CHICAGO, Sept. 27, 2002 — Exelon Corp. received approval from the Federal Energy Regulatory Commission (FERC) for its accounting treatment for goodwill during a corporate restructuring in January 2001.
FERC’s decision means that Commonwealth Edison (ComEd), Exelon’s Illinois energy delivery subsidiary, will not be required to remove goodwill from its books, as FERC had directed in a previous letter order dated August 27, 2002.
In a letter order signed today by Deputy Executive Director and Chief Accountant John M. Delaware, FERC ruled that, “Since the issuance of the August 27th letter, however, ComEd has provided the Commission, as well as the Securities and Exchange Commission, with extensive additional information to support ComEd’s contention that the amount recognized as goodwill on its books relates entirely to ComEd’s energy delivery business and thus no portion of that amount should be associated with the facilities and businesses transferred to Generation.”
The ruling comes a week after the Securities and Exchange Commission (SEC) notified Exelon that it did not object to the company’s treatment of goodwill. The SEC’s decision was significant because it confirmed Exelon’s position that the company’s accounting complied with generally accepted accounting principles (GAAP).
“This was a particularly important matter for us to resolve swiftly and conclusively, not only because of the potential impact on our shareholders, but also because of our uncompromising commitment to honest reporting,” stated Exelon Chairman and Chief Executive Officer John W. Rowe.
“Our accounting was open and appropriate, and we are quite pleased to have this behind us. I particularly appreciate the support we received from members of the Illinois Commerce Commission.”
Exelon Senior Vice President Elizabeth Moler praised federal regulators for their quick action. “Officials at FERC and the SEC deserve great credit for recognizing the potential impact of this issue on Exelon and on the continued development of competition in Illinois. Their professionalism and thoroughness was extraordinary,” said Moler.
The accounting issue arose last month when FERC staff sent ComEd a letter order ruling that an unspecified amount of goodwill should be removed from ComEd’s books in conjunction with the company’s January 2001 transfer of nuclear units and power marketing operations to its affiliate Exelon Generation Company, LLC.
ComEd responded that the company’s accounting treatment was consistent with GAAP, and that FERC’s order would unintentionally disrupt the continued development of competition in Illinois. ComEd filed a petition on September 9 asking FERC for a rehearing.
The FERC order stated, “Based on our review of the additional information ComEd has provided and the additional disclosures it intends to provide in the 2002 FERC Form 1 regarding the sensitivity of the goodwill impairment analysis, we have no objection to ComEd’s determination that none of the goodwill was related to assets transferred to Generation.”
Exelon Corporation is one of the nation’s largest electric utilities with approximately 5 million customers and more than $15 billion in annual revenues. The company has one of the industry’s largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic.
Exelon distributes electricity to approximately 5 million customers in Illinois and Pennsylvania and gas to more than 440,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.
Source: Exelon Corporation