ML17252B185

1965 Annual Report for Commonwealth Edison Company

ML17252B185
Person / Time
Site:	Dresden
Issue date:	12/31/1965
From:	Commonwealth Edison Co
To:	US Atomic Energy Commission (AEC)
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Download: ML17252B185 (28)

Text

19 6 5

• ANNUAL Commonwealth Edison Company REPORT

Your Board of D irectors has au-thorized this annual report for the year ended December 31, 1965. Our 1965 Financial Review containing detailed comparative data for the past five years will be available late in March. If you desire a copy, please write to our Secretary, William H. Colwell.

Also, if you h ave any questions or wish any further information about the Company at any time, you are cordially invited to write to Mr. Colwell or me.

HIGHLIGHTS 1965 1964 Net Income $108,947,904 $100,439,970 Up 8.5 3 Earnings per Share $2.61 $2.41 Up 8.3 3 Number of Customers at End of Year 2,272,700 2,230,300 Up 1.9 3 Operating Revenues $593,151,137 $564,903,916 Up 5.0 3 Kilowatthours Sold to Ultimate Consumers 30,637 ,668,979 28,407,863,893 Up 7.8 3 Kilowatthours Sold to Residential Customers 7,857,549,026 7,361,257,421 Up 6.7 3 Average Residential Use in Kilowatthours 3,865 3,697 Up4.5 3 Average Residential Revenue (Excluding light bulb service) per Kilowatthour 2.71¢ 2.76¢ Down 1.8 3 Production Fuel $94,026,500 $88, 724,825 Up6.0 3 Btu's per Kilowatthour Generated 10,172 10,240 Improved 0.73 Peak Load in Kilowatts 6,468,000 6,102,000 Up 6.0 3 Net Generating Capability at End of Year in Kilowatts 7,290,000 6,771,000 Up 7.7 3

19 6 5 ANNUAL REP O RT Commonwealth Edison Company 72 West Adams Street* Chicago, Illinois 60690 A BO UT T HE COVER Chicago's traditional landmarks for many years have included the Water Tower and the Tribune Tower, shown (left to right) in the left panel.

In 1963, a new and exciting landmark came on the scene, the all-electric, twin-towered, 60-story Marina City (center).

In 1965, plans were announced for three new all-electric buildings, each of which will become another dramatic landmark.

These buildings, shown in the right panel, are (left to right) the 100-story John Hancock Center, The First National Bank of Chicago's 60-story building and the 70-story Lake Point Tower.

All are now under construction.

\ ' ' l .\ 1 l"ommonv.t*a lth Ed1:--<.11 ('omp;m_,

k F l'O k I

Commonwealth Edison Company Thomas G. Ayers John A. Barr J. H arris Ward Lowell T . Coggeshall Gordon R . Cor ey Joseph L. Block 2

Board of Directors J. Harris Ward, Chairman Thomas G. Ayers, President John A. Barr, Dean, School of Business, Northwestern University Joseph L. Block, Chairman, Inland Steel Company Lowell T. Coggeshall, Vice-President, The University of Chicago Gordon R. Corey, Chairman of the Finance Committee Albert B. Dick III Willis Gale Albert B. Dick III, Chairman of the Board, A. B. Dick Company Willis Gale, former Chairman David M. Kennedy, Chairman of the Board of Directors, Continental Illinois National Bank and Trust Company of Chicago Brooks McCormick, Executive Vice-President, International Harvester Company Morgan F. Murphy, Chairman of the Executive Committee Edward Byron Smith, Chairman of the Board, The Northern Trust Company Leroy S. Stephens, Chairman of the Board, Stephens-Adamson Mfg. Co.

David M. Kennedy Brooks McCormick Morgan F. Murphy Edward Byron Smith Leroy S. Stephens 3

Management OFFICERS J. Harris Ward, Chairman Gordon R. Corey, Thomas G. Ayers, President Morgan F. Murphy, Chairman of the Finance Committee Chairman of the Executive Committee Murray Joslin, Vice-President Hubert H. Nexon, Vice-President Nicholas Galitzine, Vice-President Ludwig F. Lischer, Vice-President Laurence E. Pierron, Vice-President Glen W. Beeman, Vice-President William H. Colwell, Secretary D. Robert Bower, Treasurer Grant H. Wier, Comptroller MANAGERS DIVISION VICE-PRESIDENTS Vern L. Stone, Manager of Production Wallace B. Behnke, Jr., Chicago-North Carl E. Parker, Manager of Industrial Relations Clarence Hall, Chicago-South Paul W. Boyer, Assistant Vice-President Richard E. Meagher, Chicago-Central John G. Eilering, General Division Manager Lawrence A. Cullen, Northern, Northbrook Ralph L. Heumann, Manager of Accounting Byron Lee, Jr., Southern, Joliet Harold W. Otto, Operating Manager Arthur J. Moore, Western, Maywood Robert J. Schultz, Manager of Marketing Ralph Raymond, Illinois Northern, Dixon Transfer The Northern Trust Company, Agents 50 South LaSalle Street, Chicago, Illinois 60690 Manufacturers Hanover Trust Company, One Whitehall Street, New York, New York 10015 Old Colony Trust Company, 45 Milk Street, Boston, Massachusetts 02106 Registrars Continental Illinois National Bank and Trust Company of Chicago, 231 South LaSalle Street, Chicago, Illinois 60690 Morgan Guaranty Trust Company of New York, 140 Broadway, New York, New York 10015 State Street Bank and Trust Company, Corner of State and Congress Streets, Boston, Massachusetts 02101 The common stock is listed on the Midwest, New York and Pacific Coast Stock Exchanges.

Ticker Symbol-CWE 4

TO THE STOCKHOLDERS OF Kilowatthour Sales and Revenues Up Commonwealth Edison Total kilowatthour sales in 1965 exceeded Company those of the previous year by 8.63 while sales to ultimate consumers were up 7.8 3 . Total operating revenues rose 5.0 3 and operating Net Income Up 8.5% revenues from ultimate consumers were up Earnings per share were $2.61 in 1965 com- 4.7 3 .

pared with $2.41 in 1964. Total operating Revenues grew more slowly than sales partly revenues of $593,151,137 were 5.0 3 above because of our pricing structure, which gives those for 1964 and net income amounted to our customers lower unit costs as their use in-

$108,947,904, an increase over the previous creases, and partly because of the price reduc-year of 8.5 3 . tions described later in this report.

In view of a cool summer and extraordinarily The fast-growing area outside of Chicago heavy storm costs, the results achieved are en- continues each year to provide a greater per-couraging. As we look ahead to 1966, we expect centage of our sales and revenues. The area out-the development of our market to lead to side of the city was responsible for 54 3 of kilo-continuing sales increases. These should enable watthour sales to ultimate consumers and 53 3 us to more than counter-balance rising expenses of related revenues in 1965.

and lead to an improvement in net income ap- Sales for resale increased 37.2 3 over the pre-proximating that of 1965. vious year while revenues from such sales rose 40.5 3 . These increases were due largely to greater sales to other utilities.

Dividend Increased At the end of the year, we were serving a Quarterly cash dividends paid in 1965 were total of 2,272, 700 customers. Of these, 2,052,600 at the rate of 45¢ per share. The total of $1.80 were residential, 212,200 were commercial and per share paid for the year compares with $1.40 industrial and 7,900 were public authorities.

in 1964 plus 1 3 in stock. The total number of customers served at the The quarterly dividend was increased 5¢ a end of 1964 was 2,230,300.

share to 50¢ for the payment on February 1, Our revenues and sales by service classes in 1966. 1965 were:

Operating 3 Increase K ilowatthour 3 Increase Class of Service Revenues Over 1964 Sales Over 1964 Residential. ... . . . ..... . .. ..... . . .. .. . . .. . .. $216,596,267 4.9 7,857,549,026 6.7 Small commercial and industrial . . . . . . . .... . .. 220,096,224 3.2 9, 793,386,319 6.7 Large commercial and industrial . . . . . . ... .. . .. 105,810,360 6.4 10,412,024,205 9.3 Public authorities .. ........... . . . ... . . . . .... 31,654,770 8.9 2,192,106,886 11.3 Electric railroads . . . . . . . . . . . . . . . . . . . ... .. .. . . 5,529,838 1.2 382,602,543 4.0 Ultimate consumers . .... . ........... . .... $579,687,459 4.7 30,637,668,979 7.8 Sales for resale . . . . . . . . . . . . . . . . . . . . . . . .... . . . 8,677,671 40.5 999,521 ,903 37.2 Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 4,786,007 .4*

Total ..... . . ..... .... ..... . .. .. . . ..... . $593,151,137 5.0 31,637,190,882 8.6

• Decrease.

5

Dresden Nuclear Power Station as it will appear after its second unit has been completed. The new addition, which is now under construction, is located to the left of the entrance. The building which will house the new reactor's pressure chamber is the tall one in the foreground and attached to it is the longer turbine generator building.

Our provision for depreciation in 1965 was Operating Expenses Increase

$74,780,659, an increase of $3,708,746 over the Operating expenses other than depreciation $71,071,913 for 1964. These provisions were amounted to $230,318,099 for the year com- equivalent to 3.21 % and 3.18%, respectively, pared with $220, 731, 722 for 1964, a rise of of the cost of depreciable property.

4.33.

Total payroll for 1965 was $117 ,500,000, of which $87,400,000 was included in operating Taxes Rise expenses and $30,100,000 in construction and In 1965, 26¢ out of each customer revenue other accounts. Our total payroll increased dollar went for federal, state and local taxes

$5,100,000 over 1964. notwithstanding the fact that the corporate 6

income tax rate was reduced from 50 % in 1964 1970. This program is subject to continuous to 48 % in 1965. Tax provisions for the year review and may be changed as conditions war-were $154,946,302 compared with $150,877,022 rant. It includes expenditures for five generat-for 1964. More than $71,000,000 of this total ing units, one scheduled for service in each of was for state and local taxes. the next five years, and initial work on units We paid more state and local taxes in 1965 with later service dates. Our new construction than any other Illinois taxpayer. We are glad estimates also reflect more rapid expansion and to shoulder our fair share, but not more than reinforcement of our transmission and distribu-our fair share, of the total tax burden. We are tion systems.

bearing more than our fair share today. We At the end of 1965, our net generating capa-are hopeful that widespread recognition of the bility was 7,290,000 kilowatts compared with need for some type of revenue reform in Illinois 6,771 ~000 a year earlier. In 1970, when the will eventually result in more equitable tax generating units now under construction or on treatment for all. order are completed and after retirements of old Our tax provisions were: equipment, our net generating capability is 1965 1964 scheduled to be about 10,200,000 kilowatts.

State and local taxes . . . . $ 71,616,769 $ 66,895,847 As appears below, we now have under con-Federal income taxes . . . 73,336,000 73,603,000 struction three coal-fired units and one nuclear Deferred federal income unit for service between now and 1969, and we taxes (net) . .. .. . .. . . 8,200,000 8,550,000 have another nuclear unit on order for service Miscellaneous federal taxes . . . . .. ... . . .. . . 1,793,533 1,828,175 in 1970. Whether subsequent units will be coal-fired or nuclear will be a close question. The

$154,946,302 $150,877,022 answer may well vary from unit to unit and from year to year throughout the 1970's as the New Peak Load Established close competitive balance between coal and nu-A new peak load of 6,468,000 kilowatts was clear fuel is maintained.

established on July 23, 1965, although indus-trial load was not then at its highest because of Two 580,000-Kilowatt Additions at Joliet vacations. Despite this, the new peak exceeded The first of two new units, both now rated that for 1964 by 366,000 kilowatts, or 6 % . at 580,000 kilowatts, was placed in service at If August had not been unusually cool, the our Joliet Station on April 9, 1965. The second 1965 peak would probably have been higher. unit is expected to be ready for operation in the spring of 1966.

Construction Program Up Kincaid Construction Progressing Expenditures for new construction in 1965 Construction is progressing on our Kincaid totaled $145,081,090, an increase of $15,429,665 mine-mouth station near Taylorville, Illinois, over 1964. Plant retirements and adjustments about 175 miles southwest of Chicago. The first for the year were $20,670,277, resulting in net of two 600,000-kilowatt units is scheduled for additions to plant of $124,410,813. Gross in- service in 1967 and the second in 1968.

vestment in property, plant and equipment amounted to $2,594,308,552 at the end of 1965. Dresden 2 and 3 We have raised our estimates for new con- The Atomic Energy Commission has issued a struction and now expect to spend $800,000,000 permit for construction of the second nuclear in the next five years- $160,000,000 in 1966, unit at our Dresden Nuclear Power Station.

$175,000,000 in 1967, $165,000,000 in 1968, Construction work is now in progress. While the

$150,000,000 in 1969 and the same amount in initial licensed capacity of Dresden 2 will be 7

715,000 kilowatts, the warranted capacity of Public Financing Possible in 1966 the unit is 755,000 kilowatts and its ultimate capacity is expected to be about 800,000 kilo- The upward revisions in our construction watts, four times the capacity of Dresden 1. budget coupled with possible acceleration of in-Scheduled for completion early in 1969, the new come tax payments may require us to do some nuclear unit is expected to produce power at a public debt :financing in 1966. If so, this will be cost 5 % to 10% below that of our newest coal- our first outside security offering since 1961. We fued units. The recently ordered Dresden 3 unit have, however, continued to sell common stock is similar to Dresden 2. To be completed in under our Employe Stock Purchase Plan. In 1970, it will be our last addition at the Dresden 1965, employes purchased 70,369 shares for site. $3,57 4,399 under the Plan.

Construction site of our new Kincaid mine-mouth generating station 175 miks southwest of Chicago, showing the intake channel and the turbine room foundation. A reservoir to supply the station with condensing water will ultimately be a three finger lake covering 2, 700 acres and containing 35,000 acre feet of water-the equivalent of six football fields of water a mile deep.

8

The principal amount of debentures reac-quired in 1965 for sinking fund purposes was

$6,441,000.

Our capitalization at the end of the year was 48.2 3 debt and 51.8 3 common equity. With some outside financing anticipated, the per-centage of debt may increase moderately dur-ing the next five years.

In 1965, funds were provided and applied as follows:

Funds provided from:

Net income of $108,947,904 less

$77,145,824 cash dividends . .. ....... $ 31,802,080 Add back non-cash charges to income for depreciation, deferred federal income taxes and 3 % investment tax credit deferred.. . . . ... .. .. . ... .. ... .. . . . . 86,849,139 Total funds provided internally ... $118,651,219 Sales of common stock to employes . . . . . 3,574,399 Reduction in working capital and other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,273,433 Total funds provided . . . . . . . . . . . $150,499,051 Funds applied to :

New construction . . . . . . . . . . . . . . . . . . . . . $145,081,090 Acquisition of sinking fund debentures .. 5,417,961 Total funds applied . . . . . . . . . . . . . $150,499,051 Electricity Prices Reduced On February 1, 1965, we reduced electricity prices $3,000,000 on an annual basis. The re-duction was due to lower delivered fuel costs resulting partly from the institution of unit train coal deliveries at several of our generating stations. Similar fuel charge reductions of

$12,000,000 or more are expected before 1970.

On December 15, 1965, another electricity price reduction, amounting to $5,200,000 on an annual basis, became effective. This reduc- Helicopter being used to top out a 550-foot chimney for the tion was designed to share with our customers new 580,000-kilowatt Unit 7 at ourJolietGenerating Station.

other cost savings we have been able to achieve and to improve our competitive position. a reduction in the price of electricity for space Including these and earlier reductions, we heating from 1.25¢ to 1.20¢ per kilowatthour.

have reduced electricity prices by more than This was the seventh time in seven years that

$28,000,000 in the past four years. We fully the price of electric heat has gone down. The expect that these reductions will, in the long latest reduction is expected to encourage the run, be more than offset by increased sales. winter use of electricity and help counter-bal-Included in the December 15 price change was ance the high summer air conditioning loads.

9

Research Efforts Continue We now have more than 200 research projects under way, some carried on by us alone, and others in cooperation with manufacturers, uni-versities, suppliers and the Edison Electric In-stitute. Our research ranges from developing new uses for electricity to improving methods of power generation and supply. We hope that these projects will lead to increased sales, higher efficiency and better service to our cus-tomers.

A major concern in recent years has been our search for ways to make underground transmis-sion and distribution systems economically feasible. A cost-cutting technique resulting from this research is our practice of installing electric distribution and telephone cables in the Pres Lanham- Engineer same trench. Both cables are installed by a single crew. As a result of this and other im-provements, we have been able to bury more and more of our lines each year. In 1965, about 50 3 of our new residential subdivisions were served from underground distribution facilities.

In recent months we have been field testing a new type of distribution cable developed by Union Carbide Corporation. The cable is com-posed of a metallic sodium conductor coated with polyethylene plastic. The new sodium cable may prove to be an attractive alternative to conventional cable.

Esther Weber- Timekeeper Ray Geary-Lineman 10

Research on consumer products which use Stockholders Increase electricity is being carried on in a variety of fields. One example is the zinc-air storage bat- Our stockholders increased from 167,601 at tery now being developed jointly by Edison the end of 1964 to 169,494 at the end of 1965.

Electric Institute and General Atomics. We are They reside in every state and in 43 foreign actively participating in this work with the countries. Distribution of stock ownership in hope that an improved battery can be devel- December was as follows:

oped which will make electrically powered vehi- Percent of Total cles practical for short-haul work. The resulting Stockholders battery charging requirements would create Illinois .... .. . ..... . . 57.8 another important market for us. Other States . . . . . . . . . 41.8 Foreign ... . . . . . . ... . .4 100.0 Wages, Pensions Higher New Vice-President Elected At the end of the year, we had 12,251 em-ployes, 47 3 of whom were participating in our Glen W. Beeman was elected a Vice-President Employe Stock Purchase Plan. on October 26. Prior to his election, Mr. Beeman As a result of collective bargaining agree- was Director of Purchases.

ments with the International Brotherhood of B yron Lee, Jr., former Division Commercial Electrical Workers (AFL-CIO) and the United Manager, was appointed Vice-President of our Mine Workers of America, District 50, negoti- Southern Division, effective January 1, 1966.

ated in 1964, wage rates increased an average He succeeded Gilbert K. Hardacre who was ap-of 9.2¢ per hour on April 1, 1965. This increase pointed Executive Assistant to the Vice-Presi-amounted to $1,876,000 on an annual basis. dent in charge of division operations. Mr.

Employe giving also increased. Our employes Hardacre is scheduled to retire next May.

contributed $348,000 to the Metropolitan Cru-sade of Mercy and other community funds, 93 more than the previous year. With about 97 3 The directors join me in expressing thanks to donating, the average gift was about $30. This our stockholders, officers and employes for help-is in addition to employe participation in local ing to make 1965 another good year for the charitable, civic and community activities. Company.

In 1965 we paid $11,363,900 to our service annuity funds to provide for employe pensions. By Order of the Board.

This compares with $10,815, 700 in 1964. Dur-ing the year, retired employes were paid pen-sions totalling $8,209,635, up $1,114,102 from 1964. The book value of our annuity fund assets was $193,271,069 on December 31 when 3,859 annuitants were on our pension rolls. Chicago, January 21, 1966.

The annual meeting of stockholders will be held on May 17, 1966. Stockholders of record on April 7 will be entided to vote at the meeting. Formal notice, proxy statement and form of proxy will be mailed about April 14. Following the meeting, a booklet covering the proceedings will be sent to all stockholders.

11

THE NORTHEAST BLACKOUT Our whole country was disturbed, and properly so, by the Northeast Blackout. We have, of course, studied carefully and in detail the occurrences leading up to and surrounding the catastrophe.

We are reviewing our design and operating procedures and adding to the safeguards which have successfully protected our production and transmission systems in the past. We have never had a total system shutdown.

We have operated interconnections for many years at the highest voltages involved in the Northeast. These interconnections have improved the reliability of our system and have never caused a major service inter-ruption.

We have complete confidence in our production an transmission systems and we will continue to work con-stantly to improve our distribution system.

Recent Developments in Our Industrial, Commercial and Residential Business

Industrial Our industrial customers are the largest users of electricity in our territory. As a group, they used well over 12 billion kilowatthours, more than a third of our kilowatthour sales to ulti-mate consumers in 1965 and more than all such sales in 1950.

The use of electricity for steel making in our territory has always been of great importance.

Today, the steel industry is turning to produc-tion methods using more electric power. The production of steel with electric arc furnaces and the basic oxygen process is on the rise.

The versatile electric arc furnace, which can make almost all grades of carbon and alloy The first stage of the injector system of the new Zero Gradient Synchrotron (ZGS) at Argonne National Labora-tory. This synchrotron is the center of Argonne's high energy physics research. Argonne is one of the major atomic research and development centers in the country.

It has more than 100 buildings on its 3,700-acre site southwest of Chicago.

An electric iron melting furnace operating in a Link-Belt Company plant on Chicago's south side. This new electric process has a number of advantages over the conventional cupola. It creates no smoke or dust, assures proper blending of alloy additives and melts practically every type of charge.

steel, uses about 500 kilowatthours per ton. automobiles, heavy construction equipment, Although using far less electricity than the glass, chemicals and pharmaceuticals. This is electric arc furnace, the basic oxygen process only a sample of a long list which could be for steel production requires about five times extended almost indefinitely.

as much electricity per ton as the previously We are not mere observers of the industrial dominant open-hearth method which it is be- progress of our territory. Our Industrial Mar-ginning to replace on a major scale. A picture ket Research people study the processes used of the basic oxygen furnace at International by our industrial customers for the purpose Harvester's Wisconsin Steel Works is shown on of exploring new and improved applications of the outside back cover. electricity. Their work has given us new sales But the steel industry is not the only major opportunities. Our Industrial Development industry we serve. The large industrial loads in Department cooperates with industries and our territory are probably more varied than communities to encourage industrial growth.

those in any other area of its size. Among our During 1965, this department helped 34 new largest industrial customers are companies en- plants to locate in our territory.

gaged in such widely different fields as oil refin- The photographs on these pages show a few ing, ferrous and non-ferrous metalworking, examples of the modern processes which con-printing, and the manufacture of appliances, tribute to our growing industrial load.

A production line at the new Chrysler automobile assembly plant in Belvidere. When the plant is in full operation, it will have about 5,000 employes and produce 960 Plymouth and Dodge cars per day.

Heating Commercial Buildings with Light Because good lighting contributes so much to better work and more effective merchandise display, our customers have adopted progres-sively higher lighting levels. Today, the modern lighting required in an office building to satisfy its tenants will heat the building on all except the coldest days. With proper distribu6on of the air which has been warmed by the lighting

fixtures, and occasional use of supplementary electric heating in air ducts or under windows, the entire building can be heated comfortably and economically. In summer, the warm air from the lighting :fixtures can be exhausted to the outdoors, thus relieving the load on the air conditioning system.

Heat-with-light is an exciting concept which has captured the imagination of architects and builders of commercial buildings in Chicago and northern Illinois. An all-electric lighting, heat-ing and cooling system lets the architect plan for beauty and efficiency without having to design around a boiler, smoke stack and maze of steam piping running through the central core. Build-ing owners like the heat-with-light concept because of competitive operating costs, design simplicity, generally lower construction costs and satisfied tenants.

The First National Bank Building

Dearborn,

Monroe, Clark and Madison Streets 16

The 990 Grove office building in Evanston was one of the first major heat-with-light build-ings in our territory. It has been operating suc-cessfully since 1964. Fifty other heat-with-light buildings with over 5,000,000 square feet of space have been started, and 40 of these are al-ready occupied. Among the most recently be-gun are the all-electric 100-story John Hancock Center, which will have its office areas heated with light, and the 60-story First National Bank Building, which will be entirely heated with light. Both are shown here.

OTHER APPLICATIONS OF THE ALL-ELECTRIC CONCEPT There are many excellent electric heating systems other than heating with light. A wide variety of buildings are being designed and built to utilize electricity as the sole source of energy. In our service territory, 10 all-electric churches and 25 all-electric schools are in service or under construction. Electric heat is being used for race track pavilions, loading docks, garages, warehouses, gas stations, banks, and even outdoor passageways in shopping areas to warm shoppers as they walk from store to store.

The versatility of all-electric systems promises ever wider application.

J John Hancock Center 861 North Michigan Avenue 17

Progress in the Residential Market Each year our residential customers become more dependent upon electricity in their daily lives. During the early years of our operations, electricity was used mainly for lighting. Today electric power can supply all of the energy needs of a home.

Electric space heating is, of course, the major component in the total electric concept.

Its importance for our future can be judged from the fact that the average number of kilowatthours used by all-electric residential customers in 1965 was more than five times the Lake Point Tower 505 North Lake Shore Drive Cameo Terrace West, Downers Grove Brandywine Near Oak Brook 18

I average for other residential customers. In Residential air conditioning continued 1965, electric heat was specified for nearly 7,000 to grow at a rapid rate in 1965, spurred by dwelling units in our service area, making a the increase in the number of residences total of almost 21,000 such units now on our which installed central air conditioning. When lines or under construction. Over the past eight hot weather comes, air conditioners, refriger-years, the electric heating share of the area's ators and other cooling appliances add nearly new residential construction market has grown 1,000,000 kilowatts to our residential load.

from virtually nothing to 15 3 of the dwelling Major electric appliance installations are units now being built. also stimulating the growth of residential Some outstanding examples of the newest sales. Such appliances include electric ranges, electrically-heated projects in our service area clothes dryers, dishwashers and frost-free re-are shown on these pages. Of particular interest frigerators. Prospects for continued growth are are the 70-story, 900 unit Lake Point Tower, enhanced by greater consumer demand for under construction near Lake Shore Drive and color television and other conveniences such as Grand A venue, and the top 50 :floors of the outdoor protective and decorative lighting, and John Hancock Building which will contain 700 increasing automation of all forms of home electrically heated apartments. equipment.

Thorndale Beach Condominium Apartments 5861 North Sheridan Road, Chicago The Tiara, 6145 North Sheridan Road, Chicago 19

Opinion of Independent Public Accountants

..

ARTHUR ANDERSEN & Co.

C HICAGO, ILLI NO IS To the Stockholders of Commonwealth Edison Company:

We have examined the consolidated balance sh ee t of COMMONWEALTH EDI SON COMPANY (an Illinois cor -

poration) and subsidiary companies as of December 31, 1965, and the related statem e nts of income and retain e d ea rnings for the year then ended. Our examination was made in accordance with generally accepted audit-ing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We had made a similar examination for the preceding year.

In our opinion, the accompanying balance sheets and statements of incom e and retained earnings present fairly th e financial position of Commonwealth Edison Company and subsidiary companies as of D e cember 31, 1965 and 1964, and the r e sults of their operations for the years e nded those dat e s, in conformity with generally accepted accounting principles consistently applied during th e period.

(Signed)

AR THUR ANDERSEN & CO.

January27, 1966

Statements of Consolidated Income Commonwealth Edison Company and Subsidiary Companies 1965 1964 OPERATING REVENUES .. . ..... . ...... .. . . . .. ... . $593,151,137 $564,903,916 OTHER INCOME (net) . ........ . .. . . ........... .. . 3,510,326 3,838,439

$596,661,463 $568,742,355 OPERATING EXPENSES, TAXES AND OTHER DEDUCTIONS:

Fuel. ....... . . . ................ . ........ . . . . $ 94,026,500 $ 88,724,825 Purchased and interchanged power (net) . .. ... .. . 424,803 3,079,154 Operation .. .. ... . ......... . . .. ... . . . .. . ..... . 95,109,681 97,469,433 Maintenance .. ................ .. . . ..... . . . .. . 40,757,115 31,458,310 Provision for depreciation .... . .......... . . .. . . . 74,780,659 71,071 ,913 Provisions for taxes-State, local and miscellaneous federal. ...... .. . 73,410,302 68,724,022 Federal income ............. . ............ . . . 73,336,000 73,603,000 Deferred federal income (net ) . . ... . . . . .. .... . . 8,200 ,000 8,550,000 3% investment tax credit deferred (net) ...... . . . 3,868,480 1,417,282 Interest on long-term debt . ... . ........... . . .. . 27,725,384 27,939,241 Other deductions . .. . . ... .. ... . . . .. . ... .. .... . 457,835 231,905 Less- Interest charged to construction .. ..... . . . 4,383,200 3,966,700

$487,713,559 $468,302,385 NET INCOME .. . . . . .... ..... . .............. . ... . $108,947,904 $100,439,970 COMMON SHARES AT END OF YEAR . ....... .. ..... . 41,735,174 41 ,664,805 EARNINGS P ER SHARE ... . . .... ........... . ... . . . $2.61 $2.41 21

Consolidated Balance Sheets Commonwealth Edison Company and Subsidiary Companies Assets DECEMBER 31 DECEMBER 31 1965 1964 UTILITY PLANT:

At original cost or less ... .. ................... . $2,594,308,552 $2,469,897,739 Less- Accumulated provision for depreciation ............................ . 721,035,040 666,054,229 Net Utility Plant .......................... . $1,873,273,512 $1,803,843,510 INVESTMENTS- at cost or less:

Subsidiary companies not consolidated-Chicago & Illinois Midland Railway Company . .. ......... . .. .... . ....... . ... . 4,458,500 4,458,500 Other subsidiaries .. ... .. ..... ... ...... . . ... . 2,793,137 1,855,000 Other investments . ...... . ...... .. .... . . ..... . . 3,614,219 4,357,221

$ 10,865,856 $ 10,670, 721 CURRENT ASSETS:

Cash ........... ... .. .. ....... .. .......... .. . 10,460,718 10,551,152 Temporary cash investments, at cost ..... . ..... . 21,624,032 41,570,643 Deposit for bond interest ............. . ... .. ... . 1,861,204 1,889,822 Receivables . . ... . ..... .. .... . . . .. ...... . .... . 43,238,819 38,953,951 Less- Provision for uncollectible accounts .. . . . . . . 1,700,000 1,700,000 Coal (at average cost) ..................... ... . 18,200,336 19,921,072 Nuclear fuel (at cost or less) .. .... . ........... . 6,136,125 5,573,578 Materials and supplies (at average cost) ........ . 10,735,140 10,156,671 Prepaid insurance, taxes and other items ... ... . . . 1,412,564 1,142,130

$ 111,968,938 $ 128,059,019 DEFERRED CHARGES ............................ . 1,241,964 1,343,666

$1,997,350,270 $1,943,916,916 Rent,a,l obligations at December 31, 1965, under 48 leases extending beyond 1966, approximated $552,000 annually.

22

Liabilities DECEMBER 31 DECEMBER 31 1965 1964 CAPITAL STOCK:

Common stock- $12 .50 par value per share:

Authorized 60,000,000 shares- 278,382 shares re-served for Employe Stock Purchase Plan at December 31, 1965 Outstanding- 1965- 41 ,735,174 shares. .... . .. . $ 521,689,675 1964- 41 ,664,805 shares . . . . .. . . . $ 520,810,063 Preferred stock- 1,850,000 shares authorized None outstanding PREMIUM ON COMMON STOCK . . . . . . . ... ... .. .... . . 182,419,200 179, 724,414 RETAINED EARNINGS . ... .. ... . .. . .. .. .. . .. . . . .. . 178,233,282 146,431,202

$ 882,342,157 $ 846,965,679 LONG-TERM DEBT (see schedule on page 24 ):

First mortgage bonds . . .. . . .. ...... .... . . ..... . 590,000;000 590,000,000 Sinking fund debentures .. .. ... .. . . . .. . . . ... .. . 229,652,000 236,093,000

$ 819,652,000 $ 826,093,000 Total Capitalization .. . . . .. ... . . . . . . .. .. .. . $1, 701,994,157 $1,673,058,679 CURRENT LIABILITIES:

Accounts payable .. . ..... . .. . . ... . . . . . . . ..... . 28,072,005 20,536,879 Accrued interest ... . . .. . .. . . .. . ... .. .. .. . .. . . . 8,808,639 8,830,306 Accrued taxes .. .. .. . . . . . ...... . . . ... .. .... . . . 94,205,215 93,592,256 Dividend payable . ... . .... . .... . .. . .. . . .... . . . 20,867,587 18,749,162 Other .. . ......... . ... . .... .. . .. . .... . ..... . . . 15,232,825 13,155,825

$ 167,186,271 $ 154,864,428 DEFERRED LIABILITIES:

Accumulated deferred federal income taxes .. .. . . . 102,200,000 94,000,000 Accumulated deferred 3 3 investment tax credits being amortized over the lives of related property 10,300,762 6,432,282 Other . ... . . . . . .. . . ... .. . ... . . . . .. . . . . . .. . . .. . 15,349,575 15,160,492

$ 127,850,337 $ 115,592, 774 UNAMORTIZED NET PREMIUM ON DEBT ....... . . .. . . 319,505 401,035

$1 ,997,350,270 $1,943,916,916 Purchase commitments at December 31, 1965, principally construction, approximated $200,600,000.

23

Statements of Consolidated Retained Earnings 1965 1964 BALANCE BEGINNING OF YEAR . . . . . . .. . . . . . . . . . . . $146,431,202 $130,351,366 Ann:

Net income ... ... . ....... ... .. . . .... . .... ... . 108,947,904 100,439,970

$255,379,106 $230, 791,336 DEDUCT:

Dividends on common stock-Cash ... . . . ... . .................... ..... .. . $ 77,145,824 $ 62,015,639 Common stock- 1 % ................... . .. . . 22,344,495

$ 77,145,824 $ 84,360,134 BALANCE END OF YEAR . . . . . . . . .. ... .. .. . ... ... . $1 78,233,282 $146,431,202 Schedule of Long-Term Debt At December 31 1965 1964 FIRST MORTGAGE BONDS:

3 % due February 1, 1977 . ....... . . . . ... . . ... . . $180,000,000 $180,000,000 3 % due June 1, 1978 ... .......... ... .. .... . .. . 50,000,000 50,000,000 3 .7;l% due July 1, 1982 . .. . .. .. .. . ..... ... .. .. . 40,000,000 40,000,000 3 % due May 1, 1984 . ..... . .... .. ... ... .. ... . . 50,000,000 50,000,000 3 % due April 1, 1985 .... . ....... ..... ... .. . . . 100,000,000 100,000,000 3 72% due June 1, 1986 ..... . . .. .. . ... ..... . .. . 40,000,000 40,000,000 4 .7;l% due March 1, 1987 . .... .. ... . .......... . 50,000,000 50,000,000 3 %% due March 1, 1988 . . .... ... ... . . . . . . . . . . 50,000,000 50,000,000 4 %% due March 1, 1990 ... . .... .. . . .. ....... . 30,000,000 30,000,000

$590,000,000 $590,000,000 SINKING FUND DEBENTURES:

3 % due April 1, 1999 .. . ...... .. .. . . . .. ..... . . $ 31,746,000 $ 32,471,000 2 %% due April 1, 1999 ...................... . 31,697,000 32,914,000 2 Ys% due April 1, 2001. . . ........... . ... ... . . 33,949,000 34,799,000 3 Ys% due October 1, 2004 . ................. .. . 37,935,000 38,882,000 3Ys% due January 1, 2008 ...... . .. .... . ... ... . 40,694,000 41,827,000 4 %% due January 1, 2009 .. . ... . . . . . .. ...... . . 17,060,000 17,600,000 4% % due December 1, 2011 ....... . ... . .. ... . . 36,571,000 37,600,000

$229,652,000 $236,093,000 Total Long-Term Debt .. . . .. .. . . ....... . . . $819,652,000 $826,093,000 24

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~: x t ra- Hi g h - Vo l tage Li ne Rou tes (Exist i ng) I I bone of power lines, present and futu-re, I I designed to carry electricity to all parts of the Extra- High-Voltage Line Routes (Fut ure) I I Other Major Transmission Li ne Routes (Orn! or More Lines)

I I area from the Company's 13 generating sta-I I I I tions including Kincaid, now underconstruc-Certain Other Transmission Lines (()utsick Chicago) I I I I tion. The arrows indicate interconnections lnten:onnections With Other Companies I I with other utilities. These interties a-re used Territory Se.-.*ed by the Company I f~ both to st-rengthen the Company's system and I I I  ! to improve its efficiency and economy.

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Commonwealth Edison Company 72 West Adams Street Chicago, Illinois 60690 If undeliverable, do not return.

Molten iron being emptied into the mouth of a basic oxygen furnace at International Harvester's Wisconsin Steel Works on Chi-cago's south side. The basic oxygen furnace is replacing the open-hearth furnace. It can produce as much steel in less than an hour as an open-hearth furnace in 6 to 10 hours1.157407e-4 days <br />0.00278 hours <br />1.653439e-5 weeks <br />3.805e-6 months <br />.

Operation of the furnace and the production of the oxygen it uses require much more elec-tric power than open-hearth equipment.

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Commonwealth Edison Company ANNUAL REPORT 1965