Commonwealth Edison, Chicago, Illinois,  has agreed to participate in a statewide, comprehensive settlement regarding electric rates and related policy matters. Other participants in the settlement include Exelon Generation, Ameren, Dynegy, Midwest Generation and MidAmerican.

Reached after months of negotiations with Illinois Senate President Emil Jones, Illinois House Speaker Mike Madigan and the Attorney General Lisa Madigan, the settlement preserves the competitive electric market in Illinois while providing a multi-year, $1 billion rate relief package for Illinois residential electric consumers, a range of related electric industry policy changes including a new state power agency and an alternative method of purchasing power for consumers. It also eliminates the need for any further consideration of rate freeze or generation tax legislation.

The settlement, expected to be concluded shortly, must be approved by the Illinois House of Representatives and Senate and signed by the Governor.

Under the settlement, all Illinois residential electric customers will receive near-term rate relief beginning this fall. Additional targeted rate relief also will be provided to residential customers most in need and targeted small and mid-sized businesses. Of the total $1 billion to be provided over a four-year period, approximately $540 million will be made available during 2007 with the remaining amount to be provided in 2008, 2009 and 2010.

In order to avoid a generation tax, which would have been harmful to the state and the company, and to preserve the competitive market, Exelon Generation will provide a significant portion of the $1 billion funding to offer relief to Illinois customers. It is a one-time contribution to help customers transition to market rates.

"We are pleased that this settlement moves the competitive model forward in Illinois, which is in the best interest of consumers," said ComEd Chairman and CEO Frank M. Clark. "It ends the debate over electric rates in Illinois in a productive manner by balancing the needs of our customers, Illinois utilities and generators.

"This landmark settlement was achieved under the leadership of Senate President Emil Jones and House Speaker Michael Madigan. Governor Rod Blagojevich's environmental vision is also reflected in the settlement-we particularly appreciate the Governor's patience in allowing the parties sufficient time to negotiate," indicated Clark. "I also want to applaud the numerous legislative leaders who understood that the kind of comprehensive settlement we now have was a constructive alternative to rate freeze legislation. Leading this effort was President Jones, and included House Republican Leader Tom Cross and members of his caucus, as well as members of the Black and Hispanic caucuses.

"I want to emphasize the important roles played by Senate Minority Leader Frank Watson and Attorney General Lisa Madigan. They both demonstrated a willingness to compromise in order to reach a practical resolution. Also, the ICC has shown real courage in difficult circumstances with its continuing support for competitive market development. Also, indications by the Governor that he would call a special session if the parties were unable to reach agreement provided real impetus to finalize the settlement. Finally, we are pleased with the Governor's statement that he would sign the legislation once it reaches his desk," Clark concluded.

Following is a summary of the settlement:

• Comprehensive rate relief for Illinois customers totaling $1 billion over the next four years
• Relief for ComEd customers will be in two forms: programs for  residential customers most in need and targeted small business and  mid-sized customers, and bill credits providing relief to all  residential customers. 
• Exelon Generation will provide $747 million of the funding; ComEd  will provide $53 million; Ameren will provide $150 million; Midwest  Generation and Dynegy will each provide $25 million and MidAmerican  will contribute $1 million. 
• A total of $488 million will go directly to ComEd residential  customers, with the average customer receiving a monthly bill credit  ranging from approximately $4 to $13. This reduces the average  residential customer's 2007 rate increase to 13.5 percent, which  cuts the increase nearly in half. The impacts reflect averages, and  an individual customer's bill may be higher or lower.
• The $488 million ComEd customers will receive will be allocated over  a four-year period, with $283 million available in 2007 ($250  million in credits to all residential customers and $33 million in  targeted programs). 
• More than half of the funding is earmarked for the first year. The  balance will be available in 2008-2010. 

New Competitive Power Procurement Policy

Under the oversight of the Illinois Commerce Commission, a new Illinois Power Agency has been created to develop energy procurement plans annually, and manage the procurement process through which ComEd and Ameren will purchase power. The agency will retain a procurement administrator who will manage an alternative competitive process for procurement on behalf of the utilities' residential and small business customers. In addition, the agency will house a resource development function that could build power plants and sell output to Illinois municipalities and co-ops.

An alternative competitive power procurement process has been established. The alternative competitive procurement process will be administered by the Illinois Power Agency with Illinois Commerce Commission oversight. The procurement process will include competitive requests for proposals and will direct the purchase of power in separate base load, intermediate and peaking blocks beginning in 2008. The ICC will retain authority to accept or reject power purchases.

Promoting stable rates for residential and small business customers

ComEd will enter into a long-term financial contract to hedge market rates for a portion of the base load power that ComEd purchases for residential and small business customers. The contract, which will cover a five-year period, is designed to help stabilize rates and create certainty for residential and small business customers.

Illinois Environmental Policy

Shaped by the Governor's Sustainable Energy Policy, the legislation sets standards for renewable energy, energy efficiency and demand response programs. The effort will propel ComEd into the forefront of such energy programs in the United States within the next three to four years. The utilities and the Department of Commerce and Economic Opportunity will manage the energy efficiency programs.

Competitive Enhancements and Consumer Protections  ComEd membership in RTO

ComEd will maintain membership in the PJM Regional Transmission Organization, or another RTO selected by ComEd for at least 15 years.

Competitive declaration provision

All ComEd customers with monthly demands for power of 400 kilowatts and above will be declared competitive and will move to the market for their supply options effective May 2008. These large customers still have the option to buy power from ComEd at a fixed rate through May 2008. This represents the realities of the competitive market where 87 percent of these customers already purchase supply in the market from a source other than ComEd.

The utility also will ask the ICC to declare service competitive for customers with demands of more than 100 kW but less than 400 kW, by showing that at least 33 percent of those customers already take service from at least three competitive suppliers. The ICC must declare the service competitive within 30 days unless it finds there are disputed issues of fact, in which case it must act within 60 days.

Apartment building owner/condo association common areas assistance

ComEd will continue its assistance programs to help reduce the impact of rate increases for apartment and condominium common areas. Specifically, going forward, condominium building owners' common area rates will not exceed residential rates.

Moratorium on disconnections of space heat customers

ComEd will maintain a moratorium on disconnections for customers who heat their home with electricity until September 1, 2007. In addition, these customers will not be disconnected during the months of December through March each winter.

Additional Components  Pending litigation

The Attorney General and the parties to the settlement agree to move to dismiss all pending litigation, appeals and claims related to the Illinois auction, market-based prices, the validity of existing power contracts, and confidentiality.

Restructuring transactions

The proposed legislation would reinstate the power of a utility to engage in various types of restructuring transactions upon an informational filing at the ICC