COMMONWEALTH EDISON Co Annual Report: Your Investor's Guide

Curious about COMMONWEALTH EDISON Co (ComEd)? This summary cuts through the jargon of their latest 10-K filing, offering a clear look at the utility's performance, financial health, and key risks. We'll explore what drives ComEd's business, how it generates revenue, and what factors could shape your investment decisions.

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1. Business Overview

ComEd operates as a regulated electricity distribution company in the U.S., primarily serving northern Illinois. This means ComEd delivers electricity to homes and businesses, with government regulators overseeing its rates and operations. This regulatory framework typically provides stable, predictable revenue streams because regulators set rates to cover the company's approved costs and allow for a reasonable return on investment.

2. Financial Performance

• Revenue: For the most recent full year (2025), ComEd reported $6,419 million in revenue from its core electricity business, marking a healthy 2.4% increase from $6,266 million in 2024. This follows a 3.4% growth in 2024, when revenue reached $6,060 million from $6,060 million in 2023. This consistent, though modest, revenue growth highlights the stable nature of ComEd's regulated operations, driven by steady electricity demand in its service territory and potentially favorable rate adjustments or infrastructure investments.

• Profitability Indicator (Retained Earnings): ComEd has significantly strengthened its financial base through retained earnings – profits the company keeps rather than pays out as dividends. These earnings grew to $4,452 million by the end of 2025, up from $4,245 million in 2024 and $3,944 million in 2023. This steady increase signals ongoing profitability and financial resilience.

• Business Relationships: ComEd's operations include substantial transactions with other companies within its larger corporate family (Exelon). In 2025, these "related party" transactions totaled $2,850 million, an increase from $2,787 million in 2024. Such transactions are common in large utility holding companies and typically involve shared services, power purchases, or financing. Additionally, transactions with external customers ("non-related parties") reached $5,805 million in 2025, a slight increase from $5,705 million in 2024, and represent the bulk of ComEd's direct customer revenue.

3. Risk Factors

ComEd, as a regulated utility, faces several inherent risks that could impact its operations and financial results:

• Regulatory Risk: Changes in state or federal energy policy, unfavorable rate decisions by the Illinois Commerce Commission (ICC), or new performance-based regulations could impact ComEd's revenue and profitability. The company's ability to recover infrastructure investment costs and earn a reasonable return heavily depends on regulatory approvals.
• Operational Risk: Extreme weather events (storms, heatwaves, cold snaps) can cause significant infrastructure damage and service disruptions, leading to substantial repair costs, potential regulatory penalties, and impacts on customer satisfaction.
• Infrastructure Risk: The need for continuous investment in aging grid infrastructure to ensure reliability and meet evolving energy demands, coupled with the challenge of recovering these costs through approved rates.
• Cybersecurity Risk: The increasing threat of cyberattacks on critical infrastructure could lead to operational disruptions, data breaches, and significant financial and reputational damage.
• Interest Rate Risk: As a capital-intensive business, ComEd relies on debt financing for infrastructure projects. Rising interest rates can increase the cost of borrowing, impacting profitability and the cost of capital.
• Environmental Risk: Compliance with evolving environmental regulations and the potential impact of climate change on infrastructure and operations.

4. Financial Health

ComEd's equity foundation appears stable. Its Common Stock remained consistent at $580 million from 2022 through 2025, with Other Additional Capital also stable at $575 million over the same period. Growing retained earnings further bolster this equity base.

5. Competitive Position

As a regulated monopoly in its northern Illinois service territory, ComEd doesn't face direct competition for electricity distribution in the traditional sense. Instead, its "competitive positioning" is defined by:

• Operational Efficiency: How effectively it manages costs and delivers reliable service compared to industry benchmarks.
• Reliability & Customer Service: Its ability to minimize outages and provide high-quality customer experience.
• Regulatory Relationships: Its effectiveness in working with regulators to secure fair rates and support for necessary infrastructure investments.