Edgar Filing: EXELON GENERATION CO LLC

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number	Name of Registrant; State of Incorporation; Address of Principal Executive Offices; and Telephone Number	IRS Employer Identification Number

1-16169	EXELON CORPORATION		23-2990190
	(a Pennsylvania corporation) 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 (312) 394-7398

333-85496	EXELON GENERATION COMPANY, LLC		23-3064219
	(a Pennsylvania limited liability company) 300 Exelon Way Kennett Square, Pennsylvania 19348-2473 (610) 765-5959

1-1839	COMMONWEALTH EDISON COMPANY		36-0938600
	(an Illinois corporation) 440 South LaSalle Street Chicago, Illinois 60605-1028 (312) 394-4321

000-16844	PECO ENERGY COMPANY		23-0970240
	(a Pennsylvania corporation) P.O. Box 8699 2301 Market Street Philadelphia, Pennsylvania 19101-8699 (215) 841-4000

1-1910	BALTIMORE GAS AND ELECTRIC COMPANY		52-0280210
	(a Maryland corporation) 2 Center Plaza 110 West Fayette Street Baltimore, Maryland 21201-3708 (410) 234-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company
Exelon Corporation	x
Exelon Generation Company, LLC			x
Commonwealth Edison Company			x
PECO Energy Company			x
Baltimore Gas and Electric Company			x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The number of shares outstanding of each registrant’s common stock as of March 31, 2013 was:


Exelon Corporation Common Stock, without par value		855,849,302
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,016,781
PECO Energy Company Common Stock, without par value		170,478,507
Baltimore Gas and Electric Company Common Stock, without par value		1,000

TABLE OF CONTENTS


		Page No.

FILING FORMAT			7

FORWARD-LOOKING STATEMENTS			7

WHERE TO FIND MORE INFORMATION			7

PART I.	FINANCIAL INFORMATION		8

ITEM 1.	FINANCIAL STATEMENTS		8

	Exelon Corporation

	Consolidated Statements of Operations and Comprehensive Income		9

	Consolidated Statements of Cash Flows		10

	Consolidated Balance Sheets		11

	Consolidated Statement of Changes in Shareholders’ Equity		13

	Exelon Generation Company, LLC

	Consolidated Statements of Operations and Comprehensive Income		14

	Consolidated Statements of Cash Flows		15

	Consolidated Balance Sheets		16

	Consolidated Statement of Changes in Equity		18

	Commonwealth Edison Company

	Consolidated Statements of Operations and Comprehensive Income		19

	Consolidated Statements of Cash Flows		20

	Consolidated Balance Sheets		21

	Consolidated Statement of Changes in Shareholders’ Equity		23

	PECO Energy Company

	Consolidated Statements of Operations and Comprehensive Income		24

	Consolidated Statements of Cash Flows		25

	Consolidated Balance Sheets		26

	Consolidated Statement of Changes in Shareholders’ Equity		28

	Baltimore Gas and Electric Company

	Consolidated Statements of Operations and Comprehensive Income		29

	Consolidated Statements of Cash Flows		30

	Consolidated Balance Sheets		31

	Consolidated Statement of Changes in Shareholders’ Equity		33

	Combined Notes to Consolidated Financial Statements		34

	1. Basis of Presentation		34

	2. New Accounting Pronouncements		35

	3. Variable Interest Entities		36

	4. Merger and Acquisitions		39

	5. Regulatory Matters		44

	6. Investment in Constellation Energy Nuclear Group, LLC		58

	7. Goodwill		59

	8. Fair Value of Financial Assets and Liabilities		60


		Page No.

	9. Derivative Financial Instruments		82

	10. Debt and Credit Agreements		98

	11. Income Taxes		100

	12. Nuclear Decommissioning		103

	13. Retirement Benefits		107

	14. Stock-Based Compensation Plans		109

	15. Changes in Accumulated Other Comprehensive Income		113

	16. Earnings Per Share and Equity		114

	17. Commitments and Contingencies		115

	18. Supplemental Financial Information		131

	19. Segment Information		135

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		139

	Exelon Corporation		139

	General		139

	Executive Overview		140

	Critical Accounting Policies and Estimates		154

	Results of Operations		155

	Liquidity and Capital Resources		176

	Contractual Obligations and Off-Balance Sheet Arrangements		186

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		187

ITEM 4.	CONTROLS AND PROCEDURES		195

PART II.	OTHER INFORMATION		197

ITEM 1.	LEGAL PROCEEDINGS		197

ITEM 1A.	RISK FACTORS		197

ITEM 4.	MINE SAFETY DISCLOSURES		197

ITEM 6.	EXHIBITS		197

SIGNATURES			199

	Exelon Corporation		199

	Exelon Generation Company, LLC		199

	Commonwealth Edison Company		199

	PECO Energy Company		200

	Baltimore Gas and Electric Company		200

CERTIFICATION EXHIBITS			201

	Exelon Corporation		201, 211

	Exelon Generation Company, LLC		203, 213

	Commonwealth Edison Company		205, 215

	PECO Energy Company		207, 217

	Baltimore Gas and Electric Company		209, 219


GLOSSARY OF TERMS AND ABBREVIATIONS

Exelon Corporation and Related Entities
Exelon		Exelon Corporation
Generation		Exelon Generation Company, LLC
ComEd		Commonwealth Edison Company
PECO		PECO Energy Company
BGE		Baltimore Gas and Electric Company
BSC		Exelon Business Services Company, LLC
Exelon Corporate		Exelon in its corporate capacity as a holding company
CENG		Constellation Energy Nuclear Group, LLC
Constellation		Constellation Energy Group, Inc.
Exelon Transmission Company		Exelon Transmission Company, LLC
Exelon Wind		Exelon Wind, LLC and Exelon Generation Acquisition Company, LLC
Ventures		Exelon Ventures Company, LLC
AmerGen		AmerGen Energy Company, LLC
BondCo		RSB BondCo LLC
PEC L.P.		PECO Energy Capital, L.P.
PECO Trust III		PECO Capital Trust III
PECO Trust IV		PECO Energy Capital Trust IV
PETT		PECO Energy Transition Trust
Registrants		Exelon, Generation, ComEd, PECO and BGE, collectively

Other Terms and Abbreviations
Note “ ” of the Exelon 2012 Form 10-K		Reference to specific Combined Note to Consolidated Financial Statements within Exelon’s 2012 Annual Report on Form 10-K
1998 restructuring settlement		PECO’s 1998 settlement of its restructuring case mandated by the Competition Act
Act 11		Pennsylvania Act 11 of 2012
Act 129		Pennsylvania Act 129 of 2008
AEC		Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source
AEPS		Pennsylvania Alternative Energy Portfolio Standards
AEPS Act		Pennsylvania Alternative Energy Portfolio Standards Act of 2004, as amended
AESO		Alberta Electric Systems Operator
AFUDC		Allowance for Funds Used During Construction
ALJ		Administrative Law Judge
AMI		Advanced Metering Infrastructure
ARC		Asset Retirement Cost
ARO		Asset Retirement Obligation
ARP		Title IV Acid Rain Program
ARRA of 2009		American Recovery and Reinvestment Act of 2009
Block contracts		Forward Purchase Energy Block Contracts
CAIR		Clean Air Interstate Rule
CAISO		California ISO
CAMR		Federal Clean Air Mercury Rule
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
CFL		Compact Fluorescent Light
Clean Air Act		Clean Air Act of 1963, as amended
Clean Water Act		Federal Water Pollution Control Amendments of 1972, as amended
Competition Act		Pennsylvania Electricity Generation Customer Choice and Competition Act of 1996
CPI		Consumer Price Index
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
CTC		Competitive Transition Charge


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
DOE		United States Department of Energy
DOJ		United States Department of Justice
DSP		Default Service Provider
DSP Program		Default Service Provider Program
EDF		Electricite de France SA
EE&C		Energy Efficiency and Conservation/Demand Response
EGS		Electric Generation Supplier
EIMA		Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
EPA		United States Environmental Protection Agency
ERCOT		Electric Reliability Council of Texas
ERISA		Employee Retirement Income Security Act of 1974, as amended
EROA		Expected Rate of Return on Assets
ESPP		Employee Stock Purchase Plan
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FRCC		Florida Reliability Coordinating Council
FTC		Federal Trade Commission
GAAP		Generally Accepted Accounting Principles in the United States
GHG		Greenhouse Gas
GRT		Gross Receipts Tax
GSA		Generation Supply Adjustment
GWh		Gigawatt hour
HAP		Hazardous air pollutants
Health Care Reform Acts		Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010
IBEW		International Brotherhood of Electrical Workers
ICC		Illinois Commerce Commission
ICE		Intercontinental Exchange
Illinois Act		Illinois Electric Service Customer Choice and Rate Relief Law of 1997
Illinois EPA		Illinois Environmental Protection Agency
Illinois Settlement Legislation		Legislation enacted in 2007 affecting electric utilities in Illinois
IPA		Illinois Power Agency
IRC		Internal Revenue Code
IRS		Internal Revenue Service
ISO		Independent System Operator
ISO-NE		ISO New England Inc.
ISO-NY		ISO New York
kV		Kilovolt
kW		Kilowatt
kWh		Kilowatt-hour
LIBOR		London Interbank Offered Rate
LILO		Lease-In, Lease-Out
LLRW		Low-Level Radioactive Waste
LTIP		Long-Term Incentive Plan
MATS		U.S. EPA Mercury and Air Toxics Rule
MBR		Market Based Rates Incentive
MDE		Maryland Department of the Environment
MDPSC		Maryland Public Service Commission
MGP		Manufactured Gas Plant
MISO		Midwest Independent Transmission System Operator, Inc.
mmcf		Million Cubic Feet
Moody’s		Moody’s Investor Service
MRV		Market-Related Value


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
MW		Megawatt
MWh		Megawatt hour
NAAQS		National Ambient Air Quality Standards
n.m.		not meaningful
NAV		Net Asset Value
NDT		Nuclear Decommissioning Trust
NEIL		Nuclear Electric Insurance Limited
NERC		North American Electric Reliability Corporation
NGS		Natural Gas Supplier
NJDEP		New Jersey Department of Environmental Protection
Non-Regulatory Agreements Units		Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting
NOV		Notice of Violation
NPDES		National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission
NSPS		New Source Performance Standards
NWPA		Nuclear Waste Policy Act of 1982
NYMEX		New York Mercantile Exchange
OCI		Other Comprehensive Income
OIESO		Ontario Independent Electricity System Operator
OPEB		Other Postretirement Employee Benefits
PA DEP		Pennsylvania Department of Environmental Protection
PAPUC		Pennsylvania Public Utility Commission
PGC		Purchased Gas Cost Clause
PJM		PJM Interconnection, LLC
POLR		Provider of Last Resort
POR		Purchase of Receivables
PPA		Power Purchase Agreement
Price-Anderson Act		Price-Anderson Nuclear Industries Indemnity Act of 1957
PRP		Potentially Responsible Parties
PSEG		Public Service Enterprise Group Incorporated
PURTA		Pennsylvania Public Realty Tax Act
PV		Photovoltaic
RCRA		Resource Conservation and Recovery Act of 1976, as amended
REC		Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source
Regulatory Agreement Units		Nuclear generating units whose decommissioning-related activities are subject to contractual elimination under regulatory accounting
RES		Retail Electric Suppliers
RFP		Request for Proposal
Rider		Reconcilable Surcharge Recovery Mechanism
RGGI		Regional Greenhouse Gas Initiative
RMC		Risk Management Committee
RPM		PJM Reliability Pricing Model
RPS		Renewable Energy Portfolio Standards
RTEP		Regional Transmission Expansion Plan
RTO		Regional Transmission Organization
S&P		Standard & Poor’s Ratings Services
SEC		United States Securities and Exchange Commission
Senate Bill 1		Maryland Senate Bill 1
SERC		SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
SERP		Supplemental Employee Retirement Plan


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
SFC		Supplier Forward Contract
SGIG		Smart Grid Investment Grant
SGIP		Smart Grid Initiative Program
SILO		Sale-In, Lease-Out
SMP		Smart Meter Program
SMPIP		Smart Meter Procurement and Installation Plan
SNF		Spent Nuclear Fuel
SOS		Standard Offer Service
SPP		Southwest Power Pool
Tax Relief Act of 2010		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
TEG		Termoelectrica del Golfo
TEP		Termoelectrica Penoles
Upstream		Natural gas exploration and production activities
VIE		Variable Interest Entity
WECC		Western Electric Coordinating Council

FILING FORMAT

This combined Form 10-Q is being filed separately by the Registrants. Information contained herein relating to any individual Registrant is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this Report are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by a Registrant include (a) those factors discussed in the following sections of Exelon’s 2012 Annual Report on Form 10-K: ITEM 1A. Risk Factors, as updated by Part II, ITEM 1A of this Report; ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, as updated by Part I, ITEM 2. of this Report; and ITEM 8. Financial Statements and Supplementary Data: Note 19, as updated by Part I, Item 1. Financial Statements, Note 17 of this Report; and (b) other factors discussed herein and in other filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The public may read and copy any reports or other information that the Registrants file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. These documents are also available to the public from commercial document retrieval services, the website maintained by the SEC at www.sec.gov and the Registrants’ websites at www.exeloncorp.com. Information contained on the Registrants’ websites shall not be deemed incorporated into, or to be a part of, this Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)	2013			2012
Operating revenues	$	6,082		$	4,690
Operating expenses
Purchased power and fuel		2,981			1,765
Operating and maintenance		1,764			1,968
Depreciation and amortization		543			382
Taxes other than income		277			194

Total operating expenses		5,565			4,309

Equity in loss of unconsolidated affiliates		(9	)		(22	)
Operating income		508			359

Other income and (deductions)
Interest expense, net		(617	)		(189	)
Interest expense to affiliates, net		(6	)		(6	)
Other, net		172			194

Total other income and (deductions)		(451	)		(1	)

Income before income taxes		57			358
Income taxes		56			158

Net income		1			200
Net income attributable to noncontrolling interests, preferred security dividends and preference stock dividends		5			—

Net income (loss) on common stock		(4	)		200

Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service cost (benefit) reclassified to periodic benefit cost		—			1
Actuarial loss reclassified to periodic cost		51			41
Transition obligation reclassified to periodic cost		—			1
Pension and non-pension postretirement benefit plans valuation adjustment		75			(8	)
Change in unrealized (loss) gain on cash flow hedges		(58	)		215
Change in unrealized (loss) gain on marketable securities		(1	)		1
Change in unrealized gain on equity investments		28			—
Change in unrealized (loss) on foreign currency translation		(1	)		—

Other comprehensive income		94			251

Comprehensive income	$	95		$	451

Weighted average shares of common stock outstanding:
Basic		855			705

Diluted		855			707

Earnings per average common share — basic:	$	(0.01	)	$	0.28

Earnings per average common share — diluted:	$	(0.01	)	$	0.28

Dividends per common share	$	0.53		$	0.53

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	1		$	200
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		1,017			776
Deferred income taxes and amortization of investment tax credits		(610	)		101
Net fair value changes related to derivatives		388			(73	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(66	)		(103	)
Other non-cash operating activities		231			530
Changes in assets and liabilities:
Accounts receivable		(70	)		394
Inventories		101			104
Accounts payable, accrued expenses and other current liabilities		(542	)		(1,176	)
Option premiums paid, net		(3	)		(100	)
Counterparty collateral received (posted), net		(186	)		340
Income taxes		632			178
Pension and non-pension postretirement benefit contributions		(267	)		(55	)
Other assets and liabilities		233			(122	)

Net cash flows provided by operating activities		859			994

Cash flows from investing activities
Capital expenditures		(1,447	)		(1,496	)
Proceeds from nuclear decommissioning trust fund sales		677			3,680
Investment in nuclear decommissioning trust funds		(729	)		(3,726	)
Cash and restricted cash acquired from Constellation		—			964
Change in restricted cash		(12	)		(8	)
Other investing activities		40			(54	)

Net cash flows used in investing activities		(1,471	)		(640	)

Cash flows from financing activities
Changes in short-term debt		233			141
Issuance of long-term debt		149			—
Retirement of long-term debt		(1	)		(451	)
Dividends paid on common stock		(450	)		(350	)
Proceeds from employee stock plans		12			12
Other financing activities		(45	)		(1	)

Net cash flows used in financing activities		(102	)		(649	)

Decrease in cash and cash equivalents		(714	)		(295	)
Cash and cash equivalents at beginning of period		1,486			1,016

Cash and cash equivalents at end of period	$	772		$	721

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	679	$	1,411
Cash and cash equivalents of variable interest entities		93		75
Restricted cash and investments		83		86
Restricted cash and investments of variable interest entities		65		47
Accounts receivable, net
Customer ($322 and $289 gross accounts receivable pledged as collateral as of March 31, 2013 and December 31, 2012, respectively)		2,835		2,789
Other		1,110		1,147
Accounts receivable, net, variable interest entities		285		292
Mark-to-market derivative assets		666		938
Unamortized energy contract assets		727		886
Inventories, net
Fossil fuel		122		246
Materials and supplies		791		768
Deferred income taxes		331		131
Regulatory assets		765		764
Other		722		560

Total current assets		9,274		10,140

Property, plant and equipment, net		45,784		45,186
Deferred debits and other assets
Regulatory assets		6,521		6,497
Nuclear decommissioning trust funds		7,559		7,248
Investments		1,181		1,184
Investments in affiliates		22		22
Investment in CENG		1,883		1,849
Goodwill		2,625		2,625
Mark-to-market derivative assets		706		937
Unamortized energy contracts assets		968		1,073
Pledged assets for Zion Station decommissioning		580		614
Other		1,140		1,186

Total deferred debits and other assets		23,185		23,235

Total assets	$	78,243	$	78,561

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013			December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	233		$	—
Short-term notes payable — accounts receivable agreement		210			210
Long-term debt due within one year		2,085			975
Long-term debt due within one year of variable interest entities		79			72
Accounts payable		2,198			2,446
Accounts payable of variable interest entities		188			202
Accrued expenses		1,430			1,800
Deferred income taxes		29			58
Regulatory liabilities		418			368
Dividends payable		1			4
Mark-to-market derivative liabilities		181			352
Unamortized energy contract liabilities		410			455
Other		859			849

Total current liabilities		8,321			7,791

Long-term debt		16,210			17,190
Long-term debt to financing trusts		648			648
Long-term debt of variable interest entities		497			508
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		11,315			11,551
Asset retirement obligations		5,149			5,074
Pension obligations		3,161			3,428
Non-pension postretirement benefit obligations		2,672			2,662
Spent nuclear fuel obligation		1,020			1,020
Regulatory liabilities		4,115			3,981
Mark-to-market derivative liabilities		259			281
Unamortized energy contract liabilities		466			528
Payable for Zion Station decommissioning		372			432
Other		2,625			1,650

Total deferred credits and other liabilities		31,154			30,607

Total liabilities		56,830			56,744

Commitments and contingencies
Preferred securities of subsidiary		87			87
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 856 shares and 855 shares outstanding at March 31, 2013 and December 31, 2012, respectively)		16,652			16,632
Treasury stock, at cost (35 shares at March 31, 2013 and December 31, 2012, respectively)		(2,327	)		(2,327	)
Retained earnings		9,437			9,893
Accumulated other comprehensive loss, net		(2,673	)		(2,767	)

Total shareholders’ equity		21,089			21,431
BGE preference stock not subject to mandatory redemption		193			193
Noncontrolling interest		44			106

Total equity		21,326			21,730

Total liabilities and shareholders’ equity	$	78,243		$	78,561

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions, shares in thousands)	Issued Shares		Common Stock		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss, net			Non-controlling Interest			Preferred and Preference Stock			Total Equity
Balance, December 31, 2012		889,525	$	16,632	$	(2,327	)	$	9,893		$	(2,767	)	$	106		$	193		$	21,730
Net income (loss)		—		—		—			(4	)		—			1			4			1
Long-term incentive plan activity		1,067		20		—			—			—			—			—			20
Common stock dividends		—		—		—			(452	)		—			—			—			(452	)
Consolidated VIE dividend to non-controlling interest		—		—		—			—			—			(63	)		—			(63	)
Preferred and preference stock dividends		—		—		—			—			—			—			(4	)		(4	)
Other comprehensive income net of income taxes of $(66)		—		—		—			—			94			—			—			94

Balance, March 31, 2013		890,592	$	16,652	$	(2,327	)	$	9,437		$	(2,673	)	$	44		$	193		$	21,326

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Operating revenues
Operating revenues	$	3,141		$	2,373
Operating revenues from affiliates		392			370

Total operating revenues		3,533			2,743

Operating expenses
Purchased power and fuel		2,169			1,044
Operating and maintenance		965			1,039
Operating and maintenance from affiliates		147			140
Depreciation and amortization		214			153
Taxes other than income		93			73

Total operating expenses		3,588			2,449

Equity in loss of unconsolidated affiliates		(9	)		(22	)
Operating (loss) income		(64	)		272

Other income and (deductions)
Interest expense		(82	)		(54	)
Other, net		128			178

Total other income and (deductions)		46			124

(Loss) income before income taxes		(18	)		396
Income (benefit) taxes		(1	)		230

Net (loss) income		(17	)		166
Net income (loss) attributable to noncontrolling interests		1			(2	)

Net (loss) income on membership interest		(18	)		168

Other comprehensive (loss) income, net of income taxes
Change in unrealized (loss) gain on cash flow hedges		(130	)		252
Change in unrealized loss on foreign currency translation		(1	)		—
Change in unrealized loss on marketable securities		(1	)		—
Change in unrealized gain on equity investments		28			—

Other comprehensive (loss) income		(104	)		252

Comprehensive (loss) income	$	(121	)	$	418

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Cash flows from operating activities
Net (loss) income	$	(17	)	$	166
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
Depreciation, amortization, depletion and accretion, including nuclear fuel and energy contract amortization		688			547
Deferred income taxes and amortization of investment tax credits		(81	)		165
Net fair value changes related to derivatives		406			(63	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(66	)		(103	)
Other non-cash operating activities		66			90
Changes in assets and liabilities:
Accounts receivable		65			321
Receivables from and payables to affiliates, net		(23	)		85
Inventories		29			59
Accounts payable, accrued expenses and other current liabilities		(261	)		(782	)
Option premiums paid, net		(3	)		(100	)
Counterparty collateral (paid) received, net		(203	)		348
Income taxes		180			162
Pension and non-pension postretirement benefit contributions		(115	)		(20	)
Other assets and liabilities		(159	)		(80	)

Net cash flows provided by operating activities		506			795

Cash flows from investing activities
Capital expenditures		(841	)		(1,055	)
Proceeds from nuclear decommissioning trust fund sales		677			3,680
Investment in nuclear decommissioning trust funds		(729	)		(3,726	)
Change in restricted cash		3			(1	)
Cash acquired from Constellation		—			708
Other investing activities		25			(77	)

Net cash flows used in investing activities		(865	)		(471	)

Cash flows from financing activities
Issuance of long-term debt		149			—
Retirement of long-term debt		(1	)		(1	)
Change in short-term debt		13			—
Distribution to member		(211	)		(600	)
Other financing activities		(37	)		—

Net cash flows used in financing activities		(87	)		(601	)

Decrease in cash and cash equivalents		(446	)		(277	)
Cash and cash equivalents at beginning of period		671			496

Cash and cash equivalents at end of period	$	225		$	219

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	132	$	596
Cash and cash equivalents of variable interest entities		93		75
Restricted cash and cash equivalents of variable interest entities		13		16
Accounts receivable, net
Customer		1,470		1,482
Other		286		472
Accounts receivable, net, variable interest entities		285		292
Mark-to-market derivative assets		666		938
Mark-to-market derivative assets with affiliates		85		226
Receivables from affiliates		132		141
Unamortized energy contract assets		727		886
Inventories, net
Fossil fuel		92		130
Materials and supplies		635		626
Deferred income taxes		187		—
Other		459		331

Total current assets		5,262		6,211

Property, plant and equipment, net		19,813		19,531
Deferred debits and other assets
Nuclear decommissioning trust funds		7,559		7,248
Investments		411		420
Investment in CENG		1,883		1,849
Mark-to-market derivative assets		694		924
Prepaid pension asset		2,032		1,975
Pledged assets for Zion Station decommissioning		580		614
Unamortized energy contract assets		968		1,073
Other		789		836

Total deferred debits and other assets		14,916		14,939

Total assets	$	39,991	$	40,681

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	13	$	—
Long-term debt due within one year		523		24
Long-term debt due within one year of variable interest entities		5		4
Accounts payable		1,162		1,346
Accounts payable of variable interest entities		188		202
Accrued expenses		904		1,116
Payables to affiliates		165		193
Deferred income taxes		18		128
Mark-to-market derivative liabilities		166		334
Unamortized energy contract liabilities		349		378
Other		371		372

Total current liabilities		3,864		4,097

Long-term debt		4,893		5,245
Long-term debt to affiliate		1,997		2,007
Long-term debt of variable interest entities		203		203
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,598		5,398
Asset retirement obligations		5,013		4,938
Non-pension postretirement benefit obligations		785		755
Spent nuclear fuel obligation		1,020		1,020
Payables to affiliates		2,531		2,397
Mark-to-market derivative liabilities		199		232
Unamortized energy contract liabilities		457		516
Payable for Zion Station decommissioning		372		432
Other		789		776

Total deferred credits and other liabilities		16,764		16,464

Total liabilities		27,721		28,016

Commitments and contingencies
Equity
Member’s equity
Membership interest		8,876		8,876
Undistributed earnings		2,939		3,168
Accumulated other comprehensive income, net		409		513

Total member’s equity		12,224		12,557
Noncontrolling interest		46		108

Total equity		12,270		12,665

Total liabilities and equity	$	39,991	$	40,681

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)


	Member’s Equity
(In millions)	Membership Interest		Undistributed Earnings			Accumulated Other Comprehensive Income, net			Noncontrolling Interest			Total Equity
Balance, December 31, 2012	$	8,876	$	3,168		$	513		$	108		$	12,665
Net income (loss)		—		(18	)		—			1			(17	)
Distribution to member		—		(211	)		—			—			(211	)
Consolidated VIE dividend to non-controlling interest		—		—			—			(63	)		(63	)
Other comprehensive loss, net of income taxes of $68		—		—			(104	)		—			(104	)

Balance, March 31, 2013	$	8,876	$	2,939		$	409		$	46		$	12,270

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Operating revenues
Operating revenues	$	1,159		$	1,387
Operating revenues from affiliates		1			1

Total operating revenues		1,160			1,388

Operating expenses
Purchased power		237			373
Purchased power from affiliate		145			247
Operating and maintenance		292			276
Operating and maintenance from affiliate		36			42
Depreciation and amortization		167			149
Taxes other than income		74			75

Total operating expenses		951			1,162

Operating income		209			226

Other income and (deductions)
Interest expense		(350	)		(79	)
Interest expense to affiliates, net		(3	)		(3	)
Other, net		5			4

Total other income and (deductions)		(348	)		(78	)

(Loss) income before income taxes		(139	)		148
Income (benefit) taxes		(58	)		61

Net (loss) income		(81	)		87
Other comprehensive income, net of income taxes
Change in unrealized gain on marketable securities		—			1

Other comprehensive income		—			1
Comprehensive (loss) income	$	(81	)	$	88

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Cash flows from operating activities
Net (loss) income	$	(81	)	$	87
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation, amortization and accretion		167			149
Deferred income taxes and amortization of investment tax credits		(295	)		57
Other non-cash operating activities		42			60
Changes in assets and liabilities:
Accounts receivable		1			58
Receivables from and payables to affiliates, net		(32	)		15
Inventories		(9	)		(3	)
Accounts payable, accrued expenses and other current liabilities		(73	)		(159	)
Counterparty collateral received (paid), net		17			(8	)
Income taxes		208			116
Pension and non-pension postretirement benefit contributions		(118	)		(9	)
Other assets and liabilities		231			(72	)

Net cash flows provided by operating activities		58			291

Cash flows from investing activities
Capital expenditures		(346	)		(291	)
Proceeds from sales of investments		2			10
Purchases of investments		(1	)		(5	)
Other investing activities		9			6

Net cash flows used in investing activities		(336	)		(280	)

Cash flows from financing activities
Changes in short-term debt		220			302
Retirement of long-term debt		—			(450	)
Dividends paid on common stock		(55	)		(75	)
Other financing activities		(1	)		(3	)

Net cash flows provided by (used in) financing activities		164			(226	)

Decrease in cash and cash equivalents		(114	)		(215	)
Cash and cash equivalents at beginning of period		144			234

Cash and cash equivalents at end of period	$	30		$	19

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	30	$	144
Accounts receivable, net
Customer		495		539
Other		513		452
Inventories, net		100		91
Deferred income taxes		37		83
Counterparty collateral deposited		36		53
Regulatory assets		301		388
Other		26		25

Total current assets		1,538		1,775

Property, plant and equipment, net		14,020		13,826
Deferred debits and other assets
Regulatory assets		681		666
Investments		7		8
Investments in affiliates		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,314		2,039
Prepaid pension asset		1,729		1,661
Other		336		299

Total deferred debits and other assets		7,698		7,304

Total assets	$	23,256	$	22,905

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	220	$	—
Long-term debt due within one year		869		252
Accounts payable		384		379
Accrued expenses		199		295
Payables to affiliates		68		97
Customer deposits		136		136
Regulatory liabilities		166		170
Mark-to-market derivative liability		15		18
Mark-to-market derivative liability with affiliate		85		226
Other		94		82

Total current liabilities		2,236		1,655

Long-term debt		4,699		5,315
Long-term debt to financing trust		206		206
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		3,933		4,272
Asset retirement obligations		100		99
Non-pension postretirement benefits obligations		300		273
Regulatory liabilities		3,337		3,229
Mark-to-market derivative liability		60		49
Other		1,026		484

Total deferred credits and other liabilities		8,756		8,406

Total liabilities		15,897		15,582

Commitments and contingencies
Shareholders’ equity
Common stock		1,588		1,588
Other paid-in capital		5,186		5,014
Retained earnings		585		721

Total shareholders’ equity		7,359		7,323

Total liabilities and shareholders’ equity	$	23,256	$	22,905

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Other Paid-In Capital		Retained Deficit Unappropriated			Retained Earnings Appropriated			Accumulated Other Comprehensive Income, net		Total Shareholders’ Equity
Balance, December 31, 2012	$	1,588	$	5,014	$	(1,639	)	$	2,360		$	—	$	7,323
Net income (loss)		—		—		(81	)		—			—		(81	)
Common stock dividends		—		—		—			(55	)		—		(55	)
Parent tax matter indemnification		—		172		—			—			—		172

Balance, March 31, 2013	$	1,588	$	5,186	$	(1,720	)	$	2,305		$	—	$	7,359

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Operating revenues
Operating revenues	$	895		$	874
Operating revenues from affiliates		—			1

Total operating revenues		895			875

Operating expenses
Purchased power and fuel		265			300
Purchased power from affiliate		141			111
Operating and maintenance		164			173
Operating and maintenance from affiliates		24			30
Depreciation and amortization		57			53
Taxes other than income		41			31

Total operating expenses		692			698

Operating income		203			177

Other income and (deductions)
Interest expense		(26	)		(28	)
Interest expense to affiliates, net		(3	)		(3	)
Other, net		3			2

Total other income and (deductions)		(26	)		(29	)

Income before income taxes		177			148
Income taxes		55			51

Net income		122			97
Preferred security dividends		1			1

Net income on common stock	$	121		$	96

Comprehensive income, net of income taxes
Net income	$	122		$	97
Other comprehensive income, net of income taxes
Change in unrealized gain on marketable securities		—			1

Other comprehensive income		—			1

Comprehensive income	$	122		$	98

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	122		$	97
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		57			53
Deferred income taxes and amortization of investment tax credits		19			10
Other non-cash operating activities		39			40
Changes in assets and liabilities:
Accounts receivable		(50	)		31
Receivables from and payables to affiliates, net		1			12
Inventories		44			39
Accounts payable, accrued expenses and other current liabilities		(17	)		(71	)
Income taxes		29			76
Pension and non-pension postretirement benefit contributions		(11	)		(5	)
Other assets and liabilities		(38	)		(110	)

Net cash flows provided by operating activities		195			172

Cash flows from investing activities
Capital expenditures		(122	)		(96	)
Changes in intercompany money pool		(50	)		(35	)
Change in restricted cash		—			(3	)
Other investing activities		1			4

Net cash flows used in investing activities		(171	)		(130	)

Cash flows from financing activities
Dividends paid on common stock		(83	)		(87	)
Dividends paid on preferred securities		(1	)		(1	)

Net cash flows used in financing activities		(84	)		(88	)

Decrease in cash and cash equivalents		(60	)		(46	)
Cash and cash equivalents at beginning of period		362			194

Cash and cash equivalents at end of period	$	302		$	148

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	302	$	362
Accounts receivable, net ($322 and $289 gross accounts receivable pledged as collateral as of March 31, 2013 and December 31, 2012, respectively)
Customer		395		364
Other		138		161
Inventories, net
Fossil fuel		18		65
Materials and supplies		20		19
Deferred income taxes		40		40
Receivable from Exelon intercompany money pool		50		—
Prepaid utility taxes		96		21
Regulatory assets		33		32
Other		32		30

Total current assets		1,124		1,094

Property, plant and equipment, net		6,141		6,078
Deferred debits and other assets
Regulatory assets		1,389		1,378
Investments		23		22
Investments in affiliates		8		8
Receivable from affiliates		392		360
Prepaid pension asset		378		373
Other		36		40

Total deferred debits and other assets		2,226		2,181

Total assets	$	9,491	$	9,353

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term notes payable — accounts receivable agreement	$	210	$	210
Long-term debt due within one year		300		300
Accounts payable		224		244
Accrued expenses		97		82
Payables to affiliates		76		76
Customer deposits		49		51
Regulatory liabilities		205		169
Other		28		26

Total current liabilities		1,189		1,158

Long-term debt		1,648		1,647
Long-term debt to financing trusts		184		184
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		2,374		2,331
Asset retirement obligations		29		29
Non-pension postretirement benefits obligations		289		284
Regulatory liabilities		560		538
Other		111		113

Total deferred credits and other liabilities		3,363		3,295

Total liabilities		6,384		6,284

Commitments and contingencies
Preferred securities		87		87
Shareholder’s equity
Common stock		2,388		2,388
Retained earnings		631		593
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,020		2,982

Total liabilities and shareholders’ equity	$	9,491	$	9,353

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Accumulated Other Comprehensive Income, net		Total Shareholders’ Equity
Balance, December 31, 2012	$	2,388	$	593		$	1	$	2,982
Net income		—		122			—		122
Common stock dividends		—		(83	)		—		(83	)
Preferred security dividends		—		(1	)		—		(1	)

Balance, March 31, 2013	$	2,388	$	631		$	1	$	3,020

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Operating revenues
Operating revenues	$	876		$	694
Operating revenues from affiliates		4			3

Total operating revenues		880			697

Operating expenses
Purchased power and fuel		313			293
Purchased power from affiliate		113			92
Operating and maintenance		124			154
Operating and maintenance from affiliates		19			42
Depreciation and amortization		93			79
Taxes other than income		55			48

Total operating expenses		717			708

Operating income (loss)		163			(11	)

Other income and (deductions)
Interest expense		(33	)		(41	)
Other, net		5			6

Total other income and (deductions)		(28	)		(35	)

Income (loss) before income taxes		135			(46	)
Income taxes		55			(16	)

Net income (loss)		80			(30	)
Preference stock dividends		3			3

Net income (loss) on common stock	$	77		$	(33	)

Comprehensive income (loss)	$	80		$	(30	)

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In millions)	2013			2012
Cash flows from operating activities
Net (loss) income	$	80		$	(30	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation, amortization and accretion		93			79
Deferred income taxes and amortization of investment tax credits		73			40
Other non-cash operating activities		42			179
Changes in assets and liabilities:
Accounts receivable		(98	)		6
Receivables from and payables to affiliates, net		(22	)		31
Inventories		35			50
Accounts payable, accrued expenses and other current liabilities		(11	)		(22	)
Income taxes		(36	)		(57	)
Pension and non-pension postretirement benefit contributions		(5	)		(7	)
Other assets and liabilities		34			(11	)

Net cash flows provided by operating activities		185			258

Cash flows from investing activities
Capital expenditures		(134	)		(130	)
Change in restricted cash		(22	)		(19	)
Other investing activities		2			3

Net cash flows used in investing activities		(154	)		(146	)

Cash flows from financing activities
Dividends paid on preference stock		(3	)		(3	)
Change in restricted cash for dividends		(3	)		—
Other financing activities		1			(1	)

Net cash flows used in financing activities		(5	)		(4	)

Increase in cash and cash equivalents		26			108
Cash and cash equivalents at beginning of period		89			49

Cash and cash equivalents at end of period	$	115		$	157

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	115	$	89
Restricted cash and cash equivalents		3		—
Restricted cash and cash equivalents of variable interest entity		52		30
Accounts receivable, net
Customer		476		403
Other		135		117
Income taxes receivable		39		3
Inventories, net
Gas held in storage		12		51
Materials and supplies		35		31
Deferred income taxes		7		1
Prepaid utility taxes		28		57
Regulatory assets		148		190
Other		8		8

Total current assets		1,058		980

Property, plant and equipment, net		5,568		5,498
Deferred debits and other assets
Regulatory assets		522		522
Investments		5		5
Investments in affiliates		8		8
Prepaid pension asset		456		467
Other		22		26

Total deferred debits and other assets		1,013		1,028

Total assets	$	7,639	$	7,506

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	March 31, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Long-term debt due within one year	$	400	$	400
Long-term debt of variable interest entity due within one year		67		67
Accounts payable		186		195
Accrued expenses		100		106
Payables to affiliates		45		65
Customer deposits		69		71
Regulatory liabilities		47		29
Other		45		47

Total current liabilities		959		980

Long-term debt		1,446		1,446
Long-term debt to financing trust		258		258
Long-term debt of variable interest entity		265		265
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		1,738		1,658
Asset retirement obligations		7		8
Non-pension postretirement benefits obligations		227		229
Regulatory liabilities		218		214
Other		86		90

Total deferred credits and other liabilities		2,276		2,199

Total liabilities		5,204		5,148

Commitments and contingencies
Shareholder’s equity
Common stock		1,360		1,360
Retained earnings		885		808

Total shareholder’s equity		2,245		2,168

Preference stock not subject to mandatory redemption		190		190

Total equity		2,435		2,358

Total liabilities and shareholders’ equity	$	7,639	$	7,506

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(In millions)	Common Stock		Retained Earnings			Total Shareholders’ Equity			Preference stock not subject to mandatory redemption		Total Equity
Balance, December 31, 2012	$	1,360	$	808		$	2,168		$	190	$	2,358
Net income		—		80			80			—		80
Preference stock dividends		—		(3	)		(3	)		—		(3	)

Balance, March 31, 2013	$	1,360	$	885		$	2,245		$	190	$	2,435

See the Combined Notes to Consolidated Financial Statements

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise noted)

1. Basis of Presentation (Exelon, Generation, ComEd, PECO and BGE)

Exelon is a utility services holding company engaged through its principal subsidiaries in the energy generation and energy distribution businesses. Prior to March 12, 2012, Exelon’s principal, wholly owned subsidiaries included ComEd, PECO and Generation. On March 12, 2012, Constellation merged into Exelon with Exelon continuing as the surviving corporation pursuant to the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”). As a result of the merger transaction, Generation now includes the former Constellation generation and customer supply operations. BGE, formerly Constellation’s regulated utility subsidiary, is now a subsidiary of Exelon. Refer to Note 4 — Merger and Acquisitions for further information regarding the merger transaction.

The energy generation business includes:

•

Generation: The integrated business consists of owned and contracted generation and investments in electric generating facilities that are marketed through its leading customer facing activities. The customer facing activities include wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products, risk management services and investments in natural gas exploration and production activities.

The energy delivery businesses include:

•

ComEd: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in northern Illinois, including the City of Chicago.

•

PECO: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in southeastern Pennsylvania, including the City of Philadelphia, and the purchase and regulated retail sale of natural gas and the provision of distribution services in the Pennsylvania counties surrounding the City of Philadelphia.

•

BGE: Purchase and regulated retail sale of electricity and the provision of distribution and transmission services in central Maryland, including the City of Baltimore, and the purchase and regulated retail sale of natural gas and the provision of distribution services in central Maryland, including the City of Baltimore.

For financial statement purposes, beginning on March 12, 2012, disclosures that solely relate to Constellation or BGE activities now also apply to Exelon, unless otherwise noted. When appropriate, Exelon, Generation, ComEd, PECO and BGE are named specifically for their related activities and disclosures.

Exelon did not apply push-down accounting to BGE. As a result, BGE continues to maintain its reporting requirements as an SEC registrant. The information disclosed for BGE represents the activity of the standalone entity for the three months ended March 31, 2013 and 2012 and the financial position as of March 31, 2013 and December 31, 2012. However, for Exelon’s financial reporting, Exelon is reporting BGE activity for the three months ended March 31, 2013 and from March 12, 2012 through March 31, 2012 and the financial position as of March 31, 2013 and December 31, 2012.

Each of the Registrant’s Consolidated Financial Statements includes the accounts of its subsidiaries. All intercompany transactions have been eliminated.

For the three months ended March 31, 2013, BGE recorded a $2 million correcting adjustment to decrease amortization expense related to regulatory assets that was originally recorded during 2012. Exelon and BGE have concluded that this correcting adjustment is not material to their results of operations or cash flows for the three months ended March 31, 2013 or any prior period. Exelon and BGE do not expect this correcting adjustment to have a material impact on their results of operations or cash flows for the year ended December 31, 2013.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

The accompanying consolidated financial statements as of March 31, 2013 and 2012 and for the three months then ended are unaudited but, in the opinion of the management of each Registrant include all adjustments that are considered necessary for a fair statement of the Registrants’ respective financial statements in accordance with GAAP. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The December 31, 2012 Consolidated Balance Sheets were obtained from audited financial statements. Certain prior year amounts in BGE’s Consolidated Statements of Cash Flows, Exelon’s, Generation’s and BGE’s Consolidated Statements of Operations and Comprehensive Income and in Exelon’s, Generation’s, ComEd’s, and BGE’s Consolidated Balance Sheets have been reclassified between line items for comparative purposes. The reclassifications did not materially affect any of the Registrants’ net income or cash flows from operating activities. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for fiscal year ended December 31, 2013. These Combined Notes to Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These notes should be read in conjunction with the Notes to Combined Consolidated Financial Statements of all Registrants included in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA of their respective 2012 Form 10-K Reports.

2. New Accounting Pronouncements (Exelon, Generation, ComEd, PECO and BGE)

The following recently issued accounting standards were adopted by the Registrants during the period.

Presentation of Items Reclassified out of Accumulated Other Comprehensive Income

In February 2013, the FASB issued authoritative guidance requiring entities to present either in the notes or parenthetically on the face of the financial statements, reclassifications from each component of accumulated other comprehensive income and the affected income statement line items. Entities only need to disclose the affected income statement line item for components reclassified to net income in their entirety; otherwise, a cross-reference to the related note should be provided. This guidance is effective for the Registrants for periods beginning after December 15, 2012 and is required to be applied prospectively. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Registrants’ results of operations, cash flows or financial positions. See Note 15 — Changes in Accumulated Other Comprehensive Income for the new disclosures.

Disclosures About Offsetting Assets and Liabilities

In December 2011 (and amended in January 2013), the FASB issued authoritative guidance requiring entities to disclose both gross and net information about recognized derivative instruments, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities borrowing or lending transactions that are offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the balance sheet. This guidance is effective for the Registrants for periods beginning on or after January 1, 2013 and is required to be applied retrospectively. This guidance is primarily applicable to certain derivative transactions for Exelon and Generation. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Registrants’ results of operations, cash flows or financial positions. See Note 9 — Derivative Financial Instruments for the new disclosures.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

3. Variable Interest Entities (Exelon, Generation, ComEd, PECO and BGE)

Under the applicable authoritative guidance, a VIE is a legal entity that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity owners who do not have the obligation to absorb expected losses or the right to receive the expected residual returns of the entity. Companies are required to consolidate a VIE if they are its primary beneficiary, which is the enterprise that has the power to direct the activities that most significantly impact the entity’s economic performance.

As of March 31, 2013 and December 31, 2012, the Registrant’s consolidated five VIEs or VIE groups for which the Registrants were the primary beneficiary, and the Registrants had significant interests in nine other VIEs for which the Registrants do not have the power to direct the entities’ activities and, accordingly, were not the primary beneficiary.

Consolidated Variable Interest Entities

The Registrants’ consolidated VIEs consist of:

•

BondCo, a special purpose bankruptcy remote limited liability company formed by BGE to acquire, hold, and issue and service bonds secured by rate stabilization property;

•

a retail gas group formed to enter into a collateralized gas supply agreement with a third-party gas supplier;

•

a retail power supply company;

•

a group of solar project limited liability companies formed to build, own and operate solar power facilities, and

•

several wind projects designed to develop, construct and operate wind generation facilities.

For each of the consolidated VIEs, except as otherwise noted:

•

The assets of the VIEs are restricted and can only be used to settle obligations of the respective VIE. In the case of BondCo, BGE is required to remit all payments it receives from all residential customers for non-bypassable, rate stabilization charges to BondCo. During the three months ended March 31, 2013 and 2012, BGE remitted $22 million and $20 million, respectively, to BondCo.

•

Except for providing capital funding to the solar entities for ongoing construction of the solar power facilities and a $75 million parental guarantee to the third-party gas supplier in support of the retail gas group, during the three months ended March 31, 2013 and year ended December 31, 2012:

•

Exelon, Generation and BGE did not provide any additional financial support to the VIEs;

•

Exelon, Generation and BGE did not have any contractual commitments or obligations to provide financial support to the VIEs; and

•

the creditors of the VIEs did not have recourse to Exelon’s, Generation’s or BGE’s general credit.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the Registrants’ consolidated financial statements at March 31, 2013 and December 31, 2012 are as follows:


	March 31, 2013						December 31, 2012
	Exelon(a)(b)		Generation(b)		BGE		Exelon(a)(b)		Generation(b)		BGE
Current assets	$	551	$	491	$	52	$	550	$	519	$	30
Noncurrent assets		1,947		1,918		—		1,802		1,762		—

Total assets	$	2,498	$	2,409	$	52	$	2,352	$	2,281	$	30

Current liabilities	$	575	$	492	$	76	$	685	$	613	$	71
Noncurrent liabilities		986		693		265		837		532		265

Total liabilities	$	1,561	$	1,185	$	341	$	1,522	$	1,145	$	336

(a)	Includes certain purchase accounting adjustments not pushed down to the BGE standalone entity.

(b)

Includes total assets of $116 million and total liabilities of $59 million as of March 31, 2013 and total asset of $116 million and total liabilities of $62 million as of December 31, 2012 related to deferred and accrued taxes that are not restricted for use by the consolidated VIEs that have recorded such assets and liabilities.

Unconsolidated Variable Interest Entities

Exelon’s and Generation’s variable interests in unconsolidated VIEs generally include three transaction types: (1) equity method investments, (2) energy purchase and sale contracts, and (3) fuel purchase commitments. For the equity method investments, the carrying amount of the investments is reflected on their Consolidated Balance Sheets in investments in affiliates. For the energy purchase and sale contracts and the fuel purchase commitments (commercial agreements), the carrying amount of assets and liabilities in Exelon’s and Generation’s Consolidated Balance Sheets that relate to their involvement with the VIEs are predominately related to working capital accounts and generally represent the amounts owed by, or owed to, Exelon and Generation for the deliveries associated with the current billing cycles under the commercial agreements. Further, except as noted in the table above, Exelon and Generation have not provided material debt or equity support, or provided liquidity arrangements, performance guarantees or other commitments associated with these commercial agreements.

The Registrants’ unconsolidated VIEs consist of:

•

Energy purchase and sale agreements with VIEs for which Generation has concluded that consolidation is not required.

•

ZionSolutions, LLC asset sale agreement with EnergySolutions, Inc and certain subsidiaries in which Generation has a variable interest but has concluded that consolidation is not required.

•

Fuel purchase commitments where Generation has a variable interest, but the variable interest is not significant and Generation is not the primary beneficiary, thus consolidation is not required.

•

ComEd’s, PECO’s and BGE’s retail operations frequently include the purchase of electricity and RECs through procurement contracts of varying durations. None of ComEd, PECO or BGE considers itself the primary beneficiary of any VIEs as a result of these commercial arrangements.

•

Investment in energy development projects for which Generation has concluded that consolidation is not required.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

As of March 31, 2013 and December 31, 2012, Exelon and Generation did have significant variable interests in nine VIEs for which they were not the primary beneficiary; including certain equity method investments and certain commercial agreements. The following tables present summary information about the significant unconsolidated VIE entities:


March 31, 2013	Commercial Agreement VIEs		Equity Method Investment VIEs		Total
Total assets(a)	$	360	$	338	$	698
Total liabilities(a)		186		95		281
Registrants’ ownership interest(a)		—		98		98
Other ownership interests(a)		174		145		319
Registrants’ maximum exposure to loss:
Letters of credit		1		—		1
Carrying amount of equity method investments		—		78		78
Contract intangible asset		8		—		8
Debt and payment guarantees		—		5		5
Net assets pledged for Zion Station decommissioning(b)		49		—		49


December 31, 2012	Commercial Agreement VIEs		Equity Method Investment VIEs		Total
Total assets(a)	$	386	$	354	$	740
Total liabilities(a)		219		114		333
Registrants’ ownership interest(a)		—		97		97
Other ownership interests(a)		167		143		310
Registrants’ maximum exposure to loss:
Letters of credit		5		—		5
Carrying amount of equity method investments		—		77		77
Contract intangible asset		8		—		8
Debt and payment guarantees		—		5		5
Net assets pledged for Zion Station decommissioning(b)		50		—		50

(a)	These items represent amounts on the unconsolidated VIE balance sheets, not on Exelon’s or Generation’s Consolidated Balance Sheets. These items are included to provide information regarding the relative size of the unconsolidated VIEs.

(b)

These items represent amounts on Generation’s and Exelon’s Consolidated Balance Sheets related to the asset sale agreement with ZionSolutions, LLC. The net assets pledged for Zion Station decommissioning includes gross pledged assets of $580 million and $614 million as of March 31, 2013 and December 31, 2012, respectively; offset by payables to ZionSolutions LLC of $531 million and $564 million as of March 31, 2013 and December 31, 2012, respectively. These items are included to provide information regarding the relative size of the ZionSolutions LLC unconsolidated VIE.

For each unconsolidated VIE, Exelon and Generation assess the risk of a loss equal to their maximum exposure to be remote and, accordingly have not recognized a liability associated with any portion of the maximum exposure to loss. In addition, there are no agreements with, or commitments by, third parties that would affect the fair value or risk of their variable interests in these variable interest entities.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

4. Merger and Acquisitions

Merger with Constellation (Exelon, Generation, ComEd, PECO and BGE)

Description of Transaction

On March 12, 2012, Exelon completed the merger contemplated by the Merger Agreement, among Exelon, Bolt Acquisition Corporation, a wholly owned subsidiary of Exelon (Merger Sub), and Constellation. As a result of that merger, Merger Sub was merged into Constellation (the Initial Merger) and Constellation became a wholly owned subsidiary of Exelon. Following the completion of the Initial Merger, Exelon and Constellation completed a series of internal corporate organizational restructuring transactions. Constellation merged with and into Exelon, with Exelon continuing as the surviving corporation (the Upstream Merger). Simultaneously with the Upstream Merger, Constellation’s interest in RF HoldCo LLC, which holds Constellation’s interest in BGE, was transferred to Exelon Energy Delivery Company, LLC, a wholly owned subsidiary of Exelon that also owns Exelon’s interests in ComEd and PECO. Following the Upstream Merger and the transfer of RF HoldCo LLC, Exelon contributed to Generation certain subsidiaries, including those with generation and customer supply operations that were acquired from Constellation as a result of the Initial Merger and the Upstream Merger.

Regulatory Matters

In December 2011, Exelon and Constellation reached a settlement with the State of Maryland and the City of Baltimore and other interested parties in connection with the regulatory proceedings related to the merger that were pending before the MDPSC. As part of this settlement and the application for approval of the merger by MDPSC, Exelon agreed to provide a package of benefits to BGE customers, the City of Baltimore and the State of Maryland, resulting in an estimated direct investment in the State of Maryland of more than $1 billion.

The direct investment estimate includes $95 million to $120 million for the requirement to cause construction of a headquarters building in Baltimore for Generation’s competitive energy businesses. On March 20, 2013, Generation signed a 20 year lease agreement that is contingent upon the developer obtaining financing for the construction of the building. Once the financing conditions are met, construction will commence and the building is expected to be ready for occupancy within 2 years. The direct investment estimate also includes $625 million for Exelon’s and Generation’s commitment to develop or assist in development of 285 — 300 MWs of new generation in Maryland, expected to be completed over a period of 10 years. Such costs, which are expected to be primarily capital in nature, will be recognized as incurred. As of March 31, 2013, amounts reflected in the Exelon and Generation consolidated financial statements for these expenditure commitments were immaterial.

The settlement agreement contemplates various options for complying with the new generation development commitments, including building or acquiring generating assets, making subsidy or compliance payments, or in circumstances in which the generation build is delayed, making liquidated damages payments. Exelon and Generation expect that the majority of these commitments will be satisfied by building or acquiring generating assets, and therefore will be primarily capital in nature and recognized as incurred. If in the future Exelon determines that it is probable that it will make subsidy, compliance or liquidated damages payments related to the new generation development commitments, Exelon will record a liability at that time. As of March 31, 2013, it is reasonably possible that Exelon will be required to make subsidy or liquidated damages payments of approximately $40 million rather than build one of the generation projects contemplated by the commitments, given that the generation build is dependent upon the passage of legislation and other conditions that Exelon does not control.

Associated with certain of the regulatory approvals required for the merger, on November 30, 2012, a subsidiary of Generation sold three Maryland generating stations and associated assets, Brandon Shores and H.A. Wagner in Anne Arundel County, Maryland, and C.P. Crane in Baltimore County, Maryland, to Raven Power Holdings LLC (Raven Power), a subsidiary of Riverstone Holdings LLC. In 2012, Exelon and Generation

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

recorded a pre-tax loss of $272 million to reflect the difference between the sales price and the carrying value of the generating stations and associated assets. In the first quarter of 2013, Exelon and Generation recorded a pre-tax gain of $8 million to reflect the final settlement of the sales price with Raven Power.

Accounting for the Merger Transaction

The fair value of Constellation’s non-regulated business assets acquired and liabilities assumed was determined based on significant estimates and assumptions that are judgmental in nature, including projected future cash flows (including timing); discount rates reflecting risk inherent in the future cash flows; and future market prices. There were also judgments made to determine the expected useful lives assigned to each class of assets acquired and duration of liabilities assumed.

The financial statements of BGE do not include fair value adjustments for assets or liabilities subject to rate-setting provisions for BGE. BGE is subject to the rate-setting authority of FERC and the MDPSC and is accounted for pursuant to the accounting guidance for regulated operations. The rate-setting and cost recovery provisions currently in place for BGE provide revenue derived from costs including a return on investment of assets and liabilities included in rate base. Except for debt, fuel supply contracts and regulatory assets not earning a return, the fair values of BGE’s tangible and intangible assets and liabilities subject to these rate-setting provisions are assumed to approximate their carrying values and, therefore, do not reflect any net adjustments related to these amounts. For BGE’s debt, fuel supply contracts and regulatory assets not earning a return, the difference between fair value and book value of BGE’s assets acquired and liabilities assumed is recorded as a regulatory asset and liability at Exelon Corporate as Exelon did not apply push-down accounting to BGE. See Note 1 — Basis of Presentation for additional information on BGE’s push-down accounting treatment. Also see Note 5 — Regulatory Matters for additional information on BGE’s regulatory assets.

The preliminary valuations performed in the first quarter of 2012 were updated in the second, third and fourth quarters of 2012, with the most significant adjustments to the preliminary valuation amounts having been made to the fair values assigned to the acquired power supply and fuel contracts, unregulated property, plant and equipment and investments in affiliates. There were no significant adjustments to the purchase price allocation in the first quarter of 2013 and the purchase price allocation is now final.

The purchase price allocation of the Initial Merger of Exelon with Constellation and Exelon’s contribution of certain subsidiaries of Constellation to Generation at March 31, 2013 was as follows:


Purchase Price Allocation, excluding amortization	Exelon		Generation
Current assets	$	4,936	$	3,638
Property, plant and equipment		9,342		4,054
Unamortized energy contracts		3,218		3,218
Other intangibles, trade name and retail relationships		457		457
Investment in affiliates		1,942		1,942
Pension and OPEB regulatory asset		740		—
Other assets		2,265		1,266

Total assets		22,900		14,575

Current liabilities		3,408		2,804
Unamortized energy contracts		1,722		1,512
Long-term debt, including current maturities		5,632		2,972
Noncontrolling interest		90		90
Deferred credits and other liabilities and preferred securities		4,683		1,933

Total liabilities, preferred securities and noncontrolling interest		15,535		9,311

Total purchase price	$	7,365	$	5,264

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

Intangible Assets Recorded

For the power supply and fuel contracts acquired from Constellation, the difference between the contract price and the market price at the date of the merger was recognized as either an intangible asset or liability based on whether the contracts were in or out-of-the-money. The fair value amounts are amortized over the life of the contract in relation to the present value of the underlying cash flows as of the merger date. Amortization expense and income are recorded through purchased power and fuel expense or operating revenues. Exelon and Generation present separately in their Consolidated Balance Sheets the unamortized energy contract assets and liabilities for these contracts. Exelon’s and Generation’s amortization expense for the three months ended March 31, 2013 and the period March 12, 2012 to March 31, 2012 amounted to $170 million and $131 million, respectively. This amortization expense excludes the $19 million and $9 million in amortization of the regulatory asset for the three months ended March 31, 2013 and the period March 12, 2012 to March 31, 2012 and equally offsetting amortization of the fuel supply contract liability recorded at Exelon Corporate in the Consolidated Statement of Operations. The weighted-average amortization period is approximately 1.5 years.

Exelon’s and Generation’s straight line amortization expense for the fair value of the Constellation trade name intangible asset for the three months ended March 31, 2013 and the period March 12, 2012 to March 31, 2012 amounted to $6 million and $2 million, respectively. The amortization period is approximately 10 years. The trade name intangible asset is included in deferred debits and other assets within Exelon’s and Generation’s Consolidated Balance Sheets.

The intangible assets for the fair value of the retail relationships are amortized as amortization expense on a straight line basis over the useful life of the underlying assets averaging approximately 12.4 years. Exelon’s and Generation’s straight line amortization expense for the three months ended March 31, 2013 and the period March 12, 2012 to March 31, 2012 amounted to $5 million and $1 million, respectively. The retail relationships intangible assets are included in deferred debits and other assets within Exelon’s and Generation’s Consolidated Balance Sheets.

Exelon’s intangible assets and liabilities acquired through the merger with Constellation included in its Consolidated Balance Sheets, along with the future estimated amortization, were as follows as of March 31, 2013:


										Estimated amortization expense
Description	Weighted Average Amortization		Gross		Accumulated Amortization			Net		Remainder of 2013		2014		2015		2016			2017			2018 and Beyond
Unamortized energy contracts, net(a)		1.5	$	1,496	$	(1,133	)	$	363	$	243	$	73	$	19	$	(31	)	$	(22	)	$	81
Trade name		10.0		243		(26	)		217		18		24		24		24			24			103
Retail relationships		12.4		214		(20	)		194		15		19		19		19			19			103

Total, net			$	1,953	$	(1,179	)	$	774	$	276	$	116	$	62	$	12		$	21		$	287

(a)	Includes the fair value of BGE’s power and gas supply contracts of $70 million for which an offsetting regulatory asset was also recorded.

Impact of Merger

It is impracticable to determine the overall financial statement impact for the Constellation subsidiaries contributed down to Generation following the Upstream Merger for the three months ended March 31, 2013 and 2012. Upon closing of the merger, the operations of these Constellation subsidiaries were integrated into Generation’s operations and are therefore not fully distinguishable after the merger.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

The impact of BGE on Exelon’s Consolidated Statement of Operations and Comprehensive Income includes operating revenues of $880 million and net income of $80 million during the three months ended March 31, 2013, and operating revenues of $52 million and net loss of $65 million during the three months ended March 31, 2012.

During the three months ended March 31, 2013, Exelon, Generation, ComEd, PECO and BGE incurred merger and integration-related costs of $33 million, $23 million, $4 million, $3 million and $2 million, respectively. Of these amounts, Exelon, ComEd and BGE deferred $6 million, $4 million and $2 million as a regulatory asset as of March 31, 2013. Additionally, Exelon and BGE established a regulatory asset of $6 million as of March 31, 2013 for previously incurred 2012 merger and integration-related costs.

During the three months ended March 31, 2012, Exelon, Generation, ComEd, PECO and BGE incurred merger and integration-related costs of $516 million, $110 million, $18 million, $7 million and $169 million, respectively. Of these amounts, Exelon, ComEd and BGE deferred $32 million, $16 million and $16 million as a regulatory asset as of March 31, 2012. The costs incurred are classified primarily within Operating and Maintenance Expense in the Registrants’ respective Consolidated Statements of Operations and Comprehensive Income, with the exception of the BGE customer rate credit and the credit facility fees, which are included as a reduction to operating revenues and other, net, respectively, for the three months ended March 31, 2012.

Severance Costs

The Registrants have an ongoing severance plan under which, in general, the longer an employee worked prior to termination the greater the amount of severance benefits. The Registrants record a liability and expense or regulatory asset for severance once terminations are probable of occurrence and the related severance benefits can be reasonably estimated. For severance benefits that are incremental to its ongoing severance plan (“one-time termination benefits”), the Registrants measure the obligation and record the expense at fair value at the communication date if there are no future service requirements, or, if future service is required to receive the termination benefit, ratably over the required service period.

Upon closing the merger with Constellation, Exelon recorded a severance accrual for the anticipated employee position reductions as a result of the post-merger integration. The majority of these positions are corporate and Generation support positions. Since then, Exelon has identified specific employees to be severed pursuant to the merger-related staffing and selection process; as well as employees that were previously identified for severance but have since accepted another position within Exelon and are no longer receiving a severance benefit. Exelon adjusts its accrual each quarter to reflect its best estimate of remaining severance costs. The amount of severance expense associated with the post-merger integration recognized for the three months ended March 31, 2013 and March 31, 2012, for Exelon is $3 million and $83 million, which includes $3 million and $45 million for Generation, $0 million and $11 million for ComEd, $0 million and $5 million for PECO and $0 million and $16 million for BGE, respectively. Estimated costs to be incurred after March 31, 2013 are not material. In addition, certain employees identified during the staffing and selection process also receive pension and other postretirement benefits that are deemed contractual termination benefits, which the Registrants recorded during the second quarter of 2012.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in millions, except per share data, unless otherwise noted)

For the three months ended March 31, 2013 and March 31, 2012, the Registrants recorded the following severance benefits costs associated with the identified job reductions within operating and maintenance expense in their Consolidated Statements of Operations, except for ComEd and BGE:


Three Months Ended March 31, 2013
Severance Benefits(a)	Exelon		Generation		ComEd(b)		PECO		BGE(c)
Severance charges	$	2	$	2	$	—	$	—	$	—
Stock compensation		1		1		—		—		—

Total severance benefits	$	3	$	3	$	—	$	—	$	—


Three Months Ended March 31, 2012
Severance Benefits(a)	Exelon		Generation		ComEd(b)		PECO		BGE(c)
Severance charges	$	67	$	35	$	9	$	3	$	14
Stock compensation		8		5		1		1		1
Other charges		8		5		1		1		1

Total severance benefits	$	83	$	45	$	11	$	5	$	16

(a)

The amounts above include $3 million and $29 million at Generation, $0 million and $11 million at ComEd, $0 million and $5 million at PECO, and $0 million and $5 million at BGE, for amounts billed by BSC through intercompany allocations for the three months ended March 31, 2013 and 2012, respectively.

(b)	ComEd established regulatory assets of $0 million and $11 million for severance benefits costs for the three months ended March 31, 2013 and 2012, respectively. The majority of these costs are expected to be recovered over a five-year period.

(c)	BGE established regulatory assets of $0 million and $16 million for severance benefits costs for the three months ended March 31, 2013 and 2012, respectively. The majority of these costs are being recovered over a five-year period beginning in March 2013.

Amounts included in the table below represent the severance liability recorded by Exelon, Generation, ComEd, PECO and BGE for employees of those Registrants and exclude amounts billed through intercompany allocations:


Three Months Ended March 31, 2013
Severance liability	Exelon		Generation		ComEd		PECO	BGE
Balance at December 31, 2012	$	111	$	33	$	1	$