Edgar Filing: EXELON CORP

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 June 30, 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 June 30, 2013 was:


Exelon Corporation Common Stock, without par value		856,563,385
Exelon Generation Company, LLC		not applicable
Commonwealth Edison Company Common Stock, $12.50 par value		127,016,818
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		45

	6. Investment in Constellation Energy Nuclear Group, LLC		59

	7. Impairment of Long-Lived Assets		61

	8. Goodwill		63


		Page No.

	9. Fair Value of Financial Assets and Liabilities		64

	10. Derivative Financial Instruments		89

	11. Debt and Credit Agreements		105

	12. Income Taxes		109

	13. Nuclear Decommissioning		113

	14. Retirement Benefits		116

	15. Stock-Based Compensation Plans		119

	16. Changes in Accumulated Other Comprehensive Income		123

	17. Earnings Per Share and Equity		125

	18. Commitments and Contingencies		126

	19. Supplemental Financial Information		143

	20. Segment Information		148

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		154

	Exelon Corporation		154

	General		154

	Executive Overview		155

	Critical Accounting Policies and Estimates		173

	Results of Operations		174

	Liquidity and Capital Resources		203

	Contractual Obligations and Off-Balance Sheet Arrangements		212

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		213

ITEM 4.	CONTROLS AND PROCEDURES		222

PART II.	OTHER INFORMATION		223

ITEM 1.	LEGAL PROCEEDINGS		223

ITEM 1A.	RISK FACTORS		223

ITEM 4.	MINE SAFETY DISCLOSURES		223

ITEM 6.	EXHIBITS		223

SIGNATURES			225

	Exelon Corporation		225

	Exelon Generation Company, LLC		225

	Commonwealth Edison Company		225

	PECO Energy Company		226

	Baltimore Gas and Electric Company		226

CERTIFICATION EXHIBITS			227

	Exelon Corporation		227, 237

	Exelon Generation Company, LLC		229, 239

	Commonwealth Edison Company		231, 241

	PECO Energy Company		233, 243

	Baltimore Gas and Electric Company		235, 245


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


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
CSAPR		Cross-State Air Pollution Rule
CTC		Competitive Transition Charge
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.


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
mmcf		Million Cubic Feet
Moody's		Moody's Investor Service
MOPR		Minimum Offer Price Rule
MRV		Market-Related Value
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


GLOSSARY OF TERMS AND ABBREVIATIONS

Other Terms and Abbreviations
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
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

This Report contains certain 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 Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company and Baltimore Gas and Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2012 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 19; (2) Exelon’s First Quarter 2013 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18; and (3) other factors discussed in 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 June 30,						Six Months Ended June 30,
(In millions, except per share data)	2013			2012			2013			2012
Operating revenues	$	6,141		$	5,966		$	12,223		$	10,656
Operating expenses
Purchased power and fuel		2,419			2,606			5,400			4,371
Operating and maintenance		1,892			1,841			3,656			3,809
Depreciation and amortization		533			494			1,076			876
Taxes other than income		271			254			548			448

Total operating expenses		5,115			5,195			10,680			9,504

Equity in loss of unconsolidated affiliates		(21	)		(57	)		(30	)		(79	)
Operating income		1,005			714			1,513			1,073

Other income and (deductions)
Interest expense		(246	)		(250	)		(863	)		(439	)
Interest expense to affiliates, net		(6	)		(6	)		(13	)		(12	)
Other, net		(17	)		(43	)		155			152

Total other income and (deductions)		(269	)		(299	)		(721	)		(299	)

Income before income taxes		736			415			792			774
Income taxes		239			126			294			284

Net income		497			289			498			490
Net income attributable to noncontrolling interests, preferred security dividends and redemption and preference stock dividends		7			3			12			4

Net income attributable to common shareholders		490			286			486			486

Comprehensive income (loss), net of income taxes
Net income		497			289			498			490
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		—			1			1			1
Actuarial loss reclassified to periodic cost		50			41			100			82
Transition obligation reclassified to periodic cost		—			—			—			2
Pension and non-pension postretirement benefit plans valuation adjustment		2			(3	)		77			(11	)
Deferred compensation unit valuation adjustment		10			—			10			—
Change in unrealized (loss) gain on cash flow hedges		(65	)		(156	)		(123	)		59
Change in unrealized income on equity investments		8			6			36			6
Change in unrealized loss on foreign currency translation		(5	)		(2	)		(6	)		(2	)
Change in unrealized loss on marketable securities		—			(1	)		(1	)		—

Other comprehensive income (loss)		—			(114	)		94			137

Comprehensive income	$	497		$	175		$	592		$	627

Average shares of common stock outstanding:
Basic		856			853			856			779
Diluted		860			856			859			781

Earnings per average common share:
Basic	$	0.57		$	0.34		$	0.57		$	0.62
Diluted	$	0.57		$	0.33		$	0.57		$	0.62

Dividends per common share	$	0.31		$	0.53		$	0.84		$	1.05

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	498		$	490
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		1,972			1,895
Deferred income taxes and amortization of investment tax credits		(468	)		227
Net fair value changes related to derivatives		(28	)		(323	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(27	)		(70	)
Other non-cash operating activities		576			959
Changes in assets and liabilities:
Accounts receivable		131			414
Inventories		(18	)		45
Accounts payable, accrued expenses and other current liabilities		(583	)		(1,063	)
Option premiums paid, net		(10	)		(108	)
Counterparty collateral (posted) received, net		(259	)		451
Income taxes		705			259
Pension and non-pension postretirement benefit contributions		(284	)		(90	)
Other assets and liabilities		133			(373	)

Net cash flows provided by operating activities		2,338			2,713

Cash flows from investing activities
Capital expenditures		(2,518	)		(2,800	)
Proceeds from nuclear decommissioning trust fund sales		1,448			5,371
Investment in nuclear decommissioning trust funds		(1,565	)		(5,483	)
Cash and restricted cash acquired from Constellation		—			964
Proceeds from sales of investments		4			12
Purchases of investments		(3	)		(5	)
Change in restricted cash		22			(15	)
Other investing activities		63			(12	)

Net cash flows used in investing activities		(2,549	)		(1,968	)

Cash flows from financing activities
Changes in short-term debt		662			179
Issuance of long-term debt		509			850
Retirement of long-term debt		(616	)		(649	)
Redemption of preferred securities		(93	)		—
Dividends paid on common stock		(716	)		(773	)
Dividends paid to former Constellation shareholders		—			(51	)
Proceeds from employee stock plans		32			42
Other financing activities		(62	)		(10	)

Net cash flows used in financing activities		(284	)		(412	)

(Decrease) increase in cash and cash equivalents		(495	)		333
Cash and cash equivalents at beginning of period		1,486			1,016

Cash and cash equivalents at end of period	$	991		$	1,349

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	956	$	1,411
Cash and cash equivalents of variable interest entities		35		75
Restricted cash and investments		61		86
Restricted cash and investments of variable interest entities		53		47
Accounts receivable, net
Customer ($286 and $289 gross accounts receivable pledged as collateral as of June 30, 2013 and December 31, 2012, respectively)		2,609		2,795
Other		1,224		1,141
Accounts receivable, net, variable interest entities		252		292
Mark-to-market derivative assets		845		938
Unamortized energy contract assets		573		886
Inventories, net
Fossil fuel		214		246
Materials and supplies		805		768
Deferred income taxes		288		131
Regulatory assets		804		764
Other		690		560

Total current assets		9,409		10,140

Property, plant and equipment, net		45,994		45,186
Deferred debits and other assets
Regulatory assets		6,519		6,497
Nuclear decommissioning trust funds		7,463		7,248
Investments		1,171		1,184
Investments in affiliates		22		22
Investment in CENG		1,876		1,849
Goodwill		2,625		2,625
Mark-to-market derivative assets		772		937
Unamortized energy contracts assets		856		1,073
Pledged assets for Zion Station decommissioning		538		614
Other		1,175		1,186

Total deferred debits and other assets		23,017		23,235

Total assets	$	78,420	$	78,561

See the Combined Notes to Consolidated Financial Statements

EXELON CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013			December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings	$	662		$	—
Short-term notes payable — accounts receivable agreement		210			210
Long-term debt due within one year		1,944			975
Long-term debt due within one year of variable interest entities		87			72
Accounts payable		2,210			2,446
Accounts payable of variable interest entities		147			202
Accrued expenses		1,382			1,800
Deferred income taxes		45			58
Regulatory liabilities		357			368
Mark-to-market derivative liabilities		147			352
Unamortized energy contract liabilities		360			455
Other		823			853

Total current liabilities		8,374			7,791

Long-term debt		16,121			17,190
Long-term debt to financing trusts		648			648
Long-term debt of variable interest entities		449			508
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		11,519			11,551
Asset retirement obligations		5,202			5,074
Pension obligations		3,164			3,428
Non-pension postretirement benefit obligations		2,706			2,662
Spent nuclear fuel obligation		1,020			1,020
Regulatory liabilities		4,044			3,981
Mark-to-market derivative liabilities		178			281
Unamortized energy contract liabilities		399			528
Payable for Zion Station decommissioning		373			432
Other		2,635			1,650

Total deferred credits and other liabilities		31,240			30,607

Total liabilities		56,832			56,744

Commitments and contingencies
Preferred securities of subsidiary		—			87
Shareholders' equity
Common stock (No par value, 2,000 shares authorized, 857 shares and 855 shares outstanding at June 30, 2013 and December 31, 2012, respectively)		16,693			16,632
Treasury stock, at cost (35 shares at June 30, 2013 and December 31, 2012, respectively)		(2,327	)		(2,327	)
Retained earnings		9,660			9,893
Accumulated other comprehensive loss, net		(2,673	)		(2,767	)

Total shareholders' equity		21,353			21,431
BGE preference stock not subject to mandatory redemption		193			193
Noncontrolling interest		42			106

Total equity		21,588			21,730

Total liabilities and shareholders' equity	$	78,420		$	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)		—		—		—			486			—			(1	)		13			498
Long-term incentive plan activity		1,782		61		—			—			—			—			—			61
Common stock dividends		—		—		—			(719	)		—			—			—			(719	)
Consolidated VIE dividend to non-controlling interest		—		—		—			—			—			(63	)		—			(63	)
Redemption of preferred securities		—		—		—			—			—			—			(6	)		(6	)
Preferred and preference stock dividends		—		—		—			—			—			—			(7	)		(7	)
Other comprehensive income net of income taxes of $(67)		—		—		—			—			94			—			—			94

Balance, June 30, 2013		891,307	$	16,693	$	(2,327	)	$	9,660		$	(2,673	)	$	42		$	193		$	21,588

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 June 30,						Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Operating revenues
Operating revenues	$	3,718		$	3,345		$	6,859		$	5,718
Operating revenues from affiliates		352			420			744			790

Total operating revenues		4,070			3,765			7,603			6,508

Operating expenses
Purchased power and fuel		1,946			1,852			4,114			2,896
Operating and maintenance		1,041			990			2,007			2,029
Operating and maintenance from affiliates		148			188			295			327
Depreciation and amortization		210			204			424			357
Taxes other than income		101			90			194			164

Total operating expenses		3,446			3,324			7,034			5,773

Equity in loss of unconsolidated affiliates		(21	)		(57	)		(30	)		(79	)
Operating income		603			384			539			656

Other income and (deductions)
Interest expense		(93	)		(85	)		(176	)		(138	)
Other, net		(33	)		(76	)		95			103

Total other income and (deductions)		(126	)		(161	)		(81	)		(35	)

Income before income taxes		477			223			458			621
Income taxes		149			58			148			289

Net income		328			165			310			332
Net loss attributable to noncontrolling interests		(2	)		(1	)		(1	)		(2	)

Net income attributable to membership interest		330			166			311			334

Comprehensive income (loss), net of income taxes
Net income		328			165			310			332
Other comprehensive (loss) income, net of income taxes
Change in unrealized loss on cash flow hedges		(137	)		(266	)		(267	)		(14	)
Change in unrealized income on equity investments		8			6			36			6
Change in unrealized loss on foreign currency translation		(5	)		(2	)		(6	)		(2	)
Change in unrealized loss on marketable securities		—			(1	)		(1	)		(1	)

Other comprehensive loss		(134	)		(263	)		(238	)		(11	)

Comprehensive income (loss)	$	194		$	(98	)	$	72		$	321

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	310		$	332
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		1,358			1,423
Deferred income taxes and amortization of investment tax credits		(44	)		168
Net fair value changes related to derivatives		(21	)		(307	)
Net realized and unrealized gains on nuclear decommissioning trust fund investments		(27	)		(70	)
Other non-cash operating activities		315			318
Changes in assets and liabilities:
Accounts receivable		88			306
Receivables from and payables to affiliates, net		(29	)		(42	)
Inventories		(38	)		30
Accounts payable, accrued expenses and other current liabilities		(426	)		(732	)
Option premiums paid, net		(10	)		(108	)
Counterparty collateral (paid) received, net		(303	)		443
Income taxes		265			314
Pension and non-pension postretirement benefit contributions		(120	)		(35	)
Other assets and liabilities		(168	)		(174	)

Net cash flows provided by operating activities		1,150			1,866

Cash flows from investing activities
Capital expenditures		(1,277	)		(1,820	)
Proceeds from nuclear decommissioning trust fund sales		1,448			5,371
Investment in nuclear decommissioning trust funds		(1,565	)		(5,483	)
Change in restricted cash		(11	)		6
Cash acquired from Constellation		—			708
Other investing activities		27			(66	)

Net cash flows used in investing activities		(1,378	)		(1,284	)

Cash flows from financing activities
Issuance of long-term debt		209			850
Retirement of long-term debt		(458	)		(56	)
Change in short-term debt		288			(42	)
Changes in Exelon intercompany money pool borrowings		263			—
Distribution to member		(474	)		(891	)
Other financing activities		(49	)		(9	)

Net cash flows used in financing activities		(221	)		(148	)

(Decrease) increase in cash and cash equivalents		(449	)		434
Cash and cash equivalents at beginning of period		671			496

Cash and cash equivalents at end of period	$	222		$	930

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	187	$	596
Cash and cash equivalents of variable interest entities		35		75
Restricted cash and cash equivalents of variable interest entities		27		16
Accounts receivable, net
Customer		1,464		1,482
Other		347		472
Accounts receivable, net, variable interest entities		242		292
Mark-to-market derivative assets		845		938
Mark-to-market derivative assets with affiliates		—		226
Receivables from affiliates		123		141
Unamortized energy contract assets		573		886
Inventories, net
Fossil fuel		133		130
Materials and supplies		648		626
Deferred income taxes		195		—
Other		488		331

Total current assets		5,307		6,211

Property, plant and equipment, net		19,678		19,531
Deferred debits and other assets
Nuclear decommissioning trust funds		7,463		7,248
Investments		409		420
Investment in CENG		1,876		1,849
Mark-to-market derivative assets		740		924
Prepaid pension asset		1,982		1,975
Pledged assets for Zion Station decommissioning		538		614
Unamortized energy contract assets		856		1,073
Other		829		836

Total deferred debits and other assets		14,693		14,939

Total assets	$	39,678	$	40,681

See the Combined Notes to Consolidated Financial Statements

EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	288	$	—
Long-term debt due within one year		500		24
Long-term debt due within one year of variable interest entities		8		4
Accounts payable		1,134		1,346
Accounts payable of variable interest entities		147		202
Accrued expenses		812		1,116
Payables to affiliates		148		193
Borrowings from Exelon intercompany money pool		263		—
Deferred income taxes		35		128
Mark-to-market derivative liabilities		131		334
Unamortized energy contract liabilities		315		378
Other		321		372

Total current liabilities		4,102		4,097

Long-term debt		4,975		5,245
Long-term debt to affiliate		1,534		2,007
Long-term debt of variable interest entities		196		203
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		5,647		5,398
Asset retirement obligations		5,065		4,938
Non-pension postretirement benefit obligations		814		755
Spent nuclear fuel obligation		1,020		1,020
Payables to affiliates		2,433		2,397
Mark-to-market derivative liabilities		109		232
Unamortized energy contract liabilities		393		516
Payable for Zion Station decommissioning		373		432
Other		820		776

Total deferred credits and other liabilities		16,674		16,464

Total liabilities		27,481		28,016

Commitments and contingencies
Equity
Member's equity
Membership interest		8,873		8,876
Undistributed earnings		3,005		3,168
Accumulated other comprehensive income, net		275		513

Total member’s equity		12,153		12,557
Noncontrolling interest		44		108

Total equity		12,197		12,665

Total liabilities and equity	$	39,678	$	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)		—			311			—			(1	)		310
Noncontrolling interest acquired		(3	)		—			—			—			(3	)
Distribution to member		—			(474	)		—			—			(474	)
Consolidated VIE dividend to non-controlling interest		—			—			—			(63	)		(63	)
Other comprehensive loss, net of income taxes of $152		—			—			(238	)		—			(238	)

Balance, June 30, 2013	$	8,873		$	3,005		$	275		$	44		$	12,197

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 June 30,						Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Operating revenues
Operating revenues	$	1,080		$	1,280		$	2,238		$	2,669
Operating revenues from affiliates		—			1			1			1

Total operating revenues		1,080			1,281			2,239			2,670

Operating expenses
Purchased power		127			384			364			757
Purchased power from affiliate		121			203			266			451
Operating and maintenance		319			293			611			569
Operating and maintenance from affiliate		40			38			76			81
Depreciation and amortization		170			152			337			300
Taxes other than income		71			69			145			144

Total operating expenses		848			1,139			1,799			2,302

Operating income		232			142			440			368

Other income and (deductions)
Interest expense		(72	)		(71	)		(422	)		(150	)
Interest expense to affiliates, net		(4	)		(3	)		(7	)		(6	)
Other, net		6			3			11			7

Total other income and (deductions)		(70	)		(71	)		(418	)		(149	)

Income before income taxes		162			71			22			219
Income taxes		66			29			8			90

Net income		96			42			14			129

Other comprehensive income, net of income taxes
Change in unrealized gain on marketable securities		—			—			—			1

Other comprehensive income		—			—			—			1

Comprehensive income	$	96		$	42		$	14		$	130

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	14		$	129
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		337			300
Deferred income taxes and amortization of investment tax credits		(226	)		116
Other non-cash operating activities		39			241
Changes in assets and liabilities:
Accounts receivable		18			(26	)
Receivables from and payables to affiliates, net		(26	)		(18	)
Inventories		(11	)		(7	)
Accounts payable, accrued expenses and other current liabilities		20			(54	)
Counterparty collateral received, net		45			8
Income taxes		240			149
Pension and non-pension postretirement benefit contributions		(119	)		(12	)
Other assets and liabilities		172			(104	)

Net cash flows provided by operating activities		503			722

Cash flows from investing activities
Capital expenditures		(711	)		(585	)
Proceeds from sales of investments		4			12
Purchases of investments		(3	)		(5	)
Change in restricted cash		(3	)		—
Other investing activities		20			11

Net cash flows used in investing activities		(693	)		(567	)

Cash flows from financing activities
Changes in short-term debt		374			178
Retirement of long-term debt		(125	)		(450	)
Dividends paid on common stock		(110	)		(85	)
Other financing activities		—			(3	)

Net cash flows provided by (used in) financing activities		139			(360	)

Decrease in cash and cash equivalents		(51	)		(205	)
Cash and cash equivalents at beginning of period		144			234

Cash and cash equivalents at end of period	$	93		$	29

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	93	$	144
Restricted cash		3		—
Accounts receivable, net
Customer		455		539
Other		518		452
Inventories, net		102		91
Deferred income taxes		32		83
Counterparty collateral deposited		8		53
Regulatory assets		274		388
Other		26		25

Total current assets		1,511		1,775

Property, plant and equipment, net		14,233		13,826
Deferred debits and other assets
Regulatory assets		732		666
Investments		6		8
Investments in affiliates		6		6
Goodwill		2,625		2,625
Receivables from affiliates		2,244		2,039
Prepaid pension asset		1,680		1,661
Other		312		299

Total deferred debits and other assets		7,605		7,304

Total assets	$	23,349	$	22,905

See the Combined Notes to Consolidated Financial Statements

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings	$	374	$	—
Long-term debt due within one year		744		252
Accounts payable		432		379
Accrued expenses		253		295
Payables to affiliates		70		97
Customer deposits		135		136
Regulatory liabilities		151		170
Mark-to-market derivative liability		16		18
Mark-to-market derivative liability with affiliate		—		226
Other		81		82

Total current liabilities		2,256		1,655

Long-term debt		4,707		5,315
Long-term debt to financing trust		206		206
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		3,997		4,272
Asset retirement obligations		100		99
Non-pension postretirement benefits obligations		327		273
Regulatory liabilities		3,276		3,229
Mark-to-market derivative liability		69		49
Other		1,010		484

Total deferred credits and other liabilities		8,779		8,406

Total liabilities		15,948		15,582

Commitments and contingencies
Shareholders' equity
Common stock		1,588		1,588
Other paid-in capital		5,188		5,014
Retained earnings		625		721

Total shareholders' equity		7,401		7,323

Total liabilities and shareholders' equity	$	23,349	$	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		—		—		14			—			—		14
Appropriation of retained earnings for future dividends		—		—		(14	)		14			—		—
Common stock dividends		—		—		—			(110	)		—		(110	)
Parent tax matter indemnification		—		174		—			—			—		174

Balance, June 30, 2013	$	1,588	$	5,188	$	(1,639	)	$	2,264		$	—	$	7,401

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 June 30,						Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Operating revenues
Operating revenues	$	672		$	714		$	1,567		$	1,588
Operating revenues from affiliates		—			1			—			2

Total operating revenues		672			715			1,567			1,590

Operating expenses
Purchased power and fuel		161			171			426			472
Purchased power from affiliate		97			125			238			235
Operating and maintenance		155			146			319			318
Operating and maintenance from affiliates		26			26			50			57
Depreciation and amortization		56			54			113			107
Taxes other than income		39			42			80			74

Total operating expenses		534			564			1,226			1,263

Operating income		138			151			341			327

Other income and (deductions)
Interest expense		(25	)		(28	)		(51	)		(56	)
Interest expense to affiliates, net		(3	)		(3	)		(6	)		(6	)
Other, net		—			2			3			5

Total other income and (deductions)		(28	)		(29	)		(54	)		(57	)

Income before income taxes		110			122			287			270
Income taxes		32			42			87			93

Net income		78			80			200			177
Preferred security dividends and redemption		6			1			7			2

Net income attributable to common shareholder		72			79			193			175

Comprehensive income, net of income taxes
Net income		78			80			200			177
Other comprehensive income, net of income taxes
Change in unrealized gains on marketable securities		—			—			—			1

Other comprehensive income		—			—			—			1

Comprehensive income	$	78		$	80		$	200		$	178

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2013			2012
Cash flows from operating activities
Net income	$	200		$	177
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization and accretion		113			107
Deferred income taxes and amortization of investment tax credits		25			19
Other non-cash operating activities		50			66
Changes in assets and liabilities:
Accounts receivable		55			62
Receivables from and payables to affiliates, net		(18	)		9
Inventories		27			26
Accounts payable, accrued expenses and other current liabilities		35			(83	)
Income taxes		39			121
Pension and non-pension postretirement benefit contributions		(10	)		(8	)
Other assets and liabilities		(49	)		(87	)

Net cash flows provided by operating activities		467			409

Cash flows from investing activities
Capital expenditures		(254	)		(179	)
Changes in intercompany money pool		(263	)		18
Change in restricted cash		(1	)		(3	)
Other investing activities		4			7

Net cash flows used in investing activities		(514	)		(157	)

Cash flows from financing activities
Dividends paid on common stock		(166	)		(172	)
Dividends paid on preferred securities		(1	)		(2	)
Redemption of preferred securities		(93	)		—
Other financing activities		1			—

Net cash flows used in financing activities		(259	)		(174	)

Increase (decrease) in cash and cash equivalents		(306	)		78
Cash and cash equivalents at beginning of period		362			194

Cash and cash equivalents at end of period	$	56		$	272

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	56	$	362
Restricted cash and cash equivalents		1		—
Accounts receivable, net ($286 and $289 gross accounts receivable pledged as collateral as of June 30, 2013 and December 31, 2012, respectively)
Customer		286		364
Other		141		161
Inventories, net
Fossil fuel		36		65
Materials and supplies		20		19
Deferred income taxes		42		40
Receivable from Exelon intercompany money pool		263		—
Prepaid utility taxes		71		21
Regulatory assets		35		32
Other		43		30

Total current assets		994		1,094

Property, plant and equipment, net		6,207		6,078
Deferred debits and other assets
Regulatory assets		1,400		1,378
Investments		23		22
Investments in affiliates		8		8
Receivable from affiliates		366		360
Prepaid pension asset		373		373
Other		36		40

Total deferred debits and other assets		2,206		2,181

Total assets	$	9,407	$	9,353

See the Combined Notes to Consolidated Financial Statements

PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 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		264		244
Accrued expenses		107		82
Payables to affiliates		60		76
Customer deposits		48		51
Regulatory liabilities		166		169
Other		34		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		2,397		2,331
Asset retirement obligations		30		29
Non-pension postretirement benefits obligations		295		284
Regulatory liabilities		547		538
Other		108		113

Total deferred credits and other liabilities		3,377		3,295

Total liabilities		6,398		6,284

Commitments and contingencies
Preferred securities		—		87
Shareholder's equity
Common stock		2,388		2,388
Retained earnings		620		593
Accumulated other comprehensive income, net		1		1

Total shareholder’s equity		3,009		2,982

Total liabilities and shareholders’ equity	$	9,407	$	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		—		200			—		200
Common stock dividends		—		(166	)		—		(166	)
Preferred security dividends		—		(1	)		—		(1	)
Redemption of preferred securities		—		(6	)		—		(6	)

Balance, June 30, 2013	$	2,388	$	620		$	1	$	3,009

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 June 30,						Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Operating revenues
Operating revenues	$	649		$	614		$	1,525		$	1,307
Operating revenues from affiliates		4			2			8			5

Total operating revenues		653			616			1,533			1,312

Operating expenses
Purchased power and fuel		189			201			501			494
Purchased power from affiliate		99			84			212			176
Operating and maintenance		139			136			266			297
Operating and maintenance from affiliates		21			25			37			59
Depreciation and amortization		82			71			175			150
Taxes other than income		54			47			109			95

Total operating expenses		584			564			1,300			1,271

Operating income		69			52			233			41

Other income and (deductions)
Interest expense		(32	)		(34	)		(66	)		(75	)
Other, net		4			7			9			13

Total other income and (deductions)		(28	)		(27	)		(57	)		(62	)

Income (loss) before income taxes		41			25			176			(21	)
Income taxes		16			9			70			(7	)

Net income (loss)		25			16			106			(14	)
Preference stock dividends		3			3			6			6

Net income (loss) attributable to common shareholder	$	22		$	13		$	100		$	(20	)

Comprehensive income (loss)	$	25		$	16		$	106		$	(14	)

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(In millions)	2013			2012
Cash flows from operating activities
Net (loss) income	$	106		$	(14	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation, amortization and accretion		175			150
Deferred income taxes and amortization of investment tax credits		98			91
Other non-cash operating activities		61			100
Changes in assets and liabilities:
Accounts receivable		(58	)		76
Receivables from and payables to affiliates, net		(11	)		(3	)
Inventories		4			37
Accounts payable, accrued expenses and other current liabilities		(28	)		(71	)
Income taxes		(33	)		(48	)
Pension and non-pension postretirement benefit contributions		(11	)		(8	)
Other assets and liabilities		63			43

Net cash flows provided by operating activities		366			353

Cash flows from investing activities
Capital expenditures		(264	)		(266	)
Change in restricted cash		3			8
Other investing activities		4			(10	)

Net cash flows used in investing activities		(257	)		(268	)

Cash flows from financing activities
Issuance of long-term debt		300			—
Repayment of long-term debt		(33	)		(141	)
Dividends paid on preference stock		(6	)		(6	)
Contributions from parent		—			66
Other financing activities		(2	)		—

Net cash flows provided by (used in) financing activities		259			(81	)

Increase in cash and cash equivalents		368			4
Cash and cash equivalents at beginning of period		89			49

Cash and cash equivalents at end of period	$	457		$	53

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	457	$	89
Restricted cash and cash equivalents of variable interest entity		27		30
Accounts receivable, net
Customer		415		409
Other		145		111
Income taxes receivable		30		3
Inventories, net
Gas held in storage		44		51
Materials and supplies		34		31
Deferred income taxes		13		1
Prepaid utility taxes		1		57
Regulatory assets		142		190
Other		6		8

Total current assets		1,314		980

Property, plant and equipment, net		5,637		5,498
Deferred debits and other assets
Regulatory assets		536		522
Investments		5		5
Investments in affiliates		8		8
Prepaid pension asset		445		467
Other		23		26

Total deferred debits and other assets		1,017		1,028

Total assets	$	7,968	$	7,506

See the Combined Notes to Consolidated Financial Statements

BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions)	June 30, 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		68		67
Accounts payable		138		195
Accrued expenses		105		106
Deferred income taxes		9		—
Payables to affiliates		59		65
Customer deposits		69		71
Regulatory liabilities		40		29
Other		60		47

Total current liabilities		948		980

Long-term debt		1,746		1,446
Long-term debt to financing trust		258		258
Long-term debt of variable interest entity		230		265
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits		1,761		1,658
Asset retirement obligations		7		8
Non-pension postretirement benefits obligations		223		229
Regulatory liabilities		221		214
Other		116		90

Total deferred credits and other liabilities		2,328		2,199

Total liabilities		5,510		5,148

Commitments and contingencies
Shareholders’ equity
Common stock		1,360		1,360
Retained earnings		908		808

Total shareholder’s equity		2,268		2,168

Preference stock not subject to mandatory redemption		190		190

Total equity		2,458		2,358

Total liabilities and shareholders’ equity	$	7,968	$	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		—		106			106			—		106
Preference stock dividends		—		(6	)		(6	)		—		(6	)

Balance, June 30, 2013	$	1,360	$	908		$	2,268		$	190	$	2,458

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: Physical delivery and marketing of owned and contracted electric generation capacity and provision of renewable and other energy-related products and services, and natural gas exploration and production activities. Generation has six reportable segments consisting of the Mid-Atlantic, Midwest, New England, New York, ERCOT and Other regions.

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 and six months ended June 30, 2013 and 2012 and the financial position as of June 30, 2013 and December 31, 2012. However, for Exelon’s financial reporting, Exelon is reporting BGE activity for the three and six months ended June 30, 2013 and from March 12, 2012 through June 30, 2012 and the financial position as of June 30, 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 six months ended June 30, 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 respective results of operations or cash flows for

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

the six months ended June 30, 2013 or any prior period. Exelon and BGE do not expect this correcting adjustment to have a material impact on their respective results of operations or cash flows for the year ended December 31, 2013.

The accompanying consolidated financial statements as of June 30, 2013 and 2012 and for the three and six 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 interim periods 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 Unrecognized Tax Benefits When Net Operating Loss Carryforwards, Similar Tax Losses or Tax Credit Carryforwards Exist

In July 2013, the FASB issued authoritative guidance requiring entities to present unrecognized tax benefits as a reduction to deferred tax assets for losses or other tax carryforwards that would be available to settle the uncertain tax positions at the reporting date. Currently, the Registrants present their unrecognized tax benefits as liabilities on a gross basis unless an unrecognized tax benefit is directly associated with a tax position taken in a tax year that results in the recognition of a net operating loss or other tax carryforward for that year. This guidance is effective for the Registrants for periods beginning after December 15, 2013 and is required to be applied prospectively, with retroactive application permitted. The Registrants are currently assessing the impacts this guidance may have on their financial positions and cash flows. The adoption of this standard will not impact the Registrants’ results of operations.

Inclusion of the Fed Funds Effective Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

In July 2013, the FASB issued authoritative guidance permitting entities to designate the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes. Prior to the issuance of this guidance, only interest rates on direct treasury obligations of the U.S. government and the LIBOR swap rate were considered benchmark interest rates in the U.S. This guidance is effective immediately and can be applied prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. Currently, the Registrants do not use the Fed Funds Effective Swap Rate as a benchmark interest rate, but may in the future.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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 was 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 16 — Changes in Accumulated Other Comprehensive Income for the new disclosures.

Disclosures About Offsetting Assets and Liabilities

In December 2011, the FASB issued (and amended in January 2013), 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 10 — Derivative Financial Instruments for the new disclosures.

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 June 30, 2013 and December 31, 2012, the Registrants’ consolidated five VIEs or VIE groups for which the Registrants were the primary beneficiary, and the Registrants had significant interests in eight 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

Exelon, Generation and BGE’s 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;

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

•

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

•

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

As of June 30, 2013, ComEd and PECO do not have any consolidated VIEs.

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 through non-bypassable, rate stabilization charges to BondCo. During the three and six months ended June 30, 2013, BGE remitted $17 million and $39 million, respectively, to BondCo. During the three and six months ended June 30, 2012, BGE remitted $15 million and $35 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 six months ended June 30, 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.

The carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in Exelon, Gen

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