28 Management’s Discussion and Analysis of Financial Condition and Results of Operations EXELON CORPORATION AND SUBSIDIARY COMPANIES Effective management of capital projects is important to our business.
Energy Delivery’s business is capital intensive and requires significant investments in energy transmission and distribution facilities and in other internal infrastructure projects.
We expect to continue to make significant capital expenditures to improve the reliability of our transmission and distribution systems in order to provide a high level of service to its customers.
We further expect Energy Delivery’s capital expenditures to exceed depreciation on its plant assets.
Energy Delivery’s base rate freeze and caps will generally preclude incremental rate recovery on any of these incremental investments prior to January 1, 2007.
Our business may be significantly affected by the end of the Illinois and Pennsylvania regulatory transition periods.
Illinois electric utilities are allowed to collect competitive transition charges (CTCs) from customers who choose an alternative supplier of electric generation service or choose ComEd’s power purchase option (PPO).
CTCs were intended to assist electric utilities, such as ComEd, in recovering stranded costs that might not otherwise be recoverable in a fully competitive market.
The CTC charge represents the difference between the market value of delivered energy (the sum of generation service at market-based prices and the regulated price of energy delivery) and recoveries under historical bundled rates, reduced by a mitigation factor.
The CTC charges are updated annually.
Over time, to facilitate the transition to a competitive market, the mitigation factor increases, thereby reducing the CTC charge.
In 2003 and 2002, ComEd collected approximately $300 million of CTC revenue annually.
As a result of increasing mitigation factors, changes in energy prices and the ability of certain customers to establish fixed, multi-year CTC rates beginning in 2003, we anticipate that this revenue source will decline to approximately $180 million to $200 million in each of the years 2004 through 2006.
Under the current restructuring statute, no CTCs will be collected after 2006.
Through 2006, ComEd will continue to have an obligation to offer bundled service to all customers (except certain large customers with demand of three megawatts or more) at frozen price levels, under which a majority of ComEd’s residential and small commercial customers are expected to continue to receive service.
ComEd’s current bundled service is generally provided under an all-inclusive rate that does not separately break out charges for energy generation service and energy delivery service, but charges a single set of prices.
After the transition ends in 2006, ComEd’s bundled rates may be reset through a regulatory approval process, which may include traditional or innovative pricing, including performance-based incentives to ComEd.
In order to address post-transition uncertainty, we are continually working with Illinois state and business community leadership to facilitate the development of a competitive electricity market while providing system reliability.
Transparent and liquid markets will help to minimize litigation over electricity prices and provide consumers assurance of equitable pricing.
At the same time, we are attempting to establish a regulatory framework for the post- 2006 timeframe and we are pursuing measures that will provide greater productivity, quality and innovation in our work practices across Exelon.
Currently, it is difficult to predict the framework for or the outcome of a potential regulatory proceeding to establish rates after 2006.
In Pennsylvania, the Pennsylvania Electricity Generation Customer Choice and Competition Act (Competition Act) provides for the imposition and collection of non-bypassable CTCs on customers’ bills as a mechanism for utilities to recover their allowed stranded costs.
CTCs are assessed to and collected from virtually all retail customers who access PECO’s transmission and distribution systems.
These CTCs are assessed regardless of whether the customer purchases electricity from PECO or an alternative electric generation supplier.
The Competition Act provides, however, that PECO’s right to collect CTCs is contingent on the continued operation, at reasonable availability levels, of the assets for which the stranded costs were awarded, except where continued operation is no longer cost efficient because of the transition to a competitive market.
PECO has been authorized by the PUC to recover stranded costs of $5.3 billion over a twelve-year period ending December 31, 2010, with a return on the unamortized balance of 10.75%.
At December 31, 2003, approximately $4.3 billion had yet to be recovered.
Recovery of transition charges for stranded costs and PECO’s allowed return on its recovery of stranded costs are included in revenues.
Amortization of PECO’s stranded cost recovery, which is a regulatory asset, is included in depreciation and amortization expense.
PECO’s results will be adversely affected over the remaining transition period ending December 31, 2010 by the steadily increasing amortization of stranded costs.
The following table (amounts in millions) indicates the estimated revenues and amortization expense associated with CTC collection and stranded cost recovery through 2010
## Table 0 ##
Exelon Corporation and Subsidiary Companies Notes to Consolidated Financial Statements—(Continued) (Dollars in millions, except per share data unless otherwise noted) exposure of derivatives contracts is represented by the fair value of contracts at the reporting date.
For energy-related derivative instruments, Generation has entered into payment netting agreements or enabling agreements that allow for payment netting with the majority of its large counterparties, which reduce Generation’s exposure to counterparty risk by providing for the offset of amounts payable to the counterparty against amounts receivable from the counterparty.
The notional amount of derivatives does not represent amounts that are exchanged by the parties and, thus, is not a measure of Exelon’s exposure.
The amounts exchanged are calculated on the basis of the notional or contract amounts, as well as on the other terms of the derivatives, which relate to interest rates and the volatility of these rates.
Nuclear Decommissioning Trust Fund Investments Investments as of December 31, 2005 and 2004.
Exelon classifies investments in trust accounts for decommissioning nuclear plants as available-for-sale and estimates their fair value based on quoted market prices for the securities held in trust funds.
These investments are held to fund Generation’s decommissioning obligation for its nuclear plants.
Decommissioning expenditures are expected to occur primarily after the plants are retired.
Based on current licenses and anticipated renewals, decommissioning expenditures for plants in operation are currently estimated to begin after 2029.
See Note 13—Nuclear Decommissioning and Spent Fuel Storage for further information regarding the decommissioning of Generation’s nuclear plants.
The following tables show the fair values, gross unrealized gains and losses and amortized cost bases of the securities held in these trust accounts as of December 31, 2005 and 2004:
## Table 1 ##
The fixed-income available-for-sale securities held at December 31, 2005 have an average maturity range of seven to ten years.
The cost of these securities was determined on the basis of specific identification.
PART II (Dollars in millions except per share data, unless otherwise noted) MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Exelon’s common stock is listed on the New York Stock Exchange.
As of January 31, 2006, there were 667,233,091 shares of common stock outstanding and approximately 160,754 shareholders of common stock of record.
The following table presents the New York Stock Exchange—Composite Common Stock Prices and dividends by quarter on a per share basis:
## Table 2 ##
On July 22, 2005, Exelon’s shareholders approved the issuance of Exelon common stock as contemplated by the Agreement and Plan of Merger, dated December 20, 2004, between Exelon and PSEG.
Effective October 24, 2005, Exelon’s Amended and Restated Articles of Incorporation were amended to increase the number of authorized shares of Exelon common stock from 1.2 billion to 2 billion.
Dividends Under applicable Federal law, ComEd, PECO and Generation can pay dividends only from retained, undistributed or current earnings.
A significant loss recorded at ComEd, PECO or Generation may limit the dividends that these companies can distribute to Exelon.
Under Illinois law, ComEd may not pay any dividend on its stock unless, among other things, “[its] earnings and earned surplus are sufficient to declare and pay same after provision is made for reasonable and proper reserves,” or unless it has specific authorization from the ICC.
At December 31, 2005, Exelon had retained earnings of $3.2 billion, which includes ComEd’s retained deficit of $(81) million consisting of $1,099 million of retained earnings appropriated for future dividends offset by unappropriated deficit of $(1,180) million, PECO’s retained earnings of $649 million and Generation’s undistributed earnings of $1,002 million.
PECO’s Articles of Incorporation prohibit payment of any dividend on, or other distribution to the holders of, common stock if, after giving effect thereto, the capital of PECO represented by its common stock together with its retained earnings is, in the aggregate, less than the involuntary liquidating value of its then outstanding preferred stock.
At December 31, 2005, such capital was $2.8 billion and amounted to about 32 times the liquidating value of the outstanding preferred stock of $87 million.
PECO may not declare dividends on any shares of its capital stock in the event that: (1) it exercises its right to extend the interest payment periods on the subordinated debentures which were issued to PEC L. P.  or PECO Trust IV; (2) it defaults on its guarantee of the payment of distributions on the Series D Preferred Securities of PEC L. P.  or the preferred trust securities of PECO Trust IV; or (3) an event of default occurs under the Indenture under which the subordinated debentures are issued (see ITEM 1.
Business—Other Subsidiaries of ComEd and PECO with Publicly Held Securities of Exelon’s 2005 Form 10-K).
Other Income and Deductions.
Other income and deductions in 2004 reflects interest expense of $828 million, equity in losses of unconsolidated affiliates of $154 million, debt retirement charges of $130 million (before income taxes) recorded at ComEd associated with an accelerated liability management plan, and an $85 million gain (before income taxes) on the 2004 sale of Boston Generating.
Other income and deductions in 2003 reflects interest expense of $873 million and impairment charges of $255 million (before income taxes) related to Generation’s investment in Sithe.
Equity in earnings of unconsolidated affiliates decreased by $187 million due to the acquisition of the remaining 50% of AmerGen in 2003, the deconsolidation of certain financing trusts during 2003 and investments in synthetic fuel-producing facilities made in the fourth quarter of 2003 and the third quarter of 2004.
Effective Income Tax Rate.
The effective income tax rate from continuing operations was 28% for 2004 compared to 30% for 2003.
The decrease in the effective rate was primarily attributable to investments in synthetic fuel-producing facilities made in the fourth quarter of 2003.
Discontinued Operations.2004 and 2003 discontinued operations consist of Sithe’s 2004 results (beginning April 1, 2004), certain qualifying components of Enterprises, and AllEnergy.
AllEnergy is a business within Exelon Energy, which is a business within Generation.
A discussion of the results of Sithe and AllEnergy is included in the Generation segment results discussion below.
Enterprises’ after-tax loss from discontinued operations of $78 million in 2003 and $13 million in 2004 decreased by $65 million primarily due to a 2004 gain on the sale of the Chicago operations of Thermal and a decrease in operating and maintenance expense of $401 million, partially offset by a decrease in revenues.
At December 31, 2004, the remaining assets of the businesses associated with the former Enterprises segment totaled approximately $274 million in comparison to $697 million at December 31, 2003.
Results of Operations by Business Segment Historically, Exelon had reported Enterprises as a segment.
Exelon sold or unwound substantially all components of Enterprises in 2004 and 2003.
As a result, Enterprises is no longer reported as a segment and is included within the “other” category within the results of operations by business segment below.
Other consists of corporate operations, including Exelon Business Services Company, Enterprises and investments in synthetic fuel-producing facilities.
The comparison of 2004 and 2003 operating results and other statistical information set forth below include intercompany transactions, which are eliminated in Exelon’s consolidated financial statements.
Transfer of Exelon Energy Company from Enterprises to Generation.
Effective January 1, 2004, Enterprises’ competitive retail sales business, Exelon Energy Company, was transferred to Generation.
The 2003 information related to the Generation segment discussed below has been adjusted to reflect the transfer of Exelon Energy Company from Enterprises to the Generation segment.
Exelon Energy Company’s 2003 results, excluding intercompany eliminations, were as follows:

<table><tr><td> Year</td><td> Estimated CTC Revenue</td><td> Estimated Stranded Cost Amortization</td></tr><tr><td>2004</td><td>$812</td><td>$367</td></tr><tr><td>2005</td><td>808</td><td>404</td></tr><tr><td>2006</td><td>903</td><td>550</td></tr><tr><td>2007</td><td>910</td><td>619</td></tr><tr><td>2008</td><td>917</td><td>697</td></tr><tr><td>2009</td><td>924</td><td>783</td></tr><tr><td>2010</td><td>932</td><td>879</td></tr></table>
<table><tr><td></td><td colspan="4"> December 31, 2005 </td></tr><tr><td></td><td> Amortized Cost</td><td> Gross Unrealized Gains</td><td>Gross Unrealized Losses</td><td> Estimated Fair Value</td></tr><tr><td>Cash and cash equivalents</td><td>$80</td><td>$—</td><td>$—</td><td>$80</td></tr><tr><td>Marketable equity securities</td><td>2,762</td><td>683</td><td>-32</td><td>3,413</td></tr><tr><td>U.S. Treasury obligations and direct obligations of U.S. government agencies</td><td>361</td><td>32</td><td>-6</td><td>387</td></tr><tr><td>Other debt securities</td><td>1,695</td><td>19</td><td>-9</td><td>1,705</td></tr><tr><td>Total available-for-sale securities</td><td>$4,898</td><td>$734</td><td>$-47</td><td>$5,585</td></tr><tr><td></td><td colspan="4"> December 31, 2004 </td></tr><tr><td></td><td> Amortized Cost</td><td> Gross Unrealized Gains</td><td>Gross Unrealized Losses</td><td> Estimated Fair Value</td></tr><tr><td>Cash and cash equivalents</td><td>$184</td><td>$—</td><td>$—</td><td>$184</td></tr><tr><td>Equity securities</td><td>2,194</td><td>538</td><td>-37</td><td>2,695</td></tr><tr><td>U.S. Treasury obligations and direct obligations of U.S. government agencies</td><td>1,447</td><td>51</td><td>-4</td><td>1,494</td></tr><tr><td>Other debt securities</td><td>855</td><td>37</td><td>-3</td><td>889</td></tr><tr><td>Total available-for-sale securities</td><td>$4,680</td><td>$626</td><td>$-44</td><td>$5,262</td></tr></table>
<table><tr><td></td><td colspan="4"> 2005 </td><td colspan="4"> 2004 </td></tr><tr><td></td><td> Fourth Quarter </td><td> Third Quarter </td><td> Second Quarter </td><td> First Quarter </td><td> Fourth Quarter </td><td> Third Quarter </td><td> Second Quarter </td><td> First Quarter </td></tr><tr><td>High price</td><td>$56.00</td><td>$57.46</td><td>$52.01</td><td>$47.18</td><td>$44.90</td><td>$37.90</td><td>$34.89</td><td>$34.43</td></tr><tr><td>Low price</td><td>46.62</td><td>49.60</td><td>44.14</td><td>41.77</td><td>36.73</td><td>32.69</td><td>30.92</td><td>32.18</td></tr><tr><td>Close</td><td>53.14</td><td>53.44</td><td>51.33</td><td>45.89</td><td>44.07</td><td>36.69</td><td>33.29</td><td>34.43</td></tr><tr><td>Dividends</td><td>0.400</td><td>0.400</td><td>0.400</td><td>0.400</td><td>0.400</td><td>0.305</td><td>0.275</td><td>0.275</td></tr></table>

Question: In what year is Cash and cash equivalents positive?