- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FORM 10-K10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
(MARK
ONE)Amendment No. 1 to Form 10-K
(Mark
one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBERFor the Fiscal Year Ended December 31, 19971999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION REGISTRANT; STATE OF INCORPORATION;Commission Registrant; State of Incorporation; IRS EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.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 EXCHANGESecurities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
- --------------------------- ON WHICH REGISTEREDon Which Registered
-------------------------
UNICOM CORPORATION
- ------------------Unicom Corporation
Common Stock, without par value New York, Chicago and Pacific
COMMONWEALTH EDISON COMPANY
- ---------------------------Commonwealth Edison Company
(Listed on inside cover)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTSIndicate by check mark whether the registrants (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTIONhave filed all reports
required to be filed by Section 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OFor 15(d) of the Securities Exchange Act of
1934 DURING THE PRECEDINGduring the preceding 12 MONTHS, ANDmonths, and (2) HAVE BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PASThave been subject to such filing
requirements for the past 90 DAYS.
YESdays.
Yes X . No .
----- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMMONWEALTH EDISON COMPANY Securities Registered Pursuant to Section 12(b) of
the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------- ---------------------------
First Mortgage Bonds:
7 5/8% Series 25, due June 1, 2003 )
8% Series 26, due October 15, 2003 ) New York
8 1/8% Series 35, due January 15, 2007 )
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
Company-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust Holding Solely the
Company's 8.48% Subordinated Debt
Securities New York
THE ESTIMATED AGGREGATE MARKET VALUE OF UNICOM CORPORATION'S 216,683,743
shares of outstanding Common Stock, without par value, was approximately
$6,948 million as of February 28, 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 $1,107 million as of February 28, 1998. Unicom Corporation
held in excess of 99.99% of the 214,231,528 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
30, 1998 are incorporated by reference into Parts I, II and IV of the Unicom
Corporation Annual Report on Form 10-K and portions of its definitive Proxy
Statement to be filed prior to April 30, 1998, relating to its Annual Meeting
of shareholders to be held on May 28, 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 30, 1998 are incorporated by reference into Parts I, II and IV of the
Commonwealth Edison Company Annual Report on Form 10-K and portions of its
definitive Information Statement to be filed prior to April 30, 1998, relating
to its Annual Meeting of shareholders to be held on May 28, 1998, are
incorporated by reference into Part III of the Commonwealth Edison Company
Annual Report on Form 10-K.
UNICOM CORPORATION
ANDand
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER10-K/A
For the Fiscal Year Ended December 31, 19971999
This document contains amendments to the Annual Reports on Form 10-K for the
fiscal year ended December 31, 19971999 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
representationrepresentations 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......................................................... 2
Changes in the Electric Utility Industry........................ 3
Net Electric Generating Capability.............................. 6
Construction Program............................................ 6
Rate Matters.................................................... 8
Fuel Supply..................................................... 8
Regulation...................................................... 10
Employees....................................................... 16
Interconnections................................................ 16
Franchises...................................................... 16
Executive Officers of the Registrant............................ 18
Operating Statistics............................................ 19
Year 2000 Conversion............................................ 20
Market Risks.................................................... 20
Forward-Looking Information..................................... 20
Item 2. Properties...................................................... 20
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......................................................... 23
Item 6. Selected Financial Data......................................... 25
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 25
Item 8. Financial Statements and Supplementary Data..................... 25
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 25
Part III
Item 10. Directors and Executive Officers of the Registrant............. 25
Item 11. Executive Compensation......................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and
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, 1997
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...................................................... 28
Item 3. Legal Proceedings............................................... 28
Item 4. Submission of Matters to a Vote of Security Holders............. 28
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...................................................... 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......................................... 29
Item 12. Security Ownership of Certain Beneficial Owners and Management. 29
Item 13. Certain Relationships and Related Transactions................. 29
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...................................................................... 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............................................................ 38
Report of Independent Public Accountants on Supplemental Schedule to
Commonwealth Edison Company............................................ 39
Schedule II--Valuation and Qualifying Accounts.......................... 40
Signature Page to Unicom Corporation Annual Report on Form 10-K......... 41
Signature Page to Commonwealth Edison Company Annual Report on Form 10-
K...................................................................... 42
ii
DEFINITIONS
The following terms are used in this document withundersigned Registrant hereby amends the following meanings:
TERM MEANING
---------------------- -------------------------------------------------------
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, a ComEd subsidiary
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)
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., a ComEd
subsidiary
INPO Institute of Nuclear Power Operations
IPCB Illinois Pollution Control Board
ISO Independent System Operator
January 30, 1998 Unicom's Currentitems of its Annual
Report on Form 8-K including auditor's
Form 8-K Reports opinion dated January 30, 1998 and ComEd's Current
Report on Form 8-K including auditor's opinion dated
January 30, 1998
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NERC North American Electric Reliability Council
NPDES National Pollutant Discharge Elimination System
NPL National Priorities List
NRC Nuclear Regulatory Commission
O&M Operation and maintenance
Rate Order ICC rate order issued in January 1995, as subsequently
modified
SEC Securities and Exchange Commission
S&P Standard & Poor's
Trust Securities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely ComEd's
subordinated debt securities
Unicom Unicom Corporation
Unicom Energy Services Unicom Energy Services Inc., a Unicom subsidiary
Unicom Enterprises Unicom Enterprises Inc., a Unicom subsidiary
UT Holdings UT Holdings Inc., a Unicom subsidiary
U.S. EPA U.S. Environmental Protection Agency
1
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATIONfor the fiscal year ended December 31, 1999 as set forth
on the pages attached hereto:
1. Part III: Item 10--Directors and Executive Officers of the Registrant.
2. Part III: Item 11--Executive Compensation.
3. Part III: Item 12--Security Ownership of Certain Beneficial Owners and
Management.
4. Part III: Item 13--Certain Relationships and Related Transactions.
PART I
ITEM 1. BUSINESS.
GENERALIII
Item 10. Directors and Executive Officers of the Registrant.
Elizabeth Anne Moler resigned from the Unicom was incorporated in January 1994.and ComEd boards of directors on
December 31, 1999, to become a regulated electric
utility, is the principal subsidiary of Unicom. Unicom Enterprises is an
unregulated subsidiarySenior Vice President of Unicom and ComEd.
Donald P. Jacobs is retiring as a director of Unicom and ComEd after serving
as a director of Unicom since its incorporation in 1994 and as a director of
ComEd since 1979. His contributions to Unicom and to ComEd have been many and
are gratefully appreciated. The vacancies created by Ms. Moler's resignation
and Mr. Jacob's retirement are not being filled, and the number of directors
is being reduced to nine.
Nine directors are to be elected at the annual meeting to serve terms of one
year and until their respective successors have been elected. The nominees for
director, all of whom are now serving as directors of Unicom and ComEd, are
listed below together with certain biographical information. Except as
otherwise indicated, each nominee for director has been engaged in his or her
present principal occupation for at least the past five years. Unicom was
formed in 1994.
Biographical Information of Unicom Directors
Edward A. Brennan, age 66. Director of Unicom and ComEd since 1995. Retired.
Chairman and CEO of Sears, Roebuck and Co. (retail merchandiser) for more than
five years prior to his retirement in August 1995. Chairman of Compensation
Committee. Other directorships: The Allstate Corporation, AMR Corporation,
Dean Foods Company, Minnesota Mining and Manufacturing Company, Morgan Stanley
Dean Witter & Co. and The SABRE Group Holdings, Inc.
Carlos H. Cantu, age 66. Director of Unicom and ComEd since July 31, 1998.
Retired. President and Chief Executive Officer of The ServiceMaster Company
(service businesses) from January 1, 1994 through its subsidiaries,October 1, 1999. Other
directorships: The ServiceMaster Company, First Tennessee National
Corporation.
1
James W. Compton, age 62. Director of Unicom since 1994 and ComEd since 1989.
President and Chief Executive Officer of the Chicago Urban League (a non-
profit agency). Chairman of Audit and Compliance Committee and member of
Compensation Committee. Other directorships: Ariel Mutual Funds and Highland
Community Bank.
Bruce DeMars, age 64. Director of Unicom and ComEd since 1996. Vice President
and Secretary of DeMars, Inc. (consulting firm) since May 1997 and Partner,
Trident Merchant Group since May 1998. Admiral, United States Navy and
Director, Naval Nuclear Propulsion Program for more than five years prior to
his retirement in energyOctober 1996. Member of Audit and Compliance Committee.
Other directorship: McDermott International.
Sue L. Gin, age 58. Director of Unicom since 1994 and ComEd since 1993.
Founder, Owner, Chairman and Chief Executive Officer of Flying Food Group,
Inc. (in-flight catering company). Chairperson of Business Development
Committee and member of Audit and Compliance and Governance and Nominating
Committees.
Edgar D. Jannotta, age 68. Director of Unicom and ComEd since 1994. Senior
Director of William Blair & Company, L.L.C. (investment banking and brokerage
company) since January 1996. For more than five years prior thereto, Managing
Partner of William Blair & Company and Senior Partner during 1995. Chairman of
Governance and Nominating Committee and member of Business Development
Committee. Other directorships: AAR Corp., AON Corporation, Bandag,
Incorporated and Molex Incorporated.
John W. Rogers, Jr., age 42. Director of Unicom and ComEd since 1999.
President of Ariel Capital Management, Inc., an institutional money management
firm which he founded in 1983. Ariel Capital Management also serves as the
investment advisor, administrator and distributor for Ariel Mutual Funds.
Member of Governance and Nominating and Business Development Committees. Other
directorships: AON Corporation, Bank One Corporation, Burrell Communications
Group, Inc. and GATX Corporation.
John W. Rowe, age 54. Director, Chairman, President and Chief Executive
Officer of Unicom and ComEd since March 16, 1998. President and Chief
Executive Officer of New England Electric System from February 1989 to March
1998. Other directorships: Fleet Boston Financial, UnumProvident Corporation
and Wisconsin Central Transportation Corporation.
Richard L. Thomas, age 69. Director of Unicom and ComEd since July 31, 1998.
Retired. Chairman of First Chicago NBD Corporation (banking and financial
services) from 1995 to 1996 and of The First National Bank of Chicago from
1992 to 1996. Member of the Audit and Compliance and Compensation Committees.
Other directorships: IMC Global Inc., The PMI Group, Inc., The SABRE Group
Holdings, Inc. and Sara Lee Corporation.
2
Item 11. Executive Compensation.
Executive Compensation
The following table sets forth certain information relating to the
compensation during the past three calendar years of the person who served as
the Chief Executive Officer during 1999 and the other four most highly
compensated executive officers of Unicom or ComEd at December 31, 1999.
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------------- --------------------------------------
Bonus Awards Payouts
---------------- --------------------- ----------------
LTIP Payouts
----------------
Other Securities
Annual Underlying All Other
Stock- Compen- Restricted Options/ Stock- Compen-
Name and Salary Cash Based(1) sation(2) Stock(3) SARs Cash Based(1) sation(4)
Principal Position Year $ $ $ $ $ # $ $ $
------------------ ---- ------- ------- -------- --------- ---------- ---------- ------- -------- ---------
John W. Rowe(5)........ 1999 957,692 529,125 529,125* 55,112 -- 123,000 475,246 203,677* 42,478
Chairman (Chief 1998 726,923 484,209 484,209* 215,117 -- 250,000 343,219 52,537* 2,728,076
Executive Officer) 1997 -- -- -- -- -- -- -- -- --
Unicom and ComEd
Oliver D. Kingsley,
Jr.(6)................ 1999 544,385 -- 594,000* 175,502 231,562 40,000 -- 322,488* 24,139
Executive Vice
President 1998 475,000 -- 383,332* 220,713 -- 35,000 -- 187,984* 20,994
Unicom and ComEd 1997 82,212 -- -- 202,828 560,000 25,000 182,712 10,777* 378,395
Robert J. Manning...... 1999 401,931 210,456 70,152* -- -- 40,000 102,229 102,229* 18,327
Executive Vice
President 1998 375,035 184,958 61,653* -- -- 35,000 43,469 43,469* 22,132
Unicom and ComEd 1997 312,802 86,319 28,773* -- 291,250 25,000 42,153 42,153* 19,894
Pamela B. Strobel...... 1999 375,131 208,961 69,654* -- -- 30,000 84,410 84,410* 16,483
Executive Vice
President 1998 341,000 137,341 58,861* -- -- 20,000 42,528 42,528* 20,347
and General Counsel 1997 304,970 41,742 13,914* -- 291,250 17,500 33,605 33,605* 19,247
Unicom and ComEd
David R. Helwig(7)..... 1999 355,115 177,071 177,071* -- 479,256 25,000 -- 144,206* 15,702
Senior Vice President 1998 312,500 -- 196,727* -- -- 22,000 -- 85,747* 285,875
Unicom and ComEd 1997 -- -- -- -- -- -- -- -- --
- -------
(1) All of the amounts shown under "Bonus--Stock-Based" and "LTIP Payouts--
Stock-Based" were either paid in shares of Unicom common stock or were
deferred and are deemed to be invested in shares of Unicom's common
stock, and thus fully "at risk" until the end of the deferral period.
Deferred amounts are noted with an asterisk. See note 7 to the "Security
Ownership of Certain Beneficial Owners and Management" table on page 15.
(2) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation is at least the lesser of either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.
For 1999, includes $13,276 and $66,345 paid to Messrs. Rowe and Kingsley
for the payment of taxes and $75,000 paid to Mr. Kingsley as a living
cost allowance and $15,395 paid for financial and legal services for Mr.
Rowe. For 1998, includes $89,381 and $132,077 paid to Messrs. Rowe and
Kingsley, respectively, for reimbursements for the payment of taxes,
$108,340 paid to Mr. Rowe for moving expenses and $75,000 paid to Mr.
Kingsley as a living cost allowance. For 1997, includes payments to Mr.
Kingsley of $74,065 for moving expenses, $75,000 as a living cost
allowance and $53,251 for reimbursement of taxes.
(3) The value shown is as of the date of grant. Dividends are paid or accrued
on restricted stock awards at the same rate as paid to all shareholders.
As of December 31, 1999, Mr. Manning had an aggregate of 5,000 shares of
restricted stock worth $167,500, Ms. Strobel had an aggregate of 10,000
shares of restricted stock worth $335,000, Mr. Helwig had an aggregate of
12,000 shares of restricted stock worth $402,000 and Mr. Kingsley had an
aggregate of 16,500 shares of restricted stock worth $552,750.
(4) Amounts shown include matching contributions made by ComEd pursuant to the
ComEd Employee Savings and Investment Plan ("ESIP"), matching
contributions made by ComEd pursuant to the ComEd Excess
3
Benefit Savings Plan and premiums and administrative service activities.fees paid by
ComEd on behalf of the named individuals under various group life insurance
plans. For the year 1999, contributions made to the ESIP amounted to $6,960,
$6,960, $4,184, $4,518 and $4,547 on behalf of Mr. Rowe, Mr. Kingsley,
Mr. Manning, Ms. Strobel and Mr. Helwig, respectively. Contributions made to
the ComEd Excess Benefit Savings Plan during 1999 totaled $34,700, $16,720,
$12,311, $11,104 and $10,901 on behalf of Mr. Rowe, Mr. Kingsley, Mr.
Manning, Ms. Strobel and Mr. Helwig, respectively. Premiums and
administrative service fees paid during 1999 for Split Dollar Life,
Accidental Death and Travel Accident insurance policies for Mr. Rowe, Mr.
Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively, are as
follows: $818, $459, $1,832, $861 and $254. For the year 1998, contributions
made to the ESIP amounted to $7,287, $4,246, $4,350 and $1,915 on behalf of
Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively.
Contributions made to the ComEd Excess Benefit Savings Plan during 1998
totaled $31,621, $13,375, $11,079, $9,787 and $8,960 on behalf of Mr. Rowe,
Mr. Kingsley, Mr. Manning, Ms. Strobel and Mr. Helwig, respectively.
Premiums and administrative service fees paid during 1998 for Split Dollar
Life, Accidental Death and Travel Accident insurance policies for Mr. Rowe,
Mr. Kingsley, Mr. Manning and Ms. Strobel, respectively, are as follows:
$96,455, $332, $6,807 and $6,210. ComEd is entitled to recover the premiums
and administrative service fees from any amounts paid by the insurer on such
Split Dollar Life policies and has retained a collateral interest on each
policy to the extent of the premiums and administrative service fees paid
with respect to such policy. Includes a $2,000,000 lump sum payment to Mr.
Rowe in 1998 as partial compensation for actual compensation, benefits and
programs which Mr. Rowe was, or was reasonably expected to become, entitled
to receive from his previous employer, and a payment of $600,000 as an
inducement to enter into his employment agreement. For 1997, includes
$375,000 paid to Mr. Kingsley as an inducement to enter into his employment
agreement. For 1998, includes $275,000 paid to Mr. Helwig as an inducement
to enter into his employment agreement.
(5) Mr. Rowe commenced employment on March 16, 1998.
(6) Mr. Kingsley commenced employment on November 1, 1997.
(7) Mr. Helwig commenced employment on January 19, 1998.
Option/SAR Grants in Last Fiscal Year
Individual Grants
----------------------------------------------
Number of
Securities % of Total
Underlying Options/SARs Exercise Grant Date
Options/SARs Granted to or Base Present
Granted(1) Employees in Price Expiration Value(2)
Name # Fiscal Year $ /Share Date $
---- ------------ ------------ -------- ---------- ----------
John W. Rowe (CEO)...... 110,000 5.99 35.75 1/24/09 $712,250
John W. Rowe (CEO)...... 13,000(3) 0.71 35.563 3/03/09 84,175
Oliver D. Kingsley,
Jr..................... 40,000 2.18 35.75 1/24/09 259,000
Robert J. Manning....... 40,000 2.18 35.75 1/24/09 259,000
Pamela B. Strobel....... 30,000 1.63 35.75 1/24/09 194,250
David R. Helwig......... 25,000 1.36 35.75 1/24/09 161,875
- -------
(1) Except as noted in note 3 below, each option becomes exercisable in equal
annual increments on the first, second and third anniversaries of the
grant date, subject to acceleration in the event that termination after a
change in control of Unicom occurs. The options do not include any stock
appreciation rights.
(2) The "grant date present value" is based upon the Black-Scholes option-
pricing model. The actual value, if any, an executive may realize upon
exercise of the option will depend on the excess of the stock price over
the exercise price on the date the option is exercised. Consequently,
there is no assurance the value realized by an executive will be at or
near the value estimated by the Black-Scholes model. The principal
assumptions incorporated into the valuation model by Unicom for the
options expiring 1/24/09 and 3/03/09 are as follows: (i) expected time to
exercise of seven years, (ii) dividend yield rate of 4.5%, (iii) risk-free
interest rate of 4.83% and (iv) expected volatility of 23.02%.
(3) Mr. Rowe received this grant of options as a premium for deferring half of
his 1998 Annual Incentive Award. Half of this grant vested immediately and
the balance vested on the first anniversary of the grant date.
4
Aggregated Option Exercises in 1999 and 1999 Year-End Option Value
Underlying Unexercised Value of Unexercised
Shares Options at In-The-Money Options at
Name Acquired December 31, 1999 December 31, 1999(1)
---- on Value ------------------------- -------------------------
Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
# $ # # $ $
-------- ----------- ----------- ------------- ----------- -------------
John W. Rowe (CEO)...... 0 0 89,834 283,166 5,167 10,333
Oliver D. Kingsley,
Jr..................... 0 0 28,334 71,666 91,669 45,831
Robert J. Manning....... 0 0 45,834 71,666 326,454 93,221
Pamela B. Strobel....... 0 0 30,334 49,166 226,519 65,254
David R. Helwig......... 0 0 7,334 39,666 6,875 13,745
- --------
(1) Market value less exercise price, before payment of applicable income
taxes.
Long-term Incentive Plans--Awards in Last Fiscal Year
Estimated Future Payouts Under
Number of Performance or Other Non-Stock Price-Based Plans
Shares, Units Period Until --------------------------------
or Other Maturation Threshold Target Maximum
Name Rights(1) or Payout(2) Number Number Number
---- ------------- -------------------- --------------------- ----------
(Number of Performance Units)
John W. Rowe (CEO)...... 12,694.32 3 years 6,347.16 12,694.32 25,388.64
Oliver D. Kingsley,
Jr..................... 6,093.27 3 years 3,046.64 6,093.27 12,186.55
Robert J. Manning....... 4,804.31 3 years 2,402.16 4,804.31 9,608.62
Pamela B. Strobel....... 3,905.94 3 years 1,952.97 3,905.94 7,811.89
David R. Helwig......... 3,235.42 3 years 1,617.71 3,235.42 6,470.85
- --------
(1) Long-term performance unit awards were established in 1994 for executive
and group level employees under the Unicom Corporation Long-Term
Incentive Plan. The awards are based on a three-year performance period.
For the awards described in the table, the number of units initially
awarded to a participant is determined by dividing a percentage of base
salary (including income from current compensation units under Unicom's
principaland ComEd's Deferred Compensation Unit Plans) by $38.403. The applicable
percentages for the individuals shown in the table are: 50% for Mr. Rowe;
45% for Mr. Kingsley; 45% for Mr. Manning; 40% for Ms. Strobel; and 35%
for Mr. Helwig. If a promotion changes the applicable percentage of
salary, awards are pro-rated accordingly. Payouts are based on
achievement of corporate shareholder value added and customer
satisfaction goals as well as specific business unit strategic
initiatives over the three-year performance period ending December 31,
2001. The dollar value of a payout will be determined by multiplying (a)
the number of units applicable by (b) the average closing price of Unicom
common stock as reported in the Wall Street Journal as New York Stock
Exchange Composite Transactions during the calendar quarter ending on
December 31, 2001 by (c) the level of performance achieved. Payments will
be made half in cash and half in the form of unrestricted shares of
Unicom common stock. A participant may elect to defer receipt of up to
100% of the total award (net of applicable taxes) under the Unicom
Corporation Stock Bonus Deferral Plan and receive, after such deferral,
the deferred amount in the form of unrestricted shares of Unicom common
stock.
(2) Three-year period ending December 31, 2001.
Service Annuity System
The following table sets forth the annual retirement benefits payable under
ComEd's Service Annuity System (including payments under a supplemental
management retirement plan) to employees who retire at age 65 at stated levels
of compensation and years of service at retirement (in 1999).
5
PENSION PLAN TABLE
Highest
4-Year
Average Annual Normal Retirement Benefits After Specified Years of
Earnings Service*
-------- ----------------------------------------------------------
15 20 25 30 35 40
-- -- -- -- -- --
$ 100,000 $ 31,936 $ 42,472 $ 52,368 $ 61,784 $ 70,842 $ 79,633
200,000 63,872 84,945 104,735 123,568 141,684 159,266
300,000 95,808 127,417 157,103 185,351 212,526 238,899
400,000 127,744 169,889 209,470 247,135 283,368 318,532
500,000 159,681 212,362 261,838 308,919 354,211 398,165
600,000 191,617 254,834 314,206 370,703 425,053 477,798
700,000 223,553 297,307 366,573 432,487 495,895 557,431
800,000 255,489 339,779 418,941 494,271 566,737 637,064
900,000 287,425 382,251 471,308 556,054 637,579 716,696
1,000,000 319,361 424,724 523,676 617,838 708,421 796,329
1,100,000 351,297 467,196 576,044 679,622 779,263 875,962
1,200,000 383,233 509,668 628,411 741,406 850,105 955,595
1,300,000 415,169 552,141 680,779 803,190 920,948 1,035,228
1,400,000 447,106 594,613 733,146 864,974 991,790 1,114,861
1,500,000 479,042 637,085 785,514 926,757 1,062,632 1,194,494
1,600,000 510,978 679,558 837,882 988,541 1,133,474 1,274,127
1,700,000 542,914 722,030 890,249 1,050,325 1,204,316 1,353,760
1,800,000 574,850 764,503 942,617 1,112,109 1,275,158 1,433,393
1,900,000 606,786 806,975 994,984 1,173,893 1,346,000 1,513,026
2,000,000 638,722 849,447 1,047,352 1,235,677 1,416,842 1,592,659
- --------
* An employee may elect a marital annuity for a surviving spouse which would
reduce the employee's normal retirement benefits. The amounts shown reflect
certain assumptions as to total earnings, but do not reflect any reduction
for Social Security benefits.
Service Annuity System. ComEd maintains a non-contributory pension plan, the
Service Annuity System, for all regular employees of ComEd. The Service
Annuity System ("Plan") provides benefits upon retirement at age 65 which are
based upon years of credited service and percentages of the employee's highest
consecutive four-year average annual base pay, which includes basic
compensation and certain incentive pay. An employee with at least 10 years of
service may retire prior to attaining age 65 (but not prior to age 50) and
will receive reduced benefits if retirement is prior to age 60. A non-
executive officesemployee may work beyond age 65 with additional benefits accruing
for earnings and service after age 65. Contributions to the Plan by ComEd are
located at
10 South Dearborn Street, Post Office Box A-3005, Chicago, Illinois 60690-
3005,based upon actuarial determinations that take into account the amount
deductible for income tax purposes and its telephonethe minimum contribution required under
the Employee Retirement Income Security Act of 1974, as amended. Compensation
used in the computation of annual retirement benefits under the Plan is
substantially equivalent to the amounts shown in the "Salary" and "Bonus"
columns under the "Annual Compensation" heading of the Summary Compensation
Table. The compensation used in the computation of annual retirement benefits
under the Plan is limited by the Internal Revenue Code as of January 1, 2000
to $170,000 (which number is 312/394-7399.subject to adjustment for increases in the cost
of living) for any one employee. Any reduction in the annual retirement
benefits payable to management employees under the Plan as a result of any
limitations imposed by the Internal Revenue Code is restored under a
supplemental management retirement plan maintained by ComEd, represents substantially allwhich also
provides retirement benefits granted under employment agreements or other
arrangements. Thus, annual retirement benefits, as set forth in the Pension
Plan Table above, are based on the amounts shown in the "Salary" and "Bonus"
columns under the "Annual Compensation" heading 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, 1913Summary Compensation
Table, without limitation
6
as a result of the mergerapplication of Cosmopolitan Electric Companythe provisions of the Internal Revenue Code.
The approximate number of years of credited service under the Plan or, if
applicable, under the supplemental management retirement plan, for the persons
named in the Summary Compensation Table are as follows: John W. Rowe, 22
years; Robert J. Manning, 36 years; Oliver D. Kingsley, 17 years; Pamela B.
Strobel, 7 years; and David R. Helwig, 2 years.
Employment Agreements
John W. Rowe
Unicom and ComEd have an employment agreement with John W. Rowe, pursuant to
which he became Chairman, President and Chief Executive Officer of each
company on March 16, 1998. The agreement provides that Mr. Rowe will be paid
an annual base salary of at least $900,000. Unicom also granted Mr. Rowe an
option to purchase 250,000 shares of common stock with an option price equal
to the fair market value of the common stock as of March 16, 1998. Such
options become exercisable in equal installments on March 16 of 1999, 2000,
and 2001, and expire on March 15, 2008. In accordance with the terms of his
employment agreement, Mr. Rowe was not entitled to any additional grants of
stock options during 1998.
The employment agreement with Mr. Rowe further provides that Mr. Rowe will
participate in Unicom's Annual Incentive Award Program and will receive an
annual incentive award for 1998 and 1999 that shall equal at least $600,000.
The employment agreement was amended to provide that Mr. Rowe's annual
incentive awards for 1998 and 1999 would be paid half in cash and half in
Unicom common stock, and that the guaranteed portion of Mr. Rowe's annual
incentive award for 1998 and 1999 would be paid 50% in cash and 50% as a grant
of shares of Unicom common stock, half of which vested on the date the annual
incentive would otherwise be paid (the "Grant Date") and half of which vested
on the anniversary of the Grant Date. In connection with this grant of shares,
Mr. Rowe also received, on the Grant Date, an option to purchase 13,000 of
Unicom common stock, which was the number of shares with a value as of the
Grant Date of $90,000 (determined using the pricing models used by the
Compensation Committee). Such option became exercisable 50% on the Grant Date
and 50% on the first anniversary thereof.
Mr. Rowe participates in the Unicom Long-Term Performance Unit Award Program,
and any award payable under such Program with respect to the three-year
performance periods ending on December 31, 1998, 1999, or 2000 will be made as
though he had participated in the Program throughout such performance periods
(except in the case of a termination of employment). Mr. Rowe agreed to defer
receipt of the stock portion of any incentive award under the Unicom
Corporation Stock Bonus Deferral Plan. As partial compensation for actual
compensation, benefits and programs that Mr. Rowe was, or was reasonably
expected to become, entitled to receive from his previous employer, he
received a lump-sum payment of $2,000,000. In addition, Mr. Rowe received
$600,000 as an inducement to enter into the original corporation named Commonwealth
Edison Company.employment agreement.
Mr. Rowe's employment agreement provides for a retirement benefit equal to the
amount that would have been payable under the Service Annuity System (plus
amounts payable under the ComEd Supplemental Management Retirement Plan) for
an employee who retires at age 60 (or such greater age if Mr. Rowe should
become eligible for the retirement benefit after attaining the age of 60)
calculated based on the assumption that Mr. Rowe had completed 20 years of
credited service as well as his actual years of credited service.
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 8 million as of December
31, 1997. It includesemployment agreement with Mr. Rowe provides for severance payments to Mr.
Rowe if he should be terminated without cause or if he should terminate the
city of Chicago, an area of about 225 square miles
with an estimated population of approximately 3 million from which ComEd
derived approximately one-third of its ultimate consumer revenues in 1997.
ComEd had 3.4 million electric customers at December 31, 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.
Unregulated Operations
Unicom Enterprises is engaged, through subsidiaries, in energy service
activities which are not subject to utility regulation by state or federal
agencies. One of these subsidiaries, UT Holdings, provides district cooling,
heating and related services to offices and other buildingsemployment agreement for good reason (as defined in the central
business districtagreement) equal to
his base salary at the time of such termination, together with a formula
annual incentive award (as defined in the agreement), until the later of March
16, 2001 or one
7
year after termination (if such termination should occur before March 16,
2001), or one year after the date of termination (if such termination should
occur after March 16, 2001), and a continuation of health and life insurance
benefits during such period, plus retirement benefits. In addition, any
unvested options shall continue to become exercisable during such period,
except that any unvested portion of the citydeferred shares and additional option
granted to Mr. Rowe pursuant to the amendment to his employment agreement
described above will immediately become fully exercisable upon any such
termination of Chicago underemployment. If the termination occurs within 24 months
following a non-exclusivechange in control of Unicom, such benefits will be paid for three
years after the date of termination.
Mr. Rowe agreed not to use agreementfor his own benefit or disclose any confidential
information of Unicom or ComEd during or after the term of his employment, and
not to compete with Unicom or ComEd or solicit any key employee or interfere
with the cityrelationship with any material customer or supplier of Chicago for an initialeither company
until two years after the term expiring in 2014. District
cooling involves, in essence,of his employment with the production of chilled water at one or more
central locationscompanies.
The employment agreement has been amended 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 resultrestated, effective upon the
completion of the Clean Air
Amendments,merger, as described under "The Merger--Interests of
Unicom's Directors and Management in the manufacture of CFCs has been curtailed since January 1996,
thereby creating a marketing opportunity for non-CFC based systems, such as UT
Holdings' district cooling. UT Holdings is involvedMerger" in energy 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
distributed energy market, Unicom Energy Services alsoChapter I.
Oliver D. Kingsley, Jr.
ComEd entered into an alliance with AlliedSignal Power Systems, Inc., a subsidiary of AlliedSignal
Inc., to market, install and service an electric energy generator developed by
AlliedSignal, known as a TurboGenerator, in a 12-state region and the province
of Ontario, Canada. Unicom Energy Services entered into an exclusive national
distributorshipemployment agreement with Engage Networks, Inc.Oliver D. Kingsley, Jr.
pursuant to which he became Executive Vice President and President and Chief
Nuclear Officer--Nuclear Generation Group, effective November 1, 1997. The
agreement provides for an annual base salary for 1997 and 1998 equal to
$475,000, and further provides for a guaranteed increase of at least 4% per
year, beginning in 1999.
Mr. Kingsley received an option to purchase 25,000 shares of common stock with
an option price equal to the fair market active energy
management softwarevalue of the common stock as of
November 1, 1997. Such options become exercisable in equal installments on
November 1 of 1998, 1999 and related hardware2000, and services.
CHANGES IN THE ELECTRIC UTILITY INDUSTRY
Unicomexpire on October 31, 2007. Mr.
Kingsley also received a grant of 20,000 shares of restricted stock that vests
in equal installments on November 1 of 1998, 1999 and its predominant business, electric energy generation,
transmission2000.
The employment agreement with Mr. Kingsley provides that Mr. Kingsley will
participate in Unicom's Annual Incentive Award Program and distribution, are in a periodwill receive an
annual incentive award for 1998 and 1999 at least equal to the target award of
fundamental change$213,750.
Mr. Kingsley participates in the mannerUnicom Long-Term Performance Unit Award
Program, and any award payable under such Program with respect to the three-
year performance periods ending on December 31, 1997, 1998, or 1999 will be
made as though he had participated in which customers obtain,the Program throughout such performance
periods (except in the case of a termination of employment). In addition, Mr.
Kingsley received $375,000 as an inducement to enter into the employment
agreement, and energy suppliers provide, energy
services. These changes are attributablean annual living cost allowance equal to changes in technology,$75,000 (increased by
the relaxationamount of regulatory barriersapplicable taxes on such amount as so increased) for the first
three years of the agreement term.
Mr. Kingsley's employment agreement provides for a retirement benefit equal to
utilities' respective service territories
as well as to efforts to change the manner in which electric utilities are
regulated. Federal law and regulationsamount that would have been amended to providepayable under the Service Annuity System (plus
amounts payable under the ComEd Supplemental Management Retirement Plan) for
open
transmission system access,an employee who retires at age 60 calculated based on the assumption that Mr.
Kingsley had completed 15 years of credited service beginning with the third
year of his employment and various states, including Illinois, are
considering, or have adopted, new regulatory structures to allow accessthat such credited service increased by some or all customers to energy suppliersfive years
during each of the next two years, in addition to his actual years of credited
service after five years of employment.
8
The employment agreement with Mr. Kingsley provides for a lump sum severance
payment to Mr. Kingsley if he should be terminated without cause equal to two
times his base salary at the local utility.
Electric Utility Industry. The electric utility industry has historically
consistedtime of vertically integrated companies which combine generation,
transmissionsuch termination, and distribution assets; serve customers within relatively
defineda continuation of
health and life insurance benefits for two years after the date of
termination, plus retirement benefits (calculated as though he had completed
at least 15 years of credited service territories;if such termination occurs during the
first two years of employment) and operate under extensive regulation with
respect to rates, operations and other matters. Utilities have operated under
a regulatory compact with the state, with a statutory obligation to serve allretiree health care coverage. In addition,
any unvested portion of the electricity needs within their service territoryrestricted stock granted under the agreement will
immediately become fully vested and nonforfeitable.
Mr. Kingsley agreed not to use for his own benefit or disclose any
confidential information of Unicom or ComEd during or after the term of his
employment, and not to solicit any employee of ComEd for one year after the
term of his employment with ComEd.
Severance Plans
Unicom established the Key Management Severance Plan in a nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon1998 to provide key
employees, including the utilities' respective assessment of the current and projected needs
of their customers. In view of this obligation, regulation has focused on
investment and operating costs, and rates have been based on a recovery of
some or all of such prudently incurred costs plus a return on invested
capital. Such rate regulation, and the ability of utilities to recover
investment and other costs through rates, have provided the basis for
recordingnamed executive officers, certain costs as regulatory assets. These assets represent costs
which are allocated over future periods reflecting related regulatory
treatment, rather than expensedbenefits in the
current period.
The 1997 Act. On December 16, 1997,event their employment is terminated by their employer without cause, or in
the Governor of Illinois signed into law
the 1997 Act, which established a phased-process to introduce competition into
the electric industry in Illinois under a less regulated structure. The 1997
Act,event they resign for good reason (both terms as it applies to ComEd, provides for, among other things, a 15%
residential base rate reduction commencing on August 1, 1998, an additional 5%
residential base rate reduction commencing on May 1, 2002, and customer access
to other electric suppliers in a phased-in process. Access for commercial and
industrial customers will occur over a period from October 1999 to December
2000, and access for residential customers will occur after May 1, 2002. The
15% residential base rate reduction, commencing on August 1, 1998, is expected
to reduce ComEd's operating revenues by approximately $160 million and $375
million in 1998 and 1999, respectively, compared to 1997 rate levels. ComEd is
engaged in certain pricing experiments contemplated by the 1997 Act, which are
expected to reduce ComEd's operating revenues by approximately $30 million and
$60 million in 1998 and 1999, respectively, compared to 1997 rate levels,
notwithstanding the effects of customer growth.
The 1997 Act also provides for the collection of a CTC from customers who
choose another electric service provider during a transition period that
extends through 2006, and can be extended through 2008 with ICC approval if
certain factors are met. The CTC will be established in accordance with a
formula defined in the 1997 Act.Plan).
Benefits under the Plan include severance pay equal to the sum of a terminated
executive's current annual base salary plus the average of his annual
incentive awards for the two years preceding the termination, annual incentive
awards and long-term incentive awards (with respect to any performance cycle
for which the executive has completed 24 months) prorated through the date of
termination, continuation of health care coverage, life insurance and long-
term disability coverage, and outplacement services. Payment of severance pay
and continuation of the benefits described above is made over two years, and
the amount of the severance pay and incentive and the payment period is
included for purposes of calculating retirement benefits under the
supplemental management retirement plan and determining eligibility for
retiree health care coverage. As a condition of receiving plan benefits, an
executive must agree not to use for his own benefit or disclose any
confidential information of Unicom or ComEd during or after the term of his
employment, and not to compete with Unicom or ComEd or solicit any key
employee or interfere with the relationship with any material customer or
supplier of either company until two years after the term of his employment
with the companies, and must release Unicom from all claims arising out of his
employment as of the date of termination. In the case of Mr. Rowe and
Mr. Kingsley, the severance benefits provided under the terms of their
employment agreements will control, to the extent they exceed the benefits
provided under the Plan.
The CTC,boards of directors of Unicom and ComEd approved a change in control
policy (the "Policy") in 1998 pursuant to which will be applied on a cents per
kilowatthour basis, considersMr. Rowe and the revenue which would have been collected from
a customer under tariffed rates, reduced by the revenue the utilityother named
executive officers will receive benefits in the event their employment is
terminated without cause or if they resign for providing delivery servicesgood reason (as such terms are
defined under the Policy) within 24 months following a change in control of
Unicom. The change in control benefits are provided in the form of individual
agreements for the named executives, and Mr. Rowe's employment agreement was
amended, effective March 8, 1999, to reflect the customer, the market price for
electricity and a defined mitigation factor which represents the utility's
opportunity to develop new revenue sources and achieve cost savings.
3
Notwithstanding these rate reductions, and subject to certain earnings
tests, a rate freeze will generally be in effect until at least January 1,
2005. During this period, utilities may reorganize, sell or assign assets,
retire or remove plants from service, and accelerate depreciation or
amortization of assets with limited ICC regulatory review. Under the earnings
provision of the 1997 Act, if the earned return on common equity of a utility
during this period exceeds an established threshold, a portion of the excess
earnings must be refunded to customers. A utility may request a rate increase
during the rate freeze period when necessary to ensure the utility's financial
viability, but not before January 1, 2000.
Under the 1997 Act, utilities are required to continue to offer delivery
services, including the transmission and distribution of electric energy, such
that customers who select an alternative energy supplier can receive electric
energy from that supplier using existing transmission and distribution
facilities. Such services will continue to be offered under cost-based
regulated rates.Policy provisions. 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
ComEdbenefits provided in the event of a major outage.
The 1997 Act also allows ComEd to unbundle a portionchange in control, including approval of
its future revenues,
including tariffed ratesthe merger, are described under "The Merger--Interests of Unicom's Directors
and CTC revenues, and issue securities backed by
these revenues. The proceeds from such security issuances must generally be
used to refinance outstanding debt or equity or for certain other limited
purposes. The total amount of such securities that ComEd may issue is
approximately $6.8 billion; approximately one-half of that amount can be
issuedManagement in the twelve-month period commencingMerger" in Chapter I.
Compensation Committee Report on August 1, 1998.
As a resultExecutive Compensation
The Compensation Committee of the 1997 Act, prices for the supply of electric generation
are expected to transition from cost-based, regulated rates to rates
determined by competitive market forces. The CTC allows ComEd to recover a
portion of any of its costs which might otherwise be unrecoverable under
market-based rates. Nonetheless, ComEd will need to take steps to address the
portion of such costs which are not recoverable through the CTC. Such steps
include cost control efforts and developing new sources of revenue.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," subcaption "Changes in the Electric Utility Industry--
Accounting Effects Related to the 1997 Act" and Note 2 of Notes to Financial
Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for the accounting effects related to the 1997 Act.
Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered the FERC to introduce a greater level of competition into
the wholesale marketplace for electric energy. In April 1996, the FERC Order
was issued requiring utilities to file open access tariffs with regard to
their transmission systems. These tariffs set forth the terms, including
prices, under which other parties and the utility's wholesale marketing
function may use the utility's transmission system. ComEd has an approved open
access tariff with the FERC. The FERC Order requires the separation of the
transmission operations and wholesale marketing functions so as to ensure that
unaffiliated third parties have access to the same information as to system
availability and other requirements. The FERC Order further requires utilities
to operate an electronic bulletin board to make transmission price and access
data available to all potential users. A key feature of the FERC Order is that
it contemplates full recovery of a utility's costs "stranded" by competition.
These costs are "stranded" or "strandable" to the extent market-based rates
would be insufficient to allow for their full recovery. To recover stranded
costs, the utility must show that it had a reasonable expectation that it
would continue to serve the customer in question under its regulatory compact.
In addition, some governmental entities, such as cities, may elect to
"municipalize" a utility's distribution facilities
4
through condemnation proceedings. Such municipalities would then be able to
purchase electric power on a wholesale basis and resell it to customers over
the newly acquired facilities. The FERC Order provides for the recovery of a
utility's investment stranded by municipalization.
ComEd's Response to Regulatory Changes. ComEd is responding, and is
undertaking significant strategic planning efforts to respond further, to the
developments within the utility industry and the 1997 Act and its potential
for strandable investment. During the past several years, such efforts have
focused on cost reductions, including personnel reductions, efficiencies in
purchasing and inventory management, and an incentive compensation system
keyed to cost control and improvement in shareholder value. Notwithstanding
these efforts, ComEd's costs remain high in comparison to its neighboring
utilities. Although ComEd's operating results and financial condition have
historically been affected by various rate proceedings, ComEd expects that the
changes in the national and Illinois electric energy marketplace, and ComEd's
activities anticipating or responding to them, will directly impact its
operating results and financial condition over the next several years.
ComEd anticipates that the 1997 Act, and the resultant increasing
competition to supply energy in Illinois and elsewhere, will have significant
effects upon its revenues and assets as it takes steps to adjust its
operations and services to meet the changing market for electric energy. Both
Unicom and ComEd have been examining methods of positioning themselves and
their affiliates to deal with those effects and to address the developing
opportunities and challenges. ComEd has been engaged in a broad-based
examination of its assets and operations, particularly nuclear and fossil
generation and generation-related (i.e., fuel and inventory) assets, with a
view toward rationalizing their investment and operating costs against their
ability to contribute to the revenues of ComEd under various market scenarios.
Such an assessment involves the consideration of numerous factors, including
revenue contribution, operating costs, impacts on ComEd's service obligations,
purchase commitments and the impact of various options. Such options include
continued operation with accelerated depreciation, indefinite suspension from
operation, sale to a third party and retirement or closure. As discussed
below, ComEd recently ceased nuclear generation operations and retired
facilities at its Zion Station. If ComEd retired or closed one or more
additional generating plants, particularly a nuclear plant, such retirement
would have a material impact on Unicom and ComEd's financial position and
results of operations. See "General--Unregulated Operations" above regarding
Unicom Energy Services' energy services activities.
On January 14, 1998, the Boards of Directors of Unicom and ComEd authorizedhas
furnished the permanent cessation of nuclear generation operationsfollowing report on executive compensation:
Introduction. The Committee is responsible for Unicom's executive compensation
philosophy and retirement of
facilities at ComEd's 2,080 megawatt Zion nuclear generating station. Such
retirement resulted in a chargepolicies, which form the basis for 1997 of $523 million (after-tax) or $2.42
per common share.the Committee's decisions.
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 lightoverall objectives of the expected changes inexecutive
9
compensation programs are to drive and reinforce achievement of financial
objectives and strategic initiatives, to provide compensation opportunities
that are competitive with top performing energy services companies and general
industry firms, and to ensure that compensation is linked to performance and
increasing shareholder value.
It is the manner in which
electric energy is marketed and sold. The passagepolicy of the 1997 Act provided a
clearer basis for evaluating the costsCommittee to compensate executive officers based on
fulfillment of their responsibilities and benefitstheir achievement 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,established
corporate and the expected operating costs associated with
continued station operation.
Notwithstanding the closure of Zion Station as a nuclear generating
facility, a portion of the station will continue to be used to provide voltage
support in the transmission system that serves ComEd's northern region. Such
support will require capital expenditures at the station as well as upgrades
to the transmission system at various points, in order to improve the ability
to import and transport power through the system. See Note 5 of Notes to
Financial Statements in the January 30, 1998 Form 8-K Reports, which are
incorporated herein by reference, for additional information.
5
In April 1996, ComEd announced that it had finalized agreements to sell two
of its coal-fired generating stations, representing 1,598 megawatts of
generating capacity, and to enter into exclusive 15-year purchased power
agreements for the output of the stations.business unit goals. The sale of State Line Station was
completed in December 1997 and the sale of Kincaid Station was completed in
February 1998. The net proceeds of the sales, after income tax effects and
closing costs, were approximately $190 million. The proceeds will be used to
retire or redeem existing debt.
ComEd joined with eight Midwestern utilities to form a regional Midwest ISO
in January 1998. The Midwest ISO is a key element in accommodatingbusiness challenges resulting from the
restructuring of the electricutility industry make it critical that Unicom's
compensation programs drive and reinforce achievement of financial,
operational and strategic goals. A study of management compensation programs
was commissioned by the Committee in the fall of 1998. This study was
conducted by a leading external management compensation consulting firm and
included an assessment of business plans and strategic and competitive
compensation levels compared with the external market.
While overall, Unicom's total compensation levels were found to be generally
competitive, the study results indicated that Unicom's mix of compensation
components (i. e., salary, annual and long term incentives and stock options)
could be more effectively aligned with the competitive market. Based on those
results, Unicom's pay-for-performance philosophy was refined to have an
increased emphasis on pay-at-risk. When excellent performance is achieved, pay
will promote enhanced reliabilityexceed market levels. Failure to achieve target goals will result in
below-market pay. In addition, other compensation changes were made to achieve
a more effective use of shareholder value as a determinant of compensation and
to encourage officers and other employees to act like owners of the transmission system, equal accessbusiness.
The Committee believes that compensation paid should be appropriate in
relation to the transmission systemfinancial performance of Unicom and should be sufficient to
enable Unicom to attract and retain individuals possessing the talents
required for ensuring the Company's long-term successful performance. The
Committee also believes that incentive compensation performance goals for
executive management should be based on factors over which management has
significant control and which are important to Unicom's long-term success.
In 1999, the major components of executive officer compensation were base
salary, consisting of cash salary and current compensation unit income, non-
qualified stock options, and incentive compensation (both annual and longer-
term) related to awards under the Unicom Corporation Long-Term Incentive Plan.
Base Salary. The process of determining the officers' base salaries began with
a review of the salary levels for various comparable executive positions at a
group of peer companies identified by the Committee. The Committee also used
compensation survey information from several executive compensation-consulting
firms. The Committee then considered differences from other companies in
Unicom's organizational structure and the responsibilities of its executive
officers, in the size, scope and complexity of Unicom's operations, and in the
regulatory environment and competitive challenges faced by Unicom. Salary
range increases and salary adjustment budgets are established annually for
non-officer employees based on business and economic conditions of Unicom as
well as on competitive practices. Beginning in 1999, Unicom initiated a two-
year scheduled review cycle for officer level executives to make the rewards
more meaningful and to cover a longer performance period. Salaries are
adjusted based upon each executive's performance impact and overall
contributions to Unicom.
The Chairman reviewed the base salary of each officer and recommended an
adjustment after assessing particular responsibilities and performance. The
Chairman's recommendations were reviewed and approved by the Committee.
Percentage increases for individual officers varied and were structured to
recognize changes in industry compensation levels; to reflect the impact,
performance and contributions of individual officers; and to reflect strategic
changes in job responsibilities and assignments.
10
In 1999, four executive officers held current compensation units. Each such
unit entitles the holder to receive current income equal to the dividends paid
on one share of Unicom Common Stock. During 1999, no additional units were
awarded by the Committee.
Incentive Compensation Awards. Another component of executive compensation is
incentive compensation earned under awards made by the Committee under the
Unicom Corporation Long-Term Incentive Plan. Such incentives are designed to
drive and enforce achievement of established financial, operational and
strategic goals that are critical to Unicom's success, including increasing
shareholder value. Incentive opportunities include an annual incentive target,
a long-term performance unit target covering a three-year performance period
and non-qualified stock options.
The Unicom Corporation 1999 Annual Incentive Award for Management Employees
under the Unicom Corporation Long-Term Incentive Plan was established to
reward the achievement of certain corporate and business unit goals during
1999. The annual incentive award placed increased competition. The Midwest ISO will establish an independent bodyemphasis on financial
performance, strategic direction and results that will ultimately direct the managementincrease shareholder
value. A significant portion of the transmission system1999 annual incentive for executive
officers was tied to a Shareholder Value Added measure.
The award is variable and is designed to encourage achievement of short-term
goals. Employees receive incentive awards only if their business units and
Unicom meet or exceed the established performance targets for the utilities involved. ComEdyear. The
amount of the individual awards is based upon the individual and collective
accomplishments of employees and varies based upon the degree to which the
financial and strategic goals are met or exceeded and upon the Committee's
assessment of individual performance. For key management employees, the annual
incentive award is payable 75% in cash and 25% in Unicom Common Stock.
For management employees other than those in selected sales-related positions,
the 1999 corporate financial goal was "Shareholder Value Added." Shareholder
Value Added was defined as revenues (ComEd, Off System and Subsidiaries) less
Costs (operations and maintenance expenditures, fuel, depreciation and taxes),
minus capital charge (debt and equity costs). Staff executive officers' annual
incentive awards were tied to the corporate Shareholder Value Added goals
whereas line executive officers were tied to both the corporate Shareholder
Value Added goal and his or her business unit's Shareholder Value Added goal.
The 1999 Unicom Corporate Shareholder Value Added achieved was 138.95% of the
target level. In addition to the Shareholder Value Added goal tie, the
remaining portion of executive officers' annual incentive award was comprised
of a combination of corporate and business unit strategic initiatives and key
performance indicators. Quantitative goals (for example, nuclear capacity)
were measured on a scale of performance ranging from "threshold" to "maximum."
Other strategic goals were assessed and approved by the Committee.
For Mr. Rowe and other executive officers, the final determination of the
annual incentive award was based on the accomplishment of Shareholder Value
Added, strategic goals, and an individual performance assessment by the
Committee.
A long term performance unit award program was established in 1994 to focus
employees on long range performance by linking certain incentive payments to
specific performance measures. Incentive opportunities are expressed as a
percentage of base salary and increase with the executive's management level.
The awards payable in 2000 and in 2001 are based on the total return of Unicom
Common Stock relative to that of the other companies constituting the Dow
Jones Utility Stock Index over three-year performance periods. The Dow Jones
Utility Stock Index includes Unicom and fourteen other large energy services
companies. To better support improved business performance and the creation of
Unicom shareholder value, the award payable in 2002 places a significant
emphasis on Business Unit performance as well as corporate profitability as
measured by Corporate Cumulative Shareholder Value Added and a Customer
Satisfaction Index.
11
Awards for the performance period 1997-1999 resulted in a payment that was
115.5% of the target award. Payments to certain executive officers are
included in the "Payouts" column under the "Long-Term Compensation" heading in
the Summary Compensation Table. Unicom's shareholder return increased by 44.3%
during that same performance period.
Stock Option Grants in 1999. Unicom grants non-qualified stock options to
reward and motivate the Company's management to increase long-term shareholder
value. Option grants are made generally to key employees who are expected to
contribute materially to Unicom's success. The option awards permit grantees
to purchase shares of Unicom's Common Stock at an exercise price equal to the
market value on the date of grant, and become exercisable in equal increments
over a three-year period. The options have a maximum term of ten years.
Committee decisions regarding the size of option grants were based on an
evaluation of competitive data drawn from companies in a study conducted in
fall 1998 for Unicom by a leading executive compensation consulting firm, as
well as the option recipient's base salary, target mix of other compensation
components, management level, performance and potential.
Compensation of the Chief Executive Officer. In considering the compensation
for 1999 of Mr. Rowe, the Compensation Committee evaluated Unicom's 1998
performance, compensation for other chief executive officers, and Unicom's
strategic direction. Under his employment agreement, Mr. Rowe is paid an
annual base salary of at least $900,000, is guaranteed an annual incentive
award for 1998 and 1999 of at least $600,000, and participates in the Long-
Term Performance Unit Award Programs with respect to the three-year
performance periods ending December 31, 1998, 1999 and 2000 as though he had
participated in the Program throughout the performance periods.
Salary. The Committee's assessment of the personal performance of Mr. Rowe was
based upon an evaluation of his leadership, achievements and contributions to
Unicom during 1998, as well as an assessment of competitive practices and
market comparisons of chief executive officers for comparable companies. Mr.
Rowe's total annual salary in 1999 was increased $75,000 to a rate of $975,000
per year.
Incentive Compensation Plans
Annual Incentive Program. Mr. Rowe participated in the annual incentive
program described earlier in this report. Mr. Rowe's target award was 70% of
his base salary. The actual award paid was 155.1% of his target level based on
the achievement of Shareholder Value Added, strategic goals and an individual
performance assessment by the Committee. The Committee approved payment of the
award 50% in cash and 50% in Unicom Common Stock. Mr. Rowe deferred the
portion of his incentive that was payable in Unicom Common Stock under the
Unicom Corporation Stock Bonus Deferral Plan.
Long Term Performance Unit Award. Mr. Rowe's award opportunity for the 1997-
1999 performance cycle was at a target level of 50% of his then-current base
salary. The actual award paid was 115.5% of his target level based on the
total return of Unicom Common Stock relative to the other companies
constituting the Dow Jones Utility Stock Index over the performance period.
Stock Option Award. Mr. Rowe was granted 110,000 non-qualified stock options
as part of the normal annual grant cycle. In addition, as Mr. Rowe voluntarily
deferred one-half of his guaranteed annual awards for 1998 and 1999, the
Committee awarded him a premium of an additional 13,000 options on March 4,
1999. One-half of this premium grant vested immediately and the remaining
portion will retain ownershipvest on March 4, 2000.
Internal Revenue Code Section 162(m) Considerations. Under Section 162(m) of
the Internal Revenue Code, executive compensation in excess of $1 million is
generally not deductible for purposes of corporate income taxes. However,
"qualified performance-based compensation" which is paid pursuant to a plan
meeting certain requirements of the Code and applicable regulations remains
12
deductible. As noted in previous reports, the Committee intends to continue
reliance on performance-based compensation programs, consistent with sound
executive compensation policy. Such programs will be designed to fulfill, in
the best possible manner, future corporate business objectives. The
Committee's policy has been to seek to cause executive incentive compensation
to qualify as "performance-based" in order to preserve its deductibility for
federal income tax purposes to the extent possible without sacrificing
flexibility in designing appropriate compensation programs. In 1997 and 1999,
the Company obtained shareholder approval of performance-based incentives in
Long-Term Performance Unit Awards in order to qualify such compensation as
"performance-based." However, in order to provide executives with appropriate
incentives, the Committee may also determine, in light of all applicable
circumstances, that it would be in the best interests of Unicom for awards to
be paid under certain of its transmission lines.incentive compensation programs or otherwise in a
manner that would not satisfy the requirements to qualify as performance-based
compensation under Code Section 162(m). The formationportion of Mr. Rowe's incentive
compensation that was guaranteed under his employment agreement does not
qualify as performance-based compensation under Code Section 162(m), and
accordingly, to the extent receipt of such compensation is not deferred, the
amount of such incentive compensation and salary in excess of $1 million will
not be deductible by Unicom for purposes of corporate income taxes. Mr. Rowe
deferred the portion of his incentive that was payable in Unicom Common Stock
under the Unicom Corporation Stock Bonus Deferral Plan.
Compensation Committee
Edward A. Brennan, Chairman
James W. Compton
Donald P. Jacobs
Richard Thomas
13
Shareholder Return Performance
Set forth below is a line graph comparing the quarterly percentage change in
the cumulative total shareholder return on Unicom common stock ("UCM") against
the cumulative total return of the Midwest ISO is subject to FERC approval.
NET ELECTRIC GENERATING CAPABILITY
As described under "Item 2. Properties," ComEd considers its non-summer net
generating capability to be 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 538,000 kilowatts, ComEd considers its
net summer generating capability to be 20,198,000 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--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;S&P 500 Composite Stock Index 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,
primarily during the summer periods but also during the winter periods, when
temperature extremes create demand for either summer cooling or winter
heating.
CONSTRUCTION PROGRAMDow
Jones Utility Operations
ComEd has a construction programStock Index for the year 1998, which consists
principallyfive-year period ending December 31, 1999.
Cumulative Performance Since January 1, 1995 Assuming Reinvestment of
improvements to its 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, includes the following estimated expenditures
(excluding nuclear fuel expenditures of approximately $160 million).Dividends
(January 1, 1995 = $100)
December 31,
--------------------------------
1994 1995 1996 1997 1998 1999
------- ---- (MILLIONS
OF DOLLARS)---- ---- ---- ----
Production................................................ $425
Transmission and Distribution............................. 415
General................................................... 90
----
$930
----
----
Such estimated expenditures include $130 million toward the replacement of
the steam generators at ComEd's Braidwood Unit 1 and Byron Unit 1 nuclear
generating units by year-end 1998. The total replacement cost is estimated to
be $455 million, of which approximately $295 million has been incurred through
December 31, 1997 and $30 million will be incurred in 1999.
ComEd and the Indiana Company's construction expenditures during 1997 were
$970 million.
6
ComEd's gross investment in nuclear generating capacity (excluding nuclear
fuel) is $13.4 billion at December 31, 1997 (after reflecting the closure of
Zion Station), and ComEd expects that investment to be approximately $13.9
billion by the end of 1998 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, 1997 were $4,352 million
and $1,686 million, 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 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, equivalent purchased power or the development of
additional demand-side management resources, in 1998 and each year thereafter.
However, ComEd believes that adequate resources, including cost-effective
demand-side management resources, non-utility generation resources and other-
utility power purchases, could be obtained in sufficient quantities to meet
such forecasted needs.
The 1998 construction program includes approximately $2 million for
environmental control facilities. Expenditures on such facilities were $18
million in 1997 and $16 million for each of the years 1996 and 1995.
Purchase commitments for ComEd, principally related to construction and
nuclear fuel, approximated $286 million at December 31, 1997. In addition,
ComEd's estimated commitments for the purchase of coal are as follows:
CONTRACT PERIOD COMMITMENT(1)
-------- --------- -------------
Black Butte Coal Co............................... 1998-2000 $ 679
Decker Coal Co. .................................. 1998-2014 427
Other commitments ................................ 1998 25
------
$1,131
======Unicom Corporation............................. $100.00 144 127 154 202 183
S&P 500 Stock Index............................ $100.00 137 169 225 289 350
Dow Jones Utility Average...................... $100.00 132 144 177 210 198
--------
(1) In millions of dollars, excluding transportation costs. No
estimate of future costescalation has been made.
For additional information concerning these coal contracts and ComEd's fuel
supply, see "Fuel Supply" below and Notes 1 and 23 of Notes to Financial
Statements in the January 30, 1998 Form 8-K Reports, whichBoard Compensation
Directors who are incorporated
herein by reference.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" subcaption "Liquidity and Capital Resources--Utility
Operations--Capital Resources" in the January 30, 1998 Form 8-K Reports, which
are incorporated herein by reference, for information regarding the capital
resources of ComEd.
Unregulated Operations
Unicom has approved capital expenditures for 1998 of approximately $92
million for UT Holdings, primarily related to an expansion of two of its four
Chicago district cooling facilities, the related distribution piping and
plants in other cities. As of December 31, 1997, UT Holdings' purchase
commitments, principally related to construction, were approximately $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.
7
Unicom Enterprises has a $200 million credit facility which will expire in
November 1999, of which $40 million was unused as of December 31, 1997. The
credit facility can be used by Unicom Enterprises to finance investments in
unregulated businesses and projects, including UT Holdings and Unicom Energy
Services, and for general corporate purposes. The credit facility is
guaranteed by Unicom and includes certain covenants with respect to Unicom 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 13 of
Notes to Financial Statements in Unicom's January 30, 1998 Form 8-K Report,
which is incorporated herein by reference, for additional information
regarding certain covenants with respect to Unicom and Unicom Enterprises'
operations.
RATE MATTERS
In January 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 an increase in ComEd's total revenues of approximately $302
million (excluding add-on revenue taxes) on an annual 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 a May 30, 1997 decision of 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 which customers should pay those costs, and (ii) the
proper rate of return on common equity for ComEd. ComEd believes that the ICC
can satisfy the Appellate Court's remand directions on the basis of the
existing record from the ICC proceedings which led to the Rate Order. An ICC
Hearing Examiner issued a proposed order in January 1998 which, if adopted by
the ICC, would uphold the Rate Order and the associated $302 million revenue
increase on an annual basis. A decision is expected early in the second
quarter of 1998. See Note 4 of Notes to Financial Statements in the January
30, 1998 Form 8-K Reports, which are incorporated herein by reference, for
additional information.
See "Changes in the Electric Utility Industry--The 1997 Act" above for
information regarding the 1997 Act.
FUEL SUPPLY
The kilowatthour generation of ComEd and the Indiana Company for 1997 was
provided from the following fuel sources: nuclear 57%, coal 39% and natural
gas 4%. The lower nuclear generation as a percentage of total generation for
1997, as compared to recent prior years, is primarily due to outages at
certain of ComEd's nuclear generating stations. See "Regulation--Nuclear"
below for information regarding outages at certain of ComEd's nuclear
generating stations.
Nuclear Fuel
ComEd has uranium concentrate inventory and supply contracts sufficient to
meet all of its uranium concentrate requirements through 1999 and portions of
its uranium concentrate requirements for periods beyond 1999. ComEd's
contracted conversion services are sufficient to meet all of its uranium
conversion requirements through 1998 and portions of 1999. All of ComEd's
enrichment requirements have been contracted through 2003 and portions of its
enrichment requirements for periods beyond 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 $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 "Nuclear Fuel" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for information related
to the accounting for such costs.
See "Regulation--Nuclear" below for information concerning the disposal of
radioactive waste.
Coal
ComEd burns low sulfur western coal at all of its coal-fired stations.
ComEd's present policy is to maintain a coal inventory of 30 to 45 days of
high utilization. As of February 28, 1998, coal inventories approximated 45
days. The average cost per ton of coal consumed by ComEd and the Indiana
Company for the years 1997, 1996 and 1995, including transportation charges,
was $38.47, $41.16 and $41.72, respectively.
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, 1997, ComEd
had coal reserves of $282 million. In prior years, ComEd's commitments for the
purchase of coal exceeded its requirements. Rather than take all the coal it
was required to take, ComEd agreed to purchase the coal in place in the form
of coal reserves. For additional information concerning ComEd's coal purchase
commitments, see "Construction Program--Utility Operations" above. For
additional information regarding coal reserves, see Note 1 of Notes to
Financial Statements in the January 30, 1998 Form 8-K 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 Station 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 Station to dual fuel capability (residual oil and
natural gas) was completed during 1994 and 1996 and conversion of the fifth
unit was completed in 1997. ComEd has a contract for the delivery and storage
of natural gas from gas pipelines to Collins Station, which expires in 2003.
Fuel Adjustment Clause
The FAC provided for the recovery of changes in fossil and nuclear fuel
costs and the energy portion of purchased power costs as compared to the fuel
and purchased energy costs included in ComEd's base rates. As authorized by
the ICC, ComEd had recorded under or overrecoveries of allowable fuel and
energy costs which, under the FAC, were recoverable or refundable in
subsequent months. Pursuant to an option contained in the 1997 Act, ComEd
filed a tariff on December 16, 1997 to eliminate 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 the 1997 Act" in the January 30, 1998 Form 8-K
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, 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 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. 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, 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
Under the Nuclear Waste Policy Act of 1982, the DOE is responsible for the
selection and development of repositories for, and the disposal of, spent
nuclear fuel and high-level radioactive waste. ComEd, as required by that Act,
has signed a contract with the DOE to provide for the disposal of spent
nuclear fuel and high-level radioactive waste from ComEd's nuclear generating
stations. That contract provided for acceptance by the DOE of such materials
to begin in January 1998; however, that date was not met by the DOE and is
expected to be delayed significantly. The DOE's current estimate for opening a
facility to accept such waste is 2010. Extended delays in spent nuclear fuel
acceptance by the DOE would lead to ComEd's consideration of costly storage
alternatives. The contract with the DOE requires ComEd to pay the DOE a one-
time fee applicable to nuclear generation through April 6, 1983 of
approximately $277 million, with interest to date of payment, and a fee
payable quarterly equal to one mill per kilowatthour of nuclear-generated and
sold electricity after April 6, 1983. As provided for under the contract,
ComEd has elected to pay the one-time fee, with interest, just prior to the
first delivery of spent nuclear fuel to the DOE. The costs incurred by the DOE
for disposal activities will be paid out of fees charged to owners and
generators of spent nuclear fuel and high-level radioactive waste. ComEd has
primary responsibility for the interim storage of its spent nuclear fuel.
Dresden Station has spent fuel capacity through the year 2001, Zion Station
has capacity for all its spent fuel, Quad Cities Station has spent fuel
capacity through 2006 and all of the other stations have spent fuel capacity
through at least 2008. ComEd is developing on site dry cask spent fuel storage
for Dresden Unit 1, which is expected to be funded by the external
decommissioning trusts. See "Depreciation and Decommissioning" under Note 1 of
Notes to Financial
10
Statements in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for information regarding the external decommissioning
trusts. The Dresden Unit 1 dry storage canisters will meet the federal
requirements for both storage and transportation of spent nuclear fuel. The
storage canisters could be used by 1999. Meeting spent fuel storage
requirements beyond the years stated above could require new and separate
storage facilities.
The federal Low-Level Radioactive Waste Policy Act of 1980 provides that
states may enter into compacts to provide for regional disposal facilities for
low-level radioactive waste and restrict use of such facilities to waste
generated within the region. Illinois has entered into a compact with the
state of Kentucky, which has been approved by Congress as required by the
Waste Policy Act. Neither Illinois nor Kentucky currently has an operational
site, and none is currently expected to be operational until after the year
2011. ComEd has temporary on-site storage capacity at its nuclear generating
stations for a limited amount of low-level radioactive waste and has been
shipping such waste to a low-level radioactive waste site in Barnwell, South
Carolina. ComEd anticipates the possibility of continuing difficulties in
disposing of low-level radioactive waste. ComEd continues to evaluate its
options relating to the disposal of low-level radioactive waste.
ComEd is subject to the jurisdiction of the NRC with respect to its nuclear
generating stations. The NRC regulations control the granting of permits and
licenses for the construction and operation of nuclear generating stations and
subject such stations to continuing review and regulation. The NRC review and
regulatory process covers, among other things, operations, maintenance, and
environmental and radiological aspects of such stations. The NRC may modify,
suspend or revoke licenses and impose civil penalties for failure to comply
with the Atomic Energy Act, the regulations under such Act or the terms of
such licenses.
Nuclear operations have been, and remain, an important focus of ComEd--given
the impact of such operations on overall O&M expenditures and the ability of
nuclear power plants to produce electric energy at a relatively low marginal
cost. ComEd operates a large number of nuclear plants, ranging from the older
Dresden and Quad Cities Stations to the more recently completed LaSalle, Byron
and Braidwood Stations, and is intent upon safe, reliable and efficient
operation. These plants were constructed over a period of time in which
technology, construction procedures and regulatory initiatives and oversight
have evolved, with the result that older plants generally require greater
attention and resources to meet regulatory requirements and expectations, as
well as to maintain operational reliability. As discussed in "Changes in the
Electric Utility Industry--ComEd's Response to Regulatory Changes" above,
ComEd has ceased nuclear generation operations at its Zion Station.
ComEd's Dresden, Zion and LaSalle nuclear generating stations are currently
on the NRC's list of plants that require increased regulatory scrutiny by the
NRC. Dresden Station has been on the list since 1992 and LaSalle and Zion
Stations were added in January 1997. On January 21, 1998, the NRC stated in a
public meeting that although Dresden Station has demonstrated sustained
improved performance that would warrant removal from the list, continued
evidence of cyclical and inconsistent performance at ComEd's other nuclear
generating stations indicated removal of Dresden Station from the list would
not be appropriate at that time. The NRC also acknowledged improvements at
LaSalle Station but concluded that a substantial amount of work remains and
the plant should remain on the list. The NRC also stated that, based on a
determination made prior to the announcement of the cessation of power
operations at the station, Zion should remain on the list. The listing of the
plants does not prevent ComEd from operating the generating units; however, it
does mean that the NRC will devote additional resources to monitoring ComEd's
operating performance and that ComEd will need to work to demonstrate to the
NRC the sustainability of improvements which it believes it has undertaken and
is continuing to implement. Also at the meeting, the NRC noted a declining
performance trend at Quad Cities Station. In a meeting on March 3, 1998, the
NRC stated that weaknesses were observed with respect to certain operations,
maintenance and engineering activities
11
at Quad Cities Station. The NRC has indicated that it is monitoring ComEd's
ability to manage its nuclear operations in their entirety and that the
performance at any one facility will be viewed by the NRC in context with the
performance of ComEd's nuclear generating group as a whole.
In January 1997, the NRC took the unusual step of requiring ComEd to submit
information to allow the NRC to determine what actions, if any, should be
taken to assure that ComEd can safely operate its six nuclear generating
stations (prior to the permanent cessation of nuclear generation operations at
Zion Station) while sustaining performance improvement at each site. The
request also required ComEd to submit information regarding the criteria that
it has established, or planned to establish, to measure performance and to
explain ComEd's proposed actions if the criteria were not met. The request
stated the NRC staff's concerns with the "cyclical safety performance of ComEd
nuclear stations," noting the presence on the list of plants that require
increased regulatory scrutiny by the NRC of Dresden, LaSalle and Zion Stations
at various times during the past 10 years. It also noted concerns regarding
"ComEd's ability to establish lasting and effective programs that result in
sustained performance improvement." The problems identified by the NRC are
consistent with weaknesses that had been identified in station self-
assessments initiated by ComEd, and management had already undertaken to
develop and implement programs designed to address these issues. ComEd
submitted a response to the NRC on March 28, 1997 and the NRC indicated in an
April 25, 1997 public meeting with representatives of ComEd management that
ComEd's response was generally adequate to demonstrate ComEd's ability to
operate its nuclear generating stations while sustaining performance
improvements. In a November 4, 1997 meeting with the NRC staff, the NRC
indicated that it believes ComEd's nuclear performance has shown improvement,
but that it is too early to conclude that lasting improvement has been
achieved. The NRC noted, as an exception to ComEd's general improving and
sustained performance in its nuclear operations, concerns regarding ComEd's
engineering efforts to resolve longstanding fire protection issues at the Quad
Cities Station. The NRC and representatives of ComEd's management have met and
will continue to meet periodically in the future, to follow-up on these
matters.
INPO, a nuclear power industry funded organization, also has been critical
of ComEd's nuclear operations and the progress made by ComEd at correcting
problems INPO previously identified. In the past, INPO has raised concerns
with respect to management and performance of ComEd's nuclear operations,
including accountability and the effectiveness of efforts aimed at engaging
the workforce in the improvement process. ComEd continues to address INPO's
concerns.
ComEd has devoted, and intends to continue to devote, significant resources
to the management and operations of its nuclear generating stations. Over the
past several years, it has increased and reinforced management with managers
drawn from other utilities which have resolved similar operational and
performance issues, including the appointment of a new Chief Nuclear Officer
in late 1997. It also has sought to identify, anticipate and address operating
and performance issues in a safe, cost-effective manner, while seeking to
improve the availability and capacity factors of its nuclear generating units.
ComEd's activities, with respect to its nuclear generating stations, have
included improvements in operating and personnel procedures and repair and
replacement of equipment and can result in longer unit outages. LaSalle Units
1 and 2 and Quad Cities Units 1 and 2 are currently not operating. It
currently is expected that LaSalle Unit 1 will restart by the end of the third
quarter of 1998 and LaSalle Unit 2 is expected to restart by the end of the
first quarter of 1999. Both units at Quad Cities Station are expected to
return to service by approximately the end of the second quarter of 1998. In
each case the restart of these units requires the resolution of issues with
the NRC.
The LaSalle Station outage and an outage at Zion Station were part of
several outages of nuclear and fossil generating stations that several
utilities operating in the Midwestern power grid (including ComEd) were
expecting and experienced during 1997. Although ComEd met its customers'
electricity
12
demands, the expectation of the NERC, prior to the beginning of the summer,
had been that there could have been electric energy shortages during summer
peak demand periods due to generating station outages in the Midwestern power
grid and transmission limitations on delivering power from neighboring
systems. In response to these regional circumstances and expectations, ComEd
increased the availability of its remaining nuclear and fossil generating
capacity, reinforced transmission capacity, negotiated the purchase of power
and related transmission service from third parties, and worked with a number
of customers to manage the use and demand for power. ComEd is evaluating and
the NERC will be analyzing electric reliability and the potential for electric
energy shortages for the summer of 1998 in light of the potential for
continued outages of nuclear plants operated by ComEd and other utilities in
the Midwestern power grid.
Generating station availability and performance during a year may be issues
in fuel reconciliation proceedings in assessing the prudence of fuel and
purchased power costs during such year. Final ICC orders have been issued in
fuel reconciliation proceedings for years prior to 1994 and for the year 1995.
In 1996, an intervenor filed testimony in the fuel reconciliation proceeding
for 1994 seeking a refund of approximately $90 million relating to nuclear
station performance. In March 1998, the ICC Staff also filed testimony in the
fuel reconciliation proceeding for 1994 proposing a refund of $36 million. The
1997 Act provides that the fuel reconciliation proceedings for 1994 and 1996
must be concluded by the end of 1998. If refunds are required in these
proceedings, the refunds could have a material adverse effect on results of
operations. The 1997 Act also provides that, because ComEd eliminated its FAC
effective January 1, 1997, the ICC shall not conduct a fuel reconciliation
proceeding for the year 1997 or any subsequent years. See "Changes in the
Electric Utility Industry" and "Fuel Supply--Fuel Adjustment Clause" above for
information regarding the elimination of ComEd's FAC.
ComEd has completed replacement of the steam generators at Byron Unit 1 and
is replacing the steam generators at Braidwood Unit 1. See "Construction
Program--Utility Operations" above for additional information.
Based on ComEd's most recent study approved by the ICC, decommissioning
costs, including the cost of decontamination and dismantling, are estimated to
aggregate $4.4 billion in current-year (1998) dollars, including a contingency
allowance. ComEd estimates it will expend approximately $11.6 billion,
including a contingency allowance, for decommissioning costs primarily during
the period from 2007 through 2032. Such costs are expected to be funded by
external decommissioning trusts which ComEd established in compliance with
Illinois law and into which ComEd has been making annual contributions. Future
decommissioning cost estimates may be significantly affected by the adoption
of or changes to NRC regulations, as well as changes in the assumptions used
in making such estimates, including changes in technology, available
alternatives for the disposal of nuclear waste, and inflation. See Note 1 of
Notes to Financial Statements under "Depreciation and Decommissioning" in the
January 30, 1998 Form 8-K Reports, which are incorporated herein by reference,
for additional information regarding decommissioning costs.
During the year 1997, civil penalties were imposed on ComEd on ten occasions
for violations of NRC regulations in amounts aggregating $1,390,000. Since
January 1, 1998, civil penalties were imposed on ComEd on three occasions for
violations of NRC regulations in amounts aggregating $495,000. To ComEd's
knowledge, there are two current enforcement issues outstanding and under
review by the NRC.
The IDNS has jurisdiction over certain activities in Illinois relating to
nuclear power and safety, and radioactive materials. Effective June 1, 1987,
the IDNS replaced the NRC as the regulator and licensor of certain source, by-
product and special nuclear material in quantities not sufficient to form a
critical mass, including such material contained in various measuring devices
used at fossil-fuel power plants. The IDNS does not regulate ComEd's nuclear
generating stations. The IDNS has promulgated
13
regulations which are substantially similar to the corresponding federal
regulations. The IDNS also has authority to license a low-level radioactive
waste disposal facility and to regulate alternative methods for disposing of
materials which contain only trace amounts of radioactivity.
The uranium mining and milling operations of Cotter are subject to
regulation by the state of Colorado and the NRC.
Environmental
ComEd is subject to regulation regarding environmental matters by the United
States and by the states of Illinois, Iowa and, in the case of Cotter,
Colorado, and by local jurisdictions where ComEd operates 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 in accordance with federal
standards, impose restrictions on the emission of particulates, sulfur
dioxide, nitrogen oxides and other air pollutants and require permits from the
respective state and local environmental protection agencies for the operation
of emission sources. Permits authorizing operation of ComEd's fossil 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 either has NPDES permits for all
of its generating stations or has pending applications for such permits under
the current delegation of the program to the Illinois 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 Clean Air Amendments require reductions in nitrogen oxide emissions from
ComEd'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 the 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 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 limitation of 0.15 lbs/MBtu. Under the Acid Rain program, the
U.S. EPA prepared nitrogen oxide emission regulations that apply to all of
ComEd's boilers with a compliance date of January 1, 2000. These regulations
include limits for cyclone and tangentially fired boilers of 0.86 and 0.40
lbs/mm Btu, respectively.
CERCLA provides for immediate response and removal actions coordinated by
the U.S. EPA to releases of hazardous substances into the environment and
authorizes the U.S. Government either to clean up sites at which hazardous
substances have created actual or potential environmental hazards
14
or to order persons responsible for the situation to do so. Under CERCLA,
generators and transporters of hazardous substances, as well as past and
present owners and operators of hazardous waste sites, are made strictly,
jointly and severally liable for the cleanup costs of waste at sites, most of
which are listed by the U.S. EPA on the NPL. These responsible parties can be
ordered to perform 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 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
(1998) dollars. It is expected that the costs associated with investigation
and remediation of former MGP sites will be incurred over a period not 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 $25 million has been included in other noncurrent liabilities on
the Consolidated Balance Sheets in the January 30, 1998 Form 8-K Reports,
which are incorporated herein by reference, 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 30, 1998 Form 8-
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
operationsemployees of Unicom or ComEd.any of its subsidiaries receive
an annual fee of $36,200 payable in shares of Unicom common stock under the
Unicom Corporation 1996 Directors' Fee Plan. These cost estimates are based on currently
available information regarding the responsible parties likely to share in the
costsdirectors also receive a
fee of responding to site contamination, the extent$1,500 for each board of contamination at
sitesdirectors and committee meeting they attend
and an additional annual fee of $2,500 for which the investigation has not yet been completed and the cleanup
levels to which sites are expected to have to be remediated.
The outcome of manyeach committee of the regulatory proceedings referredboard of
directors that they chair, which meeting and chair fees may, at the election
of the director, be paid in shares of Unicom common stock under the 1996
Directors' Fee Plan. In the event that directors also serve as directors of
ComEd, or as chairs of corresponding committees of ComEd, the aggregate fees
paid 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 resultsuch directors 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
costrespect of such equipment. ComEd cannot predict the effect on the cost of such
equipment or operations if new regulations relatedservice 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,
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,exceed the foregoing amounts, so farthat directors do not receive duplicate fees.
Directors who are full-time employees of Unicom or any
14
of its subsidiaries receive no fees for service on the Unicom board of
directors. Directors may defer their fees. Prior to 1997, directors who had
never been an officer or an employee of Unicom or any of its subsidiaries, and
who had attained at least age 65 and completed the required period of board
service (3 to 5 years as they now foresee, thatapplicable, including service as a director of
ComEd), became eligible for retirement benefits upon retirement. Such benefits
were to be paid to the retired director or a surviving spouse for a period
equal to such violationsdirector's years of service (including service as a director of
ComEd) in an amount per year equal to the annual retainer for board members as
in effect at the time of payment. Effective January 1, 1997, the Unicom board
of directors terminated the further accrual of retirement benefits and offered
each director the option to irrevocably elect, in lieu of amounts otherwise
payable, a lump sum amount payable upon retirement, either by delivery of
shares of Unicom common stock or defaults will havein cash. In lieu of further accrual of
retirement benefits, non-employee directors received a material adverse effect on$6,200 increase in
their future business and
operating results, except for events otherwise described in these Annual
Reports on Form 10-K, which could have such an effect.
See "Item 3. Legal Proceedings" regarding Cotter.
EMPLOYEES
Unicom and its subsidiary companies had approximately 16,704 employees as of
December 31, 1997. ComEd had approximately 16,663 employees as of December 31,
1997 of which approximately 9,140 ComEd employees were represented by IBEW
Local 15.
A new Collective Bargaining Agreement with Local 15 becameannual fee (from $30,000 to $36,200), effective August
25,June 1, 1997 and provides, among other things, for a term expiring on March 31,
2001. A previously negotiated general wage increase of 1.5% was effective
April 1, 1997, for all employees covered by the Collective Bargaining
Agreement. Additionally, a general wage increase of 1.5% was effective October
13, 1997, and was applied on a retroactive basis to March 31, 1997. For each
of the remaining three years, a 3% general wage increase will be granted to
employees covered by the Collective Bargaining Agreement, effective the
beginning of the pay period that includes April 1st of each such year.
The supplemental agreements covering life insurance, savings and investment
plan, and health care plans are effective through 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, which
also includes 23 associate members and 5 affiliate 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 ISOpayable
in January 1998. See "Changes in the Electric Utility Industry--ComEd's
Response to Regulatory Changes" for additional information.
FRANCHISES
ComEd's franchises are, in general, deemed adequate to permit it to engage
in the business it now conducts.
In the city of Chicago, ComEd operates under a nonexclusive electric
franchise ordinance, effective January 1, 1992, and continuing in force until
December 31, 2020. ComEd derives
16
approximately one-third of its ultimate consumer revenues from customers
located within the city of Chicago. See "Item 3. Legal Proceedings" regarding
an arbitration proceeding initiated by the City of Chicago under its franchise
agreement with ComEd.
The electric business outside of the city of Chicago is conducted in
municipalities under nonexclusive franchises and, where required, under
certificates of convenience and necessity granted by the ICC. The following
tabulation summarizes, as of December 31, 1997, 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
- ---------------------------- -------------- ----------
1998-2006............................................. 3 89,000
2007-2017............................................. 10 95,000
2018-2028............................................. 3 4,000
2029-2039............................................. 1 *
2040 and subsequent years............................. 376 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 officers to their present positions
and the prior positions they have held with Unicom or other companies, since
January 1, 1993, are described below.
NAME AND AGE POSITION
------------- -------------------------------------------------------------
*John W. Chairman, President and Chief Executive Officer of Unicom and
Rowe, 52 ComEd since March 1998; previously President and Chief Exec-
utive Officer of New England Electric System.
*Oliver D. Executive Vice President and President and Chief Nuclear Of-
Kingsley, ficer--Nuclear Generation Group of ComEd since October 1997;
Jr., 55 previously Chief Nuclear Officer at the Tennessee Valley Au-
thority.
*Robert J. Executive Vice President of ComEd since January 1997 and
Manning, 55 President--Fossil Generation Group of ComEd since October
1997; previously Senior Vice President of ComEd.
*John C. Senior Vice President and Chief Financial Officer of Unicom
Bukovski, 55 and ComEd since October 1997; previously Vice President and
Chief Financial Officer of Unicom and ComEd.
*Paul D. Senior Vice President of ComEd since October 1997; previously
McCoy, 47 Vice President of ComEd.
Donald A. Senior Vice President of Unicom since 1995; President and
Petkus, 56 Chief Executive Officer of UT Holdings since 1997 and Unicom
Thermal Technologies Inc. since 1995, and Senior Vice Presi-
dent of ComEd.
*S. Gary Senior Vice President of Unicom and ComEd since October 1997;
Snodgrass, Vice President of Unicom and ComEd, September 1997 to Octo-
46 ber 1997; previously Vice President of USG Corporation.
*Pamela B. Senior Vice President and General Counsel of Unicom and ComEd
Strobel, 45 since October 1997; previously Vice President and General
Counsel of ComEd.
*Michael J. Senior Vice President of ComEd since 1993; previously Vice
Wallace, 50 President of ComEd.
John T. Vice President of Unicom and ComEd since 1996; previously
Costello, 49 Manager of Corporate Relations of ComEd, 1995 to 1996 and
Manager of Public Affairs of ComEd.
*William H. Vice President of ComEd.
Downey, 53
Ruth Ann M. Vice President and Treasurer of Unicom and ComEd since Sep-
Gillis, 43 tember 1997; previously Vice President, Chief Financial Of-
ficer and Treasurer of the University of Chicago Hospitals
and Health System from 1996 to 1997 and Senior Vice Presi-
dent and Chief Financial Officer of American National Bank
and Trust Company.
Thomas J. Vice President of Unicom and ComEd since 1996; previously
McCaffrey, Vice President of Mercer Management Consulting, 1995 to 1996
53 and Corporate Senior Vice President of First Chicago Corpo-
ration.
*Robert E. Comptroller of Unicom and ComEd since July 1997; previously
Berdelle, 42 held various financial reporting and analysis positions
within ComEd.
David A. Secretary of Unicom and ComEd since 1994 and 1989, respec-
Scholz, 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 28, 1998.
There are no family relationships among the executive officers, directors
and nominees for director of Unicom.
18
OPERATING STATISTICS
YEAR ENDED DECEMBER 31
----------------------------------
1997 1996 1995
---------- ---------- ----------
Operating Revenues (thousands of dol-
lars)(1):
Residential.............................. $2,552,742 $2,541,873 $2,621,038
Small commercial and industrial.......... 2,153,113 2,113,716 2,073,998
Large commercial and industrial.......... 1,467,574 1,445,708 1,425,784
Public authorities....................... 505,907 503,004 487,142
Electric railroads....................... 29,785 29,651 26,894
Provisions for revenue refunds--ultimate
consumers............................... (45,470) -- --
Sales for resale......................... 336,480 235,041 207,256
Other revenues........................... 82,891 68,031 67,933
---------- ---------- ----------
Total................................. $7,083,022 $6,937,024 $6,910,045
========== ========== ==========
Sales (millions of kilowatthours):
Residential.............................. 22,151 22,310 23,303
Small commercial and industrial.......... 25,860 25,131 25,313
Large commercial and industrial.......... 24,074 23,896 23,777
Public authorities....................... 7,322 7,336 7,158
Electric railroads....................... 418 424 390
Sales for resale......................... 15,679 12,178 11,412
---------- ---------- ----------
Total................................. 95,504 91,275 91,353
========== ========== ==========
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear................................. 49,136 62,610 70,261
Fossil.................................. 36,604 30,315 26,231
Fast-start peaking units................ 121 123 116
---------- ---------- ----------
Net generation........................ 85,861 93,048 96,608
Purchased power.......................... 16,672 6,129 2,475
Company use and losses................... (7,029) (7,902) (7,730)
---------- ---------- ----------
Total................................. 95,504 91,275 91,353
========== ========== ==========
Cost of Fuel Consumed (per million Btu):
Nuclear.................................. $0.57 $0.53 $0.52
Coal..................................... $2.28 $2.41 $2.43
Oil...................................... $3.90 $3.41 $3.06
Natural gas.............................. $2.69 $2.75 $1.85
Average all fuels........................ $1.33 $1.17 $1.05
Peak Load (kilowatts)..................... 18,497,000 18,916,000 19,212,000
Number of Customers (at end of year):
Residential.............................. 3,123,364 3,102,101 3,079,381
Small commercial and industrial.......... 291,143 289,803 288,848
Large commercial and industrial.......... 1,566 1,550 1,539
Public authorities....................... 12,180 12,142 12,039
Electric railroads and resale............ 53 46 26
---------- ---------- ----------
Total................................. 3,428,306 3,405,642 3,381,833
========== ========== ==========
Average Annual Revenue Per Residential
Customer
(excluding light bulb service)........... $816.91 $819.52 $852.18
Average Use Per Residential Customer
(kilowatthours).......................... 7,108 7,213 7,598
Average Revenue Per Kilowatthour:
Residential (excluding light bulb serv-
ice).................................... 11.49c 11.36c 11.22c
Small commercial and industrial.......... 8.33c 8.41c 8.19c
Large commercial and industrial.......... 6.10c 6.05c 6.00c
- --------
(1) See "Rate Matters" above.
19
YEAR 2000 CONVERSION
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," subcaption "Liquidity and Capital Resources--Year 2000
Conversion" in the January 30, 1998 Form 8-K Reports, which are incorporated
herein by reference, for information regarding Unicom and ComEd's Year 2000
conversion.
MARKET RISKS
ComEd is exposed to market risk due to changes in interest rates and changes
in the market price for electricity. Exposure for interest rate changes
relates to its long-term debt and preferred equity obligations. Exposure to
electricity market price risk relates to forward activities taken to
effectively manage the supply of, and demand for, the electric generation
capability of ComEd's generating plants. ComEd does not currently utilize
derivative commodity or financial instruments for trading or speculative
purposes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations," subcaption "Liquidity and Capital Resources--Interest
Rate Exposure and Market Price Exposure" in the January 30, 1998 Form 8-K
Reports, which are incorporated herein by reference, for additional
information.
FORWARD-LOOKING INFORMATION
Except for historical data, the information contained in these Annual
Reports constitutes forward-looking statements. Forward-looking statements are
inherently uncertain and subject to risks. Such statements should be viewed
with caution. Actual results or experience could differ materially from the
forward-looking statements as a result of many factors. Forward-looking
statements in this report include, but are not limited to: (1) statements
regarding expectations of revenue reductions as a result of the 1997 Act in
"Item 1. Business," subcaption "Changes in the Electric Utility Industry--The
1997 Act" (2) statements regarding estimated capital expenditures in "Item 1.
Business," subcaption "Construction Program," (3) statements regarding the
estimated return to service of certain nuclear generating units and the costs
of purchased power in "Item 1. Business," subcaption "Regulation--Nuclear,"
(4) statements regarding the costs of decommissioning nuclear generating
stations in "Item 1. Business," subcaption "Regulation--Nuclear," (5)
statements regarding cleanup costs associated with MGPs and other remediation
sites in "Item 1. Business," subcaption "Regulation--Environmental" and (6)
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Item 8. Financial Statements and Supplementary
Data" which, in the caseshares of Unicom incorporate portions of Unicom's January
30, 1998 Form 8-K Report, which is incorporated herein by reference, which
contain forward-looking information as described therein, and in the case of
ComEd, incorporate portions of ComEd's January 30, 1998 Form 8-K Report, which
is incorporated herein by reference, which contain forward-looking information
as described therein. Management cannot predict the course of future events or
anticipate the interaction of multiple factors beyond management's control and
their effect on revenues, project timing and costs. The statements regarding
revenue 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 64%, 10%, 22% and 4%,
respectively, of their gross investment in electric plant and equipment in
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, deemed
satisfactory by ComEd, but without examination of underlying land 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, as of March 1, 1998, is derived from
the following electric generating facilities:
NET GENERATING CAPABILITY
STATION LOCATION (KILOWATTS)(1)
------- -------------- -------------------------
Nuclear--
Zion Zion --(2)
Dresden Near Morris 1,588,000
Quad Cities Near Cordova 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 1,538,000
Joliet 6 Near Joliet 314,000
Joliet 7 & 8 Near Joliet 1,025,000
Will County Near Lockport 1,092,000
Waukegan Waukegan 789,000
Crawford Chicago 542,000
Fisk Chicago 326,000
Fast-Start Peaking Units Various 1,407,000(4)
----------
Company owned net non-summer
generating capability 19,138,000
Deduct--Summer limitations 538,000
----------
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 20,198,000
==========
- --------
(1) Reflects a re-rating of certain generating stations as of February 1,
1998.
(2) On January 14, 1998, the Boards of Directors of Unicom and ComEd
authorized the permanent cessation of nuclear generation operations at
Zion Station.
(3) Excludes the 25% undivided interest of MidAmerican Energy Company in the
Quad Cities Station.
(4) Such generating units are normally designed for use primarily during the
maximum load periods of the year or during system operating emergencies.
Such units are capable of starting and coming on-line quickly.
(5) ComEd sold its Kincaid and State Line generating stations in February 1998
and December 1997, respectively. Under the terms of the sales, ComEd
entered into exclusive 15-year purchase power agreements for the output of
the plants.
Major electric transmission lines owned and in service are as follows:
VOLTAGE CIRCUIT
(VOLTS) MILES
------- -------
765,000........................................................... 90
345,000........................................................... 2,545
138,000........................................................... 2,737
21
ComEd's electric distribution system includes 38,630 pole line miles of
overhead lines and 34,579 cable miles of underground lines. A total of
approximately 1,334,930 poles are included in ComEd's distribution system, of
which about 593,390 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 1994, a federal jury returned nominal dollar verdicts on eight
bellwether plaintiffs' claims in the 1989 cases, which verdicts were upheld on
appeal. The remaining claims in the 1989 actions have been settled and
dismissed. Although the 1991 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.
On March 11, 1998 the Illinois Supreme Court approved a settlement of
ComEd's dispute regarding property tax assessments for its Byron nuclear
generating station. Under the terms of the settlement agreement, the taxing
bodies in Ogle County have agreed that taxes in future years will not exceed
certain specified amounts. ComEd will receive $8.5 million in refunds and set
aside additional credits which will be available to enforce the provisions
regarding future levies. The settlement agreement continues in effect until
2004. Appeals are still pending for cases involving ComEd's Braidwood and
LaSalle Stations, as well as other properties. These proceedings seek refunds
and reduced valuations, resulting in lower property taxes for the challenged
and subsequent years.
On November 1, 1996, the city of Chicago, Illinois filed a demand for the
appointment of an Adjustment Board before the American Arbitration Association
under the provisions of its franchise agreement with ComEd. In its demand, the
city alleges, among other items, that ComEd has failed to carry out certain
commitments related to system reliability under the franchise agreement, which
requires ComEd to budget $1 billion in expenditures for transmission and
distribution enhancements within or for the benefit of Chicago over a ten-year
period that commenced in January 1992. ComEd is disputing the city's
allegations. During the six years since January 1992, ComEd has expended
approximately $499 million to enhance electric service reliability and energy
supply for the city, and it continues to review, and budget appropriately, for
needed projects.
On June 13, 1997, the IDR issued a Notice of Tax Liability to ComEd alleging
deficiencies in Illinois invested capital tax for the years 1988 through 1994
of $22 million, plus interest of $11 million and a penalty of $2 million. On
January 2, 1998, the IDR issued a second Notice of Tax Liability also alleging
deficiencies in Illinois invested capital tax for the years 1995 through 1996
of $7 million, plus interest of $1 million. ComEd has protested the notices,
and the matter is currently pending before the IDR's Office of Administrative
Hearings. Interest will continue to accrue on the alleged tax deficiencies at
9% per annum.
22
In November and December of 1997, Unicom and its directors were served with
several shareholder derivative lawsuits in state and federal court. All of the
suits assert identical claims that the directors breached fiduciary duties to
the shareholders by allegedly failing to properly supervise ComEd's nuclear
program. Each plaintiff alleges that this caused ComEd to violate NRC rules,
which has cost ComEd millions of dollars. Plaintiffs seek to have the
directors reimburse ComEd for these costs, and they seek attorneys' fees.
Unicom and ComEd's preliminary assessment of these claims is that they are
without merit.
In October 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" 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-
Trust Securities.................................... baa3 BBB- BBB-
Commercial paper.................................... P-2 A-2 D-2
23
As of January 1998, Moody's rating outlook on ComEd's securities is
"negative" and Duff & Phelps has classified ComEd's securities as "Rating
Watch-Down." S&P changed its rating outlook on ComEd 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. S&P's top four
bond ratings (AAA, AA, A and BBB) are generally considered to describe
obligations in which investment characteristics predominate. Obligations rated
BBB are regarded as having an adequate capacity to pay interest and repay
principal. Such obligations normally exhibit adequate protection parameters,
but adverse economic conditions or changing circumstances are more likely to
lead to weakened capacity to pay. A plus or minus sign in S&P's system shows
relative standing within its rating categories.
Both Moody's and S&P's preferred stock ratings represent relative security
of dividends. Moody's top four preferred stock ratings (aaa, aa, a and baa)
are generally considered "investment grade." Moody's baa rating describes a
medium grade preferred stock, neither highly protected nor poorly secured.
S&P's top four preferred stock ratings (AAA, AA, A and BBB) are generally
considered "investment grade." S&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.
Moody's P-2 rating of commercial paper is the second highest of three
possible ratings. P-2 describes a strong capacity for repayment of short-term
promissory obligations. S&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 bycommon stock.
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 30, 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 20, and the audited consolidated financial
statements and notes thereto on pages 22 through 54 of Unicom's January 30,
1998 Form 8-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Changes in the Electric Utility Industry," "Construction Program"
and "Regulation" for additional information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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 28, 1998 is incorporated herein by reference to the information under the
heading "Security12. Security Ownership of Certain Beneficial Owners and Management" in
Unicom's definitive Proxy Statement ("1998 Proxy Statement") to be filed with
the SEC prior to April 30, 1998, pursuant to Regulation 14A under the
Securities Exchange Act of 1934. The information required by Item 10 relating
to executive officers is set forth in Part I of Unicom's Annual Report on Form
10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and under the heading "SecurityManagement.
Security Ownership of Certain Beneficial Owners and Management"Management
No person is known to Unicom to be the beneficial owner of more than five
percent of Unicom common stock. The following table lists the beneficial
ownership, as defined under the rules of the Securities and Exchange
Commission, as of January 31, 2000, of Unicom common stock held by each of the
directors, each of the executive officers named in the Summary Compensation
Table under Item 11. Executive Compensation and Unicom's directors and
executive officers as a group. In addition, the table includes two columns
describing securities held by such persons that are not considered to be
"beneficially owned" under the rules of the SEC. The column headed "Other
Stock Options" includes
stock options held by such persons that are not exercisable within 60 days of
January 31, 2000. The column headed "Deferred Share Equivalents" includes
shares deferred by such persons under the Unicom Corporation Stock Bonus
Deferral Plan or the Unicom Corporation 1996 Directors' Fee Plan or share
equivalents held in the Unicom Corporation Retirement Plan for Directors.
Beneficial Ownership
of Common Stock
------------------------------
Other
Amount Percent Stock Deferred Share
Name and Nature of Class Options(5) Equivalents(7)
---- ------------ --------- ---------- --------------
Edward A. Brennan....... 4,403 * -- 1,000
Carlos H. Cantu......... 2,047 * -- --
James W. Compton........ 5,105 * -- 3,477
Bruce DeMars............ 3,787 * -- 505
Sue L. Gin.............. 12,347 * -- 1,169
Donald P. Jacobs........ 10,101 * -- 10,290
Edgar D. Jannotta....... 7,567 * -- 4,020
John W. Rogers, Jr...... 1,000 * -- 738
Richard L. Thomas....... 10,610 * -- 2,349
John W. Rowe............ 295,335(1)(2) * 208,333 24,344
Oliver D. Kingsley,
Jr..................... 52,795(1) * 133,332 44,530
Robert J. Manning....... 79,265(1)(3) * 68,197(6) 22,648(8)
Pamela B. Strobel....... 52,490(1) * 74,166 13,687
David R. Helwig......... 31,001(1) * 52,999 11,697
Directors and executive
officers as a group (22
persons)............... 749,385(1)(4) * 946,522 159,305
- --------
* Less than one percent
15
(1) The numbers and percentages of shares shown in the table above include
shares as to which the indicated person(s) had the right to acquire within
60 days of January 31, 2000 upon the exercise of outstanding stock
options, as follows: Mr. Rowe 289,667; Mr. Kingsley 41,668; Mr. Manning
72,103 (includes 12,935 options owned by spouse); Ms. Strobel 40,334; Mr.
Helwig 19,001; and all executive officers and directors as a group
(including such individuals) 560,778. Such persons disclaim any beneficial
ownership of the shares subject to such options.
(2) Includes 2,000 shares owned by spouse, beneficial ownership of which is
disclaimed.
(3) Includes 14,881 shares owned by spouse, beneficial ownership of which is
disclaimed.
(4) Includes 16,881 shares owned by spouses. The directors and executive
officers to whom such beneficial ownership is attributed disclaim any
beneficial ownership of the shares held by such persons.
(5) Includes stock options which are not considered to be "beneficially owned"
under SEC rules because they cannot be exercised within 60 days of January
31, 2000.
(6) Includes 9,865 stock options held by spouse, beneficial ownership of which
is disclaimed.
(7) Includes share equivalents that are not considered to be "beneficially
owned" under SEC rules because they are deferred under the Unicom
Corporation Stock Bonus Deferral Plan, the Unicom 1996 Directors' Fee
Plan, or the Unicom Corporation Retirement Plan for Directors. Under the
Unicom Corporation Stock Bonus Deferral Plan and the Unicom 1996
Directors' Fee Plan, executives and directors, respectively, may defer the
receipt of the stock portion of certain awards made pursuant to the Unicom
Corporation Long-Term Incentive Plan or certain fees, respectively.
Deferred amounts are only required to be kept in Unicom's 1998 Proxy Statement,books of account
as deferred stock accounts, which are incorporated hereinfor bookkeeping purposes only.
Unicom has no obligation to set aside or segregate any actual shares of
Unicom common stock or other assets in respect of such accounts. Unicom
has elected to issue the deferred shares to trusts having an institutional
trustee, which has sole voting rights with respect to such shares. At the
end of the deferral period
(in the case of the Unicom Stock Bonus Deferral Plan) or upon leaving the
board of directors (in the case of the Unicom 1996 Directors' Fee Plan),
the share equivalents are distributed in whole shares of Unicom common
stock and cash in lieu of any fractional share. Dividends paid with respect
to deferred shares under the Unicom Stock Bonus Deferral Plan are either
reinvested in Unicom common stock and held by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by referencesuch Trustee or are paid to
the information labelled "Compensation of Directors" andexecutive officer making the paragraphsdeferral. Dividends paid with respect to
deferred shares under the heading "Executive Compensation" (other thanUnicom 1996 Directors' Fee Plan are reinvested in
Unicom common stock and held by such Trustee. Under the paragraphsUnicom Corporation
Retirement Plan for Directors, effective January 1, 1997, the accrual of
further benefits was terminated and directors could elect to have benefits
accrued through such date deferred into share equivalents to be paid in
shares of Unicom common stock upon retirement. Accounts under such Plan are
credited with an additional number of share equivalents determined by
assuming the heading "Corporate Governancereinvestment of dividend equivalents on share equivalents in
such accounts.
(8) Includes 3,608 deferred share equivalents held by spouse.
Item 13. Certain Relationships and Compensation CommitteeRelated Transactions.
None
COMMONWEALTH EDISON COMPANY
The undersigned Registrant hereby amends the following items of its Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 as set forth
on the pages attached hereto:
1. Part III: Item 10--Directors and Executive Compensation") in Unicom's 1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required byOfficers of the Registrant.
2. Part III: Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security11--Executive Compensation.
3. Part III: Item 12--Security Ownership of Certain Beneficial Owners and
Management" in Unicom's 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
25Managers.
4. Part III: Item 13--Certain Relationships and Related Transactions.
16
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"III
Item 10. Directors and "ExecutiveExecutive Officers of the Registrant"), which is incorporated
herein by this reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The effective year of election ofRegistrant.
Elizabeth Anne Moler resigned from the officers to their present positions
and the prior positions they have held with ComEd or other companies, since
January 1, 1993, are described below.
NAME AND AGE POSITION
---------------------------- -----------------------------------------------
*John W. Rowe, 52 Chairman, President and Chief Executive Officer
of ComEd and Unicom since March 1998; previ-
ously President and Chief Executive Officer of
New England Electric System.
*Oliver D. Kingsley, Jr., 55 Executive Vice President and President and
Chief Nuclear Officer--Nuclear Generation
Group of ComEd since October 1997; previously
Chief Nuclear Officer at the Tennessee Valley
Authority.
*Robert J. Manning, 55 Executive Vice President of ComEd since January
1997 and President--Fossil Generation Group of
ComEd since October 1997; previously Senior
Vice President of ComEd.
*John C. Bukovski, 55 Senior Vice President and Chief Financial Offi-
cer of ComEd and Unicom since October 1997;
previously Vice President and Chief Financial
Officer of ComEd and Unicom.
*Paul D. McCoy, 47 Senior Vice President of ComEd since October
1997; previously Vice President of ComEd.
Donald A. Petkus, 56 Senior Vice President of ComEd since 1992 and
of Unicom since 1995; President and Chief Ex-
ecutive Officer of UT Holdings since 1997 and
Unicom Thermal Technologies Inc. since 1995.
*S. Gary Snodgrass, 46 Senior Vice President of ComEd and 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. Wallace, 50 Senior Vice President of ComEd since 1993; pre-
viously Vice President of ComEd.
T. Oliver Butler, 46 Vice President of ComEd since July 1997; previ-
ously Purchasing Vice President of ComEd, 1994
to 1997 and European Acquisition Manager--Ge-
neva of Digital Corporation.
26
NAME AND AGE POSITION
----------------------- ----------------------------------------------------
Frank M. Clark, 52 Vice President of ComEd since January 1997; previ-
ously Governmental Affairs Vice President 1996 to
January 1997 and Governmental Affairs Manager.
John T. Costello, 49 Vice President of ComEd and Unicom since 1996; pre-
viously Manager of Corporate Relations of ComEd,
1995 to 1996 and Manager of Public Affairs of
ComEd.
Louis O. DelGeorge, 50 Vice President of ComEd.
*William H. Downey, 53 Vice President of ComEd.
Ruth Ann M. Gillis, 43 Vice President and Treasurer of ComEd and Unicom
since September 1997; previously Vice President,
Chief Financial Officer and Treasurer of the Uni-
versity of Chicago Hospitals and Health System from
1996 to 1997 and Senior Vice President and Chief
Financial Officer of American National Bank and
Trust Company.
David R. Helwig, 47 Vice President of ComEd since January 1998; previ-
ously General Manager of General Electric Company's
Nuclear Services Company, 1997 to January 1998 and
Vice President at PECO Energy.
Emerson W. Lacey, 56 Vice President of ComEd.
Andrew J. Lynch, 51 Vice President of ComEd since April 1997; previously
President of First Chicago Trust Company of New
York.
Thomas J. McCaffrey, 53 Vice President of ComEd and Unicom since 1996; pre-
viously Vice President of Mercer Management Con-
sulting, 1995 to 1996 and Corporate Senior Vice
President of First Chicago Corporation.
J. Stephen Perry, 59 Vice President of ComEd since 1994; previously Se-
nior Vice President of Illinois Power Company.
James A. Small, 54 Vice President of ComEd since 1993; previously Gen-
eral Manager of Fuel Services of Georgia Power Com-
pany.
Harold Gene Stanley, 57 Vice President of ComEd since September 1997; Site
Vice President at Braidwood Station, 1996 to 1997;
previously Vice President at Pennsylvania Power and
Light Company.
*Robert E. Berdelle, 42 Comptroller 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 1994,
respectively.
--------
* Executive Officers for Section 16 reporting purposes.
The present term of office of each of the above executive officers extends to
the first meeting of ComEd's Board of Directors after the next annual election
of Directors scheduled to be held on May 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.
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 30, 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 19, and the audited consolidated financial
statements and notes thereto on pages 21 through 51 of ComEd's January 30,
1998 Form 8-K Report. Reference is also made to "Item 1. Business,"
subcaptions "Changes in the Electric Utility Industry," "Construction Program"
and "Regulation" for additional information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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 28, 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 ("1998 Information Statement") to be
filed with the SEC prior to April 30, 1998, pursuant to Regulation 14C under
the Securities Exchange Act of 1934. The information required by Item 10
relating to executive officers is set forth in Part I of ComEd's Annual Report
on Form 10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and under the heading "Security Ownership of Certain Beneficial
Owners and Management" in ComEd's 1998 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") in ComEd's 1998 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" in ComEd's 1998 Information
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
29
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 30,
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 30, 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
30, 1998 Form 8-K Report:
Report of Independent Public Accountants.................... 21 20
Statements of Consolidated Operations for the years 1997,
1996 and 1995.............................................. 22 21
Consolidated Balance Sheets--December 31, 1997 and 1996..... 23-24 22-23
Statements of Consolidated Capitalization--December 31, 1997
and 1996................................................... 25 24
Statements of Consolidated Retained Earnings (Deficit) for
the years 1997, 1996 and 1995.............................. 26 25
Statements of Consolidated Cash Flows for the years 1997,
1996 and 1995.............................................. 27 26
Notes to Financial Statements............................... 28-54 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.............................. 38 x
Report of Independent Public Accountants on
Supplemental Schedule.............................. 39 x
Schedule II--Valuation and Qualifying Accounts for
each of the three years in the period
ended
December 31, 1997........................ 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.
30
The individual financial statements and schedules of ComEd's
nonconsolidated wholly owned subsidiaries have been omitted from Unicom and
ComEd's Annual Reports 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, 1997, the assets of the nonconsolidated
subsidiaries, in the aggregate, were less than 1% of ComEd's consolidated
assets. The 1997 revenues of the nonconsolidated subsidiaries, in the
aggregate, were less than 1% of ComEd's consolidated annual revenues.
The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an
asterisk (*) are incorporated by reference to the File No. indicated.
Documents indicated by a plus sign (+) identify management contracts or
compensatory plans or arrangements.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(3)-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
effective February 20, 1985, including
Statements of Resolution Establishing 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 Preference Stock" and
the "$2.425 Cumulative Preference Stock."
(File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective Jan-
uary 28, 1994 as amended through March 11,
1998. x
(3)-4 By-Laws of Commonwealth Edison Company, ef-
fective September 2, 1988 as amended through
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 August 1, 1944, and amendments and
supplements thereto dated, respectively, Au-
gust 1, 1946, April 1, 1953, March 31, 1967,
April 1, 1967, July 1, 1968, October 1,
1968, February 28, 1969, May 29, 1970, Janu-
ary 1, 1971, June 1, 1971, May 31, 1972,
June 1, 1973, June 15, 1973, October 15,
1973, May 31, 1974, June 13, 1975, May 28,
1976, January 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 Indenture to Mortgage dated July
1, 1923 dated April 15, 1986 (File No. 33-
6879, Form S-3, Exhibit (4)-9). x
31
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
*(4)-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, Exhibits (4)-11 and (4)-
12). x
*(4)-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)-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)-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)-8 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, July 15,
1992 and September 15, 1992 (File No. 33-
53766, Form S-3, Exhibits (4)-13 and (4)-
14). x
*(4)-9 Supplemental Indenture to Mortgage dated July
1, 1923 dated February 1, 1993 (File No. 1-
1839, Form 10-K for the year ended December
31, 1992, Exhibit (4)-14). x
*(4)-10 Supplemental Indentures to Mortgage dated
July 1, 1923 dated, respectively, April 1,
1993 and April 15, 1993 (File No. 33-64028,
Form S-3, Exhibits (4)-12 and (4)-13). x
*(4)-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)-12 Supplemental Indenture to Mortgage dated July
1, 1923 dated July 15, 1993 (File No. 1-
1839, Form 10-Q for the quarter ended June
30, 1993, Exhibit (4)-1). x
*(4)-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)-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)-15 Supplemental Indenture to Mortgage dated July
1, 1923 dated June 1, 1996. (File No. 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (4)-16). x
*(4)-16 Instrument of Resignation, Appointment and
Acceptance dated January 31, 1996, under the
provisions of the Mortgage dated July 1,
1923, and Indentures Supplemental thereto
(File No. 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)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1,
1923 and Indentures Supplemental thereto
(File No. 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National
Bank of Chicago, Trustee (Amalgamated Bank
of Chicago, as current successor Trustee),
dated April 1, 1949, October 1, 1949, Octo-
ber 1, 1950, October 1, 1954, January 1,
1958, January 1, 1959 and December 1, 1961
(File No. 1-1839, Form 10-K for the year
ended December 31, 1982, Exhibit (4)-20). x
*(4)-19 Indenture of ComEd dated February 15, 1973 to
The First National Bank of Chicago, Trustee
(LaSalle National Bank, successor Trustee),
and Supplemental Indenture thereto dated
July 13, 1973 (File No. 2-66100, Form S-16,
Exhibit (b)-2). x
*(4)-20 Indenture dated as of September 1, 1987 be-
tween ComEd and Citibank, N.A., Trustee re-
lating to Notes (File No. 33-20619, Form S-
3, Exhibit (4)-13). x
*(4)-21 Supplemental Indenture to Indenture dated
September 1, 1987 dated July 14, 1989 (File
No. 33-32929, Form S-3, Exhibit (4)-16). x
(4)-22 Supplemental Indenture to Indenture dated
September 1, 1987 dated January 1, 1997. x
*(4)-23 Credit Agreement dated as of October 1, 1991,
among 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)-24 Credit Agreement dated as of October 1, 1991,
among 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)-25 Letter Agreement dated as of September 29,
1997, among ComEd and certain of the Banks
party to the Credit Agreement dated as of
October 1, 1991. x
*(4)-26 Amended and Restated Credit Agreement dated
as of November 15, 1996, among Unicom
Enterprises, the Banks Named Therein and
Citibank, N.A. (File No. 1-11375, Form 10-K
for the year ended December 31, 1996,
Exhibit (4)-31). x
*(4)-27 Amended and Restated Guaranty dated as of No-
vember 15, 1996, by Unicom in favor of the
Lenders and LC Banks parties to the afore-
mentioned Credit Agreement with Unicom En-
terprises (File No. 1-11375, Form 10-K for
the year ended December 31, 1996, Exhibit
(4)-32). x
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)-29 First Supplemental Indenture dated September
19, 1995 to Indenture dated September 1,
1995. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (4)-
35). x
*(4)-30 Second Supplemental Indenture dated January
24, 1997 to Indenture dated September 1,
1995. (File No. 1-1839, Form 10-K for the
year ended 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 No-
vember 23, 1993, between CommEd Fuel Compa-
ny, Inc., as Lessor, and ComEd, as Lessee
(File No. 1-1839, Form 10-K for the year
ended December 31, 1993, Exhibit (10)-1). x
+*(10)- Unicom Corporation Amended and Restated Long-
2 Term Incentive Plan (File No. 1-11375,
Unicom Proxy Statement dated April 9, 1997,
Exhibit A). x
+*(10)- 1995 Long-Term Performance Unit Award for
3 Executive and Group Level Employees Payable
in 1998 under the Unicom Corporation Long-
Term Incentive Plan, as amended (File Nos.
1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1995, Exhibit (10)-6). x x
+*(10)- 1996 Long-Term Performance Unit Award for Ex-
4 ecutive and Group Level Employees Payable in
1999 under the Unicom Corporation Long-Term
Incentive Plan (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended Decem-
ber 31, 1995, Exhibit (10)-9). x x
+*(10)-5 1997 Long-Term Performance Unit Award for Ex-
ecutive and Group Level Employees Payable in
2000 under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-12). x x
+(10)-6 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable
in 2001 under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)-7 Unicom Corporation General Provisions Regard-
ing 1996 Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-9). x x
34
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
+*(10)-8 Unicom Corporation General Provisions Regard-
ing 1996B Stock Option Awards Granted under
the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form
10-K for the year ended December 31, 1996,
Exhibit (10)-11). x x
+(10)-9 Unicom Corporation General Provisions Regard-
ing Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x
+*(10)- 1997 Annual Incentive Award for Management
10 Employees under the Unicom Corporation Long-
Term Incentive Plan. (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended
December 31, 1996, Exhibit (10)-13). x x
+*(10)- 1997 Award to Mr. O'Connor, Mr. Mullin and
11 Mr. Skinner under the Unicom Corporation
Long-Term Incentive Plan. x x
+(10)- 1998 Annual Incentive Award for Management
12 Employees under the Unicom Corporation Long-
Term Incentive Plan. x x
+*(10)- Unicom Corporation Deferred Compensation Unit
13 Plan, as amended (File Nos. 1-11375 and 1-
1839, Form 10-K for the year ended Decem-
ber 31, 1995, Exhibit (10)-12). x x
+*(10)- Deferred Compensation Plan (included in Arti-
14 cle Five of Exhibit (3)-2 above). x
+*(10)- Management Incentive Compensation Plan, ef-
15 fective January 1, 1989 (File No. 1-1839,
Form 10-K for the year ended December 31,
1988, Exhibit (10)-4). x
+*(10)- Amendments to Management Incentive Compensa-
16 tion Plan, dated December 14, 1989 and March
21, 1990 (File No. 1-1839, Form 10-K for the
year ended December 31, 1989, Exhibit (10)-
5). x
+*(10)- Amendment to Management Incentive Compensa-
17 tion Plan, dated March 21, 1991 (File No. 1-
1839, Form 10-K for the year ended December
31, 1991, Exhibit (10)-6). x
+*(10)- 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, 1996, Exhibit (10)-
20) x
+*(10)- Unicom Corporation 1996 Directors' Fee Plan
20 (File No. 1-11375, Unicom Proxy Statement
dated April 8, 1996, Appendix A). x x
+*(10)- Executive Group Life Insurance Plan (File No.
21 1-1839, Form 10-K for the year ended Decem-
ber 31, 1980, Exhibit (10)-3). x
+*(10)- Amendment to the Executive Group Life Insur-
22 ance Plan (File No. 1-1839, Form 10-K for
the year ended December 31, 1981, Exhibit
(10)-4). x
+*(10)- Amendment to the Executive Group Life Insur-
23 ance Plan dated December 12, 1986 (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1986, Exhibit (10)-6). x
35
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
+*(10)- Amendment of Executive Group Life Insurance
24 Plan to implement program of "split dollar
life insurance" dated December 13, 1990
(File No. 1-1839, Form 10-K for the year
ended December 31, 1990, Exhibit (10)-10). x
+*(10)- Commonwealth Edison Company Supplemental Man-
25 agement Retirement Plan (File No. 1-1839,
Form 10-K for the year ended December 31,
1985, Exhibit (10)-6). x
+*(10)- Amendment of Executive Group Life Insurance
26 Plan to stabilize the death benefit applica-
ble to participants dated July 22, 1992
(File No. 1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (10)-13). x
+*(10)- Letter Agreement dated December 16, 1992 be-
27 tween ComEd and Samuel K. Skinner (File No.
1-1839, Form 10-K for the year ended Decem-
ber 31, 1992, Exhibit (10)-14). x
+*(10)- Amendment dated May 31, 1995 to Letter Agree-
28 ment dated December 16, 1992 between ComEd
and Samuel K. Skinner (File No. 1-1839, Form
10-K for the year ended December 31, 1995,
Exhibit (10)-27). x
+*(10)- Amendments dated December 11, 1996 and March
29 24, 1997 to Letter Agreement dated December
16, 1992 between ComEd and Samuel K. Skin-
ner. (File No. 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-
30). x
+*(10)- Letter Agreement dated November 14, 1995 be-
30 tween ComEd and Leo F. Mullin (File No.
1-1839, Form 10-K for the year ended
December 31, 1995, Exhibit (10)-28). x
+*(10)- Amendment dated March 24, 1997 to Letter
31 Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin. (File No. 1-1839,
Form 10-K for the year ended December 31,
1996, Exhibit (10)-32). x
+*(10)- Commonwealth Edison Company Excess Benefit
32 Savings Plan (File No. 1-1839, Form 10-Q for
the quarter ended June 30, 1994, Exhibit
(10)-2). x
+*(10)- Amendment No. 1 to Commonwealth Edison Com-
33 pany Excess Benefit Savings Plan dated May
24, 1995 (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit
(10)-30). x
+(10)-34 Amendment No. 2 to Commonwealth Edison Com-
pany Excess Benefit Savings Plan effective
as of September 1, 1997. x
+*(10)- Unicom Corporation Stock Bonus Deferral Plan
35 (File Nos. 1-11375 and 1-1839, Form 10-K for
the year ended December 31, 1995, Exhibit
(10)-31). x x
+(10)-36 Amendment No. 1 to Unicom Corporation Stock
Bonus Deferral Plan dated January 3, 1997. x x
+(10)-37 Form of Stock Award Agreement under the
Unicom Corporation Long-Term Incentive Plan. x x
36
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- --------------------------------------------- ------ -----
(12) Statement re computation of ratios of earn-
ings to fixed charges and ratios of earnings
to fixed charges and preferred and prefer-
ence stock dividend requirements for ComEd. x
(18) Letter from independent public accountants
regarding change in accounting principle. x x
(21)-1 Subsidiaries of Unicom. x
(21)-2 Subsidiaries of ComEd. x
(23)-1 Consent of experts for Unicom. x
(23)-2 Consent of experts for ComEd. x
(24)-1 Powers of attorney of Directors whose names
are signed to the Unicom Annual Report on
Form 10-K pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names
are signed to the ComEd Annual Report on
Form 10-K pursuant to such powers. x
(99)-1 Unicom's Current Report on Form 8-K dated
January 30, 1998. x
(99)-2 ComEd's Current Report on Form 8-K dated Jan-
uary 30, 1998. x
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd hereby agreeboards of directors on
December 31, 1999, to furnish to the SEC, upon request, any instrument
defining the rightsbecome a Senior Vice President of holdersUnicom and ComEd.
Donald P. Jacobs is retiring as a director 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:
A Current Report on Form 8-K dated October 9, 1997, was filed by Unicom and ComEd after serving
as a director of ComEd since 1979 and as a director of Unicom since its
incorporation in 1994. His contributions to announce that James J. O'Connor,Unicom and ComEd have been many
and are gratefully appreciated. The vacancies created by Ms. Moler's
resignation and Mr. Jacob's retirement are not being filled, and the number of
directors is being reduced to nine.
Nine Directors are to be elected at the annual meeting to serve terms of one
year and until their respective successors have been elected. The nominees for
Director, all of whom are now serving as Directors of the Company and Unicom,
are listed below together with certain biographical information. Except as
otherwise indicated, each nominee for Director has been engaged in his or her
present principal occupation for at least the past five years.
Biographical Information of ComEd Directors
EDWARD A. BRENNAN, age 66. Director of Unicom and ComEd since 1995. Retired.
Chairman and CEO of Sears, Roebuck and Co. (retail merchandiser) for more than
five years prior to his retirement in August 1995. Chairman of Compensation
Committee and Nuclear Oversight Committee. Other directorships: The Allstate
Corporation, AMR Corporation, Dean Foods Company, Minnesota Mining and
Manufacturing Company, Morgan Stanley Dean Witter & Co. and The SABRE Group
Holdings, Inc.
CARLOS H. CANTU, age 66. Director of Unicom and ComEd since 1998. Retired
President and Chief Executive Officer of The ServiceMaster Company (service
businesses) from January 1, 1994 through October 1, 1999. Other directorships:
The ServiceMaster Company, First Tennessee National Corporation.
JAMES W. COMPTON, age 62. Director of Unicom since 1994 and ComEd since 1989.
President and Chief Executive Officer of the Chicago Urban League (a non-
profit agency). Chairman of Audit and Compliance Committee and member of
Compensation Committee. Other directorships: Ariel Mutual Funds and Highland
Community Bank.
BRUCE DeMARS, age 64. Director of Unicom and ComEd since 1996. Vice President
and Secretary of DeMars, Inc. (consulting firm) since May 1997 and Partner,
Trident Merchant Group since May, 1998. Admiral, United States Navy and
Director, Naval Nuclear Propulsion Program for more than five years prior to
his retirement in October 1996. Member of Audit and Compliance Committee and
Nuclear Oversight Committee. Other directorship: McDermott International.
SUE L. GIN, age 58. Director of Unicom since 1994 and ComEd since 1993.
Founder, Owner, Chairman and Chief Executive Officer of Flying Food Group,
Inc. (in-flight catering company). Member of Audit and Compliance and
Governance and Nominating Committees.
EDGAR D. JANNOTTA, age 68. Director of Unicom and ComEd since 1994. Senior
Director of William Blair & Company, L.L.C. (investment banking and brokerage
company) since January 1996. For more than five years prior thereto, Managing
Partner of William Blair & Company and Senior Partner during 1995. Chairman of
Governance and Nominating Committee and member of Nuclear Oversight Committee.
Other directorships: AAR Corp., AON Corporation, Bandag, Incorporated and
Molex Incorporated.
17
JOHN W. ROGERS, JR., age 42. Director of Unicom and ComEd Since 1999.
President of Ariel Capital Management, Inc., an institutional money management
firm which he founded in 1983. Ariel Capital Management also serves as the
investment advisor, administrator and distributor for Ariel Mutual Funds.
Member of Governance and Nominating and Business Development Committees. Other
directorships: AON Corporation, Bank One Corporation; Burrell Communications
Group, Inc. and GATX Corporation.
JOHN W. ROWE, age 54. Director, Chairman, President and Chief Executive
Officer of Unicom and ComEd intendedsince March 16, 1998. President and Chief
Executive Officer of New England Electric System from February 1989 to retire from the
companies.
A Current Report on Form 8-K dated December 16, 1997, was filed byMarch
1998. Other directorships: FleetBoston Financial, UNUM Provident Corporation
and Wisconsin Central Transportation Corporation.
RICHARD L. THOMAS, age 69. Director of Unicom and ComEd since 1998. Retired.
Chairman of First Chicago NBD Corporation (banking and financial services)
from 1995 to describe1996 and of The First National Bank of Chicago from 1992 to 1996.
Member of the 1997Audit and Compliance and Compensation Committees. Other
directorships: IMC Global Inc., The PMI Group, Inc., The SABRE Group Holdings,
Inc., and Sara Lee Corporation.
Item 11. Executive Compensation.
See Unicom's "Item 11. Executive Compensation," which is incorporated herein
by reference. In addition to the matters discussed under the heading "Board
Compensation," any non-employee Director who is also a member of the Nuclear
Oversight Committee receives an additional annual fee of $5,000.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
See Unicom's "Item 12. Security Ownership of Certain Beneficial Owners and
Management," which is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
None.
18
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 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 statementsstate 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 30, 1998.
Our audits were made for the purpose of forming an opinionIllinois on the basic
financial statements taken as a whole. The schedule listed in Item 14.(a), is
presented for purposes28th
day 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 30, 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 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 30, 1998
39
SCHEDULE IIApril, 2000.
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, 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 $ 1,728 $ -- $ (1,728)(c) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $57,976 $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 $50,574,000,
$41,846,000 and $26,278,000 in 1997, 1996 and 1995, respectively.
(b) Write-off of obsolete materials.
(c) Expenditures for site investigation and cleanup costs.
(d) Payments of claims and related costs.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 27TH
DAY OF MARCH, 1998.
UNICOM CORPORATION/s/ John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OFPursuant 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.
SIGNATUREthis report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 28th day of
April, 2000.
Signature
- ----------------------------
TITLETitle
---------------------
/s/ John W. Rowe Chairman, President and
- ---------------------------- Chief Executive Officer
John W. Rowe and Director (principal
executive officer)
John C. Bukovski/s/ Ruth Ann M. Gillis
- ---------------------------- Senior Vice
John C. BukovskiRuth Ann M. Gillis President(principal
financial officer)
/s/ Robert E. Berdelle Vice President and Comptroller (principal
- ---------------------------- (principal accounting officer)
Robert E. Berdelle
Edward A. Brennan* Director
Carlos Cantu* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director
David A. ScholzJohn W. Rogers, Director
Jr.*
Richard L. Thomas* Director
/s/ John P. McGarrity
*By
--------------------------------
David A. Scholz, Attorney-in-
factJohn P. McGarrity, Attorney-
in-fact
[Signature page to Unicom Corporation Annual Report on Form 10-K]
4110-K/A]
19
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTIONPursuant to the requirements of Section 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OFor 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.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 April, 2000.
COMMONWEALTH EDISON COMPANY
/s/ John W. Rowe
By
--------------------------------
John W. Rowe, Chairman,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OFPursuant 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.
SIGNATUREthis report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 28th day of
April, 2000.
Signature
- ----------------------------
TITLETitle
---------------------
/s/ John W. Rowe Chairman, President and
- ---------------------------- Chief Executive Officer
John W. Rowe and Director (principal
executive officer)
John C. Bukovski/s/ Ruth Ann M. Gillis
- ---------------------------- Senior Vice
John C. BukovskiRuth Ann M. Gillis President(principal
financial officer)
/s/ Robert E. Berdelle Vice President and Comptroller (principal
- ---------------------------- (principal accounting officer)
Robert E. Berdelle
Edward A. Brennan* Director
Carlos Cantu* Director
James W. Compton* Director
Bruce DeMars* Director
Sue L. Gin* Director
Donald P. Jacobs* Director
Edgar D. Jannotta* Director
David A. ScholzJohn W. Rogers, Director
Jr.*
Richard L. Thomas* Director
/s/ John P. McGarrity
*By
--------------------------------
David A. Scholz, Attorney-in-
factJohn P. McGarrity, Attorney-
in-fact
[Signature page to Commonwealth Edison Company Annual Report on Form 10-K]
42
Unicom Corporation and
Commonwealth Edison Company
Form 10-K
File Nos. 1-11375 and 1-1839
EXHIBIT INDEX
The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an asterisk
(*) are incorporated by reference to the File No. indicated. Documents indicated
by a plus sign (+) identify management contracts or compensatory plans or
arrangements.
Exhibit
Number Description of Document Unicom 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 February10-K/A]
20 1985, including Statements
of Resolution Establishing Series, relating to
the establishment of three new series of ComEd
preference stock known as the "$9.00 Cumulative
Preference Stock," the "$6.875 Cumulative Pref-
erence Stock" and the "$2.425 Cumulative Prefer-
ence Stock." (File No. 1-1839, Form 10-K for the
year ended December 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective January
28, 1994 as amended through March 11, 1998. x
(3)-4 By-Laws of Commonwealth Edison Company, effective
September 2, 1988 as amended through 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, March 31, 1967, April 1, 1967,
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, June 13, 1975,
May 28, 1976, January 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
1
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-3 Supplemental Indenture to Mortgage dated July 1,
1923 dated April 15, 1986 (File No. 33-6879,
Form S-3, Exhibit (4)-9). x
*(4)-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)-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)-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)-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)-8 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, July 15, 1992 and
September 15, 1992 (File No. 33-53766, Form S-3,
Exhibits (4)-13 and (4)-14). x
*(4)-9 Supplemental Indenture to Mortgage dated July 1,
1923 dated February 1, 1993 (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibits (4)-14). x
*(4)-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)-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)-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)-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)-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)-15 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 1, 1996. (File No. 1-1839, Form
10-K for the year ended December 31, 1996, Ex-
hibit (4)-16). x
2
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-16 Instrument of Resignation, Appointment and Ac-
ceptance dated January 31, 1996, under the pro-
visions of the Mortgage dated July 1, 1923, and
Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-28). x
*(4)-17 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1, 1923
and Indentures Supplemental thereto (File No. 1-
1839, Form 10-K for the year ended December 31,
1995, Exhibit (4)-29). x
*(4)-18 Indentures of ComEd to The First National Bank of
Chicago, Trustee (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)-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)-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)-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)-22 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated January 1, 1997. x
*(4)-23 Credit Agreement dated as of October 1, 1991,
among 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
3
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
*(4)-24 Credit Agreement dated as of October 1, 1991,
among 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)-25 Letter Agreement dated as of September 29, 1997,
among ComEd and certain of the Banks party to
the Credit Agreement dated as of October 1,
1991. x
*(4)-26 Amended and Restated Credit Agreement dated as of
November 15, 1996, among Unicom Enterprises, the
Banks Named Therein and Citibank, N.A. (File No.
1-11375, Form 10-K for the year ended December
31, 1996, Exhibit (4)-31). x
*(4)-27 Amended and Restated Guaranty dated as of Novem-
ber 15, 1996, by Unicom in favor of the Lenders
and LC Banks parties to the aforementioned
Credit Agreement with Unicom Enterprises (File
No. 1-11375, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-32). x
*(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)-29 First Supplemental Indenture dated September 19,
1995 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-35). x
*(4)-30 Second Supplemental Indenture dated January 24,
1997 to Indenture dated September 1, 1995. (File
No. 1-1839, Form 10-K for the year ended Decem-
ber 31, 1996, Exhibit (4)-36). x
*(4)-31 Rights Agreement dated as of February 2, 1998
between Unicom 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 CommEd Fuel Company, Inc., as
Lessor, and ComEd, as Lessee (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (10)-1). x
+*(10)-2 Unicom Corporation Amended and Restated Long-Term
Incentive Plan (File No. 1-11375, Unicom Proxy
Statement dated April 9, 1997, Exhibit A). x
+*(10)-3 1995 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable in
1998 under the Unicom Corporation Long-Term
Incentive Plan, as amended (File Nos. 1-11375 and
1-1839, Form 10-K for the year ended December
31, 1995, Exhibit (10)-6). x x
4
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-4 1996 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 1999
under the Unicom Corporation Long-Term Incentive
Plan (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1995, Exhibit
(10)-9). x x
+*(10)-5 1997 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 2000
under the Unicom Corporation Long-Term Incentive
Plan. (File Nos. 1-11375 and 1-1839, Form 10-K
for the year ended December 31, 1996, Exhibit
(10)-12). x x
+(10)-6 1998 Long-Term Performance Unit Award for
Executive and Group Level Employees Payable in
2001 under the Unicom Corporation Long-Term
Incentive Plan. x x
+*(10)-7 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
1996B Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan.
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1996, Exhibit (10)-11). x x
+(10)-9 Unicom Corporation General Provisions Regarding
Stock Option Awards Granted under the
Unicom Corporation Long-Term Incentive Plan
(Effective July 10, 1997). x x
+*(10)-10 1997 Annual Incentive Award for Managment
Employees under the Unicom Corporation Long-Term
Incentive Plan. (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1996,
Exhibit (10)-13). x x
+*(10)-11 1997 Award to Mr. O'Connor, Mr. Mullin and Mr.
Skinner under the Unicom Corporation Long-Term
Incentive Plan. x x
+(10)-12 1998 Annual Incentive Award for Management
Employees under the Unicom Corporation Long-Term
Incentive Plan. x x
+*(10)-13 Unicom Corporation Deferred Compensation Unit
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
Five of Exhibit (3)-2 above). x
+*(10)-15 Management Incentive Compensation Plan, effective
January 1, 1989 (File No. 1-1839, Form 10-K for
the year ended December 31, 1988, Exhibit (10)-
4). x
+*(10)-16 Amendments to Management Incentive Compensation
Plan, dated December 14, 1989 and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 31, 1989, Exhibit (10)-5). x
5
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-17 Amendment to Management Incentive Compensation
Plan, dated March 21, 1991 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (10)-6). x
+*(10)-18 Retirement Plan for Directors, effective Septem-
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
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
No. 1-11375, Unicom Proxy Statement dated April
8, 1996, Appendix A). x x
+*(10)-21 Executive Group Life Insurance Plan (File No. 1-
1839, Form 10-K for the year ended December 31,
1980, Exhibit (10)-3). x
+*(10)-22 Amendment to the Executive Group Life Insurance
Plan (File No. 1-1839, Form 10-K for the year
ended December 31, 1981, Exhibit (10)-4). x
+*(10)-23 Amendment to the Executive Group Life Insurance
Plan dated December 12, 1986 (File No. 1-1839,
Form 10-K for the year ended December 31, 1986,
Exhibit (10)-6). x
+*(10)-24 Amendment of Executive Group Life Insurance Plan
to implement program of "split dollar life in-
surance" dated December 13, 1990 (File No. 1-
1839, Form 10-K for the year ended December 31,
1990, Exhibit (10)-10). x
+*(10)-25 Commonwealth Edison Company Supplemental Manage-
ment Retirement Plan (File No. 1-1839, Form 10-K
for the year ended December 31, 1985, Exhibit
(10)-6). x
+*(10)-26 Amendment of Executive Group Life Insurance Plan
to stabilize the death benefit applicable to
participants dated July 22, 1992 (File No. 1-
1839, Form 10-K for the year ended December 31,
1992, Exhibit (10)-13). x
+*(10)-27 Letter Agreement dated December 16, 1992 between
ComEd and Samuel K. Skinner (File No. 1-1839,
Form 10-K for the year ended December 31, 1992,
Exhibit (10)-14). x
+*(10)-28 Amendment dated May 31, 1995 to Letter Agreement
dated December 16, 1992 between ComEd and Samuel
K. Skinner (File No. 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit (10)-27). x
+*(10)-29 Amendments dated December 11, 1996 and March 24,
1997 to Letter Agreement dated December 16, 1992
between ComEd and Samuel K. Skinner. (File No.
1-1839, Form 10-K for the year ended December
31, 1996, Exhibit (10)-30). x
+*(10)-30 Letter Agreement dated November 14, 1995 between
ComEd and Leo F. Mullin (File No. 1-1839, Form
10-K for the year ended December 31, 1995, Ex-
hibit (10)-28). x
6
Exhibit
Number Description of Document Unicom ComEd
------- ------------------------------------------------- ------ -----
+*(10)-31 Amendment dated March 24, 1997 to Letter Agree-
ment dated November 14, 1995 between ComEd and
Leo F. Mullin. (File No. 1-1839, Form 10-K for
the year ended December 31, 1996, Exhibit (10)-
32). x
+*(10)-32 Commonwealth Edison Company Excess Benefit Sav-
ings Plan (File No. 1-1839, Form 10-Q for the
quarter ended June 30, 1994, Exhibit (10)-2). x
+*(10)-33 Amendment No. 1 to Commonwealth Edison Company
Excess Benefit Savings Plan dated May 24, 1995
(File No. 1-1839, Form 10-K for the year ended
December 31, 1995, Exhibit (10)-30). x
+(10)-34 Amendment No. 2 to Commonwealth Edison Company
Excess Benefit Savings Plan effective as of
September 1, 1997. x
+*(10)-35 Unicom Corporation Stock Bonus Deferral Plan
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1995, Exhibit (10)-31). x x
+(10)-36 Amendment No. 1 to Unicom Corporation Stock
Bonus Deferral Plan dated January 3, 1997. x x
+(10)-37 Form of Stock Award Agreement under the Unicom
Corporation Long-Term Incentive Plan. x x
(12) Statement re computation of ratios of earnings to
fixed charges and ratios of earnings to fixed
charges and preferred and preference stock divi-
dend requirements for ComEd. x
(18) Letter from independent public accountants
regarding change in accounting principle.
x x
(21)-1 Subsidiaries of Unicom. x
(21)-2 Subsidiaries of ComEd. x
(23)-1 Consent of experts for Unicom. x
(23)-2 Consent of experts for ComEd. x
(24)-1 Powers of attorney of Directors whose names are
signed to the Unicom Annual Report on Form 10-K
pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names are
signed to the ComEd Annual Report on Form 10-K
pursuant to such powers. x
(99)-1 Unicom's Current Report on Form 8-K dated January
30, 1998. x
(99)-2 ComEd's Current Report on Form 8-K dated January
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