SEC Comment Letter for EXELON CORP (EXC) (CIK 0001109357) (EXC) — Aug 25, 2010
EXELON CORP (EXC) (CIK 0001109357)
Date: Aug. 25, 2010 · CIK: 0001109357 · Accession: 0000000000-10-049132
AI Filing Summary & Sentiment
File numbers found in text: 001-16169
Letter
August 25, 2010
John W. Rowe Chairman and Chief Executive Officer Exelon Corporation 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 Re: Exelon Corporation Form 10-K for Fiscal Year Ended December 31, 2009 Filed February 5, 2010 Definitive Proxy Statement on Schedule 14A Filed March 18, 2010 File No. 001-16169 Dear Mr. Rowe: We have reviewed your filings and have the following comments. You should comply with the comments in all future filings, as appl icable. Please confirm in writing that you will do so, and also explain to us in sufficient detail for an understa nding of the disclosure how you intend to comply by providing us with your proposed revisions. Please respond to this letter within te n business days by providing the requested information or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response.
After reviewing the information you provide in response to these comments, we may have additional comments. Form 10-K for Fiscal Year Ended December 31, 2009
Item 8. Financial Statements and Supplementary Data, page 152
Combined Notes to Consolidated Financial Statements, page 184
Note 2. Regulatory Issues, page 200
Pennsylvania Transition-Related Legisla tive and Regulatory Matters, page 205
1. We note a June 9, 2009 order from the PAPUC in which settlement discussions continue through the filing date of your Form 10-K. To the extent this matter has not been settled, you should provide your readers with a quantif ied assessment about the adverse financial
John W. Rowe Exelon Corporation August 25, 2010 Page 2
impacts that may occur if you are no longer able to recover nuclear decommission costs from ratepayers for the seven former PECO un its. If this event is reasonably possible, then a further discussion of whether customer collections via the PAPUC may need to be reinstated as well as the likelihood of that occurring may be helpful to a reader. Note 11. Asset Retirement Obligation, page 264
2. We note your description of the reasons fo r the net decrease in the ARO of $409 and $300 million for 2009 and 2008, respectively, beginning on page 264. We also note your analysis of the effect of changing some of the critical ARO assumptions beginning on page 70. Please tell us the following with a view toward future filing disclosure:
• The likelihood of obtaining a 20 year exte nsion for those nuclear units in which extension has been factored into the analysis; • The effect on the ARO of failure to ob tain one or more license renewals;
• The extent to which tritium leaks in unde rground pipes at the Braidwood station are reflected in the decommissioning cost estimate study. If a separate analysis of such remediation costs was obtained and is reflect ed elsewhere in the financial statements, please explain to the staff how such amounts are reflected in the financial statements; and • The extent to which the credit-adjusted, risk free rate applicable to discounting cash flows has been adjusted in past revisions of future cash outflows. If the discount rate has not been adjusted due to the directi on of the revision, consider discussing what effect changes in the discount rate would have on the ARO in the event they were required to be revisited.
On this final point, you may want consider a narrative that attempts to correlate the relative growth of the asset and liability due to accretion of the ARO liability versus the assumed growth in trust assets based on a ssumed long term return rates. While GAAP requires separate accounting for the AR O and the trust assets, the economic consequences of failure to have sufficient trust assets to decommi ssion the plants could have major liquidity effect on Generation. Therefore, to the extent you can provide a discussion of the interplay between these two balance sheet ac counts, within the minimum funding requirements of the NRC, it may be helpful to a reader in simulating possible over/under funding scenarios.
John W. Rowe Exelon Corporation August 25, 2010 Page 3
Definitive Proxy Statement on Schedule 14A
Compensation Committee, page 9
Compensation Consultant, page 10
3. We note your disclosure under this heading that:
• An office of Towers Perrin in a different city than Mr. Meischeid’s office provides Exelon with other services, including: actuarial valuation of pension plans and retiree welfare plans (and rela ted services); pension plan admi nistration services; health and welfare plan administration services; employee communications services; and information technology services; • The amount of revenues for such other se rvices is reported to the compensation committee on a quarterly basis; and • In 2009, the aggregate amount paid to Towe rs Perrin for compensation consultant services was $120,998, and the amount paid for other services was $4,317,000. Please disclose whether the decision to engage Towers Perrin for these other services was made, or recommended, by mana gement, and whether the compensation committee or the board approved such other services of Towers Perrin. Refer to Item 407(e)(3)(iii)(A) of Regulation S-K.
We urge all persons who are responsible for th e accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules requir e. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comments, please provi de a written statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filings; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
John W. Rowe Exelon Corporation August 25, 2010 Page 4
You may contact Adam Phippen, Staff Accountant, at (202) 551-3336 or Jim Allegretto, Senior Assistant Chief Accountant, at (202) 551-3849 if you have questions regarding comments on the financial statements and related matters. Please contact Catherine Brown, Staff Attorney, at (202) 551-3513 or me at (202) 551-3720 with any other questions you may have.
Sincerely,
H. Christopher Owings Assistant Director
Show Raw Text
August 25, 2010 John W. Rowe Chairman and Chief Executive Officer Exelon Corporation 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 Re: Exelon Corporation Form 10-K for Fiscal Year Ended December 31, 2009 Filed February 5, 2010 Definitive Proxy Statement on Schedule 14A Filed March 18, 2010 File No. 001-16169 Dear Mr. Rowe: We have reviewed your filings and have the following comments. You should comply with the comments in all future filings, as appl icable. Please confirm in writing that you will do so, and also explain to us in sufficient detail for an understa nding of the disclosure how you intend to comply by providing us with your proposed revisions. Please respond to this letter within te n business days by providing the requested information or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response. After reviewing the information you provide in response to these comments, we may have additional comments. Form 10-K for Fiscal Year Ended December 31, 2009 Item 8. Financial Statements and Supplementary Data, page 152 Combined Notes to Consolidated Financial Statements, page 184 Note 2. Regulatory Issues, page 200 Pennsylvania Transition-Related Legisla tive and Regulatory Matters, page 205 1. We note a June 9, 2009 order from the PAPUC in which settlement discussions continue through the filing date of your Form 10-K. To the extent this matter has not been settled, you should provide your readers with a quantif ied assessment about the adverse financial John W. Rowe Exelon Corporation August 25, 2010 Page 2 impacts that may occur if you are no longer able to recover nuclear decommission costs from ratepayers for the seven former PECO un its. If this event is reasonably possible, then a further discussion of whether customer collections via the PAPUC may need to be reinstated as well as the likelihood of that occurring may be helpful to a reader. Note 11. Asset Retirement Obligation, page 264 2. We note your description of the reasons fo r the net decrease in the ARO of $409 and $300 million for 2009 and 2008, respectively, beginning on page 264. We also note your analysis of the effect of changing some of the critical ARO assumptions beginning on page 70. Please tell us the following with a view toward future filing disclosure: • The likelihood of obtaining a 20 year exte nsion for those nuclear units in which extension has been factored into the analysis; • The effect on the ARO of failure to ob tain one or more license renewals; • The extent to which tritium leaks in unde rground pipes at the Braidwood station are reflected in the decommissioning cost estimate study. If a separate analysis of such remediation costs was obtained and is reflect ed elsewhere in the financial statements, please explain to the staff how such amounts are reflected in the financial statements; and • The extent to which the credit-adjusted, risk free rate applicable to discounting cash flows has been adjusted in past revisions of future cash outflows. If the discount rate has not been adjusted due to the directi on of the revision, consider discussing what effect changes in the discount rate would have on the ARO in the event they were required to be revisited. On this final point, you may want consider a narrative that attempts to correlate the relative growth of the asset and liability due to accretion of the ARO liability versus the assumed growth in trust assets based on a ssumed long term return rates. While GAAP requires separate accounting for the AR O and the trust assets, the economic consequences of failure to have sufficient trust assets to decommi ssion the plants could have major liquidity effect on Generation. Therefore, to the extent you can provide a discussion of the interplay between these two balance sheet ac counts, within the minimum funding requirements of the NRC, it may be helpful to a reader in simulating possible over/under funding scenarios. John W. Rowe Exelon Corporation August 25, 2010 Page 3 Definitive Proxy Statement on Schedule 14A Compensation Committee, page 9 Compensation Consultant, page 10 3. We note your disclosure under this heading that: • An office of Towers Perrin in a different city than Mr. Meischeid’s office provides Exelon with other services, including: actuarial valuation of pension plans and retiree welfare plans (and rela ted services); pension plan admi nistration services; health and welfare plan administration services; employee communications services; and information technology services; • The amount of revenues for such other se rvices is reported to the compensation committee on a quarterly basis; and • In 2009, the aggregate amount paid to Towe rs Perrin for compensation consultant services was $120,998, and the amount paid for other services was $4,317,000. Please disclose whether the decision to engage Towers Perrin for these other services was made, or recommended, by mana gement, and whether the compensation committee or the board approved such other services of Towers Perrin. Refer to Item 407(e)(3)(iii)(A) of Regulation S-K. We urge all persons who are responsible for th e accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules requir e. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comments, please provi de a written statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filings; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. John W. Rowe Exelon Corporation August 25, 2010 Page 4 You may contact Adam Phippen, Staff Accountant, at (202) 551-3336 or Jim Allegretto, Senior Assistant Chief Accountant, at (202) 551-3849 if you have questions regarding comments on the financial statements and related matters. Please contact Catherine Brown, Staff Attorney, at (202) 551-3513 or me at (202) 551-3720 with any other questions you may have. Sincerely, H. Christopher Owings Assistant Director