UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
October 2, 2002
(Date of earliest
event reported)
Commission File Name of Registrant; State of Incorporation; Address of IRS Employer
Number Principal Executive Offices; and Telephone Number Identification Number
- --------------------- --------------------------------------------------------- -------------------------
1-16169 EXELON CORPORATION 23-2990190
(a Pennsylvania corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-7398
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-4321
333-85496 EXELON GENERATION COMPANY, LLC 23-3064219
(a Pennsylvania limited liability company)
300 Exelon Way
Kennett Square, Pennsylvania 19348
(610) 765-8200
Item 5. Other Events
On October 3, 2002 Exelon issued the following note to its financial community:
Exelon Generation Company, LLC Exercises Options Under Purchase Power Agreement
With Midwest Generation, LLC
On October 2, 2002, Exelon Generation notified Midwest Generation, LLC (Midwest)
of its exercise of certain of Exelon Generation's termination options under the
existing Collins Generating Station and Peaking Unit Purchase Power Agreements
(PPA). Exelon Generation is a subsidiary of Exelon Corporation (Exelon). Midwest
is a subsidiary of Edison Mission Energy and Edison International. Exelon
Generation has elected to exercise its termination options on Collins Units 2,
4, and 5 totaling 1,614 MWs of the capacity for the fourth and fifth contract
years, 2003 and 2004. Exelon Generation has also elected to exercise its
termination options with respect to Calumet units 33 and 34 and Lombard unit 33
totaling 113 MWs for the same period. The effect of exercising these termination
options is that Exelon Generation will release the output of the following
Midwest generating units during 2003 and 2004.
Collins Unit 2 - 554 MW
Collins Unit 4 - 530 MW
Collins Unit 5 - 530 MW
Calumet 33 - 38 MW
Calumet 34 - 43 MW
Lombard 33 - 32 MW
--------
Total 1,727 MW
Exelon Generation did not exercise its termination options on Collins Units 1
and 3 (1,084 MWs of capacity) or on the remaining 694 MWs of peaking capacity
under contract (a total of 1,778 MWs of capacity). Accordingly, Exelon
Generation will take output from the following units during 2003.
Collins
Unit 1 - 554 MW
Unit 3 - 530 MW
Peaking units - 694 MW
--------
Total 1,778 MW
Exelon Generation also has a Coal Generating Stations Purchase Power Agreement
with Midwest. Under that PPA, during the fourth contract year, 2003, Exelon
Generation contracted for 1,696 MWs of non-option capacity from Midwest with a
call option on 3,949 MWs of capacity. On July 1, 2002 Exelon Generation
exercised it call option on 1,265 MWs of option capacity. For the contract year
2003, Exelon Generation will take the 1,696 MWs of non-option coal capacity,
1,265 MWs of the option coal capacity, 1,084 MWs of Collins station capacity and
694 MWs of peaking capacity from Midwest. In total, Exelon Generation has
retained a total of 4,739 MWs of capacity under the terms of the three existing
PPAs with Midwest Generation. Providing reliable service to customers in
Illinois served by delivery subsidiary ComEd remains a top priority of Exelon.
On June 20, 2002, Exelon provided earnings per share guidance of a 4.5% to 5.5%
compound annual growth rate (CAGR) off a 2001 base. The cost savings related to
the Midwest contract incorporated in Exelon's model at that time totaled $120
million in 2003. The $120 million represented an estimate of the cost savings
that could be achieved if the company turned back 50% of the July 1 coal options
relative to the estimated cost of the contract in 2003. With the release of
about 70% of the coal options and 1,727 MWs of Collins and peaking capacity, the
estimated savings in 2003 relative to the full Midwest contract price are about
$250 million. However, since the PPAs included a significant step-up in cost in
2003, that contract savings number does not represent year-over-year savings in
2003 compared to 2002.
With the exercise of the termination options on Collins and the peaking plants
in addition to the options on the coal plants, the contract with Midwest is in
place for 2003. By exercising the Midwest contract options and restructuring the
2003 supply portfolio, the expected capacity cost savings in 2003 compared with
2002 are approximately $130 million. The estimated cost savings are after
recognition of capacity payments to other suppliers for the desired amount of
contracted replacement of the released supply. Incremental savings related to
the energy charge on purchased power will be a function of Exelon Generation's
supply portfolio in 2003, fuel prices, wholesale market prices and volumes
purchased.
For additional information please contact me at (312) 394-7696.
Sincerely,
Linda C. Byus, CFA
Vice President Investor Relations
================================================================================
This note contains certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained herein. The forward-looking statements herein include statements about
future financial and operating results of Exelon. Economic, business,
competitive and/or regulatory factors affecting Exelon's businesses generally
could cause actual results to differ materially from those described herein. For
a discussion of the factors that could cause actual results to differ
materially, please see "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Exelon Generation Company's
Registration Statement on Form S-4, Reg. No. 333-85496 and Exelon's and Exelon
Generation Company's filings with the Securities and Exchange Commission,
particularly those discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Outlook" in Exelon's 2001 Annual
Report. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this note. Exelon
does not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this note.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXELON CORPORATION
COMMONWEALTH EDISON COMPANY
EXELON GENERATION COMPANY, LLC
/S/ Ruth Ann Gillis
------------------------------------
Ruth Ann Gillis
Senior Vice President and Chief Financial Officer
Exelon Corporation
October 3, 2002