Item 8.01. Other Events
On February 1, 2023, an ordinance is expected to be introduced to the Chicago
City Council that, if approved, would (1) grant Commonwealth Edison Company
("ComEd") a new franchise agreement, or license ("New License"), to provide on a
non-exclusive basis electric utility services using public ways within the City
of Chicago, Illinois, and (2) authorize the City to enter into a related Energy
and Equity Agreement ("EEA") with ComEd. The New License would have an initial
15-year term ending December 31, 2037 and, subject to mutual agreement reached
on or before December 31, 2036, an additional five-year extension term ending
December 31, 2042, and the EEA would have a term expiring December 31, 2042, or,
if earlier, the expiration date of the New License.
Upon its effectiveness, the New License would replace the existing 1992
non-exclusive license from the City of Chicago under which ComEd currently
provides electric utility service within the City of Chicago. The New License
would cover, among other things, the use of the public ways and property,
coordination of activities, permitting, relocation of utility facilities,
undergrounding of overhead utility facilities, and reporting and information
requirements. It also establishes certain utilization initiatives, including
goals for participation by minority-owned and women-owned business enterprises
and utilization of City of Chicago residents in certain non-electric grid
projects. The New License would provide for compensation to be paid by ComEd to
the City in the form of a franchise fee, recoverable from customers in the City,
determined as prescribed by the Illinois Infrastructure Maintenance Fee Law.
The New License would grant the City the right, upon not less than one year's
prior demand, which may not be given earlier than January 1, 2027, to acquire
ComEd's utility facilities located in Chicago that provide electricity to
customers within Chicago. That acquisition would require a cash consideration
equal to: (a) the cost of reproduction new of those utility facilities, minus
(b) the depreciation on those utility facilities, plus (c) the net actual costs
of separating the utility facilities to be transferred to the City from other
portions of ComEd's electric utility system, plus (d) a "Municipalization
Increment", intended to recover a pro rata portion of contributions (assuming a
15-year pro ration period) made to the non-profit entity discussed below, net of
any amounts recovered in utility rates or, in certain cases, third party
sources.
Under the EEA, the parties would create a new non-profit entity to advance
energy and energy-related equity projects. The non-profit would be governed by a
seven-member board of directors, two of whom would be appointed by ComEd and
five of whom would be appointed by the City of Chicago. No board member may be a
current employee or director of Exelon Corporation or its affiliates.
Projects advanced by the non-profit would be funded, at least in part, by ComEd.
ComEd would fund the non-profit in installments to be made between 2023 and
2026, in the aggregate amount of $90 million, with an additional $20 million
funded if the City and ComEd allow the New License to enter the five-year
extension term. Those fundings would not be recovered in rates charged to
customers. Under the EEA, ComEd also would commit to funding not less than $10
million to establish workforce development initiatives with the intent of
preparing individuals from disadvantaged communities for clean energy careers;
provided that if ComEd recovered that $10 million in rates, it would make a
further $10 million payment to the non-profit.
No assurance can be provided as to the nature or timing of any action that the
Chicago City Council may take in connection with its consideration of the
ordinance or as to the final terms of any New License or EEA.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
101 Cover Page Interactive Data File - the cover page XBRL tags are embedded
within the Inline XBRL document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101)
* * * * *
This combined Current Report on Form 8-K is being furnished separately by Exelon
Corporation and Commonwealth Edison Company (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.
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This Current Report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that are subject
to risks and uncertainties. Words such as "could," "may," "expects,"
"anticipates," "will," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates," "predicts," "should," and variations on such
words, and similar expressions that reflect our current views with respect to
future events and operational, economic, and financial performance, are intended
to identify such forward-looking statements.
The factors that could cause actual results to differ materially from the
forward-looking statements made by the Registrants include those factors
discussed herein as well as the items discussed in (1) the Registrants' Annual
Report on Form 10-K filed with the SEC on February 25, 2022 in Part I, ITEM 1A.
Risk Factors; (2) the Registrants' Current Report on Form 8-K filed with the SEC
on June 30, 2022 to recast Exelon's consolidated financial statements and
certain other financial information originally included in the 2021 Form 10-K in
(a) Part II, ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations and (b) Part II, ITEM 8. Financial Statements and
Supplementary Data: Note 17, Commitments and Contingencies; (3) the Registrants'
Third Quarter 2022 Quarterly Report on Form 10-Q in (a) Part II, ITEM 1A. Risk
Factors, (b) Part I, ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations, and (c) Part I, ITEM 1. Financial
Statements: Note 13, Commitments and Contingencies; and (4) other factors
discussed in filings with the Securities and Exchange Commission by the
Registrants.
Investors are cautioned not to place undue reliance on these forward-looking
statements, whether written or oral, 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.
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