commercial
and industrial 7.86c 6.43c
Large commercial
and industrial 5.88c 4.76c
20
FORWARD LOOKINGthe January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for additional
information.
FORWARD-LOOKING INFORMATION
Certain portions ofExcept for historical data, the information contained in these Annual
Reports contain forward lookingconstitutes forward-looking statements. Forward-looking statements are
inherently uncertain and subject to risks. Such statements should be viewed
with respect to the consequences of future events, including estimates of
costs associated with certain actions and outcomes. Unforeseen eventscaution. Actual results or conditions may require changes in the factors affecting such estimates and the
projected results thereof. Consequently, actual resultsexperience could differ materially from the
estimates presented. Seeforward-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 last paragraph under the
subheading "Construction Program"1997 Act in
"Item 1. Business" for additional
informationBusiness," subcaption "Changes in the Electric Utility Industry--The
1997 Act" (2) statements regarding certain caveats affecting forward looking statements.
Forward looking information is containedestimated capital expenditures in various sections of these Annual
Reports, including, without limitation, (i) "Item 1.
Business" underBusiness," subcaption "Construction Program," (3) statements regarding the
subheadingestimated return to service of certain nuclear generating units and the costs
of purchased power in "Item 1. Business," subcaption "Regulation--Nuclear,"
with respect to(4) statements regarding the estimated costs of decommissioning nuclear generating
stations (ii)in "Item 1. Business" under the
subheading "Construction Program,Business," regarding ComEd's construction program
budget, (iii) "Item 1. Business" under the subheadings "Construction Program"
andsubcaption "Regulation--Nuclear," regarding the time frame for steam generator
replacement at ComEd's Zion nuclear generating station, (iv) "Item 1.
Business" under the subheading "Regulation--Environmental,"(5)
statements regarding cleanup costs associated with MGPMGPs and other remediation
sites in "Item 1. Business," subcaption "Regulation--Environmental" and (v)(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
31, 199730, 1998 Form 8-K Report, which is incorporated herein by reference, which
contain forward lookingforward-looking information as described therein, and in the case of
ComEd, incorporate portions of ComEd's January 31, 199730, 1998 Form 8-K Report, which
is incorporated herein by reference, which contain forward lookingforward-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 reductions 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 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 66%64%, 10%, 21%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 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 1,321,0001,407,000(4)
----------
NetCompany owned net non-summer
generating capability 22,511,00019,138,000
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 21,954,00020,198,000
==========
- --------
(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 MidAmerican Energy Company in the
Quad Cities station.
(2) GeneratingStation.
(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.
21
(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........................................................... 2,5332,545
138,000........................................................... 2,7252,737
21
ComEd's electric distribution system includes 38,04038,630 pole line miles of
overhead lines and 32,85034,579 cable miles of underground lines. A total of
approximately 1,320,3501,334,930 poles are included in ComEd's distribution system, of
which about 590,630593,390 poles are owned jointly with telephone companies.
ITEM 3. LEGAL PROCEEDINGS.
During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and 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 thesethe 1989 cases, which verdicts were upheld on
appeal. The remaining claims in the 1989 actions are the subject of a
settlement agreement entered into by counsel for the plaintiffshave been settled and Cotter. If
the settlement agreement is implemented, the 1989 actions will be
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. A case relating to 14 of the plaintiffs in the 1991
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 these
customers to be without power for up to 48 hours. In the wake of these power
outages, 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.
ComEd has appeals pending in applicable counties in connection withOn 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 nuclear generating
stations.Stations, as well as other properties. These proceedings seek refunds
and reduced valuations, resulting in lower property taxes for the challenged
and subsequent years.
In January 1996,
the PTAB rendered a decision substantially adopting ComEd's positions with
respect to the Byron nuclear station. Thereafter, the Ogle County Board of
Review issued a revised assessment. ComEd has received tax bills for 1995
taxes, payable in 1996, based on the revised assessment. However, certain Ogle
County taxing bodies have filed legal actions challenging both the PTAB
decision and the Board of Review assessment. ComEd has also challenged the
assessment, on the grounds that it does not fully implement the PTAB decision.
ComEd continues to challenge tax assessments with respect to other properties.
The reduction in ComEd's provision for real estate taxes in 1995 and 1996
reflects the bills received.
On November 1, 1996, the Citycity 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
Citycity 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 yearten-year
period that commenced in January 1992. ComEd is disputing the City'scity's
allegations. During the fivesix years since January 1992, ComEd has expended
approximately $426$499 million to enhance electric service reliability and energy
supply for the City,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 1997, six ComEd employees who were formerly located at ComEd's
nuclear station in Zion, Illinois brought state and federal claims against
ComEd, alleging that they were 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 former positions, back pay, compensatory
damages, attorneys' fees and punitive damages. The aggregate amount of
punitive damages requested equals $18 million. They also filed a claim with
the U.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 proposed facility. If Tower and QST are allowed to
pursue the installation and interconnection of their proposed facility, ComEd
could lose customer revenue. ComEd does not believe 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 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 Matters," "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.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies 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........................................ Baa3 BBB- BBB-
Convertible preferred stock......................... baa3 BBB- BBB-
Preference stock.................................... baa3 BBB- BBB-
ComEd-obligated mandatorily redeemable preferred se-
curities
of the Trust.......................................Trust Securities.................................... baa3 BBB- BBB-
Commercial paper.................................... P-2 A-2 D-2
In23
As of January 1997,1998, Moody's changed the rating outlook on ComEd's securities from "stable" tois
"negative" and Duff & Phelps addedhas classified ComEd's securities toas "Rating
Watch-Down." As of March 1997, Standard & Poor'sS&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. A 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'sS&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. A 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 23
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").
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 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-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 D-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 3 of Unicom's January 31, 199730, 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 3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 4 through 16,20, and the audited consolidated financial
statements and notes thereto on pages 1722 through 4554 of Unicom's January 31,
199730,
1998 Form 8-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Construction Program," "Regulation" and "Changes in the Electric Utility Industry"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 Unicom's Annual Meeting of shareholders to be held on
May 29, 199728, 1998 is incorporated herein by reference to the information under the
heading "Security Ownership of Certain Beneficial Owners and Management" in
Unicom's definitive Proxy Statement ("19971998 Proxy Statement") to be filed with
the SEC prior to April 30, 19971998, 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 24
Annual Report on Form
10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and under the heading "Security Ownership of Certain Beneficial
Owners and Management" ofin Unicom's 19971998 Proxy Statement, which are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to
the information labelled "Compensation of Directors" and the paragraphs under
the heading "Executive Compensation" (other than the paragraphs under the
heading "Corporate Governance and Compensation Committee Report on Executive
Compensation") ofin Unicom's 19971998 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" in Unicom's 19971998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
25
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 executive officers to their present positions
and the prior positions they have held with ComEd or other companies, since
January 1, 19921993, are described below.
NAME AND AGE POSITION
------------ ------------------------------------------------------------------------------------------ -----------------------------------------------
James J. Chairman and Chief Executive Officer of ComEd since 1980 and
O'Connor, Chairman and Chief Executive Officer of Unicom since 1994.
60
Leo F. Vice Chairman of ComEd since 1995; Vice Chairman of Unicom
Mullin, 54 since 1995; President and Chief Operating Officer of First
Chicago Corporation, 1993 to 1995 and*John W. Rowe, 52 Chairman, President and Chief Executive Officer
of American National BankComEd and Trust
CompanyUnicom since March 1998; previ-
ously President and Chief Executive Officer of
Chicago, 1992 to 1993.
Samuel K.New England Electric System.
*Oliver D. Kingsley, Jr., 55 Executive Vice President and President and
Chief Nuclear Officer--Nuclear Generation
Group of ComEd since 1993; President of Unicom since 1994;
Skinner, 58 General Chairman of Republican National Committee, 1992 to
1993 andOctober 1997; previously
Chief of Staff to President ofNuclear Officer at the United States,
1992.
ThomasTennessee Valley
Authority.
*Robert J. Manning, 55 Executive Vice President of ComEd since January
1997 and President--Fossil Generation Group of
ComEd since October 1997; previously Senior
Maiman, 58Vice 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 of ComEd since 1992 to Januaryand
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 Presi-
dentPresident of ComEd 1992.
Robertand Unicom since
October 1997; Vice President of ComEd and
Unicom, September 1997 to October 1997; previ-
ously Vice President of USG Corporation.
*Pamela B. Strobel, 45 Senior Vice President and General Counsel of
ComEd and Unicom since October 1997; previ-
ously Vice President and General Counsel of
ComEd.
*Michael J. ExecutiveWallace, 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; Senior
Manning, 54 Vice President of ComEd, 1992 to January 1997 and Vice Presi-
dent of ComEd, 1992.
Donald A. Senior Vice President of ComEd since 1992; Vice President of
Petkus, 55 ComEd, 1992; Senior Vice President of Unicom since 1995 and
President of Unicom Thermal since 1995.
Cordell Senior Vice President of ComEd, 1987 to 1997 (Announced re-
Reed, 59 tirement in January 1997).
Michael J. Senior Vice President of ComEd since 1993 and Vice President
Wallace, 49 of ComEd, 1992 to 1993.
John C. Vice President of ComEd since 1989 and Vice President of
Bukovski, Unicom since 1994.
54
Frank M. Vice President of ComEd since January 1997;previ-
ously Governmental Af-
Clark, 51 fairsAffairs Vice President 1996 to
January 1997 and Governmental Affairs Manager, 1992 to 1996.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 1996;January 1998; previ-
ously General Manager of Corporate Rela-
Costello, tions of ComEd, 1995General Electric Company's
Nuclear Services Company, 1997 to 1996; Manager of Public Affairs of
48 ComEd, 1992 to 1995January 1998 and
Vice President at PECO Energy.
Emerson W. Lacey, 56 Vice President of Unicom since 1996.
Louis O.ComEd.
Andrew J. Lynch, 51 Vice President of ComEd since 1992 and Assistant Vice Presi-
DelGeorge, dentApril 1997; previously
President of ComEd, 1992.
49
William H.First Chicago Trust Company of New
York.
Thomas J. McCaffrey, 53 Vice President of ComEd since 1992 and Manager of Marketing
Downey, 52 and Customer Services of ComEd, 1992.
William H. Vice President of ComEd since 1994; Manager of Quality of
Dunbar, ComEd, 1992 to 1994 and Division Vice President of ComEd--
Jr., 56 Chicago North, 1992.
26
NAME AND AGE POSITION
------------ --------------------------------------------------------------
J. Stanley Vice President of ComEd since 1987.
Graves, 60
Harold W. Vice President of ComEd since 1995; Executive Vice President
Keiser, 53 and Chief Operating Officer of Entergy Operations, Inc., 1993
to 1995 and Senior Vice President of Pennsylvania Power &
Light Company, 1992 to 1993.
Emerson W. Vice President of ComEd since 1992 and Fossil Engineering and
Lacey, 55 Construction Manager of ComEd, 1992.
Thomas J. Vice President of ComEdUnicom since 1996; Vice President of Unicom
McCaffrey, since 1996;pre-
viously Vice President of Mercer Management Consulting,
52Con-
sulting, 1995 to 1996 and Corporate Senior Vice
President of First Chicago Corporation, 1992 to 1994.
Paul D.Corporation.
J. Stephen Perry, 59 Vice President of ComEd since 1992 and Manager of Transmission
McCoy, 46 and Distribution Operations of ComEd, 1992.
Robert A.1994; previously Se-
nior Vice President of ComEd 1994 to 1996 (Resigned January 1997)
Paul, 53 and Corporate Purchasing Manager of Digital Equipment Corpo-
ration, 1992 to 1994.
J. StephenIllinois Power Company.
James A. Small, 54 Vice President of ComEd since 1994 and Senior Vice President
Perry, 581993; previously Gen-
eral Manager of IllinoisFuel Services of Georgia Power Company, 1992 to 1994.
James A.Com-
pany.
Harold Gene Stanley, 57 Vice President of ComEd since 1993 and General Manager of Fuel
Small, 53 Services of Georgia Power Company, 1992 to 1993.
Pamela B.September 1997; Site
Vice President at Braidwood Station, 1996 to 1997;
previously Vice President at Pennsylvania Power and
General Counsel of ComEd since 1993 and
Strobel, 44 Partner of Sidley & Austin, 1992 to 1993.
Roger F.Light Company.
*Robert E. Berdelle, 42 Comptroller of ComEd and Unicom since July 1997;
previously held various financial reporting and
analysis positions within ComEd.
David A. Scholz, 56 Secretary of ComEd and Unicom since 1989 and Comptroller of Unicom
Kovack, 48 since 1994.
Dennis F. Treasurer of ComEd since 1989 and Treasurer of Unicom since
O'Brien, 51 1994.
David A. Secretary of ComEd since 1989 and Secretary of Unicom since
Scholz, 55 1994.1994,
respectively.
--------
* Executive Officers for Section 16 reporting purposes.
The present term of office of each of the above executive officers except
for Mr. Reed and Mr. Paul, extends to
the first meeting of ComEd's Board of Directors after the next annual election
of Directors scheduled to be held on May 29, 1997.28, 1998.
27
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.
27
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 "Cash Dividends Paid Per Share of Common Stock" on page 3 of
ComEd's January 31, 199730, 1998 Form 8-K Report.
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 3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 4 through 15,19, and the audited consolidated financial
statements and notes thereto on pages 1621 through 4251 of ComEd's January 31,
199730,
1998 Form 8-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Changes in the Electric Utility Industry," "Construction Program,"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 29, 199728, 1998 is incorporated herein by reference to information under the
heading "Security Ownership of Certain Beneficial Owners and Management" in
ComEd's definitive Information Statement ("19971998 Information Statement") to be
filed with the SEC prior to April 30, 19971998, 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 under the heading "Security Ownership of Certain Beneficial
Owners and Management" in ComEd's 19971998 Information 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" and the paragraphs under
the heading "Executive Compensation" (other than the paragraphs under the
heading "Corporate Governance and Compensation Committee Report on Executive
Compensation") ofin ComEd's 19971998 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" ofin ComEd's 19971998 Information
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
2829
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)FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS:
PAGE OF
JANUARY 31,
199730,
1998 FORM 8-
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 31, 199730, 1998 Form 8-K
Report, and into the ComEd Annual Report on Form 10-K by
reference to the indicated page or pages of ComEd's January
31, 199730, 1998 Form 8-K Report:
Report of Independent Public Accountants.................... 17 1621 20
Statements of Consolidated IncomeOperations for the years 1997,
1996 1995
and 1994................................................... 18 171995.............................................. 22 21
Consolidated Balance Sheets--December 31, 19961997 and 1995..... 19-20 18-191996..... 23-24 22-23
Statements of Consolidated Capitalization--December 31, 19961997
and 1995................................................... 21 201996................................................... 25 24
Statements of Consolidated Retained Earnings (Deficit) for
the years 1997, 1996 1995 and 1994........................................ 22 211995.............................. 26 25
Statements of Consolidated Cash Flows for the years 1997,
1996 1995 and 1994.............................................. 23 221995.............................................. 27 26
Notes to Financial Statements............................... 24-45 23-4228-54 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.............................. 3738 x
Report of Independent Public Accountants on
Supplemental Schedule.............................. 3839 x
Schedule II--Valuation and Qualifying Accounts for
each of the three years in the period
ended
December 31, 1996........................ 391997........................ 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.
2930
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, 1996,1997, the assets of the nonconsolidated
subsidiaries, in the aggregate, approximatedwere less than 1% of ComEd's consolidated
assets. The 19961997 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)-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)-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 DecemberDecem-
ber 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective JanuaryJan-
uary 28, 1994 as amended through January 29, 1997.March 11,
1998. x
(3)-4 By-Laws of Commonwealth Edison Company, effectiveef-
fective September 2, 1988 as amended through
January 29,
1997.March 11, 1998. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Harris Trust and Savings
Bank, as current successor Trustee), dated
July 1, 1923, Supplemental Indenture thereto
dated Au-
gustAugust 1, 1944, and amendments and
supplements thereto dated, respectively, AugustAu-
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, Janu-
aryJanuary 15, 1977 and June 3, 1977
(File No. 2-60201, Form S-7, Exhibit
2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, May 17,
1978, August 31, 1978, June 18, 1979, June
20, 1980, April 16, 1981, April 30, 1982,
April 15, 1983, April 13, 1984 and April 15,
1985 (File No. 2-99665, Form S-3, Exhibit
(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
3031
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 Indentures to Mortgage dated
July 1, 1923 dated, respectively, February
15, 1990 and June 15, 1990 (File No. 33-38232,33-
38232, Form S-3, Ex-
hibitsExhibits (4)-11 and (4)-12)-
12). x
*(4)-6-5 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,-
12, (4)-13 and (4)-14). x
*(4)-7-6 Supplemental Indenture to Mortgage dated July
1, 1923 dated February 1, 1992 (File No. 1-1839,1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (4)-18). x
*(4)-8-7 Supplemental Indenture to Mortgage dated July
1, 1923 dated May 15, 1992 (File No. 33-48542,33-
48542, Form S-3, Exhibit (4)-14). x
*(4)-9-8 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, Form S-3, Exhibits (4)-13 (4)-14 and (4)-15)-
14). x
*(4)-10-9 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)-11-10 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-
hibitsExhibits (4)-12 and (4)-13). x
*(4)-12-11 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)-13-12 Supplemental Indenture to Mortgage dated July
1, 1923 dated July 15, 1993 (File No. 1-1839,1-
1839, Form 10-Q for the quarter ended June
30, 1993, Ex-
hibitExhibit (4)-1). x
*(4)-14-13 Supplemental Indenture to Mortgage dated July
1, 1923 dated January 15, 1994 (File No. 1-1839,1-
1839, Form 10-K for the year ended December
31, 1993, Exhibit (4)-15). x
*(4)-15-14 Supplemental Indenture to Mortgage dated July
1, 1923 dated December 1, 1994 (File No. 1-1839,1-
1839, Form 10-K for the year ended December
31, 1994, Exhibit (4)-16). x
(4)-16*(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, Exhibit (4)-16). x
31
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
*(4)-17-16 Instrument of Resignation, Appointment and
Ac-
ceptanceAcceptance dated January 31, 1996, under the
pro-
visionsprovisions of the Mortgage dated July 1,
1923, and Indentures Supplemental thereto
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-28). x
32
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-18-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1,
1923 and Indentures Supplemental thereto
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-29). x
*(4)-19-18 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, OctoberOcto-
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)-20). x
*(4)-20-19 Indenture of ComEd dated February 15, 1973 to
The First National Bank of Chicago, Trustee
(LaSalle National Bank, successor Trustee),
and Supple-
mentalSupplemental Indenture thereto dated
July 13, 1973 (File No. 2-66100, Form S-16,
Exhibit (b)-2). x
*(4)-21-20 Indenture dated as of September 1, 1987 betweenbe-
tween ComEd and Citibank, N.A., Trustee relatingre-
lating to Notes (File No. 33-20619, Form S-3,S-
3, Exhibit (4)-
13)-13). x
*(4)-22-21 Supplemental Indenture to Indenture dated
Septem-
ber 1, 1987 dated May 18, 1988 (File No. 33-
23036, Form S-3, Exhibit (4)-14). x
*(4)-23 Supplemental Indenture to Indenture dated Septem-
berSeptember 1, 1987 dated July 14, 1989 (File
No. 33-
32929,33-32929, Form S-3, Exhibit (4)-16). x
*(4)-24(4)-22 Supplemental Indenture to Indenture dated
Septem-
berSeptember 1, 1987 dated AprilJanuary 1, 1991 (File No. 33-
44018, Form S-3, Exhibit (4)-21).1997. x
*(4)-25 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)-26 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)-27 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
32
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
*(4)-28-23 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, 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 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)-30-25 Letter Agreement dated as of September 30, 1996,29,
1997, among Commonwealth Edison CompanyComEd and certain of the Banks
party to the Credit Agreement dated as of
October 1, 1991. x
(4)-31*(4)-26 Amended and Restated Credit Agreement dated
as of November 15, 1996, among Unicom
Enterprises, Inc., the Banks Named Therein and
Citibank, N.A. (File No. 1-11375, Form 10-K
for the year ended December 31, 1996,
Exhibit (4)-31). x
(4)-32*(4)-27 Amended and Restated Guaranty dated as of Novem-
berNo-
vember 15, 1996, by Unicom Corporation in favor of the
Lenders and LC Banks parties to the afore-
mentioned Credit Agreement with Unicom Enter-
prises Inc. (included as Exhibit E in Exhibit
(4)-31). x
*(4)-33 Guaranty dated November 22, 1994, by Unicom Cor-
poration in favor of Citibank, N.A.En-
terprises (File No. 1-
11375,1-11375, Form 10-K for
the year ended December 31, 1994,1996, Exhibit
(4)-37). x
(4)-34-32). x
33
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-28 Indenture dated September 1, 1995 between
ComEd and Wilmington Trust Company. (File
No. 1-1839, Form 10-K for the year ended De-
cember 31, 1996, Exhibit (4)-34). x
(4)-35*(4)-29 First Supplemental Indenture dated September
19, 1995 to Indenture dated September 1,
19951995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (4)-
35). x
(4)-36*(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 December 31, 1996, Exhibit (4)-
36). x
*(4)-31 Rights Agreement dated as of February 2, 1998
between Unicom Corporation and First Chicago
Trust Company of 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 NovemberNo-
vember 23, 1993, between CommEd Fuel Company,Compa-
ny, 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)- Unicom Corporation Long-Term Incentive Plan (FileAmended and Restated Long-
2 No. 1-1839, ComEd Proxy Statement dated March
26, 1993, Exhibit A). x
+*(10)- Amendment to Unicom Corporation Long-Term Incen-
3 tive Plan, effective September 1, 1994 (File No.
33-56991, Form S-8, Exhibit (4)-4). x
+*(10)- 1994 Long-Term Performance Unit Award for Execu-
4 tive and Group Level Employees Payable in 1997
under the 1993 Long-TermTerm Incentive Plan (File No. 1-1839, Form 10-K/A-1 for the year ended De-
cember 31, 1993,1-11375,
Unicom Proxy Statement dated April 9, 1997,
Exhibit (10)-5)A). x x
33
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
+*(10)- 1995 Long-Term Performance Unit Award for
Execu-
5 tive3 Executive and Group Level Employees Payable
in 1998 under the Unicom Corporation Long-TermLong-
Term Incentive Plan, as amended (File No.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 Execu-
6 tiveEx-
4 ecutive 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 DecemberDecem-
ber 31, 1995, Exhibit (10)-9). x x
+*(10)-7 1996 Variable Compensation Award for Management
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, 1995,
Exhibit (10)-10). x x
+*(10)-8 1996 Award to Mr. O'Connor, Mr. Mullin and Mr.
Skinner 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)-11). x x
+ (10)-9 Unicom Corporation General Provisions Regarding
1996 Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan. x x
+ (10)- Unicom Corporation General Provisions Regarding
10 1996B Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan. x x
+ (10)--5 1997 Long-Term Performance Unit Award for Execu-
11 tiveEx-
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 Managment Employ-
12 eesManagement
10 Employees under the Unicom Corporation Long-Term In-
centiveLong-
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.
13 Skinner under the Unicom Corporation
Long-Term Incentive Plan. x x
+(10)- 1998 Annual Incentive Award for Management
12 Employees under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)- Unicom Corporation Deferred Compensation Unit
1413 Plan, as amended (File Nos. 1-11375 and 1-1839,1-
1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1995, Exhibit (10)-12). x x
+*(10)- Deferred Compensation Plan (included in Article
15Arti-
14 cle Five of Exhibit (3)-2 above). x
+*(10)- Management Incentive Compensation Plan, effective
16ef-
15 fective January 1, 1989 (File No. 1-1839,
Form 10-K for the year ended December 31,
1988, Exhibit (10)-
4)-4). x
+*(10)- Amendments to Management Incentive Compensation
17Compensa-
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)-
5). x
+*(10)- Amendment to Management Incentive Compensation
18Compensa-
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)- Retirement Plan for Directors, effective Sep-
18 tember 1, 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)- 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, 1991,1996, Exhibit (10)-6). x
34
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
+ (10)-
Retirement Plan for Directors, effective Septem-
19 ber 1, 1994, as amended through March 12, 1997. x
+ (10)- Retirement Plan for Directors, effective January
20 1, 1987, as amended through March 12, 1997.20) x
+*(10)- Unicom Corporation 1996 Directors' Fee Plan
20 (File
21 No. 1-11375, Unicom Proxy Statement
dated April 8, 1996, Appendix A). x x
+*(10)- Executive Group Life Insurance Plan (File No.
1-
22 1839,21 1-1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1980, Exhibit (10)-3). x
+*(10)- Amendment to the Executive Group Life Insurance
23Insur-
22 ance Plan (File No. 1-1839, Form 10-K for
the year ended December 31, 1981, Exhibit
(10)-4). x
+*(10)- Amendment to the Executive Group Life Insurance
24Insur-
23 ance Plan dated December 12, 1986 (File No.
1-1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1986, Exhibit (10)-6). x
35
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
+*(10)- Amendment of Executive Group Life Insurance
24 Plan
25 to implement program of "split dollar
life in-
surance"insurance" dated December 13, 1990
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1990, Exhibit (10)-10). x
+*(10)- Commonwealth Edison Company Supplemental Manage-
26 mentMan-
25 agement Retirement Plan (File No. 1-1839,
Form 10-K for the year ended December 31,
1985, Exhibit (10)-6). x
+*(10)- Amendment of Executive Group Life Insurance
26 Plan
27 to stabilize the death benefit applicableapplica-
ble to participants dated July 22, 1992
(File No. 1-
1839,1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (10)-13). x
+*(10)- Letter Agreement dated December 16, 1992 between
28 Com-
monwealth Edison Companybe-
27 tween ComEd and Samuel K. Skinner (File No.
1-1839, Form 10-K for the year ended DecemberDecem-
ber 31, 1992, Exhibit (10)-14). x
+*(10)- Amendment dated May 31, 1995 to Letter Agreement
29Agree-
28 ment dated December 16, 1992 between Commonwealth Ed-
ison CompanyComEd
and Samuel K. Skinner (File No. 1-1839, Form
10-K for the year ended December 31, 1995,
Exhibit (10)-27). x
+ +*(10)- Amendments dated December 11, 1996 and March
29 24,
30 1997 to Letter Agreement dated December
16, 1992 between Commonwealth Edison CompanyComEd and Samuel K. Skinner.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 between
31 Commonwealth Edison Companybe-
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
Agree-
32 ment31 Agreement dated November 14, 1995 between
Common-
wealth Edison CompanyComEd 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
Sav-
33 ings32 Savings Plan (File No. 1-1839, Form 10-Q for
the quarter ended June 30, 1994, Exhibit
(10)-2). x
35
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
+*(10)- Amendment No. 1 to Commonwealth Edison Company
34Com-
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 earningsearn-
ings to fixed charges and ratios of earnings
to fixed charges and preferred and preferenceprefer-
ence stock divi-
denddividend 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 Compa-
ny.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 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 31, 1997.30, 1998. x
(99)-2 Commonwealth Edison Company'sComEd's Current Report on Form 8-K dated January 31, 1997.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.
36A 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 31, 1997.30, 1998.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed 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 31, 1997
3730, 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 31, 1997.30, 1998.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed 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 31, 1997
3830, 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, 1994
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,910 $ (190) $ -- $ -- $10,720
======= ======= ====== ======== =======
Estimated Obsolete Materi-
als....................... $13,066 $13,650 $ -- $(13,026)(b) $13,690
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $29,522 $ 5,039 $ -- $ (2,039)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $56,734 $20,270 $7,802 $(29,494)(d) $55,312
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1995
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,720 $ 1,108 $ -- $ -- $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..... $32,522 $ 2,271 $ -- $ (2,271)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $55,312 $21,135 $4,671 $(23,142)(d) $57,976
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1996
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $11,828 $ 1,065 $ -- $ -- $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..... $32,522 $ 1,7061,728 $ -- $ (1,706)(1,728)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $57,976 $13,325 $3,280$10,892 $5,713 $(20,609)(d) $53,972
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1997
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $12,893 $ 4,651 $ -- $ -- $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..... $32,522 $ 2,410 $ -- $ (2,910)(c) $32,022
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $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 $25,287,000,$50,574,000,
$41,846,000 and $26,278,000 in 1997, 1996 and $41,846,000 in 1994, 1995, and 1996, respectively.
(b) WriteoffWrite-off of obsolete materials.
(c) Expenditures for site investigation and cleanup costs.
(d) Payments of claims and related costs.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
39
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 28TH
DAY OF MARCH 1997.
UNICOM CORPORATION
James J. O'Connor
By_____________________________
James J. O'Connor, Chairman
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 28TH DAY OF
MARCH 1997.
SIGNATURE
- ----------------------------
TITLE
---------------------
James J. O'Connor Chairman and Chief
- ---------------------------- Executive Officer and
James J. O'Connor Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Vice President (principal
John C. Bukovski financial officer)
Roger F. Kovack Comptroller (principal
- ---------------------------- accounting officer)
Roger F. Kovack
Jean Allard* Director
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
Edward A. Mason* Director
Leo F. Mullin* Vice Chairman and
Frank A. Olson Director
Director
Samuel K. Skinner* President and Director
David A. Scholz
*By____________________________
David A. Scholz, Attorney-in-
fact
[Signature page to Unicom Corporation Annual Report on Form 10-K]
40
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 28TH27TH
DAY OF MARCH, 1997.
COMMONWEALTH EDISON COMPANY
James J. O'Connor
By_____________________________
James J. O'Connor,1998.
UNICOM CORPORATION
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 28TH27TH DAY OF
MARCH, 1997.1998.
SIGNATURE
- ----------------------------
TITLE
---------------------
James J. O'ConnorJohn W. Rowe Chairman, President and Chief
- ---------------------------- Chief Executive Officer
John W. Rowe and
James J. O'Connor 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
- ---------------------------- accounting officer)
Roger F. Kovack
Jean Allard* DirectorRobert 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
Edward A. Mason* Director
Leo F. Mullin* Vice Chairman and
Frank A. Olson Director
Director
Samuel K. Skinner* President andJannotta* Director
David A. Scholz
*By____________________________*By
--------------------------------
David A. Scholz, Attorney-in-
fact
[Signature page to Unicom Corporation Annual Report on Form 10-K]
41
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 27TH
DAY OF MARCH, 1998.
COMMONWEALTH EDISON COMPANY
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 27TH DAY OF
MARCH, 1998.
SIGNATURE
- ----------------------------
TITLE
---------------------
John W. Rowe Chairman, President and
- ---------------------------- Chief Executive Officer
John W. Rowe and Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Senior Vice
John C. Bukovski President(principal
financial officer)
Robert E. Berdelle Comptroller (principal
- ---------------------------- accounting officer)
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
David A. Scholz
*By
--------------------------------
David A. Scholz, Attorney-in-
fact
[Signature page to Commonwealth Edison Company Annual Report on Form 10-K]
4142
UNICOM CORPORATION
COMMONWEALTH EDISON COMPANY
FILE NO.'SUnicom Corporation and
Commonwealth Edison Company
Form 10-K
File Nos. 1-11375 ANDand 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)-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)-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 January 29, 1997.March 11, 1998. x
(3)-4 By-Laws of Commonwealth Edison Company, effective
September 2, 1988 as amended through January 29,
1997.March 11,
1998. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Harris Trust and Savings Bank,
as current successor Trustee), dated July 1,
1923, Supplemental Indenture thereto dated Au-
gust 1, 1944, and amendments and supplements
thereto dated, 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, Janu-
aryJanuary 15, 1977 and June 3, 1977
(File No. 2-60201, Form S-7, Exhibit 2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, May 17, 1978, August
31, 1978, June 18, 1979, June 20, 1980, April
16, 1981, April 30, 1982, April 15, 1983, April
13, 1984 and April 15, 1985 (File No. 2-99665,
Form S-3, Exhibit (4)-3). x
*(4)-3 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, May 17, 1978, August
31, 1978, June 18, 1979, June 20, 1980, April
16, 1981, April 30, 1982, April 15, 19861983, April
13, 1984 and May
1, 1986April 15, 1985 (File No. 33-6879,2-99665,
Form S-3, Exhibit (4)-9)-3). x
1
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMEDExhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-4-3 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 12, 1987April 15, 1986 (File No. 33-13193,33-6879,
Form S-3, Exhibit (4)-6)-9). x
*(4)-5-4 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 15, 1990 and
June 15, 1990 (File No. 33-38232, Form S-3, Ex-
hibits (4)-11 and (4)-12). x
*(4)-6-5 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)-7-6 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)-8-7 Supplemental Indenture to Mortgage dated July 1,
1923 dated May 15, 1992 (File No. 33-48542, Form
S-3, Exhibit (4)-14). x
*(4)-9-8 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)-10-9 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)-11-10 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)-12-11 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)-13-12 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)-14-13 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)-15-14 Supplemental Indenture to Mortgage dated July 1,
1923 dated December 1, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-16). x
(4)-16*(4)-15 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 1, 1996. (File No. 1-1839, Form
10-K for the year ended December 31, 1996, Ex-
hibit (4)-16). x
2
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMEDExhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-17-16 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)-18-17 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)-19-18 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, October 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)-20-19 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)-21-20 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)-22 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated May 18, 1988 (File No. 33-
23036, Form S-3, Exhibit (4)-14). x
*(4)-23-21 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 14, 1989 (File No. 33-
32929, Form S-3, Exhibit (4)-16). x
*(4)-24(4)-22 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated AprilJanuary 1, 1991 (File No. 33-
44018, Form S-3, Exhibit (4)-21).1997. x
*(4)-25 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)-26 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)-27 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
3
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
*(4)-28-23 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-1839,1-
1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-27). x
3
Exhibit
(4)-27). xNumber Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-29-24 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company,ComEd, as borrower, the Banks named
therein and the other Lenders from time to time
parties thereto, and Citibank, N.A. (File No. 1-1839,1-
1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-28). x
(4)-30-25 Letter Agreement dated as of September 30, 1996,29, 1997,
among Commonwealth Edison CompanyComEd and certain of the Banks party to
the Credit Agreement dated as of October 1,
1991. x
(4)-31*(4)-26 Amended and Restated Credit Agreement dated as of
November 15, 1996, among Unicom Enterprises, Inc., the
Banks Named Therein and Citibank, N.A. (File No.
1-11375, Form 10-K for the year ended December
31, 1996, Exhibit (4)-31). x
(4)-32*(4)-27 Amended and Restated Guaranty dated as of Novem-
ber 15, 1996, by Unicom Corporation in favor of the Lenders
and LC Banks parties to the afore-
mentionedaforementioned
Credit Agreement with Unicom Enter-
prises Inc. (included as Exhibit E in Exhibit
(4)-31). x
*(4)-33 Guaranty dated November 22, 1994, by Unicom Cor-
poration in favor of Citibank, N.A.Enterprises (File
No. 1-
11375,1-11375, Form 10-K for the year ended DecemberDecem-
ber 31, 1994,1996, Exhibit (4)-37)-32). x
(4)-34*(4)-28 Indenture dated September 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)-35*(4)-29 First Supplemental Indenture dated September 19,
1995 to IdentureIndenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-35). x
(4)-36*(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 Corporation and First Chicago
Trust Company of 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 ComEdCommEd 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 Long-Term Incentive Plan (File
2 No. 1-1839, ComEd Proxy Statement dated March
26, 1993, Exhibit A). x
+*(10)- Amendment to Unicom Corporation Long-Term Incen-
3 tive Plan, effective September 1, 1994 (File No.
33-56991, Form S-8, Exhibit (4)-4). x
4
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
+*(10)- 1994 Long-Term Performance Unit Award for Execu-
4 tiveAmended and Group Level Employees Payable in 1997
under the 1993Restated Long-Term
Incentive Plan (File No. 1-1839, Form 10-K/A-1 for the year ended De-
cember 31, 1993,1-11375, Unicom Proxy
Statement dated April 9, 1997, Exhibit (10)-5)A). x
x
+*(10)--3 1995 Long-Term Performance Unit Award for
Execu-
5 tiveExecutive and Group Level Employees Payable in
1998 under the Unicom Corporation Long-Term
Incentive Plan, as amended (File No.Nos. 1-11375 and
1-1839, Form 10-K for the year ended December
31, 1995, Exhibit (10)-6). x x
4
Exhibit
(10)-6). x xNumber Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)--4 1996 Long-Term Performance Unit Award for Execu-
6
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)-7 1996 Variable Compensation-5 1997 Long-Term Performance Unit Award for ManagementExecu-
tive and Group Level Employees Payable in 2000
under the Unicom Corporation Long-Term Incentive
PlanPlan. (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1995,1996, Exhibit
(10)-10)-12). x x
+*(10)-8 1996+(10)-6 1998 Long-Term Performance Unit Award to Mr. O'Connor, Mr. Mullinfor
Executive and Mr.
SkinnerGroup Level Employees Payable in
2001 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)-11).Plan. x x
+ +*(10)-9-7 Unicom 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
10
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 Long-Term Performance UnitAnnual Incentive Award for Execu-
11 tive and Group LevelManagment
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)-13). x x
+ +*(10)- 1997 Annual Incentive Award for Managment Employ-
12 ees under the Unicom Corporation Long-Term In-
centive Plan. x x
+ (10)--11 1997 Award to Mr. O'Connor, Mr. Mullin and Mr.
13
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)--13 Unicom Corporation Deferred Compensation Unit
14
Plan, as amended (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1995,
Exhibit (10)-12). x x
+*(10)--14 Deferred Compensation Plan (included in Article
15
Five of Exhibit (3)-2 above). x
+*(10)--15 Management Incentive Compensation Plan, effective
16
January 1, 1989 (File No. 1-1839, Form 10-K for
the year ended December 31, 1988, Exhibit (10)-
4). x
+*(10)--16 Amendments to Management Incentive Compensation
17
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
5
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMEDExhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)--17 Amendment to Management Incentive Compensation
18
Plan, dated March 21, 1991 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (10)-6). x
+ +*(10)--18 Retirement Plan for Directors, effective Septem-
19
ber 1, 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)--19 Retirement Plan for Directors, effective January
20
1, 1987, as amended through March 12, 1997.
(File No. 1-1839, Form 10-K for the year ended
December 31, 1996, Exhibit (10)-20) x
+*(10)--20 Unicom Corporation 1996 Directors' Fee Plan (File
21
No. 1-11375, Unicom Proxy Statement dated April
8, 1996, Appendix A). x x
+*(10)--21 Executive Group Life Insurance Plan (File No. 1-
22
1839, Form 10-K for the year ended December 31,
1980, Exhibit (10)-3). x
+*(10)--22 Amendment to the Executive Group Life Insurance
23
Plan (File No. 1-1839, Form 10-K for the year
ended December 31, 1981, Exhibit (10)-4). x
+*(10)--23 Amendment to the Executive Group Life Insurance
24
Plan dated December 12, 1986 (File No. 1-1839,
Form 10-K for the year ended December 31, 1986,
Exhibit (10)-6). x
+*(10)--24 Amendment of Executive Group Life Insurance Plan
25
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)--25 Commonwealth Edison Company Supplemental Manage-
26
ment Retirement Plan (File No. 1-1839, Form 10-K
for the year ended December 31, 1985, Exhibit
(10)-6). x
+*(10)--26 Amendment of Executive Group Life Insurance Plan
27
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)--27 Letter Agreement dated December 16, 1992 between
28 Com-
monwealth Edison CompanyComEd and Samuel K. Skinner (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibit (10)-14). x
+*(10)--28 Amendment dated May 31, 1995 to Letter Agreement
29 dated December 16, 1992 between Commonwealth Ed-
ison CompanyComEd 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,
30
1997 to Letter Agreement dated December 16, 1992
between Commonwealth Edison CompanyComEd 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
31 Commonwealth Edison CompanyComEd and Leo F. Mullin (File No. 1-1839, Form
10-K for the year ended December 31, 1995, ExhibitEx-
hibit (10)-28). x
+ (10)- Amendment dated March 24, 1997 to Letter Agree-
32 ment dated November 14, 1995 between Common-
wealth Edison Company and Leo F. Mullin. x
6
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMEDExhibit
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-
33
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
34
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
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
(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 Compa-
ny.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 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
31, 1997.30, 1998. x
(99)-2 Commonwealth Edison Company'sComEd's Current Report on Form 8-K dated January
31, 1997.30, 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.
7