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
March 10, 2009
Date of Report (Date of earliest event reported)
| Commission File Number |
Exact Name of Registrant as Specified in Its Charter; State of Incorporation; Address of Principal Executive Offices; and Telephone Number |
IRS Employer Identification Number | ||
| 1-16169 | EXELON CORPORATION | 23-2990190 | ||
| (a Pennsylvania corporation) 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 (312) 394-7398 |
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| 000-16844 | PECO ENERGY COMPANY | 23-0970240 | ||
| (a Pennsylvania corporation) P.O. Box 8699 2301 Market Street Philadelphia, Pennsylvania 19101-8699 (215) 841-4000 |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 8 – Regulation FD
Item 8.01. Other Events.
On March 10, 2009, PECO Energy Company (PECO), a subsidiary of Exelon Corporation (Exelon), announced via press release that it had filed a joint petition for settlement with a Pennsylvania Public Utilities Commission Administrative Law Judge in connection with its default service procurement plan. The settlement plan was agreed to by all parties to the proceeding (“Joint Petitioners”), which included consumer advocates, industrial users, wholesale suppliers, retail suppliers and others as part of PECO’s comprehensive program to address the needs of customers in 2011 and beyond.
Under the settlement, PECO’s revised default service provider program (“Revised DSP Program”) will have a twenty-nine month term, beginning January 1, 2011 and ending May 31, 2013. PECO’s default service customers will be divided into four procurement classes: a Residential class, a Small Commercial class (for non-residential customers with peak demand up to 100 kW), a Medium Commercial class (for non-residential customers with peak demand of greater than 100 kW up to 500 kW), and a Large Commercial and Industrial class for non-residential customers with peak demand in excess of 500 kW.
For the Residential class, seventy-five percent (75%) of the load will be served through competitively procured contracts for load-following, “full requirements” default supply service. Contracts for forty-five percent (45%) of the Residential class load will have terms of two years, and contracts for the remaining thirty percent (30%) will have terms of one year. For the other twenty-five percent (25%) of the Residential class load (the “PECO Share”), PECO will competitively procure forward purchases of energy blocks and will balance the remaining load through sales and purchases of energy in PJM’s competitive markets. PECO will competitively purchase all other necessary products to serve the PECO Share, including ancillary services and capacity.
For the Small Commercial class, PECO will enter into competitively procured contracts for load-following, full requirements default supply service. Approximately seventy percent (70%) of Small Commercial class customer load will be served through contracts with a term of one year, while approximately twenty percent (20%) of load will be served through contracts with a term of two years. Approximately ten percent (10%) of the Small Commercial class customer load will be served through competitively procured contracts for load-following, full requirements default supply service with the price for energy in each contract set to be the hourly price of the PJM day-ahead wholesale “spot” energy market during the term of delivery.
For the Medium Commercial class, PECO will enter into competitively procured contracts for load-following, full requirements default supply service. Approximately eighty-five (85%) of Medium Commercial class customer load will be served through contracts with a term of one year. Approximately fifteen percent (15%) of the Medium Commercial class customer load will be served through competitively procured contracts for load-following, full requirements default supply service with the price for energy in each contract set to be the hourly price of the PJM day-ahead wholesale “spot” energy market during the term of delivery.
For the Large Commercial and Industrial class, PECO will enter into competitively procured contracts for load-following, full requirements default supply service, with the price for energy in each contract set to be the hourly price of the PJM day-ahead wholesale “spot” energy market during the term of delivery. In addition, for the first year of PECO’s Revised DSP Program, PECO will offer Large Commercial and Industrial customers a fixed-price optional service.
The Joint Petitioners have also agreed on form supplier contracts and related documents to implement the Revised DSP Program, as well as procedures for the acquisition and use of alternative energy credits and contingency plans in the event of supplier default. The Joint Petitioners further resolved other procurement-related issues, including a limitation that a single supplier shall provide no more than sixty-five (65%) percent of the load of a procurement class, and the appointment of NERA Economic Consulting, Inc. (“NERA”) as an independent monitor of PECO’s procurements. In addition, the Joint Petitioners have agreed upon tariff and rate design changes to implement the Revised DSP Program, including a program to permit customers to defer rate increases until a future date, the phase-out of demand-based declining energy blocks, and the establishment of new interruptible service and economic development rates.
Under the settlement, PECO will materially expand its Customer Assistance Program (“CAP”) and other low-income assistance initiatives. For CAP, PECO will adopt a new six-tier CAP rate design and increase the discount levels that it offers to CAP customers so that approximately ninety percent (90%) of each tier of CAP customers will meet Commission affordability targets. PECO will also implement a usage tracking system to monitor consumption by CAP customers and expand its spending under its Low-Income Usage Reduction Program (“LIURP”), which provides weatherization and conservation assistance to low-income customers.
To facilitate and promote retail competition, PECO will update its database on customer information for release to retail suppliers, collaborate with the OCA and suppliers to develop customer education materials, and appoint a retail choice ombudsman. In addition, PECO will lead three separate collaboratives – one addressing residential customer market share threshold proposals; one addressing an alternative customer aggregation proposal; and one addressing a direct mail referral program for residential and small commercial customers (with demand 25 kW and below) prior to PECO’s next default service filing.
A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Exhibit 99.2 is a summary of the procurement plan design including the size of the various procurement products.
Exhibit 99.3 is the procurement schedule showing the laddering of the procurement purchases. Please note that some products include five month stub periods to establish the laddering consistent with the PJM planning year.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press release | |
| 99.2 | Procurement Plan Design Summary | |
| 99.3 | Procurement Schedule | |
* * * * *
This combined Form 8-K is being furnished separately by Exelon and PECO (Registrants). Information contained herein relating to any individual Registrant has been furnished by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.
This Current Report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon’s 2008 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; and (2) other factors discussed in filings with the Securities and Exchange Commission by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Current Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EXELON CORPORATION |
| /s/ Matthew F. Hilzinger |
| Matthew F. Hilzinger |
| Senior Vice President and Chief Financial Officer |
| Exelon Corporation |
| PECO ENERGY COMPANY |
| /s/ Phillip S. Barnett |
| Phillip S. Barnett |
| Senior Vice President and Chief Financial Officer |
| PECO Energy Company |
March 10, 2009
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press release | |
| 99.2 |
Procurement Plan Design Summary | |
| 99.3 |
Procurement Schedule | |
Exhibit 99.1
| Contact: | Cathy Engel | FOR IMMEDIATE RELEASE | ||
| PECO | ||||
| 2301 Market Street, S14-1 | ||||
| Philadelphia, PA 19103 | ||||
| 215-841-5555 | ||||
| catherine.engel@peco-energy.com |
SIGNED . . .SEALED . . .DELIVERED!
Settlement is first step to end price uncertainty
and provides $7 million in additional energy efficiency assistance to low-income customers
PHILADELPHIA (March 10, 2009) – PECO has finalized a plan that will result in the lowest electricity prices for customers when rate caps expire on January 2011. The plan also provides $7 million in additional energy efficiency assistance for low-income customers. Agreed to by consumer advocates, industrial users and others, the plan was filed today for approval with the Pennsylvania Public Utility Commission (PUC) and is part of PECO’s comprehensive program to address the needs of customers in 2011 and beyond.
“This is a very good day for all PECO customers,” said Denis O’Brien, president and CEO of PECO. “We know our customers are concerned about how the end of rate caps will impact their bill. With this plan we can begin purchasing electricity in the near future, taking advantage of current lower prices. We also will make those purchases in a way that will provide the best prices for our customers. And, we will provide even more assistance to customers through energy efficiency and weatherization, which benefits the environment as well.”
The plan includes:
A robust strategy to buy electricity at the lowest prices
PECO will take advantage of current wholesale market prices by beginning to buy electricity for its customers in June. The company will buy electricity at several different times, reducing the risk to customers of purchasing electricity all at one time, when market prices could be high.
Specifically, PECO will buy electricity nine times between June 2009 and the fall of 2012. PECO’s purchases will include both short-term and long-term contracts, as well as some hourly priced purchases.
The electricity that PECO buys will be available to customers who do not choose to purchase their electricity from a retail energy supplier. PECO will continue to ensure the safe, reliable delivery of electricity to all customers regardless of whether or not they purchase electricity from another supplier.
-MORE-
PECO Settlement Release
Significantly expanded programs for low-income customers
PECO, which already manages the largest and most comprehensive low-income programs in the state, will significantly expand those programs as a result of the settlement. PECO’s Customer Assistance Program (CAP), which provides discounted rates to qualified customers, will be expanded from four to six rates to provide more targeted assistance.
PECO also will spend an additional $7 million during the next four years on energy efficiency, conservation and weatherization programs for low-income customers. This is in addition to the $5.6 million currently spent each year through the Low Income Usage Reduction Program (LIURP).
Easing the transition to market-based rates
PECO committed to working with retail electric marketers to support a healthy retail energy market for Pennsylvania. The company also will provide customers with helpful information on the competitive energy market and retail energy suppliers.
Beyond this filing, the company will continue to develop programs to help customers manage the transition to market-based rates. These would include energy efficiency tools and information, rebates, and the option to phase-in any price increases.
PECO’s Early Phase-In proposal is currently being reviewed by the PUC. Through Early Phase-In, customers would make advance payments beginning in July 2009. Those payments, plus 6 percent interest paid by PECO, would be applied to their account beginning in January 2011 to help offset any price increases.
Organizations that worked with PECO to achieve the settlement included the Office of the Consumer Advocate, Office of the Small Business Advocate, the Philadelphia Area Industrial Energy Users Group, the City of Philadelphia, the Retail Energy Supplier Association and others.
A complete copy of the settlement is available at www.peco.com/KNOW.
###
Based in Philadelphia, PECO is an electric and natural gas utility subsidiary of Exelon Corporation (NYSE: EXC). PECO serves 1.6 million electric and 485,000 natural gas customers in southeastern Pennsylvania and employs about 2,400 people in the region. PECO delivered 83.7 billion cubic feet of natural gas and 39.4 billion kilowatt-hours of electricity in 2008. Founded in 1881, PECO is one of the Greater Philadelphia Region’s most active corporate citizens, providing leadership, volunteer and financial support to numerous arts and culture, education, environmental, economic development and community programs and organizations.
If you are a member of the media and would like to receive PECO news releases via e-mail please send your e-mail address to PECO.Communication@exeloncorp.com
Page 2
 1 PECO Post-2010 Procurement Plan Day-ahead hourly priced service; 1-year fixed price optional service from 1/1/11 to 12/31/11 85% full requirements with 1-year term; 15% full requirements spot 90% full requirements with 1-year terms (70%) and 2-year (20%) terms; 10% full requirements spot 75% full requirements with 1-year terms (30%) and 2-year terms (45%); 20% energy block and 5% spot Products Large Commercial & Industrial (peak demand >500 kW) Medium Commercial (peak demand between 100 and 500 kW) Small Commercial (peak demand <100 kW) Residential Procurement Class Note: Parties agreed to a load cap limitation such that a single supplier shall provide no more than 65% of the load of a procurement class. Exhibit 99.2 |
 2 Product Details 80 3 Months Winter On-Peak (5 X 16) (Dec, Jan, Feb) 130 3 Months Summer On-Peak (5 X 16) (June, July, Aug) 160 100 50 12 months 24 months 60 months Baseload (24 X 7) MW Duration Residential Forward Energy Block Products 49.21 4.47% 19 935.00 1,100.00 Medium Commercial TBD 1,249.20 2,372.25 Fixed-Price PLC (MW) TBD 1,388.00 3,163.00 Total PLC (MW) TBD 25 47 Fixed-Price Tranches TBD TBD Large Commercial & Industrial 49.97 3.60% Small Commercial 50.47 1.60% Residential Fixed Price MW-Measure Fixed-Price Tranche Size Procurement Class 55.00 5.00% 3 165.0 1,100.00 Medium Commercial TBD 138.8 Spot-Price PLC (MW) TBD 1,388.00 Total PLC (MW) TBD 3 Spot-Price Tranches TBD TBD Large Commercial & Industrial 46.27 3.33% Small Commercial Spot Price MW-Measure Spot-Price Tranche Size Procurement Class Note 1. PLC refers to the Peak Load Contribution effective 6/1/2008 for the
PECO system in accordance with PJM 1 |
Exhibit 99.3 - Procurement Schedule
| Class |
Product Term | Full Requirements Fixed Price Products | ||||||||||||||||||
| Spring 20091 | Fall 2009 | Spring 2010 | Fall 2010 | Spring 2011 | Fall 2011 | Winter 2012 | Spring 2012 | Fall 20122 | ||||||||||||
| Number of tranches | ||||||||||||||||||||
| Residential |
January 2011 - May 2012 | 8 | 8 | 8 | 9 | |||||||||||||||
| January 2011 - May 2013 | 4 | 3 | 3 | 4 | ||||||||||||||||
| June 2012 - May 2013 | 9 | 10 | ||||||||||||||||||
| June 2012 - May 2014 | 7 | 7 | ||||||||||||||||||
| Small Commercial |
January 2011 - May 2012 | 6 | 6 | 7 | ||||||||||||||||
| January 2011 - May 2013 | 3 | 3 | ||||||||||||||||||
| June 2012 - May 2013 | 9 | 10 | ||||||||||||||||||
| Medium Commercial |
January 2011 - May 2012 | 3 | 8 | 8 | ||||||||||||||||
| June 2012 - May 2013 | 9 | 10 | ||||||||||||||||||
| Large Commercial & Industrial |
January 2011 - Dec 2011 | TBD | ||||||||||||||||||
| Class |
Product Term | Full Requirements Spot Price Products | ||||||||||||||||||
| Spring 20091 | Fall 2009 | Spring 2010 | Fall 2010 | Spring 2011 | Fall 2011 | Winter 2012 | Spring 2012 | Fall 20122 | ||||||||||||
| Number of tranches | ||||||||||||||||||||
| Small Commercial |
January 2011 - May 2012 | 3 | ||||||||||||||||||
| June 2012 - May 2013 | 3 | |||||||||||||||||||
| Medium Commercial |
January 2011 - May 2012 | 3 | ||||||||||||||||||
| June 2012 - May 2013 | 3 | |||||||||||||||||||
| Large Commercial & Industrial |
January 2011 - May 2012 | TBD | ||||||||||||||||||
| June 2012 - May 2013 | 54 | |||||||||||||||||||
| Description |
Duration |
MW |
Product Term |
Blocks for Residential Class | ||||||||||||||||||||
| Spring 20091 | Fall 2009 | Spring 2010 | Fall 2010 | Spring 2011 | Fall 2011 | Winter 2012 | Spring 2012 | Fall 20122 | ||||||||||||||||
| MW | ||||||||||||||||||||||||
| Baseload |
12 | 160 | Jan 2011-Dec 2011 | 40MW | 40MW | 40MW | 40MW | |||||||||||||||||
| 24 | 100 | Jan 2011-Dec 2012 | 50MW | 50MW | ||||||||||||||||||||
| 60 | 50 | Jan 2011-Dec 2015 | 50MW | |||||||||||||||||||||
| Winter Peak |
2 | 80 | Jan 2011 - Feb 2011 | 40MW | 40MW | |||||||||||||||||||
| Summer Peak |
3 | 130 | Jun 2011- Aug 2011 | 60MW | 70MW | |||||||||||||||||||
| Winter Peak |
3 | 80 | Dec 2011 - Feb 2012 | 40MW | 40MW | |||||||||||||||||||
| Baseload |
12 | 160 | Jan 2012 - Dec 2012 | 80MW | 80MW | |||||||||||||||||||
| Summer Peak |
3 | 130 | Jun 2012 - Aug 2012 | 60MW | 70MW | |||||||||||||||||||
| Winter Peak |
3 | 80 | Dec 2012 - Feb 2013 | 40MW | 40MW | |||||||||||||||||||
| Baseload |
12 | 160 | Jan 2013 - Dec 2013 | 80MW | 80MW | |||||||||||||||||||
| 24 | 100 | Jan 2013 - Dec 2014 | 50MW | 50MW | ||||||||||||||||||||
Notes:
| 1 | The Spring 2009 soliciation date is contingent upon a final Order being issued by the Commission in a timely manner. |
| 2 | The Fall 2012 solicitation may include full requirements spot price products or full requirements fixed price products. Such purchases would be part of a subsequent default service plan. |