SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 1999
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
- ----------- ---------------------------------- ------------------
1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321
<PAGE>
Item 5. Other Events
On September 15, 1999, Commonwealth Edison Company ("ComEd")
issued a plan to improve the reliability of its electricity
transmission and distribution system. The report followed an
investigation and evaluation that ComEd conducted of its
transmission and distribution system. The plan contemplates
that ComEd's transmission and distribution system-related
operations, maintenance and capital expenditures will increase by
$100 million in 1999 over originally budgeted expenditures. See
ComEd's News Release dated September 15, 1999, attached as
Exhibit 99, for additional information regarding the transmission
and distribution investigation, evaluation and improvement plan.
During the summer of 1999, ComEd experienced peak loads that
were approximately 10% higher than projected. As part of its
preparation for similar or greater peak loads anticipated for the
summer of 2000, Unicom Corporation ("Unicom") also intends to
purchase and install approximately 600 megawatts of additional
combustion turbine generators prior to the summer of 2000. Such
generators have a fast-start generating capability and would be
used to assist in meeting peak demand for electricity. Unicom
expects to spend approximately $165 million to purchase such
generators, and it will incur significant additional costs for
related equipment and to site and install such generators.
Unicom is evaluating the amount of such additional costs.
Unicom does not expect that such additional expenditures
will prevent it from achieving its previously announced earnings
targets of $2.60 and over $3.00 per common share for the years
1999 and 2000, respectively, primarily as a result of lower
purchased power expenses resulting from improved nuclear
performance.
The information regarding expected increases in operations,
maintenance and capital expenditures associated with transmission
and distribution system improvements, the impact on net income
for 1999 and 2000, and the purchase costs and the timing and
anticipated capacity associated with the combustion turbine
generators intended to be installed constitute forward-looking
statements. Forward-looking statements are inherently uncertain
and subject to risks. Such statements should be viewed with
caution. Actual results or experience could differ materially
from the forward-looking statements as a result of many factors.
Management cannot predict the course of future events or
anticipate the interaction of multiple factors beyond
management's control upon capital expenditure timing and costs.
Delays in the receipt of necessary materials or regulatory
approvals and unexpected field conditions could affect the
timing, scope and costs of maintenance activities and the
installation of the additional combustion turbine generators.
Unicom and ComEd make no commitment to disclose any revisions to
the forward-looking statements, or any facts, events or
circumstances after the date hereof that may bear upon the
forward-looking statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned thereunto duly
authorized.
UNICOM CORPORATION
(Registrant)
Date: September 15, 1999 By: John C. Bukovski
------------------------
John C. Bukovski
Senior Vice President
COMMONWEALTH EDISON COMPANY
(Registrant)
Date: September 15, 1999 By: John C. Bukovski
-------------------------
John C. Bukovski
Senior Vice President
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
1. None
2. None
4. None
16. None
17. None
20. None
23. None
24. None
27. None
99. News release dated September 15, 1999 issued by Commonwealth
Edison Company
<PAGE>
NEWS RELEASE
[ComEd Logo]
From: Corporate Communications
One First National Plaza
P.O. Box 767
Chicago, IL 60690-0767
www.ucm.com
Contact: Adrienne Levatino FOR IMMEDIATE RELEASE
312-394-3003 Wednesday, September 15,1999
COMED CHAIRMAN ANNOUNCES COMPLETION OF 30-DAY, $20 MILLION,
250,000 STAFF-HOUR DIAGNOSIS OF T&D SYSTEM
COMPANY ANNOUNCES MAJOR RESTORATION PLAN
ALL CRITICAL REPAIRS COMPLETED BEFORE NEXT SUMMER
HELWIG SAYS SYSTEM IN "SERIOUS, NOT CRITICAL" CONDITION
CHICAGO - Commonwealth Edison today released a five-
point plan to improve the reliability of its transmission
and distribution (T&D) system over the next two years. The
improvement plan will increase ComEd's spending by $100
million over its original $800 million budget for 1999.
ComEd's total spending on T&D system construction,
operations and maintenance will total more than $1.5 billion
in 2000 and 2001. The plan is the result of an intensive 30-
day investigation and evaluation of the T&D system that cost
$20 million and involved more than 250,000 staff-hours of
work. The plan provides for:
- More aggressive inspection and maintenance
- Better monitoring of equipment
- Additional capacity in key locations
- Improved system flexibility
- New organization and management
"Today is a milestone for Commonwealth Edison," said
Chairman and Chief Executive Officer John W. Rowe. "With the
investigation complete, we now know what we need to do to
improve reliability." Rowe said that over the last 18
months, working under the scrutiny of Mayor Daley, the ICC,
and other concerned public officials, ComEd has made many
improvements to reliability. However, he said, "The
unfortunate outages this summer showed that we had
underestimated the seriousness of the problem. This plan
puts us back on the road to providing the reliability our
customers expect and deserve."
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Improvement Plan
Wednesday, September 15, 1999
Also today, ComEd submitted its first report to the
City of Chicago as required by the settlement agreement
reached earlier this year. Rowe pointed to two highlights of
the City report: ComEd is meeting or exceeding every
commitment in the settlement agreement, and ComEd has
accelerated or expanded projects that will upgrade the
Northwest Substation and reduce reliance on the Jefferson
Substation, two of the substations involved in this summer's
outages.
EVALUATION COMPLETE
ComEd's investigation and planning effort has been
headed by Senior Vice President David R. Helwig and included
dozens of outside consultants and experts. Mercer Management
was brought in to conduct a comprehensive, unbiased look at
the system's performance. Specialists from the Electric
Power Research Institute (EPRI) reviewed ComEd's practices
and programs. A panel of experts from EPRI, General
Electric, Kenny Construction and ABB evaluated the findings
and provided recommendations to Helwig and his team.
Karl Stahlkopf, vice president - Power Delivery at
EPRI, said that the scope of the ComEd review is
unprecedented in the utility industry. "In the last four
weeks, Helwig and his team have produced the fastest,
fullest, most comprehensive T&D investigation ever launched
in the history of the industry," said Stahlkopf.
Helwig said that his investigation found many problems
but few surprises. While ComEd's basic infrastructure is
sufficient and comparable to other big-city T&D systems, the
company needs significant improvements in several areas. He
summarized the findings by saying, "The problems with
ComEd's transmission and distribution system are serious,
but they are not critical. They can be fixed with a
sustained, thoughtful improvement effort." Among the major
conclusions:
- The ComEd T&D system has not been planned or designed for
extremes of weather or load. As a result, its substations
are short on distribution capacity during times of peak
demand. For example, the investigation found that more
than 10 percent (27) of large substations operate more
than 10 percent above their rated capacity at times of
peak demand.
- The system has somewhat less flexibility than many
systems in other words, it is hard to re-route power when
necessary. This design problem, combined with the
system's uniformly high load of electricity, makes it
vulnerable to service interruptions when problems do
occur.
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Improvement Plan
Wednesday, September 15, 1999
- Because the system operates on such a small margin for
error, maintenance must be more than merely adequate - it
must be superior in order to ensure the high levels of
reliability that must be provided. As the investigation
showed, maintenance has not lived up to this high
standard.
FIVE-POINT PLAN
To address these and other problems, the improvement
plan calls for basic changes over the next two years to the
way ComEd does business in five key areas. Rowe said that
ComEd intends to work with the Mayor's office, the ICC,
legislators and other public officials as these improvements
are pursued, and that customers should begin to notice
improvements in reliability within a year.
MORE AGGRESSIVE INSPECTION AND MAINTENANCE. Helwig said that
reliability could be improved quickly and substantially
through better maintenance of existing equipment. The
improvement plan calls for ComEd to:
- Continue the inspection and repair project launched on
Aug. 10. This effort has already resulted in 4,346
completed inspections. To date, it has identified 8,828
items needing maintenance and completed 2,304 repairs.
- Create a comprehensive program of ongoing inspections and
preventive maintenance. The investigation report
establishes a series of new measures to track the
company's performance in this area.
BETTER MONITORING OF EQUIPMENT. Some of the problems ComEd
experienced this summer, including the July 30 outage at
Cortland and Northwest Substation, might have been avoided
by monitoring wear on equipment to predict and correct
problems before they occur. The improvement plan recommends
that ComEd:
- Install more sophisticated monitoring equipment to enable
the early detection of pending failures. This will allow
the company to fix problems on its own terms, before they
lead to service interruptions.
- Install more sensitive and reliable protective devices
throughout the system to avoid catastrophic failures when
problems do occur.
ADDITIONAL CAPACITY IN KEY LOCATIONS. The problem with
ComEd's system is not a lack of power. Between construction,
importation and its fleet of nuclear
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Improvement Plan
Wednesday, September 15, 1999
plants, ComEd expects to have a sufficient supply of power.
Instead, the problems this summer have been with the wires,
cables and equipment that deliver power to customers. To
increase ComEd's ability to get power to its customers,
ComEd intends to:
- Increase the capacity of the 27 substations and related
circuits that exceed their rated capacity during times of
peak demand. The company plans to complete the work by
the beginning of next summer.
- Ensure that practical contingencies are in place to carry
the load when necessary.
IMPROVED SYSTEM FLEXIBILITY. Helwig said that the detailed
data collected during the past month's investigation
provides a powerful tool for evaluating and improving the
overall design of the system. Building on the findings from
the last 30 days, ComEd will:
- Enhance and accelerate the design improvements intended
for a number of key substations.
- Complete a System Optimization study within 90 days that
will identify other actions to improve reliability in an
effective and timely manner.
NEW ORGANIZATION AND MANAGEMENT. While the first four
components of the improvement plan address the physical
infrastructure of the T&D system, Rowe and Helwig both
stressed that no significant improvements to reliability
could happen without changes to the organization. Among the
changes already underway:
- Rowe has tapped Carl Croskey, a recognized industry
expert with more than 25 years experience, as the new
President of the ComEd Distribution Group and Senior Vice
President of Unicom Corporation.
- Helwig has announced a series of interim organizational
changes to create greater accountability by giving
managers responsibility for specific geographic regions.
The improvement plan includes timetables for corrective
maintenance and lists performance measures in a wide range
of areas that will allow greater public oversight of ComEd
than ever before. By the end of the year, ComEd will present
the City, the ICC and the public with an enforceable plan
detailing how much the company will spend on improvements,
where the money will be spent
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Improvement Plan
Wednesday, September 15, 1999
and when the projects will be completed. Beginning on Dec.
15, ComEd will issue quarterly progress reports on the
implementation of the programs and initiatives outlined in
the improvement plan announced today. Finally, Helwig said
that in conjunction with these quarterly reports, he intends
to continue convening the panel of experts that has advised
him throughout the investigation and evaluation.
According to Rowe, "We have made commitments to improve
reliability, we have been specific about what we will do,
and we invite the public to measure our progress and hold us
accountable as we work to regain their confidence."
###
Incorporated in 1994 and based in Chicago, Unicom
Corporation (NYSE:UCM) is a public company dedicated to
meeting the energy needs of residential, commercial,
industrial and wholesale customers. With nearly 16,000
employees and $7 billion in revenues, Unicom Corporation is
the parent holding company to Commonwealth Edison Company
(ComEd), its principal subsidiary, and Unicom Enterprises,
Inc. (UEI), offering competitive energy-related products and
services.
Engaged principally in the production, purchase,
transmission, distribution and sale of electricity to retail
and wholesale customers, ComEd provides service to more than
3.4 million customers across Northern Illinois, or 70
percent of the state's population.
