Exelon Corp, et al. – ‘10-K’ for 12/31/00

On:  Monday, 4/2/01, at 3:05pm ET   ·   For:  12/31/00   ·   Accession #:  950159-1-191   ·   File #s:  1-01401, 1-01839, 1-16169

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                        131    667K 
 2: EX-3.3      Articles of Incorporation/Organization or By-Laws     18     68K 
 3: EX-3.6      Articles of Incorporation/Organization or By-Laws     10     39K 
 4: EX-4.1      Instrument Defining the Rights of Security Holders    80    258K 
 5: EX-4.4      Instrument Defining the Rights of Security Holders    12     52K 
 6: EX-4.7.3    Instrument Defining the Rights of Security Holders    25     88K 
 8: EX-10.25.1  Material Contract                                     58    194K 
 9: EX-10.27.1  Material Contract                                      4     18K 
10: EX-10.30.1  Material Contract                                      2±    12K 
11: EX-10.30.2  Material Contract                                      2     12K 
12: EX-10.32.1  Material Contract                                      2     12K 
 7: EX-10.6.1   Material Contract                                      2     12K 
13: EX-18.1     Letter re: Change in Accounting Principles             1     11K 
14: EX-18.2     Letter re: Change in Accounting Principles             1     11K 
15: EX-21.1     Subsidiaries of the Registrant                         1      7K 
16: EX-21.2     Subsidiaries of the Registrant                         1      7K 
17: EX-21.3     Subsidiaries of the Registrant                         1      7K 
18: EX-23.1     Consent of Experts or Counsel                          1     10K 
19: EX-23.2     Consent of Experts or Counsel                          1      9K 
20: EX-23.3.1   Consent of Experts or Counsel                          1      9K 
21: EX-23.3.2   Consent of Experts or Counsel                          1     10K 

10-K   —   Annual Report
Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 -------------------

 FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934                                          
For the Fiscal Year Ended December 31, 2000                   
OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE               
SECURITIES EXCHANGE ACT OF 1934                               

                                                        [Enlarge/Download Table]

Commission File            Name of Registrant; State of Incorporation; Address of       IRS Employer             
Number                     Principal Executive Offices; and Telephone Number            Identification Number    
---------------------      ---------------------------------------------------------    -------------------------
                                                                                                                 
1-16169                    EXELON CORPORATION                                           23-2990190               
                           (a Pennsylvania corporation)                                                          
                           10 South Dearborn Street - 37th Floor                                                 
                           P.O. Box 805379                                                                       
                           Chicago, Illinois 60680-5379                                                          
                           (312) 394-4321                                                                        

1-1401                     PECO ENERGY COMPANY                                          23-0970240               
                           (a Pennsylvania corporation)                                                          
                           P.O. Box 8699                                                                         
                           2301 Market Street                                                                    
                           Philadelphia, Pennsylvania 19101-8699                                                 
                           (215) 841-4000                                                                        

1-1839                     COMMONWEALTH EDISON COMPANY                                  36-0938600               
                           (an Illinois corporation)                                                             
                           10 South Dearborn Street - 37th Floor                                                 
                           P.O. Box 805379                                                                       
                           Chicago, Illinois 60680-5379                                                          
                           (312) 394-4321                                                                        

Securities registered pursuant to Section 12(b) of the Act:                                                      

                                                                                    Name of Each Exchange on     
Title of Each Class                                                                 Which Registered             
------------------------------------------------------------------------------      -----------------------------
EXELON CORPORATION:                                                                                              

     Common Stock, without par value                                                New York, Chicago and        
                                                                                    Philadelphia                 
PECO ENERGY COMPANY:                                                                                             

     First and Refunding Mortgage Bonds:  5-5/8% Series due 2001,                   New York                     
     6-3/8% Series due 2005, and 6-1/2% Series due 2003                                                          

     Cumulative Preferred Stock, without par value:  $4.68 Series, $4.40            New York                     
     Series, $4.30 Series and $3.80 Series                                                                       

     Trust Receipts of PECO Energy Capital Trust II, each representing an           New York                     
     8.00% Cumulative Monthly Income Preferred Security, Series C, $25                                           
     stated value, issued by PECO Energy Capital, L.P. and unconditionally                                       
     guaranteed by PECO Energy Company                                                                           

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     Trust Receipts of PECO Energy Capital Trust III, each representing an          New York                     
     7.38% Cumulative Preferred Security, Series D, $25 stated value, issued                                     
     by PECO Energy Capital, L.P. and unconditionally guaranteed by PECO                                         
     Energy Company                                                                                              

COMMONWEALTH EDISON COMPANY:                                                                                     

     Sinking Fund Debentures:  2-7/8%, due April 1, 2001                            New York                     

     Company-Obligated Mandatorily Redeemable Preferred Securities of               New York                     
     Subsidiary Trust Holding Solely Commonwealth Edison Company's 8.48%                                         
     Subordinated Debt Securities and unconditionally guaranteed by                                              
     Commonwealth Edison Company                                                                                 

Securities registered pursuant to Section 12(g) of the Act:                     

PECO ENERGY COMPANY:                                                            
     Cumulative  Preferred  Stock,  without  par value:  $7.48  Series and $6.12
Series                                                                          

COMMONWEALTH EDISON COMPANY:                                                    
Common Stock Purchase Warrants, 1971 Warrants and Series B Warrants   

         Indicate  by check  mark  whether  the  registrants  (1) have 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) have been subject to such
filing requirements for the past 90 days.Yes [X] No [ ]                         

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrants'  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.   [ ]                                              

         The  estimated  aggregate  market  value of the voting  and  non-voting
common equity held by  nonaffiliates of the registrants as of March 1, 2001, was
as follows:                                                                     

    Exelon Corporation Common Stock, without par value         $20,986,864,596
    PECO Energy Company Common Stock, without par value                   None
Commonwealth Edison Company Common Stock,                             
     $12.50 par value                                     No established market.

         The number of shares  outstanding of each registrant's  common stock as
of March 1, 2001, except for Commonwealth Edison Company which is as of December
31, 2000, was as follows:                                                       

    Exelon  Corporation  Common Stock,  without par value          320,068,089
    PECO Energy Company Common Stock, without par value            170,478,507
Commonwealth Edison Company Common Stock,                             
    $12.50 par value                                               163,805,020

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DOCUMENTS INCORPORATED BY REFERENCE:

         Portions of Exelon Corporation's Current Report on Form 8-K dated March
16, 2001 containing  consolidated  financial  statements and related information
for the year ended December 31, 2000, are  incorporated  by reference into Parts
I,  II  and  IV  of  this  Annual  Report  on  Form  10-K.  Portions  of  Exelon
Corporation's definitive Proxy Statement filed on March 23, 2001 relating to its
annual meeting of  shareholders,  are incorporated by reference into Part III of
this Annual Report on Form 10-K.                                                

         Portions of PECO Energy Company's definitive  Information  Statement to
be  filed  prior  to  April  30,  2001,   relating  to  its  annual  meeting  of
shareholders,  are incorporated by reference into Part III of this Annual Report
on Form 10-K.                                                                   

         Portions  of  Commonwealth  Edison  Company's  definitive   Information
Statement to be filed prior to April 30, 2001, relating to its annual meeting of
shareholders,  are incorporated by reference into Part III of this Annual Report
on Form 10-K.                                                                   

         This combined Form 10-K is separately filed by Exelon Corporation, PECO
Energy Company and  Commonwealth  Edison Company.  Information  contained herein
relating to any  individual  registrant  is filed by such  registrant in its own
behalf.  Each registrant makes no representation  as to information  relating to
the other registrants.                                                          

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 TABLE OF CONTENTS

PART I                                                                 Page No. 
                                                                      --------
ITEM 1.  BUSINESS 1                                                   
                    General............................................1
                    Energy Delivery....................................2
                    Generation........................................10
                    Enterprises.......................................19
                    Employees.........................................20
                    Environmental Regulation..........................20
                    Related Entities..................................23
                    Executive Officers of Exelon, ComEd and PECO......25
 ITEM 2.  PROPERTIES..................................................28
 ITEM 3.  LEGAL PROCEEDINGS...........................................30
 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........31

PART II                                                                         
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED            
          STOCKHOLDER MATTERS.........................................31
 ITEM 6.  SELECTED FINANCIAL DATA.....................................33
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL            
          CONDITION AND RESULTS OF OPERATIONS.........................35
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES                     
          ABOUT MARKET RISK...........................................51
 ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................51
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON             
          ACCOUNTING AND FINANCIAL DISCLOSURE........................109

PART III                                                                        
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE                      
          REGISTRANT.................................................110
 ITEM 11. EXECUTIVE COMPENSATION.....................................110
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL                     
          OWNERS AND MANAGEMENT......................................111
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............111

PART IV                                                                         

ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND                  
             REPORTS ON FORM 8-K.....................................111

SIGNATURES...............................................................125    

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PART I

ITEM 1.  BUSINESS.                                                              

General                                                                         

         Exelon   Corporation,   a  Pennsylvania   corporation   (Exelon),   was
incorporated  in February  1999.  On October 20, 2000,  Exelon became the parent
corporation  for each of PECO  Energy  Company  (PECO) and  Commonwealth  Edison
Company (ComEd) as a result of the completion of the  transactions  contemplated
by an Agreement and Plan of Exchange and Merger, as amended,  among PECO, Unicom
Corporation  (Unicom)  and Exelon.  PECO and ComEd,  which was a  subsidiary  of
Unicom,  became the principal utility subsidiaries of Exelon through a mandatory
exchange  of each  share of  outstanding  common  stock of PECO for one share of
common  stock of Exelon  and a merger  of Unicom  into  Exelon.  In the  merger,
holders of Unicom common stock received 0.875 shares of Exelon common stock plus
$3.00 in cash for each of their  shares  of  Unicom  common  stock.  The  merger
transaction was accounted for as a purchase of Unicom by PECO.                  

         Exelon,  through  subsidiaries  including  PECO and ComEd,  operates in
three business segments:                                                        

          o    Energy   Delivery,   consisting   of   the   retail   electricity
               distribution  and  transmission  businesses  of ComEd in northern
               Illinois and PECO in  southeastern  Pennsylvania  and the natural
               gas distribution  business of PECO in the  Pennsylvania  counties
surrounding the City of Philadelphia.             

          o    Generation,  consisting of electric generating facilities,  power
               marketing operations and equity interests in Sithe Energies, Inc.
(Sithe) and AmerGen Energy Company, LLC (AmerGen).

          o    Enterprises,  consisting  of  competitive  retail  energy  sales,
               energy and  infrastructure  services,  communications and related
investments.                                      

         During  January  2001,  Exelon  undertook a  restructuring  to separate
Exelon's  generation and other competitive  businesses from its regulated energy
delivery business.  As part of the restructuring,  the non-regulated  operations
and related assets of ComEd and PECO were  transferred to separate  subsidiaries
of Exelon. Restructuring will streamline the process for managing, operating and
tracking the financial performance of each business segment.                    

         Exelon's  principal  executive offices are located at 10 South Dearborn
Street, Chicago, Illinois 60603, and its telephone number is 312-394-4321. ComEd
was  organized  in the State of  Illinois  in 1913 as a result of the  merger of
Cosmopolitan  Electric Company into the original  corporation named Commonwealth
Edison Company,  which was  incorporated in 1907.  ComEd's  principal  executive
offices are located at 10 South Dearborn Street, Chicago, Illinois 60603 and its
telephone number is 312-394-4321. PECO was incorporated in Pennsylvania in 1929.
PECO's  principal   executive   offices  are  located  at  2301  Market  Street,
Philadelphia, Pennsylvania 19101-8699 and its telephone number is 215-841-4000. 

         Exelon and various of its subsidiaries are subject to Federal and state
regulation.  Exelon is a registered  holding  company  under the Public  Utility
Holding  Company  Act of 1935  (PUHCA).  ComEd is a  public  utility  under  the
Illinois  Public  Utilities Act subject to  regulation by the Illinois          

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Commerce  Commission  (ICC).  PECO is a public  utility  under the  Pennsylvania
Public  Utility Code subject to regulation by the  Pennsylvania  Public  Utility
Commission  (PUC).  PECO, ComEd and Generation are electric  utilities under the
Federal  Power Act  subject  to  regulation  by the  Federal  Energy  Regulatory
Commission  (FERC).  Specific  operations  of  Exelon  are also  subject  to the
jurisdiction  of various  other  Federal,  state,  regional and local  agencies,
including the United States Nuclear Regulatory Commission (NRC).                

         As a  registered  holding  company,  Exelon  and its  subsidiaries  are
subject to a number of restrictions under PUHCA.  These  restrictions  generally
involve financing,  investments and affiliate transactions.  Under PUHCA, Exelon
and its  subsidiaries  cannot  issue  debt or equity  securities  or  guaranties
without  approval of the Securities and Exchange  Commission  (SEC),  or in some
circumstances  in the case of ComEd and PECO, the ICC or the PUC,  respectively.
Exelon  currently  has SEC approval to issue up to an aggregate of $4 billion in
common stock,  preferred securities,  long-term debt and short-term debt, and to
issue up to $4.5  billion in  guaranties.  PUHCA also limits the  businesses  in
which Exelon may engage and the  investments  that Exelon may make. With limited
exceptions,  Exelon may only  engage in  traditional  electric  and gas  utility
businesses and other  businesses that are reasonably  incidental or economically
necessary  or  appropriate  to the  operations  of  the  utility  business.  The
exceptions  include  Exelon's  ability  to invest  in exempt  telecommunications
companies,  in  exempt  wholesale  generating  businesses  and  foreign  utility
companies  (these  investments  are capped at $4 billion in the  aggregate),  in
energy-related companies (as defined in SEC rules, and subject to a cap on these
investments  of 15%  of  Exelon's  consolidated  capitalization),  and in  other
businesses,  subject to SEC approval. In addition,  PUHCA requires that all of a
registered  holding  company's utility  subsidiaries  constitute a single system
that  can be  operated  in an  efficient,  coordinated  manner.  For  additional
information about  restrictions on the payment of dividends and other effects of
PUHCA on Exelon and its subsidiaries,  see ITEM 7.  Management's  Discussion and
Analysis of Financial Condition and Results of Operations - Exelon.             

Energy Delivery                                                                 

         Energy  Delivery   consists  of  Exelon's   regulated  energy  delivery
operations conducted by ComEd and PECO.                                         

         ComEd  is   engaged   principally   in  the   purchase,   transmission,
distribution  and  sale  of  electricity  to  a  diverse  base  of  residential,
commercial,  industrial and wholesale customers in northern Illinois. ComEd is a
public utility under the Illinois Public Utilities Act.  Consequently,  ComEd is
subject to  regulation  by the ICC as to rates and charges,  issuance of most of
its securities, service and facilities, classification of accounts, transactions
with affiliated interests,  as defined in the Illinois Public Utilities Act, and
other  matters.  ComEd is also subject to regulation by FERC as to  transmission
rates and certain other aspects of its business,  including interconnections and
sales of transmission related assets.                                           

         ComEd's  traditional  service  territory  has an area of  approximately
11,300 square miles and an estimated population of approximately 8 million as of
December 31, 2000. The service territory  includes the City of Chicago,  an area
of about 225 square  miles  with an  estimated  population  of  approximately  3
million. ComEd had approximately 3.5 million customers at December 31, 2000.    

         ComEd's  franchises  are  sufficient  to  permit  it to  engage  in the
business it now conducts.  ComEd's  franchise rights are generally  nonexclusive
rights  documented  in  agreements  and, in some cases,  certificates  of public
convenience  issued by the ICC. With few exceptions,  the franchise  rights have
stated expiration dates ranging from 2001 to 2040 and subsequent years.         

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         PECO is engaged principally in the purchase, transmission, distribution
and sale of electricity  to  residential,  commercial,  industrial and wholesale
customers  and  in  the  purchase,  distribution  and  sale  of  natural  gas to
residential, commercial and industrial customers. PECO is a public utility under
the Pennsylvania Public Utility Code. As a result, PECO is subject to regulation
by the PUC as to electric  distribution  rates,  retail gas rates,  issuances of
securities and certain other aspects of PECO's operations.  PECO is also subject
to regulation by FERC as to transmission  rates and certain other aspects of its
business, including interconnections and sales of transmission related assets.  

         Pursuant to the Pennsylvania Electricity Generation Customer Choice and
Competition Act (Competition Act), the Commonwealth of Pennsylvania has required
the  unbundling  of retail  electric  services  in  Pennsylvania  into  separate
generation,  transmission and distribution services with open retail competition
for generation  services.  Since the  commencement of deregulation in 1999, PECO
serves  as  the  local  distribution  company  providing  electric  distribution
services to all customers in its service  territory and bundled electric service
to customers who do not choose an alternate electric generation  supplier.  PECO
delivers  electricity to approximately  1.5 million customers and natural gas to
approximately 425,000 customers.                                                

         PECO's  traditional  retail service territory covers 2,107 square miles
in southeastern Pennsylvania. PECO provides electric delivery service in an area
of 1,972 square miles, with a population of approximately 3.6 million, including
1.6  million in the City of  Philadelphia.  Natural gas service is supplied in a
1,475 square mile area in southeastern  Pennsylvania  adjacent to  Philadelphia,
with a population of 1.9 million.                                               

         PECO has the  necessary  franchise  rights to furnish  electric and gas
service in the various  municipalities  or  territories in which it now supplies
such services. PECO's franchise rights, which are generally nonexclusive rights,
consist of charter rights and certificates of public  convenience  issued by the
PUC and/or "grandfather  rights".  Such franchise rights are generally unlimited
as to time.                                                                     

         As a result of Exelon's  restructuring  to separate its  regulated  and
competitive  businesses,  both  ComEd  and PECO  transferred  their  assets  and
liabilities unrelated to energy delivery to other subsidiaries of Exelon. In the
case  of  ComEd,  the  assets  and  liabilities   transferred  included  nuclear
generation and wholesale  power  marketing  operations  and some  administrative
functions.  In the case of PECO, the assets and liabilities  transferred related
to nuclear,  fossil and hydroelectric  generation and wholesale power marketing;
unregulated ventures and activities,  including  communications,  infrastructure
services and unregulated gas and electric sales activities;  and administrative,
information  technology and other support for all other  business  activities of
Exelon and its subsidiaries.                                                    

         Energy  Delivery's   kilowatt-hour   (kWh)  sales  and  generation  are
generally higher, primarily during the summer periods but also during the winter
periods,  when  temperature  extremes create demand for either summer cooling or
winter heating. ComEd's highest peak load experienced to date occurred on August
30, 1999 and was 21,243,000 kilowatts,  and the highest peak load experienced to
date during a winter  season  occurred on December  20, 1999 and was  14,484,000
kilowatts. PECO's highest peak load experienced to date occurred on July 6, 1999
and was  7,959,000  kilowatts;  and the highest  peak load  experienced  to date
during a winter season occurred on January 17, 2000 and was 6,135,000 kilowatts.

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Retail Electric Services                                      

         Electric utility restructuring  legislation was adopted in Pennsylvania
in December 1996 and in Illinois in December  1997.  Both states,  through their
regulatory  agencies,  established a phased  approach to  competition,  allowing
customers to choose an alternative electric generation  supplier;  required rate
reductions and imposed caps on rates during a transition period; and allowed the
collection of  competitive  transition  charges (CTCs) from customers to recover
costs that might not  otherwise be recovered in a competitive  market  (stranded
costs).  Under the  restructuring  initiatives  adopted at the Federal and state
levels,  the role of electric  utilities in the supply and delivery of energy is
changing. ComEd and PECO continue to be obligated to provide a reliable delivery
system under  cost-based  rates.  During the transition  period to a competitive
supply  marketplace,  ComEd and PECO are also  obligated  to  supply  generation
services to customers who do not or cannot choose an alternate supplier.        

         The rates for the  generation  service  provided  by ComEd and PECO are
subject to rate caps during the  transition  periods.  PECO has  entered  into a
long-term power purchase agreement with Generation to obtain sufficient power at
the  rates it is  allowed  to  charge to serve  customers  who do not  choose an
alternate generation supplier. ComEd has entered into a long-term power purchase
agreement with Generation to obtain sufficient power at fixed rates.            

         ComEd.  Under the Illinois  legislation,  as of December 31, 2000,  all
non-residential  customers  were  eligible to choose a new  electric  generation
supplier or elect the power purchase  option.  The power purchase  option allows
the  purchase of  electric  energy from ComEd at  market-based  prices.  ComEd's
residential  customers become eligible to choose a new electric  supplier in May
2002.  As  of  December  31,  2000,   over  9,500   non-residential   customers,
representing  approximately  27% of ComEd's retail  kilowatt-hour  sales for the
twelve months prior to the  introduction of retail  competition,  had elected to
receive their electric energy from an alternative electric supplier or chose the
power purchase option.                                                          

         In addition to retail competition for generation services, the Illinois
legislation  provided  for  residential  base rate  reductions,  a sharing  with
customers  of any  earnings  over a defined  threshold  and a base rate  freeze,
reflecting the residential base rate reductions,  through January 1, 2005. A 15%
residential base rate reduction became effective on August 1, 1998 and a further
5% residential  base rate reduction will become effective in October 2001. Under
the earnings provision, one-half of any earnings over a defined threshold return
on common equity during the period ending  December 31, 2004 must be refunded to
customers. The threshold rate of return on common equity is based on the 30-year
treasury  bond rate,  plus 8.5% in the years 2000 through  2004.  Earnings,  for
purposes of the earnings  provision,  include  ComEd's net income  calculated in
accordance  with  generally  accepted  accounting  principles  and  may  include
accelerated  amortization of regulatory assets and the amortization of goodwill.
At December 31, 2000, ComEd had a regulatory  asset with an unamortized  balance
of $385  million as a result of the  Illinois  legislation.  It expects to fully
recover and amortize that  regulatory  asset by the end of 2003.  ComEd does not
currently  expect to trigger the earnings  sharing  provisions in the years 2001
through 2004.                                                                   

         The Illinois legislation also provided for the collection of a CTC from
customers who choose to purchase electric energy from an alternative supplier or
elect the power purchase option during a transition  period that extends through
2006. The CTC,  which was  established as of October 1, 1999 and is applied on a
cents per kWh basis, considers the revenue that would have been collected from a
customer under tariffed  rates,  reduced by the revenue the utility will receive
for  providing  delivery  services  to  the  customer,   the  market  price  for
electricity  and a defined  mitigation  factor,  which  represents the utility's
opportunity  to develop new revenue  sources and achieve cost  savings.  The CTC
allows ComEd to recover some of its costs that might otherwise be  unrecoverable
under market-based rates.                                                       

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         As part of a settlement agreement between ComEd and the City of Chicago
relating to ComEd's Chicago franchise  agreement,  ComEd and Chicago agreed to a
revised  combination  of ongoing  work  under the  franchise  agreement  and new
initiatives   that  will  result  in  defined   transmission   and  distribution
expenditures  by ComEd to improve  electric  service in  Chicago.  The  Illinois
legislation  also committed ComEd to spend at least $2 billion during the period
1999  through  2004 on  transmission  and  distribution  facilities  outside  of
Chicago. In addition, ComEd conducted an extensive evaluation of the reliability
of its transmission  and distribution  systems in response to several outages in
the  summer of 1999.  As a result of the  evaluation,  ComEd has  increased  its
capital and operating  and  maintenance  expenditures  on its  transmission  and
distribution facilities in order to improve their reliability.                  

         As a result of ComEd's  commitments  to improve the  reliability of its
transmission and  distribution  system,  ComEd expects its capital  expenditures
will exceed depreciation on its rate base assets through at least 2002. The base
rate freeze will  generally  preclude rate  recovery on and of such  investments
prior to January 1, 2005. Unless ComEd can offset the additional  carrying costs
against cost savings, its return on investment will be reduced during the period
of the rate freeze and until rate increases are approved authorizing a return of
and on this new investment.                                                     

         In  addition,  the  Illinois  legislation  provides  that  an  electric
utility,  such as ComEd, will be liable for actual damages suffered by customers
in the event of a continuous power outage of four hours or more affecting 30,000
or more customers and provides for  reimbursement of governmental  emergency and
contingency   expenses  incurred  in  connection  with  any  such  outage.   The
legislation bars recovery of consequential  damages. The legislation also allows
an affected  utility to seek relief from these provisions from the ICC where the
utility  can show that the cause of the outage was  unpreventable  damage due to
weather events or conditions, customer tampering or third party causes.         

         The  Illinois  legislation  also  allows a portion  of  ComEd's  future
revenues to be  segregated  and used to support the  issuance of  securities  by
ComEd  or  a  special  purpose  financing  subsidiary.   The  proceeds,  net  of
transaction  costs,  from such  securities  issuances  must be used to refinance
outstanding  debt or equity or for certain  other  limited  purposes.  The total
amount of such securities that may be issued is approximately  $6.8 billion.  In
December  1998,  special  purpose  financing  subsidiaries  of ComEd issued $3.4
billion of notes.  For additional  information,  see Related  Entities below and
ITEM 8. Financial  Statements and Supplementary Data - Exelon,  Note 15 of Notes
to Consolidated Financial Statements.                                           

         PECO.  Retail  competition  for electric  generation  services began in
Pennsylvania  on January 1,  1999,  and by January 1, 2000 all of PECO's  retail
electric  customers  had the  right to choose  their  generation  suppliers.  At
December 31, 2000,  approximately  18% of PECO's  residential  load,  46% of its
commercial  load  and 42% of its  industrial  load  were  purchasing  generation
service from alternative suppliers.                                             

         In addition  to retail  competition  for  generation  services,  PECO's
settlement of its  restructuring  case mandated by the  Competition Act required
PECO to provide generation  services to customers who do not or cannot choose an
alternate  supplier through December 31, 2010 and established caps on generation
and distribution rates. The 1998 settlement also authorized PECO to recover $5.3
billion of stranded  costs and to  securitize up to $4.0 billion of its stranded
cost recovery.                                                                  

         Under  the 1998  settlement,  PECO's  distribution  rates  were  capped
through June 30, 2005 at the level in effect on December  31,  1996.  Generation
rates, consisting of the charge for stranded cost recovery and a shopping credit
or capacity and energy charge,  were capped through December 31, 2010. For 2001,
the  generation  rate cap is $0.0681 per kWh,  increasing  to $0.0698 per kWh in
2002,                                                                           

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$0.0751 per kWh in 2006 and  $0.0801 per kWh in 2007.  The rate caps are subject
to limited exceptions, including significant increases in Federal or state taxes
or other significant  changes in law or regulations that would not allow PECO to
earn a fair rate of return.                                                     

         In  connection  with its request for  authorization  to  securitize  an
additional $1 billion of its stranded cost recovery,  PECO agreed to provide its
customers  with  additional  rate  reductions of $60 million in 2001.  Under the
settlement agreement entered into by PECO in 2000 relating to the PUC's approval
of the  merger  with  Unicom,  PECO  agreed to $200  million in  aggregate  rate
reductions  for all customers  over the period  January 1, 2002 through 2005 and
extended the rate cap on distribution rates through December 31, 2006.          

         PECO has been authorized to recover stranded costs of $5.3 billion over
a twelve-year  period ending  December 31, 2010 with a return on the unamortized
balance of 10.75%.  PECO's  recovery of stranded  costs is based on the level of
transition  charges  established in the settlement of PECO's  restructuring case
and the projected annual retail sales in PECO's service  territory.  Recovery of
transition  charges for stranded costs and PECO's allowed return on its recovery
of stranded costs are included in operating revenue.                            

         As a mechanism for utilities to recover their allowed  stranded  costs,
the Competition Act provides for the imposition and collection of non-bypassable
CTCs on customers'  bills.  CTCs are assessed to and  collected  from all retail
customers who have been assigned  stranded  cost  responsibility  and access the
utilities'  transmission  and  distribution  systems.  As the CTCs are  based on
access to the  utility's  transmission  and  distribution  system,  they will be
assessed  regardless of whether such  customer  purchases  electricity  from the
utility or an  alternate  electric  generation  supplier.  The  Competition  Act
provides, however, that the utility's right to collect CTCs is contingent on the
continued  operation at reasonable  availability  levels of the assets for which
the stranded costs were awarded,  except where continued  operation is no longer
cost efficient because of the transition to a competitive market.               

         The following table shows the estimated average levels of stranded cost
recovery and the  amortization  of the  remaining  portion of PECO's  authorized
stranded  cost  recovery  ($5.2 billion at December 31, 2000) for the years 2001
through 2010,  based on estimated  0.8% annual sales growth  assumed in the 1998
settlement of PECO's restructuring case. Exelon's independent  accountant's have
neither examined nor compiled these projections.                                

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                                                        [Enlarge/Download Table]

                                             Annual Stranded Cost                                          
                                            Amortization And Return                                        

                                                                        Revenue Excluding                  
                                    Stranded Cost                       Gross Receipts Tax                 
                                      Recovery      -------------------------------------------------------
Year            Annual Sales (1)     Charge (2)           Total         Return @ 10.75%       Amortization 
-------------- ------------------- ---------------- -------------------------------------------------------
                      MWh             $/kWh                 ($000)              ($000)            ($000)   
                                                                                                           
2001              34,108,616          0.0231               753,241             482,561           270,680   
2002              34,381,485          0.0251               825,004             516,869           308,135   
2003              34,656,537          0.0247               818,352             482,401           335,951   
2004              34,933,789          0.0243               811,540             444,798           366,742   
2005              35,213,260          0.0240               807,933             403,555           404,378   
2006              35,494,966          0.0266               902,623             353,070           549,553   
2007              35,778,925          0.0266               909,844             290,627           619,217   
2008              36,065,157          0.0266               917,123             220,312           696,811   
2009              36,353,678          0.0266               924,459             141,229           783,231   
2010              36,644,507          0.0266               931,855              52,381           879,474   
----------------------------------                                                                         
<FN>                                                                                                       
(1)      Subject to reconciliation of actual sales and collections.                                        

(2)      Subject to periodic adjustments for over- or under- recovery.                                     
</FN>                                                                                                      

         Under the  Competition  Act,  licensed  entities,  including  alternate
electric  generation  suppliers,  may act as agents to provide a single bill and
provide associated  billing and collection  services to retail customers located
in PECO's retail  electric  service  territory.  In that event,  the alternative
supplier or other third party  replaces the customer as the obligor with respect
to the  customer's  bill  and  PECO  generally  has no  right  to  collect  such
receivable from the customer.  Third-party  billing would change PECO's customer
profile (and risk of non-payment by customers) by replacing  multiple  customers
with the entity providing third-party billing for those customers.  PUC-licensed
entities may also finance,  install, own, maintain,  calibrate and remotely read
advanced  meters  for  service to retail  customers  in PECO's  retail  electric
service  territory.  To date, no third  parties are providing  billing of PECO's
charges to customers or advanced metering.  Only PECO can physically  disconnect
or reconnect a customer's distribution service.                                 

          As permitted by the  Competition  Act and the 1998  settlement  of its
restructuring case, PECO securitized $4 billion of its stranded cost recovery in
1999 by the issuance of  transition  bonds through a special  purpose  financing
entity.  In 2000, PECO securitized an additional $1 billion of its stranded cost
recovery,  also through the  issuance of  transition  bonds.  As required by the
Competition  Act, the proceeds from the  securitizations  were applied to reduce
stranded  costs,  including  related  capitalization  of PECO.  In  March  2001,
approximately  $805  million  of the  first  series  of  transition  bonds  were
refinanced.  For additional information,  see Related Entities below and ITEM 8.
Financial  Statements  and  Supplementary  Data -  Exelon,  Note 22 of  Notes to
Consolidated Financial Statements.                                              

         PECO's  settlement  of its  restructuring  case  included  a number  of
provisions designed to encourage  competition for generation services.  Shopping
credits for generation  service may provide an economic  incentive for customers
to choose an  alternate  supplier.  Effective  January 1, 2001,  PECO  agreed to
assign 20% of its  non-shopping  residential  customers to  competitive  default
service                                                                         

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provided  by one or more  alternate  suppliers.  If on January  1, 2003,  50% of
PECO's  residential  and  commercial  customers  are  not  obtaining  generation
services from alternate generation suppliers,  then non-shopping  customers will
be assigned to alternate generation suppliers to reach that level.              

         On November 29, 2000, the PUC approved PECO's  bilateral  contract with
New Power  Company  (New Power) to move 22% of PECO's  non-shopping  residential
customers to New Power for competitive  default generation  service.  Under this
contract,  New Power has agreed that it will provide generation services through
January 2004,  at specified  discounted  rates,  to nearly  300,000  residential
customers of PECO who are currently taking their  generation  service from PECO.
During this period, those customers will continue to have the right to switch to
an alternate electric  generation  supplier other than New Power, as well as the
right to return as customers of PECO,  without penalty or charge.  At the end of
2002, if the number of competitive  default service customers then served by New
Power has dropped below 20% of PECO's  residential  customer base, there will be
an  additional  allocation  of  residential  customers to New Power to bring its
competitive  default service levels back up to 20% of the  residential  customer
base.                                                                           

         In addition to the New Power  contract,  PECO has also  entered  into a
contract  with  Green  Mountain  Energy  Company  to  assign  50,000  of  PECO's
non-shopping  residential  customers to Green Mountain for  competitive  default
generation  service, on the same terms and conditions as the New Power contract.
On February 21, 2001, the PUC approved the Green Mountain contract.             

Transmission Services                                         

         Energy Delivery  provides  wholesale  transmission  service under rates
established  by FERC.  FERC  Order No.  888  (Order  888)  requires  all  public
utilities that own, control or operate interstate  transmission  facilities have
open-access   transmission  tariffs  for  wholesale   transmission  services  in
accordance with non-discriminatory  terms and conditions established by FERC. In
response to Order 888, both ComEd and PECO filed individual  compliance  tariffs
with FERC.                                                                      

         FERC has used its regulation of transmission  to encourage  competition
for wholesale  generation services and the development of regional structures to
facilitate  regional wholesale markets.  In December 1999, FERC issued Order No.
2000  requiring  jurisdictional  utilities to file a proposal to form a regional
transmission  organization (RTO) meeting certain  governance,  operational,  and
scope and scale  requirements  articulated  in the order or,  alternatively,  to
describe  efforts to  participate in or work toward  participating  in an RTO or
explain  why they were not  participating  in an RTO.  Order  2000 is  generally
designed to separate the  governance  and operation of the  transmission  system
from generation companies and other market  participants.  RTOs may be organized
and may independently manage regional transmission systems in a variety of ways,
including  through   independent   for-profit  or  not-for-profit   transmission
companies,  independent  not-for-profit  system  operators  or ISOs (such as the
Midwest  Independent  Transmission  System  Operator  (MISO)),  as well as other
structures.  FERC has set December  15, 2001 as the  deadline  for  transferring
control over transmission facilities to approved RTOs.                          

         ComEd.  ComEd  has  been  a  transmission-owning   member  of  MISO,  a
prospective  RTO. On October 31, 2000, ComEd announced its intention to join the
Alliance Regional Transmission Organization (Alliance), an RTO being established
by utilities  generally located to the east of ComEd.  Participation  options in
the  Alliance  are being  evaluated,  including a transfer  of the  transmission
assets for a passive equity interest, leasing or a management-type  arrangement.
On the same date,  ComEd  provided  notice of its intention to withdraw from the
MISO,  which  withdrawal is needed in order to participate  in the Alliance.  In
March 2001,  ComEd,  the MISO and other market  participants  reached a proposed
settlement regarding issues associated with ComEd's                             

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withdrawal from the MISO,  including  related costs. The proposed  settlement is
subject to FERC approval,  which has the power to accept, reject or make changes
as a condition to its approval.  If the  settlement  is approved,  ComEd will be
permitted to withdraw from the MISO and to join the Alliance. At present,  ComEd
believes it has established  adequate  reserves for its portion of costs related
to its withdrawal from the MISO.                                                

         PECO.  PECO  provides  regional  transmission  service  pursuant  to  a
regional open-access  transmission tariff filed by it and the other transmission
owners who are  members of PJM  Interconnection  LLC (PJM).  PJM is a power pool
that  integrates,  through  central  dispatch,  the generation and  transmission
operations of its member companies across a 50,000 square mile territory.  Under
the PJM tariff,  transmission service is provided on a region-wide,  open-access
basis using the transmission facilities of the PJM members at rates based on the
costs of transmission  service.  PJM's Office of  Interconnection is the ISO for
PJM and is responsible for operation of the PJM control area and  administration
of the PJM  open-access  transmission  tariff.  PECO and the other  transmission
owners in PJM have turned over control of their  transmission  facilities to the
ISO. The PJM ISO and the transmission  owners who are members of PJM,  including
PECO, have filed with FERC for approval of PJM as an RTO.                       

Gas                                                           

         Historically,  PECO's gas sales and gas  transportation  revenues  were
derived  pursuant to rates  regulated by the PUC. The PUC  established,  through
regulated  proceedings,  the base rates that PECO may charge for gas  service in
Pennsylvania.  PECO's gas rates are subject to quarterly adjustments designed to
recover or refund the  difference  between the actual cost of purchased  gas and
the  amount  included  in base  rates  and to  recover  or refund  increases  or
decreases in certain state taxes not recovered in base rates.                   

         On July 1, 2000, PECO implemented the  Pennsylvania  Natural Gas Choice
and  Competition  Act that was  passed in 1999.  The Act  expands  choice of gas
suppliers to residential  and small  commercial  customers and eliminates the 5%
gross receipts tax on gas distribution companies' sales of gas. Large commercial
and industrial  customers have been able to choose their  suppliers  since 1984.
Approximately one-third of PECO's current total yearly throughput is supplied by
third parties.  The Act permits gas  distribution  companies to continue to make
regulated sales of gas, at cost, to their customers. The Act does not deregulate
the transportation service provided by gas distribution companies, which remains
subject to rate  regulation.  Gas  distribution  companies  continue  to provide
billing, metering, installation, maintenance and emergency response services.   

         PECO's  natural gas supply is provided  by  purchases  from a number of
suppliers for terms of up to five years.  These  purchases  are delivered  under
several  long-term  firm  transportation  contracts.   PECO's  aggregate  annual
entitlement   under  these  firm   transportation   contracts  is  87.5  million
dekatherms.  Peak gas is provided by PECO's  liquefied  natural gas facility and
propane-air  plant.  PECO also has under  contract  21.7 million  dekatherms  of
underground  storage through service  agreements.  Natural gas from  underground
storage  represents   approximately  45%  of  PECO's  2000-2001  heating  season
supplies.                                                                       

Construction Budget                                           

         The  following  table shows  Exelon's  most recent  estimate of capital
expenditures for plant additions and improvements for Energy Delivery for 2001: 

                                            ComEd                   PECO
                                             (Millions of $)
                                             -----------------------------------
        Transmission and Distribution           $745                    $181
        Gas                                       --                      69
        Other                                    155                      10
                                                ----                    ----
                 Total                          $900                    $260
                                                ====                    ====

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Generation                                                                      

General                                                       

         Generation  combines  the  generating  resources  and  wholesale  power
marketing  operations  owned by PECO and ComEd prior to Exelon's  restructuring.
The  generating  resources  of  Generation  consist of  ownership  interests  in
generating facilities and long-term contracts for capacity. Generation also owns
a 50% interest in AmerGen,  a joint venture with British Energy,  Inc., a wholly
owned  subsidiary of British  Energy plc (British  Energy),  which  acquires and
operates  nuclear  generating  facilities.  In  2000,  Exelon  acquired  a 49.9%
interest in Sithe, with an option to purchase the other 50.1% beginning in 2003.
Sithe develops, owns and operates merchant generating facilities.               

         Generation's wholesale power marketing group, Power Team, is one of the
largest  wholesale  power  marketers  in North  America.  Power Team manages the
output of Generation's resources to meet the load requirements of ComEd and PECO
and the supply commitments of Exelon Energy,  Exelon's competitive retail energy
supplier.                                                                       

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Generating Resources                                          

         The generating  resources of  Generation,  AmerGen and Sithe consist of
the following:                                                                  

Type of Capacity                             MW                 % of Total      
----------------                           ------              -----------      
Generation 1                                                                    
   Nuclear                         13,949                  42.2%
   Fossil                           3,721                  11.3%
   Hydro                            1,489                   4.5%
   Long-term Contracts 2           13,900                  42.0%
                                   ------                 ------
          Total                    33,059                 100.0%
                                   ======                 ======
AmerGen 3                                                                       
   Nuclear                          2,378                 100.0%
                                   ======                 ======
Sithe 4                                                                         
   Fossil                           3,782                  37.7%
   Under Development                3,715                  37.0%
   Under Advanced Construction      2,535                  25.3%
                                   ------                 ------
          Total                    10,032                 100.0%
                                   ======                 ======

1 See "Fuel" for sources of fuels used in electric generation.                  
2 Contracts range from 4 to 29 years.                                           
3  Generation  owns a 50% interest in AmerGen.  Capacity and the related  energy
from AmerGen's  facilities not sold under  long-term  contracts to third parties
are marketed by the Power Team. See "AmerGen" below.                            
4 Generation  owns a 49.9%  interest in Sithe.  The capacity and related  energy
from Sithe's facilities are marketed by Sithe. Fossil includes Hydro of 80 MW or
0.79% of total Sithe capacity. See "Sithe" below.                               

         The  generating  resources of Generation  are located  primarily in the
Midwest   (approximately   45%  of  capacity)  and  the  Mid  Atlantic   regions
(approximately 55% of capacity).  AmerGen's generating resources are also in the
Midwest and the Mid Atlantic regions. Sithe's generating resources are primarily
in the New England region.                                                      

Nuclear Facilities                                                              

         Generation  has  ownership   interests  in  eight  nuclear   generating
stations,  consisting of 16 units with 13,949 MW of capacity (Exelon share). For
additional  information,  see ITEM 2. Properties.  All of the nuclear generating
stations  are operated by  Generation,  with the  exception of Salem  Generating
Station (Salem),  which is operated by PSE&G Nuclear, LLC. In addition,  AmerGen
owns and operates three nuclear generating  stations,  consisting of three units
with 2,378 MW of capacity.                                                      

         In 2000,  approximately  59% of  Exelon's  electric  output  (including
output of ComEd prior to the merger) was generated  from the nuclear  generating
facilities. During 2000 and 1999, the nuclear generating facilities now owned by
Generation  operated  at  weighted  average  capacity  factors  of 94% and  89%,
respectively.                                                                   

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         Generation is in the process of increasing  the capacity of its nuclear
fleet through  power  uprates and plant  modifications  and  refinements.  Power
uprate  projects  involve  equipment  and  instrumentation  modifications  which
require NRC approval.  These power uprate  projects have the potential of adding
up to 885 MW of capacity by the end of 2003.  Generation is also pursuing  other
capacity  additions  through  plant  modifications  and  refinements  of several
nuclear  units  that have the  potential  of adding  between  60 MW and 90 MW of
capacity.                                                                       

         On  September  30,  1999,  Exelon  reached an  agreement to purchase an
additional 7.51% ownership  interest in Peach Bottom Atomic Power Station (Peach
Bottom),  constituting  164 MW of capacity,  from Atlantic City Electric Company
and Delmarva Power & Light Company for $18 million. On December 24, 2000, Exelon
completed the purchase of Delmarva Power & Light  Company's  3.755%  interest in
Peach Bottom for $9 million.  The purchase of Atlantic City  Electric  Company's
ownership  interest is still pending regulatory  approval,  which is expected in
2001.                                                                           

         Regulation.  Generation is subject to the  jurisdiction of the NRC with
respect to its nuclear  generating  stations.  The NRC  regulations  control the
granting of permits and licenses for the  construction  and operation of nuclear
generating   stations  and  subject  such  stations  to  continuing  review  and
regulation.  The NRC review and regulatory  process covers,  among other things,
the operations,  maintenance, and environmental and radiological aspects of such
stations.  The NRC may  modify,  suspend or revoke  licenses  and  impose  civil
penalties  for failure to comply with the Atomic  Energy  Act,  the  regulations
under such Act or the terms of such licenses.  Changes in regulations by the NRC
that  require  a  substantial  increase  in  capital  expenditures  for  nuclear
generating  facilities  or that result in increased  operating  costs of nuclear
generating units could adversely affect Exelon and its results of operations.   

         In April 2000, the NRC implemented a Revised Reactor  Oversight Process
that replaced the Systematic Assessment of Licensee Performance process. The new
process relies on quantifiable  performance  indicators and inspections of areas
not covered by indicators to determine safety performance. An overall assessment
of  performance  is  provided  by the NRC on an annual  basis and  reflects  the
combination of performance indicators and inspection results.                   

         Nuclear  Waste  Disposal.  There are no commercial  facilities  for the
reprocessing  of spent  nuclear fuel (SNF)  currently in operation in the United
States,  nor has the NRC  licensed  any such  facilities.  Generation  currently
stores all SNF from its nuclear  generating  facilities  in on-site,  spent-fuel
storage pools and, for certain plants in dry cask storage facilities.  The spent
fuel  storage  pools at  Generation's  nuclear  plants  may not have  sufficient
storage capacity for the life of the plant and additional storage facilities may
be required.                                                                    

         Under the Nuclear Waste Policy Act of 1982 (NWPA), the U.S.  Department
of Energy  (DOE) is  responsible  for the  disposal of SNF and other  high-level
radioactive  waste.  ComEd and PECO each signed contracts with the DOE (Standard
Contract)  to  provide  for  disposal  of  SNF  from  their  respective  nuclear
generating  stations.  In  accordance  with the NWPA and the Standard  Contract,
ComEd and PECO pay the DOE one mill ($.001) per kWh of net nuclear generation to
cover the cost of SNF disposal.  This fee may be adjusted prospectively in order
to ensure full disposal cost  recovery by DOE. In July 1996,  the U.S.  Court of
Appeals for the District of Columbia (D.C.  Court of Appeals),  in response to a
suit  filed  by a group of  utilities,  ruled  that  the DOE had an  unequivocal
obligation to begin to accept SNF in 1998. In November  1997,  the D.C. Court of
Appeals  issued a decision in which it confirmed  its earlier  decision that the
DOE has an  unconditional  obligation  to begin  disposal  of SNF by January 31,
1998, but directed utilities to pursue contractual remedies for DOE's failure to
perform.                                                                        

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         In July 1998,  ComEd  filed a  complaint  against the DOE in the United
States Court of Federal  Claims  seeking to recover  damages caused by the DOE's
failure to honor its contractual obligation to begin disposing of SNF in January
1998. In August 2000, the United States Court of Appeals for the Federal Circuit
decided two other similar cases,  granting partial summary judgment on liability
for the plaintiff  utility.  ComEd has requested  that the Court of Claims grant
its pending summary judgment motion on liability,  particularly in light of this
Federal Circuit's decision.                                                     

         In July 2000,  PECO entered into an agreement  with the DOE relating to
Peach  Bottom to address  the DOE's  failure to begin  removal of SNF in January
1998, as required by the Standard Contract. Under that agreement, the DOE agreed
to provide  credits  against future  contributions  to the nuclear waste fund to
compensate for SNF storage costs incurred as a result of the DOE's breach of the
Standard Contract.  The agreement also provides that, upon request, the DOE will
take title to the SNF and the interim storage  facility at Peach Bottom provided
certain conditions are met. In November 2000, eight utilities with nuclear power
plants filed a Joint  Petition for Review against the DOE with the United States
Court of Appeals for the Eleventh  Circuit seeking to invalidate that portion of
the agreement  providing for credits  against nuclear waste fund payments on the
ground that such provision is a violation of the NWPA.  PECO has intervened as a
defendant in that case, which is ongoing.                                       

         The Standard  Contract with the DOE requires  ComEd and PECO to pay the
DOE a one-time fee applicable to nuclear  generation through April 6, 1983. PECO
has paid the one-time fee. Pursuant to the Standard Contract,  ComEd has elected
to pay the one-time fee of $277 million, with interest,  just prior to the first
delivery of SNF to the DOE. As of  December  31,  2000,  the  liability  for the
one-time fee with interest was $810 million.                                    

         As a by-product of their operations,  nuclear  generating units produce
low-level  radioactive  waste (LLRW).  LLRW is  accumulated  at each  generating
station and permanently  disposed of at a Federally  licensed disposal facility.
The Federal Low-Level  Radioactive Waste Policy Act of 1980 provides that states
may enter into compacts to provide for regional disposal facilities for LLRW and
restrict use of such facilities to waste generated  within the region.  Illinois
and the  Commonwealth  of Kentucky  have entered into a compact,  which has been
approved by Congress as required by the Waste Policy Act.  Neither  Illinois nor
Kentucky currently has an operational site, and none is currently expected to be
operational until after the year 2011. Pennsylvania,  which had agreed to be the
host site for LLRW disposal  facilities for generators  located in Pennsylvania,
Delaware,  Maryland and West Virginia,  has suspended the search for a permanent
disposal site.                                                                  

         Generation  has  temporary  on-site  storage  capacity  at its  nuclear
generating stations for limited amounts of LLRW and has been shipping such waste
to LLRW disposal facilities in South Carolina and Utah.  Generation  anticipates
the possibility of continuing  difficulties in disposing of LLRW.  Generation is
also  pursuing  alternative  disposal  strategies  for  LLRW,  including  a LLRW
reduction program.                                                              

         The National  Energy Policy Act of 1992  requires,  among other things,
that  utilities  with  nuclear   reactors  pay  for  the   decommissioning   and
decontamination of the DOE nuclear fuel enrichment  facilities.  The total costs
to domestic utilities are estimated to be $150 million per year through 2006, of
which  Generation's  share is  approximately  $22 million  per year.  The Energy
Policy Act provides that these costs are to be recoverable in the same manner as
other fuel costs.  ComEd and PECO are currently  recovering  these costs through
regulated rates.                                                                

         Insurance.  The  Price-Anderson  Act currently  limits the liability of
nuclear reactor owners to $9.5 billion for claims that could arise from a single
nuclear incident. The limit is subject to change to                             

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account  for the  effects of  inflation  and  changes in the number of  licensed
reactors.  Generation carries the maximum available commercial insurance of $200
million  and  the  remaining   $9.3  billion  is  provided   through   mandatory
participation in a financial  protection pool. Under the Price-Anderson Act, all
nuclear  reactor  licensees  can be  assessed  up to $89 million per reactor per
incident, payable at no more than $10 million per reactor per incident per year.
This  assessment is subject to inflation and state premium  taxes.  In addition,
the U.S.  Congress could impose revenue raising measures on the nuclear industry
to pay claims if the damages  from an incident  at a licensed  nuclear  facility
exceed $9.5 billion.  The  Price-Anderson  Act and the  extensive  regulation of
nuclear  safety by the NRC do not preclude  claims under state law for personal,
property or punitive damages related to radiation hazards.                      

         Property  insurance is maintained for each nuclear power plant in which
Generation  has  an  ownership  interest.  Generation  is  responsible  for  its
proportionate  share of  premiums  for  such  insurance  based on its  ownership
interest.  Generation's  insurance policies provide coverage for decontamination
liability expense,  premature  decommissioning and loss or damage to its nuclear
facilities.  These policies require that insurance  proceeds first be applied to
assure  that,  following  an  accident,  the  facility  is in a safe and  stable
condition and can be maintained in such condition. Within 30 days of stabilizing
the  reactor,  the  licensee  must  submit a report to the NRC that  provides  a
clean-up plan, including the identification of all clean-up operations necessary
to  decontaminate  the reactor to permit either the  resumption of operations or
decommissioning of the facility. Under Generation's insurance policies, proceeds
not already  expended to place the reactor in a stable condition must be used to
decontaminate the facility. If, as a result of an accident, the decision is made
to  decommission  the  facility,  a portion of the  insurance  proceeds  will be
allocated  to a fund that  Generation  is  required  by the NRC to  maintain  to
decommission  the facility.  These proceeds would be paid to the fund to make up
any difference  between the amount of money in the fund at the time of the early
decommissioning and the amount that would have been in the fund if contributions
had been made over the  normal  life of the  facility.  Generation  is unable to
predict  what  effect  these   requirements  may  have  on  the  timing  of  the
availability of insurance  proceeds to creditors and the amount of such proceeds
that would be available.  Under the terms of the various  insurance  agreements,
Generation  could be assessed up to $69 million for losses incurred at any plant
insured by the insurance  companies.  Generation is  self-insured  to the extent
that any losses may exceed the amount of insurance  maintained.  Any such losses
could have a material adverse effect on Exelon's financial  condition or results
of operations.                                                                  

         Generation  is a member of an industry  mutual  insurance  company that
provides  replacement  power cost  insurance in the event of a major  accidental
outage at a nuclear  station.  The  policy  contains  a  waiting  period  before
recovery of costs can  commence.  The  premium  for this  coverage is subject to
assessment  for  adverse  loss  experience.  Generation's  maximum  share of any
assessment is $18 million per year.                                             

         In addition,  Generation  participates in the American Nuclear Insurers
Master Worker Program,  which provides coverage for worker tort claims filed for
bodily injury caused by a nuclear  energy  accident.  This program was modified,
effective   January  1,  1998,   to  provide   coverage  to  all  workers  whose
nuclear-related  employment began on or after the  commencement  date of reactor
operations.  Generation will not be liable for a retrospective  assessment under
this new policy. However, in the event losses incurred under the small number of
policies in the old program exceed accumulated  reserves,  a maximum retroactive
assessment of up to $50 million could apply.                                    

         Decommissioning.  NRC  regulations  require  that  licensees of nuclear
generating  facilities  demonstrate  reasonable  assurance  that  funds  will be
available in certain  minimum  amounts at the end of the life of the facility to
decommission the facility.  Based on estimates of decommissioning costs         

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for  each  of the  nuclear  facilities  in  which  Generation  has an  ownership
interest,  the PUC permits  PECO and the ICC permits  ComEd to collect  from its
customers  and deposit in  segregated  accounts  amounts  which,  together  with
earnings  thereon,  will be used to  decommission  such nuclear  facilities.  At
December  31, 2000,  Generation's  current  estimate of its nuclear  facilities'
decommissioning cost was $6.9 billion. At December 31, 2000, ComEd and PECO held
$3.1 billion in trust accounts,  representing  amounts  recovered from customers
and net realized and  unrealized  investment  earnings  thereon,  to fund future
decommissioning  costs. The decommissioning  liabilities and related trust funds
were  transferred  to  Generation  as of January 1, 2001  pursuant  to  Exelon's
corporate   restructuring.   Amounts   collected  by  ComEd  and  PECO  to  fund
decommissioning costs will continue to be paid into the nuclear  decommissioning
trust funds.                                                                    

         In connection with the transfer of ComEd's nuclear generating  stations
to  Generation,  ComEd  asked  the ICC to  approve  the  continued  recovery  of
decommissioning  costs after the transfer.  On December 20, 2000, the ICC issued
an order  finding  that  the ICC has the  legal  authority  to  permit  ComEd to
continue  to  recover  decommissioning  costs  from  ComEd's  customers  for the
six-year term of the power  purchase  agreement  between  ComEd and  Generation.
Under the ICC order,  ComEd is  permitted  to recover  $73 million per year from
customers for decommissioning for the years 2001 through 2004. In 2005 and 2006,
ComEd can recover up to $73 million annually,  depending upon the portion of the
output  of  the  former  ComEd  nuclear   stations  that  ComEd  purchases  from
Generation.  Subsequent  to  2006,  there  will  be  no  further  recoveries  of
decommissioning  costs  from  customers.  The ICC order also  provides  that any
surplus funds after ComEd's former nuclear stations are  decommissioned  must be
refunded to ComEd's  customers.  The amount of recovery in the ICC order is less
than the $84 million  annual  amount ComEd  recovered in 2000.  The ICC order is
currently pending appeal in the Illinois Appellate Court.                       

Fuel                                                                            

         The  following   table  shows  sources  of  electric  output  for  2000
(including  output of ComEd prior to the merger) and sources of electric  output
as estimated for 2001:                                                          

                                                      Electric      Electric
                                                        Output     Output 2001
                                                       2000         (Est.)
                                                        -----      -----------
Nuclear.............................................       59%           62%    
Fossil including Hydro..............................        6%            6%    
Purchased, interchange and nonutility generated.....       35%           32%    
                                                     -----         -----
                                                      100%          100%
                                                     =====         =====

         The fuel  costs for  nuclear  generation  are  substantially  less than
fossil-fuel   generation.   Consequently,   nuclear   generation   is  the  most
cost-effective way for Generation to meet its commitment to supply the base load
requirements of ComEd, PECO and Exelon Energy and for sales to other utilities. 

         The cycle of production  and  utilization  of nuclear fuel includes the
mining and milling of uranium ore into uranium  concentrates;  the conversion of
uranium  concentrates  to uranium  hexafluoride;  the  enrichment of the uranium
hexafluoride;  the  fabrication of fuel  assemblies;  and the use of the nuclear
fuel in the  generating  station  reactor.  Generation  has uranium  concentrate
inventory and supply contracts sufficient to meet all of its uranium concentrate
requirements  through  2001.  Generation's  contracted  conversion  services are
sufficient to meet all of its uranium conversion  requirements through 2002. All

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of  Generation's  enrichment  requirements  have been  contracted  through 2004.
Contracts for fuel fabrication have been obtained through 2005.  Generation does
not anticipate  difficulty in obtaining the necessary  uranium  concentrates  or
conversion, enrichment or fabrication services for its nuclear units.           

         Generation  obtains  approximately 25% of its enrichment  services from
European  suppliers.  There is an ongoing  trade action by USEC,  Inc.  alleging
dumping in the United States against European enrichment services suppliers.  If
the trade  action is resolved  unfavorably  against the European  suppliers,  it
could increase Generation's cost of enrichment services.                        

         Coal is obtained for Generation's coal-fired capacity primarily through
long-term  contracts  with the  remainder  supplied  through  either  short-term
contracts or  spot-market  purchases.  Generation  purchases  fuel oil through a
combination of short-term contracts and spot-market purchases. The contracts are
normally not longer than one year in length.  Fuel oil  inventories  are managed
such that in the winter months  sufficient  volumes of fuel are available in the
event of extreme weather  conditions and during the remaining  months  inventory
levels are managed to take  advantage of favorable  market  pricing.  Generation
obtains natural gas for electric  generation  through a combination of long-term
and short-term contracts and spot purchases as well as through PECO's own retail
gas tariff.                                                                     

Power Team                                                                      

         Generation  competes in the wholesale electric generation business on a
national basis. Generation competes on the basis of price and service offerings,
utilizing its generation portfolio to assure customers of energy deliverability.
Generation  enters  into  bilateral  arrangements  for the  purchase,  sale  and
delivery of energy and  competes in the  developing  wholesale  spot markets for
electricity.                                                                    

         Generation  has agreed to supply  ComEd and PECO with their  respective
load requirements for customers through 2006 and 2010, respectively.  Generation
has also contracted with Exelon Energy to meet its supply  commitments  pursuant
to its competitive retail generation sales agreements. Under the agreements with
ComEd and PECO,  Generation  will supply all of ComEd and PECO's needs to supply
customers who do not select an alternative  electric generation supplier through
the end of the respective transition periods. Therefore, the supply requirements
under the agreements will vary depending on how much of the load has selected an
alternative supplier.                                                           

         FERC's stated goal in  promulgating  Order 888 and related orders is to
remove impediments to competition in the wholesale bulk power marketplace and to
bring more efficient and lower cost power to electricity  consumers.  Generation
has received authorization from FERC to sell energy at market-based rates.      

         Generation's  wholesale  operations  include the physical  delivery and
marketing  of  power  obtained  through  its  generation  capacity,   and  long,
intermediate  and  short-term  contracts.  Generation  seeks to  maintain  a net
positive supply of energy and capacity,  through  ownership of generation assets
and power  purchase  and lease  agreements,  to  protect  it from the  potential
operational  failure of one of its owned or contracted power  generating  units.
Generation  has also  contracted  for access to  additional  generation  through
bilateral long-term power purchase agreements.  These agreements are commitments
related  to  power   generation  of  specific   generation   plants  and/or  are
dispatchable in nature similar to asset ownership.  Generation enters into power
purchase  agreements  with the  objective of obtaining  low-cost  energy  supply

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sources to meet its physical delivery obligations to customers.  Excess power is
sold in the wholesale market. Generation has also purchased transmission service
to ensure that it has  reliable  transmission  capacity to  physically  move its
power  supplies  to meet  customer  delivery  needs.  The  intent  and  business
objective  for  the  use of its  capital  assets  and  contracts  is to  provide
Generation  with  physical  power supply to enable it to deliver  energy to meet
customer needs.  Except for hedging purposes,  Generation does not use financial
contracts in its wholesale marketing activities. During 2001, Generation intends
to pursue  financial  trading,  primarily  to  complement  the  marketing of its
generation portfolio.  Generation intends to manage the risk of these activities
through a mix of long-term and short-term supply obligations and through the use
of established policies, procedures and trading limits.                         

         Generation has entered into bilateral long-term contractual obligations
for sales of energy  to  load-serving  entities  including  electric  utilities,
municipalities,  electric cooperatives, and retail load aggregators.  Generation
also enters into  contractual  obligations to deliver energy to wholesale market
participants  who primarily focus on the resale of energy products for delivery.
Generation  provides delivery of its energy to these customers through access to
transmission assets or rights for transmission service.                         

         In addition,  Generation  has entered  into  long-term  power  purchase
agreements with  independent  power producers under which Generation makes fixed
capacity  payments in return for exclusive  rights to the energy and capacity of
the  generating  units  for a fixed  period.  The terms of the  long-term  power
purchase agreements enable Generation to dispatch energy from the plants.       

         At  December  31,  2000,  Generation  had  long-term  commitments,   in
megawatt-hours  (MWh) and dollars,  relating to the purchase and sale of energy,
capacity  and  transmission  rights from  unaffiliated  utilities  and others as
expressed in the following tables (in millions):                                

      Power Only
    --------------------------------------------
  Purchases                  Sales
    ------------------          ----------------
      MWh     Dollars           MWh      Dollars
    ------------------          ----------------
2001                  17     $362              36      $  840               
2002                  11      167              18         371               
2003                   9      135              15         327               
2004                   5       71               8         190               
2005                   4       61               6         148               
Thereafter             5       81               4          87               
              ----                      ------
Total                        $877                      $1,963               
              ====                      ======

         Capacity         Capacity        Transmission
           Purchases          Sales       Rights Purchases
       in Dollars       in Dollars        in Dollars
       ---------------------------------------------
2001                 $  856            $  32           $  119               
2002                    881               21               35               
2003                    786               16               32               
2004                    778                3               25               
2005                    414                3               25               
Thereafter            5,200                8               80               
       -------           ------           --------
Total                $8,915             $ 83           $  316               
      ======             ====           ======

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Capital Expenditures                                          

      Generation's estimated capital expenditures for 2001 are as follows:

                                     (Millions of $)
                                     -------------
Production Plant                    $459  
Nuclear Fuel                         308  
Investment in AmerGen                185  
                                   -----
       Total                      $952
                                  ====

         Capital  expenditures  for  production  plant include  expenditures  to
increase capacity of existing plants.                                           

Sithe                                                         

         As a  result  of a  purchase  in  December  2000,  Exelon  owns a 49.9%
interest in Sithe, an independent  power producer.  The remaining 50.1% is owned
by Vivendi, SA (34%), Marubeni Corp. (15%) and Sithe Management (1%). As part of
the  transaction,  Exelon has the right to purchase the remaining 50.1% interest
in Sithe from Vivendi, Marubeni and Sithe Management within two to five years at
a  price  based  on  market  conditions  when  the  call  option  is  exercised.
Alternatively,  Vivendi, Marubeni and Sithe Management have the right to require
Exelon to purchase the remaining 50.1% within two to five years at a price based
on market  conditions  when the option is  exercised.  Exelon  accounts  for its
investment in Sithe under the equity method of accounting.                      

         Sithe  presently  owns and operates 27 power  generation  facilities in
North America,  with approximately 3,800 MW of net merchant generating capacity.
It has 11 facilities under  construction with an estimated  capacity of 2,500 MW
and approximately  3,700 MW of generation capacity in various stages of advanced
development.                                                                    

AmerGen                                                       

         In  1997,   Exelon  and  British   Energy  formed   AmerGen  to  pursue
opportunities to acquire and operate nuclear  generating  stations in the United
States. Generation and British Energy each own a 50% equity interest in AmerGen.
Exelon  accounts  for its  investment  in  AmerGen  under the  equity  method of
accounting.                                                                     

         In 1999, AmerGen, purchased Clinton Nuclear Power Station (Clinton) and
Three Mile Island Unit No. 1 Nuclear  Generating  Facility  (TMI).  Clinton is a
boiling  water  reactor  with a capacity of 933 MW. TMI is a  pressurized  water
reactor with a capacity of 814 MW.                                              

         In August 2000,  AmerGen completed the purchase of Oyster Creek Nuclear
Generation Facility (Oyster Creek) from GPU, Inc. (GPU) for $10 million.  Oyster
Creek is a boiling water reactor with a capacity of 630 MW.                     

         In  conjunction  with each of the completed  acquisitions,  AmerGen has
entered  into a power  purchase  agreement  providing  the seller  with all or a
portion of the energy  produced at the  acquired  facility for periods of two to
five years.  The energy produced at the plants not sold under the power purchase
agreement is sold in the wholesale  market.  At the closing of each acquisition,
AmerGen received funded  decommissioning  trust funds,  with assets to cover the
anticipated  costs to  decommission  each nuclear  plant  following its licensed
life, including an annual net growth rate of 2% in                              

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accordance with NRC  regulations.  AmerGen believes that the amount of the trust
funds  and  investment   earnings   thereon  will  be  sufficient  to  meet  its
decommissioning obligations.                                                    

Enterprises                                                                     

         Enterprises  combines the competitive  businesses formerly held by PECO
and  Unicom.  Enterprises  focuses  its  business  activities  in the  areas  of
infrastructure  services,  communications,  retail energy sales, energy services
and related investments.                                                        

         Exelon  Infrastructure  Services,  Inc. (EIS)  provides  infrastructure
services,  including  infrastructure  construction,   operation  management  and
maintenance  services  to  owners of  electric,  gas,  cable and  communications
systems,   including   industrial  and  commercial   customers,   utilities  and
municipalities,  throughout the United States. Since it was established in 1997,
EIS has acquired thirteen infrastructure service companies.  Currently,  EIS has
annualized revenues of over $1 billion and employs more than 8,000 people.      

         Exelon  Energy   provides  retail  electric  and  gas  services  as  an
unregulated  retail energy supplier in Illinois,  Massachusetts,  Michigan,  New
Jersey,  Ohio,  Pennsylvania and other areas in the Midwest and Northeast United
States.                                                                         

         Exelon Services is engaged in the design, installation and servicing of
heating,   ventilation  and  air  conditioning  facilities  for  commercial  and
industrial  customers.  Exelon Services also provides  energy-related  services,
including performance contracting and energy management systems.                

         Exelon  Thermal  Technologies  provides  district  cooling  and related
services to offices and other  buildings  in the  central  business  district of
Chicago  and in other  cities in North  America,  generally  working  with local
utilities.  District  cooling involves the production of chilled water at one or
more central  locations and its circulation to customers'  buildings,  primarily
for air conditioning.                                                           

         Exelon  Communications is the unit of Enterprises  through which Exelon
manages  its  communications   investments.   Exelon  Communications'  principal
investments   are   PECOAdelphia   Communications   and  AT&T  Wireless  PCS  of
Philadelphia,  LLC (AT&T Wireless  Philadelphia).  PECOAdelphia is a competitive
local exchange carrier, providing local and long-distance,  point-to-point voice
and  data  communications,  internet  access  and  enhanced  data  services  for
businesses and  institutions in eastern  Pennsylvania.  PECOAdelphia  utilizes a
large-scale,  fiber-optic  cable-based  network that currently  extends over 700
miles and is connected  to major  long-distance  carriers and local  businesses.
PECOAdelphia  is a 50% owned joint  venture with  Adelphia  Business  Solutions.
Formed  in 1996,  AT&T  Wireless  Philadelphia  is a joint  venture  to  provide
personal communications services (PCS) in the Philadelphia  metropolitan trading
area.  AT&T Wireless  Philadelphia  has  completed the initial  build-out of its
digital  wireless PCS network and  commercially  launched PCS service in October
1997. Enterprises holds a 49% equity interest in AT&T Wireless Philadelphia.    

         Exelon  Capital  Partners  was  created in 1999 as a vehicle for direct
venture  capital  investing in the areas of  unregulated  energy  sales,  energy
services,  utility infrastructure  services,  e-commerce and communications.  At
December 31, 2000, Exelon Capital Partners had made direct  investments in eight
companies,  with funding commitments  totaling  approximately $100 million.  The
investment  mix was  weighted  toward  the  communications  industry,  but  also
included companies in energy services and retail services, including e-commerce.

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Employees                                                                       

         As of January 1, 2001,  Exelon and its subsidiaries  had  approximately
29,000  employees,  including  2,700  employees  at PECO and 8,000  employees at
ComEd. The number of employees does not include employees of joint ventures.  As
a result of the  restructuring  of Exelon's  operations in January 2001,  Energy
Delivery,  Generation and Enterprises had approximately  10,700, 7,500 and 9,800
employees, respectively.                                                        

         Over the past several  years,  a number of unions have filed  petitions
with the National Labor  Relations  Board to hold  certification  elections with
regard to  different  segments of  employees  within  PECO.  In all cases,  PECO
employees have rejected union  representation.  PECO expects that such petitions
will continue to be filed in the future.                                        

         Approximately  7,400 employees,  including 5,100 employees of ComEd and
2,200 employees of Generation,  are covered by a collective bargaining agreement
with Local 15 of the  International  Brotherhood  of Electrical  Workers.  ComEd
reached  agreement with Local 15 on the pension,  as well as other benefits,  on
September 15, 2000. The collective bargaining agreement with Local 15 expires on
March 31,  2001.  Negotiations  are  ongoing  with  respect to a new  collective
bargaining agreement.                                                           

         In addition,  approximately  3,100 EIS  employees  are  represented  by
unions,  including  approximately 1,500 employees who are represented by various
local  unions  of the  International  Brotherhood  of  Electrical  Workers.  The
remaining  union  employees  are members of a number of different  local unions,
including laborers, welders, operators, plumbers and machinists.                

Environmental Regulation                                                        

General                                                       

         Specific  operations  of Exelon,  primarily  those of  Generation,  are
subject to regulation regarding  environmental  matters by the United States and
by the  states  of  Illinois,  Pennsylvania,  New  Jersey  and Iowa and by local
jurisdictions  where Exelon  operates  its  facilities.  The Illinois  Pollution
Control Board (IPCB) has jurisdiction over environmental control in the State of
Illinois,  together with the Illinois  Environmental  Protection  Agency,  which
enforces  regulations  of  the  IPCB  and  issues  permits  in  connection  with
environmental control. The Pennsylvania  Department of Environmental  Protection
(PDEP)  has  jurisdiction  over  environmental  control in the  Commonwealth  of
Pennsylvania. State regulation includes the authority to regulate air, water and
noise  emissions  and solid waste  disposals.  The United  States  Environmental
Protection  Agency (EPA)  administers  certain Federal statutes relating to such
matters.                                                                        

Water                                                         

         Under  the  Federal  Clean  Water  Act,  National  Pollutant  Discharge
Elimination System (NPDES) permits for discharges into waterways are required to
be  obtained  from the EPA or from the state  environmental  agency to which the
permit program has been delegated.  Those permits must be renewed  periodically.
Generation  either has NPDES permits for all of its  generating  stations or has
pending  applications  for  such  permits.  Generation  is also  subject  to the
jurisdiction of certain other state agencies, including the Delaware River Basin
Commission and the Susquehanna River Basin Commission.                          

Solid and Hazardous Waste                                     

         The Comprehensive Environmental Response,  Compensation,  and Liability
Act of 1980, as amended  (CERCLA),  provides for immediate  response and removal
actions  coordinated by the EPA in the event of threatened releases of hazardous
substances into the                                                             

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environment and authorizes the U.S. Government either to clean up sites at which
hazardous substances have created actual or potential  environmental  hazards or
to  order  persons  responsible  for  the  situation  to do  so.  Under  CERCLA,
generators and transporters of hazardous substances, as well as past and present
owners and  operators  of  hazardous  waste  sites,  are  strictly,  jointly and
severally  liable  for the  cleanup  costs of waste at sites,  most of which are
listed by the EPA on the  National  Priorities  List  (NPL).  These  potentially
responsible parties (PRPs) can be ordered to perform a cleanup,  can be sued for
costs associated with a EPA-directed  cleanup,  may voluntarily  settle with the
U.S. Government concerning their liability for cleanup costs, or may voluntarily
begin a site  investigation  and site remediation under state oversight prior to
listing on the NPL. Various states,  including  Illinois,  have enacted statutes
that  contain  provisions  substantially  similar to CERCLA.  In  addition,  the
Resource  Conservation  and Recovery Act (RCRA) governs  treatment,  storage and
disposal  of  solid  and  hazardous  wastes  and  cleanup  of sites  where  such
activities were conducted.                                                      

         Generation,  PECO and ComEd and their subsidiaries are or are likely to
become parties to proceedings  initiated by the EPA, state agencies and/or other
responsible  parties  under  CERCLA and RCRA with  respect to a number of sites,
including  manufactured  gas plant (MGP) sites, or may voluntarily  undertake to
investigate and remediate sites for which they may be liable.                   

         By notice issued in November  1986, the EPA notified over 800 entities,
including  PECO and ComEd,  that they may be PRPs under  CERCLA with  respect to
releases of radioactive  and/or toxic  substances  from the Maxey Flats disposal
site, a LLRW disposal site near Moorehead, Kentucky, where PECO and ComEd wastes
were  deposited.  Approximately  90 PRPs,  including  PECO,  formed  a  steering
committee to investigate  the nature and extent of possible  involvement in this
matter. The steering committee preliminarily estimated that implementing the EPA
proposed  remedy at the Maxey  Flats  site would  cost  $60-$70  million in 1993
dollars.  A  settlement  was reached  among the Federal  and private  PRPs,  the
Commonwealth  of Kentucky  and the EPA  concerning  their  respective  roles and
responsibilities  in  conducting  remedial  activities  at the  site.  Under the
settlement,  the private PRPs agreed to perform the initial remedial work at the
site and the  Commonwealth  of  Kentucky  agreed  to assume  responsibility  for
long-range  maintenance and final remediation of the site. Exelon estimates that
it will be responsible for  approximately  $1.4 million of the remediation costs
to be incurred by the private PRPs. On April 18, 1996, a consent  decree,  which
included the terms of the settlement,  was entered by the United States District
Court  for the  Eastern  District  of  Kentucky.  The PRPs have  entered  into a
contract for the design and  implementation  of the  remedial  plan and work has
commenced.                                                                      

         By notice issued in December 1987, the EPA notified  several  entities,
including  PECO,  that they may be PRPs  under  CERCLA  with  respect  to wastes
resulting  from the treatment  and disposal of  transformers  and  miscellaneous
electrical equipment at a site located in Philadelphia,  Pennsylvania (the Metal
Bank of America site).  Several of the PRPs,  including PECO,  formed a steering
committee to investigate  the nature and extent of possible  involvement in this
matter. On May 29, 1991, a Consent Order was issued by the EPA pursuant to which
the  members  of  the  steering   committee   agreed  to  perform  the  remedial
investigation  and  feasibility  study as described in the work plan issued with
the Consent Order.  PECO's share of the cost of study was approximately  30%. On
July 19, 1995, the EPA issued a proposed plan for  remediation of the site which
involves  removal of contaminated  soil,  sediment and groundwater and which the
EPA estimated  would cost  approximately  $17 million to implement.  On June 26,
1998,  the EPA  issued an Order to the non-de  minimis  PRP Group  members,  and
others,  including the owner, to implement the remedial design (RD) and remedial
action  (RA).  The PRP group is  proceeding  as  required  by the Order.  It has
selected a contractor  which has been  approved by the EPA,  and, on November 5,
1998,  submitted the draft RD work plan. The EPA has approved the PRP Group's RD
work plan and based upon the RD  investigation,  the EPA has  modified  the work
plan.  On March 5, 2001,  the PRP group  submitted  a revised RD to the EPA,  in
which it estimates the cost to implement the RA to range from $14 million to $27
million.  The EPA and the PRPs are also  involved  in  litigation  with the site
owner concerning remediation liability.  PECO is unable to estimate its share of
the costs of the remedial activities.                                           

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MGP Sites                                                     

         MGPs manufactured gas in Illinois and Pennsylvania  from  approximately
1850 to 1950.  ComEd  generally  did not operate MGPs as a corporate  entity but
did, however,  acquire MGP sites as part of the absorption of smaller utilities.
Approximately  half of these  sites were  transferred  to Nicor Gas as part of a
general  conveyance in 1954. ComEd also acquired former MGP sites as vacant real
estate on which  ComEd  facilities  have been  constructed.  To date,  ComEd has
identified  44 former  MGP sites  for  which it may be liable  for  remediation.
Similarly,  PECO has  identified 28 sites where former MGP  activities  may have
resulted in site contamination.  With respect to these sites, ComEd and PECO are
presently engaged in performing various levels of activities,  including initial
evaluation to determine the existence and nature of the contamination,  detailed
evaluation  to determine the extent of the  contamination  and the necessity and
possible methods of remediation,  and implementation of remediation.  Overseeing
state regulatory agencies have approved the remediation of five MGP sites, while
35 other sites are currently  under some degree of active study or  remediation.
At December 31, 2000,  Exelon had accrued  $140  million for  investigation  and
remediation  of these MGP sites  that  currently  can be  reasonably  estimated.
Exelon believes that it could incur  additional  liabilities with respect to MGP
sites,  which cannot be  reasonably  estimated  at this time.  Exelon has sued a
number of insurance  carriers seeking  indemnity/coverage  for remediation costs
associated with these former MGP sites.                                         

Air                                                           

         Air quality  regulations  promulgated by the EPA, the PDEP and the City
of  Philadelphia  in accordance with the Federal Clean Air Act and the Clean Air
Act  Amendments  of  1990  (Amendments)   impose  restrictions  on  emission  of
particulates,   sulfur  dioxide  (SO(2)),  nitrogen  oxides  (NO(x))  and  other
pollutants and require permits for operation of emission  sources.  Such permits
have been obtained by Exelon's subsidiaries and must be renewed periodically.   

         The Amendments  establish a comprehensive  and complex national program
to  substantially  reduce air  pollution.  The  Amendments  include a  two-phase
program to reduce acid rain effects by significantly reducing emissions of SO(2)
and  NO(x)  from  electric  power  plants.   Flue-gas   desulfurization  systems
(scrubbers)  have been installed at all of Generation's  coal-fired  units other
than the Keystone  Station.  Keystone is subject to, and in compliance with, the
Phase II SO(2)  and NO(x)  limits  of the  Amendments,  which  became  effective
January 1, 2000.  Generation  and the other  Keystone  co-owners are  purchasing
SO(2) emission allowances to comply with the Phase II limits.                   

         Generation  has  completed  implementation  of measures,  including the
installation  of  NO(x)  emissions   controls  and  the  imposition  of  certain
operational  constraints,  to  comply  with  the  Reasonably  Available  Control
Technology  limitations of the Amendments.  Generation  expects that the cost of
compliance with  anticipated  air-quality  regulations may be substantial due to
further limitations on permitted NO(x) emissions.                               

         The EPA has issued two  regulations  to limit  nitrogen  oxide  (NO(x))
emissions  from power plants in the eastern  United States to address the "ozone
transport"  issue.  The first  regulation  was issued on September 24, 1998. The
original NO(x) regulation  covered power plants in the 22 eastern states and had
an effective date of May 1, 2003. As a result of litigation at the D.C.  Circuit
Court of Appeals,  the original NO(x) regulation was revised to cover 19 eastern
states  (rather  than the  original  22) and the  effective  date was delayed by
approximately  one year to May 31, 2004.  In most other  respects,  the original
NO(x) regulation was  substantively  upheld by the Court.  Both Pennsylvania and
Illinois power plants are covered by the original NO(x)  regulation.  The second
EPA regulation, referred to as the "Section 126 Petition Regulation," was issued
on May 25, 1999.  This  regulation was issued by the EPA in response to downwind
state (Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania,

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Rhode Island,  Vermont)  complaints  under Section 126 of the Clean Air Act that
upwind state NO(x) emissions were negatively  impacting downwind states' ability
to attain the  Federal  ozone  standard.  The Section  126  Petition  Regulation
requires  substantively  the same  NO(x)  reduction  requirement  for the  power
generation  sector as the original NO(x)  regulation.  However,  the Section 126
Petition  Regulation covers a more limited number of states (Delaware,  Indiana,
Kentucky,  Maryland,  Michigan,  North  Carolina,  New Jersey,  New York,  Ohio,
Virginia and West  Virginia).  It does not cover power  plants in Illinois.  The
compliance date of the Section 126 Petition  Regulation is May 1, 2003, one year
earlier  than states  covered  only under the  original  NO(x)  regulation.  The
Section 126 Petition Regulation is currently being litigated in the D.C. Circuit
Court of Appeals with a decision expected in spring 2001. On September 23, 2000,
Pennsylvania  issued final state NO(x)  reduction  regulations  for power plants
that  satisfy both the original  NO(x)  regulation  and the Section 126 Petition
Regulation.  The  Pennsylvania  regulation is effective  May 1, 2003.  Exelon is
currently  evaluating  options to comply with the new Pennsylvania  regulations.
These regulations could restrict the operation of the Generation's  fossil-fired
units, require the purchase of NO(x) emission allowances from others, or require
the installation of additional control equipment.                               

         Many other provisions of the Amendments  affect  activities of Exelon's
business,  primarily  Generation.  The Amendments  establish  stringent  control
measures for  geographical  regions which have been determined by the EPA to not
meet National  Ambient Air Quality  Standards;  establish limits on the purchase
and operation of motor vehicles and require increased use of alternative  fuels;
establish  stringent  controls on emissions of toxic air  pollutants and provide
for possible future  designation of some utility  emissions as toxic;  establish
new permit and monitoring requirements for sources of air emissions; and provide
for significantly increased enforcement power, and civil and criminal penalties.

Costs                                                         

         At  December  31,  2000,   Exelon  accrued  $172  million  for  various
investigation and remediation costs that can be reasonably estimated,  including
approximately $140 million for investigation and remediation of former MGP sites
as described above.  Exelon cannot currently predict whether it will incur other
significant  liabilities for additional  investigation  and remediation costs at
sites  presently  identified  or  additional  sites which may be  identified  by
Exelon,  environmental  agencies  or others or  whether  all such  costs will be
recoverable through rates or from third parties.                                

         Exelon's budget for capital  requirements  for 2001 for compliance with
environmental  requirements total approximately $8 million. In addition,  Exelon
may be  required  to make  significant  additional  expenditures  not  presently
determinable.                                                                   

Related Entities                                                                

         PECO Energy  Transition Trust (PETT), a Delaware  business trust wholly
owned by PECO, was formed on June 23, 1998 pursuant to a trust agreement between
PECO, as grantor,  First Union Trust Company,  National  Association,  as issuer
trustee,  and two beneficiary  trustees  appointed by PECO. PETT was created for
the sole purpose of issuing  transition  bonds to securitize a portion of PECO's
authorized stranded cost recovery.  On March 25, 1999, PETT issued $4 billion of
its Series 1999-A                                                               

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Transition  Bonds.  On May 2, 2000,  PETT issued $1 billion of its Series 2000-A
Transition  Bonds and on March 1, 2001,  PETT issued $805  million of its Series
2001-A  Transition Bonds to refinance a portion of the Series 1999-A  Transition
Bonds. The Transition Bonds are solely obligations of PETT secured by intangible
transition  property,  representing  the  right to  collect  transition  charges
sufficient to pay the principal and interest on the  Transition  Bonds,  sold by
PECO to PETT.                                                                   

         PECO Energy Capital  Corp.,  a wholly owned  subsidiary of PECO, is the
sole  general  partner  of  PECO  Energy  Capital,   L.P.,  a  Delaware  limited
partnership (Partnership). The Partnership was created solely for the purpose of
issuing preferred  securities,  representing  limited partnership  interests and
lending  the  proceeds  thereof  to PECO and  entering  into  similar  financing
arrangements.  The loans to PECO are evidenced by PECO's subordinated debentures
(Subordinated  Debentures),  which are the only assets of the  Partnership.  The
only revenues of the  Partnership are interest on the  Subordinated  Debentures.
All of the operating expenses of the Partnership are paid by PECO Energy Capital
Corp. As of December 31, 2000, the  Partnership  held $128.1  million  aggregate
principal amount of the Subordinated Debentures.                                

         PECO Energy  Capital  Trust II (Trust II) was created in June 1997 as a
Delaware  business trust solely for the purpose of issuing trust receipts (Trust
II Receipts) each  representing  an 8.00%  Cumulative  Monthly Income  Preferred
Security,  Series C (Series C  Preferred  Securities)  of the  Partnership.  The
Partnership  is the sponsor of Trust II. As of December 31,  2000,  Trust II had
outstanding  2,000,000  Trust II Receipts.  At December 31, 2000,  the assets of
Trust II consisted  solely of 2,000,000  Series C Preferred  Securities  with an
aggregate stated liquidation preference of $50 million.  Distributions were made
on the Trust II  Receipts  during  2000 in the  aggregate  amount of $4 million.
Expenses of Trust II for 2000 were approximately $50,000, all of which were paid
by PECO Energy Capital Corp. The Trust II Receipts are issued in book-entry only
form.                                                                           

         PECO Energy  Capital Trust III (Trust III) was created in April 1998 as
a Delaware  business  trust  solely for the  purpose of issuing  trust  receipts
(Trust III Receipts) each representing an 7.38% Cumulative  Preferred  Security,
Series D (Series D Preferred Securities) of the Partnership.  The Partnership is
the sponsor of Trust III. As of December  31,  2000,  Trust III had  outstanding
78,105  Trust III  Receipts.  At  December  31,  2000,  the  assets of Trust III
consisted  solely of 78,105  Series D  Preferred  Securities  with an  aggregate
stated liquidation preference of $78.1 million. Distributions were made on Trust
III Receipts  during 2000 in the aggregate  amount of $5.8 million.  Expenses of
Trust III for 2000 were  approximately  $50,000,  all of which were paid by PECO
Energy Capital Corp. The Trust III Receipts are issued in book-entry only form. 

         ComEd Financing I, a Delaware  business  trust,  was formed by ComEd on
July 21, 1995.  ComEd  Financing I was created solely for the purpose of issuing
$200 million of trust preferred securities.  The trust preferred securities were
issued on September 26, 1995, carry an annual distribution rate of 8.48% and are
mandatorily redeemable on September 30, 2035. The sole assets of ComEd Financing
I are $206.2 million principal amount of 8.48% subordinated  deferrable interest
notes due September 30, 2035, issued by ComEd.                                  

         Similarly, ComEd Financing II, a Delaware business trust, was formed by
ComEd on November  20,  1996.  ComEd  Financing  II was  created  solely for the
purpose of issuing $150 million of trust capital  securities.  The trust capital
securities were issued on January 24, 1997, carry an annual distribution rate of
8.50% and are  mandatorily  redeemable  on Janaury 15, 2027.  The sole assets of
ComEd  Financing II are $154.6 million  principal  amount of 8.50%  subordinated
deferrable interest debentures due January 15, 2027, issued by ComEd.           

         ComEd  Transitional  Funding Trust (ComEd  Funding  Trust),  a Delaware
business  trust,  was formed on October 28, 1998,  pursuant to a trust agreement
among First Union Trust Company, National Association,  as Delaware trustee, and

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two individual  trustees appointed by ComEd. ComEd Funding Trust was created for
the sole purpose of issuing transitional funding notes to securitize  intangible
transition  property granted to ComEd Funding LLC, a ComEd affiliate,  by an ICC
order issued July 21, 1998.  On December 16, 1998,  ComEd  Funding  Trust issued
$3.4 billion of transitional  funding notes,  the proceeds of which were used to
purchase the  intangible  transition  property held by ComEd Funding LLC.  ComEd
Funding LLC transferred the proceeds to ComEd where they were used,  among other
things,  to repurchase  outstanding  debt and equity  securities  of ComEd.  The
transitional funding notes are solely obligations of ComEd Funding Trust and are
secured by the intangible  transition  property,  which  represents the right to
receive  instrument  funding  charges  collected  from  ComEd's  customers.  The
instrument   funding  charges  represent  a  nonbypassable,   usage-based,   per
kilowatt-hour charge on designated consumers of electricity.                    

                                                        [Enlarge/Download Table]


Executive Officers of the Registrants at December 31, 2000                                                                      

Exelon                                                                                                                          
                                    Age at                                                                                      
Name                             Dec. 31, 2000                 Position                                                         
----                             -------------                 --------                                                         
                                                                                                                                
McNeill, Jr., Corbin A................61        Co-Chief Executive Officer and Chairman                                         
Rowe, John W..........................55        Co-Chief Executive Officer and President                                        
Egan, Michael J.......................47        Executive Vice President                                                        
Kingsley Jr., Oliver D................58        Executive Vice President                                                        
Strobel, Pamela B.....................48        Executive Vice President                                                        
Gillis, Ruth Ann M....................46        Senior Vice President and Chief Financial Officer                               
McLean, Ian P.........................51        Senior Vice President                                                           
Mehrberg, Randall E...................45        Senior Vice President and General Counsel                                       
Moler, Elizabeth A....................51        Senior Vice President, Government Affairs-Federal                               
Padron, Honorio J.....................48        Senior Vice President                                                           
Snodgrass, S. Gary....................49        Senior Vice President and Chief Human Resources Officer                         
Gibson, Jean..........................44        Vice President and Corporate Controller                                         

ComEd                                                                                                                           
                                    Age at                                                                                      
Name                             Dec. 31, 2000                 Position                                                         
----                             -------------                 --------                                                         
McNeill, Jr., Corbin A................61        Co-Chief Executive Officer, ComEd                                               
Rowe, John W. ........................55        President, Co-Chief Executive Officer and Chairman, ComEd                       
Egan, Michael J.......................47        Executive Vice President, Exelon                                                
Kingsley Jr., Oliver D. ..............58        Executive Vice President, Nuclear and Chief Nuclear Officer, ComEd              
Strobel, Pamela B. ...................48        Executive Vice President, Energy Delivery, Exelon and Vice Chairman, ComEd      
Clark, Frank M. ......................55        Senior Vice President, Distribution Customer and Marketing Services and External
                                                     Affairs, ComEd                                                             
Gillis, Ruth Ann M....................46        Senior Vice President, Finance and Chief Financial Officer, Exelon              
Helwig, David R.......................50        Senior Vice President, Operations, ComEd                                        
McLean, Ian P.........................51        Senior Vice President, Power Team, ComEd                                        
Mehrberg, Randall E...................45        Senior Vice President and General Counsel, Exelon                               
Moler, Elizabeth A....................51        Senior Vice President, Government Affairs-Federal, Exelon                       
Padron, Honorio J.....................48        Senior Vice President, Business Services, ComEd                                 
Snodgrass, S. Gary....................49        Senior Vice President, Human Resources, ComEd                                   
Gibson, Jean..........................44        Vice President and Controller, Exelon                                           

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PECO                                                                                                                            
                                    Age at                                                                                      
Name                             Dec. 31, 2000                 Position                                                         
----                             -------------                 --------                                                         
McNeill, Jr., Corbin A. ..............61        President, Co-Chief Executive Officer and Chairman, PECO                        
Rowe, John W..........................55        Co-Chief Executive Officer, PECO                                                
Egan, Michael J.......................47        Executive Vice President, Enterprises, PECO                                     
Kingsley Jr., Oliver D. ..............58        Executive Vice President, Nuclear and Chief Nuclear Officer, PECO               
Strobel, Pamela B.                    48        Executive Vice President, Energy Delivery, Exelon and Vice                      
                                                     Chairman, PECO                                                             
Gillis, Ruth Ann M....................46        Senior Vice President, Finance and Chief Financial Officer, Exelon              
Lawrence, Kenneth G...................53        Senior Vice President, Distribution, PECO                                       
McLean, Ian P.........................51        Senior Vice President, Power Team, PECO                                         
Mehrberg, Randall E...................45        Senior Vice President and General Counsel, Exelon                               
Moler, Elizabeth A....................51        Senior Vice President, Government Affairs-Federal, Exelon                       
Padron, Honorio J.....................48        Senior Vice President, Business Services, PECO                                  
Snodgrass, S. Gary....................49        Senior Vice President, Human Resources, PECO                                    
Gibson, Jean..........................44        Vice President and Controller, Exelon                                           

         Each of the  above  executive  officers  was  elected  to  such  office
effective  October 20, 2000, the closing date of the merger,  except for Randall
E. Mehrberg, who was elected effective December 1, 2000.                        

         Each  of  the  above  executive  officers  holds  such  office  at  the
discretion  of the  respective  companys'  board of  directors  until his or her
replacement or earlier resignation, retirement or death.                        

         Prior to his election to his current position, Mr. McNeill was Chairman
of the Board,  President  and Chief  Executive  Officer of PECO Energy  Company;
President and Chief Executive Officer of PECO Energy Company;  and President and
Chief  Operating  Officer and Executive  Vice President - Nuclear of PECO Energy
Company.                                                                        

         Prior to his election to his current  position,  Mr. Rowe was Chairman,
President  and Chief  Executive  Officer  of ComEd and Unicom  Corporation;  and
President and Chief Executive Officer of New England Electric System.           

         Prior to his election to his current position, Mr. Egan was Senior Vice
President,  Finance and Chief Financial  Officer of PECO Energy Company;  Senior
Vice President and Chief Financial  Officer of Aristech  Chemical  Company;  and
Vice President of Planning and Control of ARCO Chemical Company, Americas.      

         Prior  to his  election  to his  current  position,  Mr.  Kingsley  was
Executive  Vice  President  of ComEd and  Unicom,  President  and Chief  Nuclear
Officer - Nuclear  Generation  Group of ComEd;  and Chief Nuclear Officer at the
Tennessee Valley Authority.                                                     

         Prior  to her  election  to  her  current  position,  Ms.  Strobel  was
Executive  Vice President and General  Counsel of ComEd and Unicom;  Senior Vice
President  and  General  Counsel of ComEd and  Unicom;  and Vice  President  and
General Counsel of ComEd.                                                       

         Prior to her election to her current  position,  Ms.  Gillis was Senior
Vice President and Chief Financial  Officer of ComEd and Unicom;  Vice President
and Treasurer of ComEd and Unicom;  Vice President,  Chief Financial Officer and
Treasurer of the University of Chicago  Hospitals and Health System;  and Senior
Vice President and Chief Financial  Officer of American  National Bank and Trust
Company.                                                                        

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         Prior to his election to his current position, Mr. McLean was President
of the Power Team division of PECO Energy  Company;  and Group Vice President of
Engelhard Corporation.                                                          

         Prior to his  election to his current  position,  Mr.  Mehrberg  was an
equity  partner  with the law firm of Jenner & Block;  and  General  Counsel and
Lakefront Director of the Chicago Park District.                                

         Prior to her  election to her current  position,  Ms.  Moler was Senior
Vice President of ComEd and Unicom; Director of Unicom and ComEd; Partner at the
law firm of Vinson & Elkins,  LLP;  Deputy  Secretary of the U.S.  Department of
Energy; and Chair of the Federal Energy Regulatory Commission.                  

         Prior to his election to his current position, Mr. Padron Executive was
Vice President,  Process  Engineering and Chief Information  Officer of CompUSA,
Inc.; Senior Vice President and Chief Information  Officer of Pepsico Restaurant
Service Group;  and Senior Vice President,  Business  Engineering and Technology
and Chief Information Officer of Flagstar Corporation.                          

         Prior to his election to his current position, Mr. Snodgrass was Senior
Vice President of ComEd and Unicom; Vice President of ComEd and Unicom; and Vice
President of USG Corporation.                                                   

         Prior to her  election to her  current  position,  Ms.  Gibson was Vice
President and Controller of PECO Energy Company;  and Director of Audit Services
and Director of the Tax Division of PECO Energy Company.                        

         Prior to his  election to his current  position,  Mr.  Clark was Senior
Vice  President  of ComEd and  Unicom;  Vice  President  of ComEd;  Governmental
Affairs Vice President; and Governmental Affairs Manager.                       

         Prior to his election to his current  position,  Mr.  Helwig was Senior
Vice  President of ComEd;  Vice President of ComEd;  General  Manager of General
Electric  Company's Nuclear Services Company;  and Vice President at PECO Energy
Company.                                                                        

         Prior to his election to his current position,  Mr. Lawrence was Senior
Vice President,  Corporate and President,  Distribution, of PECO Energy Company;
Senior Vice President - Local  Distribution of PECO Energy Company;  Senior Vice
President - Finance and Chief Financial Officer of PECO Energy Company; and Vice
President - Gas Operations of PECO Energy Company.                              

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ITEM 2.  PROPERTIES.                                                            

Energy Delivery                                                                 

         The electric  substations and a portion of the  transmission  rights of
way of ComEd and PECO are owned in fee. A  significant  portion of the  electric
transmission  and  distribution  facilities  is located over or under  highways,
streets,  other public places or property  owned by others,  for which  permits,
grants,   easements  or  licenses,   deemed  satisfactory  by  ComEd  and  PECO,
respectively,  but without  examination  of  underlying  land titles,  have been
obtained.                                                                       

Transmission and Distribution                                 

         Exelon's higher voltage electric  transmission  and distribution  lines
owned and in service are as follows:                                            

Voltage (Volts)                    Circuit Miles                
--------------------------------       ----------------------                   
ComEd:                                                  
765,000                               90                
345,000                            2,589                
138,000                            2,097                

PECO:                                                 
500,000                              891                
220,000                            1,634                
132,000                               15                

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         ComEd's electric distribution system includes 40,605 pole-line miles of
overhead  lines and 38,517 cable miles of  underground  lines.  PECO's  electric
distribution  system  includes 48,222 circuit miles,  21,009  pole-line miles of
overhead lines and 21,002 cable miles of underground lines.                     

Gas                                                           

         The  following  table sets forth PECO's gas pipeline  miles at December
31, 2000:                                                                       

                                  Pipeline Miles
 Transmission                         28
 Distribution                      6,099
 Service piping                    5,030
                                 -------
     Total                        11,157
                                 =======

         PECO has a liquefied natural gas facility located in West Conshohocken,
Pennsylvania  which has a storage capacity of 1,200,000 million cubic feet (mcf)
and a sendout  capacity of 157,000  mcf/day and a  propane-air  plant located in
Chester,  Pennsylvania,  with a tank storage capacity of 1,980,000 gallons and a
peaking capability of 28,800 mcf/day. In addition, PECO owns 27 natural gas city
gate stations at various locations throughout its gas service territory.        

Mortgages                                                     

         The principal plants and properties of ComEd are subject to the lien of
ComEd's  Mortgage dated July 1, 1923, as amended and  supplemented,  under which
ComEd's first mortgage bonds are issued.                                        

         The principal  plants and properties of PECO are subject to the lien of
PECO's  Mortgage  dated May 1, 1923,  as amended and  supplemented,  under which
PECO's first mortgage bonds are issued.                                         

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Generation                                                                      

         The  following  table  sets  forth   Generation's  owned  net  electric
generating capacity by station at January 1, 2001:                              

                                                        [Enlarge/Download Table]

                                                              Net Generating Capacity                        
                                                                  (1) (Kilowatts)             Estimated      
Station                     Location                                                       Retirement Year   
--------------------------- -------------------------------- --------------------------- --------------------
                                                                                                             
Nuclear(2)                                                                                                   
Braidwood                   Braidwood, IL                              2,308,000             2026, 2027      
Byron                       Byron, IL                                  2,304,000             2024, 2026      
Dresden                     Morris, IL                                 1,592,000             2009, 2011      
LaSalle County              Seneca, IL                                 2,291,000             2022, 2023      
Limerick                    Limerick Twp., PA                          2,312,000             2024, 2029      
Peach Bottom                Peach Bottom Twp., PA                      1,028,000(3)          2013, 2014      
Quad Cities                 Cordova, IL                                1,172,000(3)          2011, 2012      
Salem                       Hancock's Bridge, NJ                         942,000(3)          2016, 2020      
                                                                    ------------                             
                            Total Nuclear                            13,949,000                              

Hydro                                                                                                        
Conowingo                   Harford Co., MD                              512,000                2014         

Pumped Storage                                                                                               
Muddy Run                   Lancaster Co., PA                            977,000                2014         

Fossil (Steam Turbines)                                                                                      
Cromby                      Phoenixville, PA                             345,000                 (4)         
Delaware                    Philadelphia, PA                             250,000                 (4)         
Eddystone                   Eddystone, PA                              1,341,000           2009, 2010, 2011  
Schuylkill                  Philadelphia, PA                             166,000                 (4)         
Conemaugh                   New Florence, PA                             352,000(3)          2005, 2006      
Keystone                    Shelocta, PA                                 357,000(3)          2002, 2003      
                                                                    ------------                             
Total Fossil (Steam Turbine)                                          2,811,000                              

Fossil (Gas Turbines)                                                                                        
Chester                     Chester, PA                                   39,000                 (4)         
Croydon                     Bristol Twp., PA                             380,000                 (4)         
Delaware                    Philadelphia, PA                              56,000                 (4)         
Eddystone                   Eddystone, PA                                 60,000                 (4)         
Fairless Hills              Falls Twp., PA                                60,000                 (4)         
Falls                       Falls Twp., PA                                51,000                 (4)         
Moser                       Lower Pottsgrove Twp., PA                     51,000                 (4)         
Pennsbury                   Falls Twp., PA                                 6,000                 (4)         
Richmond                    Philadelphia, PA                              96,000                 (4)         
Schuylkill                  Philadelphia, PA                              30,000                 (4)         
Southwark                   Philadelphia, PA                              52,000                 (4)         
Salem                       Hancock's Bridge, NJ                          16,000(3)              (4)         
                                                                    ------------                             
Total Fossil (Gas Turbines)                                              897,000                             

Fossil (Internal Combustion)                                                                                 
Cromby                      Phoenixville, PA                               2,700                 (4)         
Delaware                    Philadelphia, PA                               2,700                 (4)         
Schuylkill                  Philadelphia, PA                               2,800                 (4)         
Conemaugh                   New Florence, PA                               2,300(3)             2006         
Keystone                    Shelocta, PA                                   2,300(3)             2003         
                                                                    ------------                             
Total Fossil (Internal Combustion)                                        12,800                             
                                                                    ------------                             
Total                                                                 19,158,800                             
                                                                    ============                             
<FN>                                                                                                         
(1)  Nuclear stations reflect the annual mean rating. All other stations reflect                             
     a summer rating.                                                                                        
(2)  All nuclear stations are boiling water reactors except Braidwood, Byron and                             
     Salem which are pressurized water reactors.                                                             
(3)  Generation's portion.                                                                                   
(4)  Retirement  dates are under  on-going  review.  Current  plans call for the                             
     continued operation of these units beyond 2001.                                                         
</FN>                                                                                                        

         The net generating  capability  available for operation at any time may
be less due to regulatory restrictions, fuel restrictions, efficiency of cooling
facilities and generating units being temporarily out of service for inspection,
maintenance,   refueling,   repairs  or  modifications  required  by  regulatory
authorities.                                                                    

         Exelon and its subsidiaries maintain property insurance against loss or
damage to its principal  plants and properties by fire or other perils,  subject
to certain exceptions.  For information regarding nuclear insurance, see ITEM 1.
Business -  Generation.  Exelon and its  subsidiaries  are  self-insured  to the
extent that any losses may exceed the amount of insurance  maintained.  Any such
losses could have a material adverse effect on Exelon's  consolidated  financial
condition and results of operations.                                            

ITEM 3.  LEGAL PROCEEDINGS.                                                     

Exelon                                                                          

None.                                                         

PECO                                                                            

         On May 27, 1998, the United States Department of Justice,  on behalf of
the Rural  Utilities  Service  (RUS) and the  Chapter 11  Trustee  for the Cajun
Electric  Power  Cooperative  Inc. filed an action  claiming  breach of contract
against  PECO in the United  States  District  Court for the Middle  District of
Louisiana arising out of PECO's  termination of the contract to purchase Cajun's
interest in the River Bend nuclear power plant. In the complaint,  RUS seeks the
full  purchase  price of the 30% interest in the River Bend nuclear power plant,

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that is, $50 million,  plus interest and the Trustee seeks alleged consequential
damages to Cajun's Chapter 11 estate as a result of the termination. On February
24, 2000,  PECO and the  plaintiffs  filed  cross-motions  for summary  judgment
regarding the issue of  liability.  In addition,  the court ordered  counsel for
PECO to file a supplemental motion for summary judgment on the issue of damages.
On March 21,  2001,  all of the pending  motions and  cross-motions  for summary
judgment were denied. While PECO cannot predict the outcome of this matter, PECO
believes that it validly  exercised its right of termination  and did not breach
the agreement.                                                                  

Generation                                                                      

         Generation  is  involved in tax  appeals  regarding  two of its nuclear
facilities, Limerick Generating Station (Montgomery County, PA) and Peach Bottom
(York  County,  PA). The Board of Assessment  Appeals of  Montgomery  County has
reduced the assessment of Limerick from $939 million to $912 million.  Assessors
in York County have valued Peach Bottom at $303  million.  Primarily  because of
decommissioning  costs  inherent in the  property and  supported  by  comparable
sales,  Generation believes that the values for real property taxes for Limerick
and Peach Bottom for 1998,  1999 and 2000 are negative.  Generation is appealing
the  assessments  in both counties.  As of January 11, 2001,  Generation and the
Montgomery  County taxing  authorities  entered into a  stipulation  and interim
settlement  agreement  providing  for  partial  payment  of  taxes  pending  the
determination of the appeal.  Generation and the York County taxing  authorities
are negotiating a stipulation and interim settlement agreement.  Generation does
not believe the outcome of these matters will have a material  adverse effect on
Generation's results of operations or financial condition.                      

ComEd                                                                           

          Three of ComEd's wholesale  municipal  customers filed a complaint and
request for refund with FERC alleging  that ComEd failed to properly  adjust its
rates,  as provided for under the terms of the electric  service  contracts with
the  municipal  customers and to track  certain  refunds made to ComEd's  retail
customers in the years 1992 through 1994. In the third quarter of 1998, the FERC
granted the complaint and directed that refunds be made,  with  interest.  ComEd
filed a request for  rehearing.  On January 11,  2001,  FERC issued its Order on
Rehearing Requesting Submission of Additional Information.  Responsive pleadings
have been filed by all parties and final FERC action is still  pending.  ComEd's
management  believes an adequate reserve has been established in connection with
the case.                                                                       

         In  August  1999,   three  class  action   lawsuits  were  filed,   and
subsequently consolidated, in the Circuit Court of Cook County, Illinois seeking
damages for personal  injuries,  property  damage and economic losses from ComEd
related  to a series of service  interruptions  that  occurred  in the summer of
1999.  The  combined  effect of these  interruptions  resulted  in over  168,000
customers   losing  service  for  more  than  four  hours.   Conditional   class
certification  has been  approved by the Court for the sole purpose of exploring
settlement talks. A hearing on a motion filed by ComEd to dismiss the complaints
is  scheduled  for April  2001.  A portion of any  settlement  or verdict may be
covered by  insurance  and  discussions  with the carrier are  ongoing.  ComEd's
management  believes  adequate reserves have been established in connection with
these cases.                                                                    

         In 1999,  the ICC  opened an  investigation  regarding  the  design and
reliability of ComEd's transmission and distribution system, which investigation
was  expanded  during 2000 to include a circuit  breaker  fire that  occurred in
October 2000 at a ComEd  substation.  The ICC has issued several reports in that
investigation  covering the summer 1999 outages as well as the  transmission and
distribution system. These reports include recommendations and an implementation
timetable.  The recommendations are not legally binding on ComEd;  however,  the
ICC may enforce them through  litigation.  Two more reports are  anticipated  in
early 2001,  and the  investigation  is expected to conclude by mid-2001.  Since
summer  1999,  ComEd  has  devoted   significant   resources  to  improving  the
reliability of its  transmission  and distribution  system.  ComEd's  management
believes that the likelihood of a successful  material claim  resulting from the
investigation is remote.                                                        

         The Illinois  Department of Revenue  (Department) has issued Notices of
Tax Liability to ComEd alleging  deficiencies in Illinois  invested  capital tax
for the years 1988 through 1997. The alleged deficiencies including interest and
penalties  totaled  approximately $54 million as of December 31, 2000. The issue
presented  for each of the years in question is whether,  for Illinois  invested
capital tax purposes,  ComEd's  liability under capital leases is to be included
in long-term debt and thus form a part of ComEd's  invested  capital  subject to
the tax.  ComEd's  position  is that the  definition  of  invested  capital  for
purposes of the tax is to be determined on the basis of ComEd's  annual  reports
to the ICC, which, in accordance with ICC  instructions,  do not include capital
leases in long-term debt.  After December 31, 1997, the invested  capital tax no
longer  applies as the result of  legislation  enacted  in  Illinois.  ComEd has
protested  the  notices,   and  the  matter  is  currently  pending  before  the
Department's Office of Administrative Hearings. Interest will continue to accrue
on the alleged tax deficiencies.                                                

         In 1996, several developers of non-utility  generating facilities filed
litigation  against various Illinois  officials claiming that the enforcement of
an  amendment to Illinois law  removing  the  facilities'  entitlement  to state
subsidized  payments for electricity sold to ComEd after March 15, 1996 violated
their  rights under  Federal and state  constitutions,  and against  ComEd for a
declaratory  order that their rights under their  contracts  with ComEd were not
affected by the amendment.  On August 4, 1999, the Illinois Appellate Court held
that the developers'  claims against the State were premature,  and the Illinois
Supreme Court denied leave to appeal that ruling.  Developers of both facilities
have since filed  amended  complaints  repeating  their  allegations  that ComEd
breached the contracts in question,  and requesting  damages for such breach, in
the amount of the difference  between the  state-subsidized  rate and the amount
(such amount being referred to as the avoided cost) ComEd was willing to pay for
the electricity.  ComEd has contested the assertions by the developers that they
are entitled to any payment in excess of avoided cost.                          

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                   

None.                                                         

 PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. 

Exelon                                                                          

         The   information   required  by  this  Item  with  respect  to  market
information  relating  to  Exelon's  common  stock  is  incorporated  herein  by
reference  to "Market for  Registrant's  Common  Equity and Related  Stockholder
Matters" in Exhibit 99-1 to Exelon's  Current Report on Form 8-K dated March 16,
2001.                                                                           

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PECO                                                                            

         As of March 1,  2001,  there  were  outstanding  170,478,507  shares of
common stock, without par value, of PECO, all of which were held by Exelon.     

         PECO's Articles of  Incorporation  prohibit payment of any dividend on,
or other  distribution  to the holders of,  common stock if, after giving effect
thereto,  the capital of PECO  represented by its common stock together with its
Other Paid-in Capital and Retained Earnings is, in the aggregate,  less than the
involuntary  liquidating  value  of its then  outstanding  preferred  stock.  At
December 31, 2000,  such capital  ($1.6  billion)  amounted to about 9 times the
liquidating value of the outstanding preferred stock ($174 million).            

         PECO may not declare  dividends  on any shares of its capital  stock in
the event that:  (1) PECO  exercises  its right to extend the  interest  payment
periods on the Subordinated Debentures which were issued to the Partnership; (2)
PECO defaults on its guarantee of the payment of  distributions  on the Series C
or Series D Preferred Securities of the Partnership;  or (3) an event of default
occurs under the Indenture under which the  Subordinated  Debentures are issued.
See Item 1. Business-Related Entities.                                          

ComEd                                                                           

         As of December 31, 2000, there were outstanding  163,805,020  shares of
common stock,  $12.50 par value, of ComEd, of which 163,796,961 shares were held
by Exelon. In addition to Exelon,  there were at December 31, 2000 approximately
268 additional holders of ComEd common stock. There is no established market for
shares of the common stock of ComEd.                                            

Dividends                                                                       

         Under  PUHCA  and the  Federal  Power  Act,  Exelon,  PECO,  ComEd  and
Generation  can only pay dividends  from retained or current  earnings.  Similar
restrictions also apply to ComEd under the Illinois Public Utilities Act. An SEC
order issued  under PUHCA  granted  permission  to Exelon and ComEd to pay up to
$500 million in dividends  out of  additional  paid-in  capital,  provided  that
Exelon  agreed not to pay dividends  out of paid-in  capital after  December 31,
2002 if its  common  equity  is less than 30% of its  total  capitalization.  At
December  31,  2000,  Exelon had  retained  earnings of $332  million,  PECO had
retained  earnings of $197 million,  ComEd had retained earnings of $133 million
and Generation had no retained earnings.                                        

         The following  table sets forth the quarterly  cash  dividends  paid by
PECO and ComEd during 2000 and 1999:                                            

                                                        [Enlarge/Download Table]

---------------------------------------------------------- ---------------------------------------------
                                2000                                           1999                     
---------------------------------------------------------- ---------------------------------------------
               1st         2nd         3rd        4th         1st        2nd         3rd        4th     
             Quarter     Quarter     Quarter    Quarter     Quarter    Quarter     Quarter    Quarter   
----------------------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
                                                                                                        
PECO          $0.25       $0.25       $0.25      $0.16       $0.25      $0.25       $0.25      $0.25    
----------------------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
ComEd         $0.40       $0.40       $0.40      $0.09       $0.40      $0.40       $0.40      $0.40    
----------------------- ----------- ---------- ----------- ---------- ----------- ---------- -----------

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         Exelon did not pay any cash dividends. The Board of Directors of Exelon
has announced its intention, subject to approval and declaration by the Board of
Directors each quarter, to declare annual dividends on its common stock of $1.69
per share.                                                                      

ITEM 6.  SELECTED FINANCIAL DATA.                                               

Exelon                                                                          

         The  information  required  by this  Item  is  incorporated  herein  by
reference  to  "Selected  Financial  Data" in Exhibit  99-1 to Exelon's  Current
Report on Form 8-K dated March 16, 2001.                                        

PECO                                                                            

         The  selected  consolidated  financial  data  presented  below has been
derived from the audited financial statements of PECO. This data is qualified in
its  entirety by  reference  to, and should be read in  conjunction  with PECO's
Consolidated  Financial  Statements and Management's  Discussion and Analysis of
Financial Condition and Results of Operations included herein.                  

                                                        [Enlarge/Download Table]

                                                                 For the Years Ended December 31,                    
                                            -------------------------------------------------------------------------
                                               2000           1999            1998            1997             1996  
                                            -------------------------------------------------------------------------
                                                                           (in millions)                             
                                                                                                                     
Statement of Income Data:                                                                                            
Operating Revenues                          $  5,950        $  5,478        $  5,325        $  4,601        $  4,284 
Operating Income                               1,222           1,373           1,268           1,006           1,249 
Income before Extraordinary Items                                                                                    
  and Cumulative Effect of a Change in                                                                               
  Accounting Principle                           487             619             533             337             517 
Extraordinary Items (net of income taxes)         (4)            (37)            (20)         (1,834)             -- 
Cumulative Effect of a Change in                                                                                     
  Accounting Principle                            24              --              --              --              -- 
Net Income (Loss) on Common Stock                497             570             500          (1,514)            499 

                                                                           At December 31,                           
                                            -------------------------------------------------------------------------
                                               2000           1999            1998            1997             1996  
                                            -------------------------------------------------------------------------
                                                                           (in millions)                             

Balance Sheet Data:                                                                                                  
Current Assets                              $  1,779        $  1,221        $    582        $  1,003        $    420 
Property, Plant and Equipment, net             5,158           5,004           4,804           4,671          10,942 
Deferred Debits and Other Assets               7,839           6,862           6,662           6,683           3,899 
                                            --------        --------        --------        --------        -------- 
Total Assets                                $ 14,776        $ 13,087        $ 12,048        $ 12,357        $ 15,261 
                                            ========        ========        ========        ========        ======== 

Current Liabilities                         $  2,818        $  1,286        $  1,735        $  1,619        $  1,103 
Long-Term Debt                                 6,002           5,969           2,920           3,853           3,936 
Deferred Credits and Other Liabilities         4,016           3,738           3,756           3,576           4,982 
Company-Obligated Mandatorily Redeemable                                                                             
  Preferred Securities                           128             128             349             352             302 
Mandatorily Redeemable Preferred Stock            37              56              93              93              93 
Shareholders' Equity                           1,775           1,910           3,195           2,864           4,845 
                                            --------        --------        --------        --------        -------- 
Total Liabilities and Shareholders' Equity  $ 14,776        $ 13,087        $ 12,048        $ 12,357        $ 15,261 
                                            ========        ========        ========        ========        ======== 

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ComEd                                                                           

         The  selected  consolidated  financial  data  presented  below has been
derived from the audited  financial  statements of ComEd. This data is qualified
in its entirety by reference to, and should be read in conjunction  with ComEd's
Consolidated  Financial  Statements and Management's  Discussion and Analysis of
Financial Condition and Results of Operations included herein.                  

         The  information  for the year ended 2000 is presented  for the periods
before and after the merger. For additional information, see ITEM 8. - Financial
Statements  and  Supplementary  Data -  ComEd,  Notes  1 and 2 of the  Notes  to
Consolidated Financial Statements.                                              

                                                        [Enlarge/Download Table]

                              Oct. 20 -   Jan. 1 -          For the Years Ended December 31,           
                              Dec. 31     Oct. 19     ------------------------------------------------ 
                              2000         2000       1999           1998          1997           1996 
                              ----         ----       ----           ----          ----           ---- 
                                                          (in millions)                                
Statement of Income Data:                                                                              
                                                                                                       
Operating Revenues         $ 1,310       $ 5,702    $ 6,793        $ 7,150       $ 7,076        $ 6,935
Operating Income               338         1,048      1,549          1,387         1,214          1,724
Income (Loss) before                                                                                   
  Extraordinary Items                                                                                  
  And Cumulative Effect                                                                                
  of a Change in                                                                                       
  Accounting Principle         133           603        651            594          (160)           743
Extraordinary Item                                                                                     
  (net of income taxes)         --            (4)       (28)            --          (810)            --
Cumulative Effect of                                                                                   
  a Change in                                                                                          
  Accounting Principle          --            --         --             --           196             --
Net Income (Loss)                                                                                      
  on Common Stock          $   133       $   599    $   623        $   594       $  (774)       $   743

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                                                        [Enlarge/Download Table]

                                                                      At December 31,                       
                                             ---------------------------------------------------------------
                                               2000          1999          1998         1997           1996 
                                             ---------------------------------------------------------------
                                                                      (in millions)                         
Balance Sheet Data:                                                                                         
                                                                                                            
Current Assets                               $ 2,410       $ 4,045       $ 4,974       $ 1,745       $ 1,398
Property, Plant and Equipment, net             7,657        11,993        13,300        16,622        17,395
Deferred Debits and Other Assets              10,214         6,538         6,583         3,397         3,756
                                             -------       -------       -------       -------       -------
Total Assets                                 $20,281       $22,576       $24,857       $21,764       $22,549
                                             =======       =======       =======       =======       =======

Current Liabilities                          $ 1,806       $ 3,427       $ 3,309       $ 2,223       $ 1,921
Long-Term Debt                                 6,882         6,962         7,677         5,563         5,958
Deferred Credits and Other Liabilities         5,082         6,456         7,770         8,050         7,671
Mandatorily Redeemable Preference Stock           --            69           171           205           249
Company Obligated Mandatorily Redeemable                                                                    
  Preferred Securities of Subsidiary Trusts                                                                 
  Holding the Company's Subordinated Debt                                                                   
  Securities                                     328           350           350           350           200
Shareholders' Equity                           6,183         5,312         5,580         5,373         6,550
                                             -------       -------       -------       -------       -------
Total Liabilities and Shareholders' Equity   $20,281       $22,576       $24,857       $21,764       $22,549
                                             =======       =======       =======       =======       =======

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND        
RESULTS OF OPERATIONS                                         

Exelon                                                                          

         The  information  required  by this  Item  is  incorporated  herein  by
reference to  "Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations"  in Exhibit 99-2 to Exelon's  Current Report on Form 8-K
dated March 16, 2001.                                                           

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PECO                                                                            

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                               
CONDITION AND RESULTS OF OPERATIONS                                             

General                                                                         

         On October 20, 2000, PECO became a wholly owned subsidiary of Exelon as
a result of the transactions relating to the merger of PECO and Unicom.         

         During January 2001,  Exelon  undertook a restructuring to separate its
generation and other  competitive  businesses from its regulated energy delivery
business. As part of the restructuring, the non-regulated operations and related
assets and  liabilities of PECO,  representing  the  Generation and  Enterprises
business  segments were  transferred to separate  subsidiaries  of Exelon.  As a
result,  beginning  January 2001,  the  operations of PECO consist of its retail
electricity distribution and transmission business in southeastern  Pennsylvania
and itsnatural gas distribution  business  located in the Pennsylvania  counties
surrounding the City of Philadelphia.                                           

         As a result of retail competition in Pennsylvania, all of PECO's retail
electric  customers  have the right to choose  their  generation  suppliers.  In
addition to retail competition for generation  services,  PECO's 1998 settlement
of its  restructuring  case  mandated by the  Competition  Act requires  PECO to
provide  generation  services  to  customers  who  do not or  cannot  choose  an
alternate  generation supplier through December 31, 2010 and established caps on
generation and  distribution  rates.  The  settlement  also  authorized  PECO to
recover $5.3  billion of stranded  costs and to  securitize  up a portion of its
stranded cost  recovery.  For additional  information,  see Item 1. Business and
Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operation - Exelon.                                                          

Significant Operating Trends                                                    

                                                        [Enlarge/Download Table]

Percentage of Total Operating Revenues                                        Percentage Dollar Changes 
--------------------------------------                                       ---------------------------
     2000      1999     1998                                                 2000 vs.1999   1999 vs.1998
     ----      ----     ----                                                 ------------   ------------
                                                                                                        
     100%      100%     100%        Operating Revenues                            9%             3%     
     ----      ----     ----                                                                            

      36%       39%      34%        Fuel and Purchased Power                     (1)%           19%     
      30%       27%      23%        Operating and Maintenance                    23%            21%     
       4%       --       --         Merger-Related Costs                        N.M.           N.M.     
      --        --        2%        Early Retirement and Separation Program     N.M.           N.M.     
       5%        4%      12%        Depreciation and Amortization                37%           (63)%    
       4%        5%       5%        Taxes Other Than Income                     (10)%           (6)%    
    -----     -----    -----                                                                            
      79%       75%      76%        Total Operating Expenses                     15%             1%     
     ----      ----     ----                                                                            

      21%       25%      24%        Operating Income                            (11)%            8%     
     ----      ----     ----                                                                            

N.M. - not meaningful                                                                                   

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Results of Operations                                                           

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999           

Net Income                                                                      

         Net income increased $48 million,  or 8% in 2000,  before giving effect
to  extraordinary  items,  the  cumulative  effect  of a  change  in  accounting
principle  and  non-recurring  items.  Net  income,  inclusive  of a $4  million
extraordinary  charge,  a $24  million  benefit for the  cumulative  effect of a
change  in   accounting   principle   and   non-recurring   items   relating  to
merger-related  costs  of  $159  million  and a  writedown  of a  communications
investment of $21 million, decreased $75 million, or 13% in 2000.               

         Energy   Delivery's   results   improved   because  of  favorable  rate
adjustments  partially  offset by lower margins due to the  unplanned  return of
certain  commercial  and  industrial   customers,   milder  weather,   increased
depreciation and amortization expense and higher interest expense.  Generation's
results  improved as a result of higher  margins on  wholesale  and  unregulated
retail  energy  sales.  Enterprises'  results were  adversely  impacted by lower
margins on its infrastructure  services  businesses,  increased  amortization of
goodwill and costs to integrate the businesses acquired in 1999 and 2000.       

Operating Revenue                                                               
                     2000           1999       $ Variance       % Variance
                     ----           ----       ----------       ----------
                 (in millions, except percentage data)
Energy Delivery        $3,373        $3,265        $  108              3.3%     
Generation              1,931         2,097          (166)            (7.9)%    
Enterprises               646           116           530            456.9%     
------        ------        ------

                  $5,950        $5,478        $  472              8.6%
======        ======        ======

Energy Delivery                                                                 
         The increase in Energy Delivery's operating revenue was attributable to
higher  electric  revenue  of $32  million  and  additional  gas  revenue of $76
million.  The increase in electric  revenue reflects $102 million from customers
in Pennsylvania  selecting PECO as their electric  generation  supplier and rate
adjustments in Pennsylvania,  partially offset by a decrease of $69 million as a
result of lower summer volume.  Regulated gas revenue reflected increases of $44
million related to higher prices,  $29 million  attributable to increased volume
from new and existing  customers and $24 million from  increased  winter volume.
These increases were partially offset by $21 million of lower gross receipts tax
collections  as a result of the repeal of the gross receipts tax on gas sales in
connection with gas restructuring in Pennsylvania.                              

Generation                                                                      
         The decrease in  Generation's  operating  revenue was a result of lower
electric  revenue of $180 million  partially offset by higher gas revenue of $14
million. The decrease in electric revenue was principally  attributable to lower
sales of competitive  retail electric  generation  services of $132 million,  of
which $196 million represented decreased volume that was partially offset by $64
million from higher  prices.  In addition,  the  termination  of the  management
agreement for Clinton resulted in lower revenues of $99 million.  As a result of
the acquisition by AmerGen of Clinton in December 1999, the management agreement
was terminated and, accordingly,  the operations have been included in Equity in
Earnings (Losses) of Unconsolidated Affiliates on PECO's Consolidated Statements
of Income since that date.  These decreases were partially offset by an increase
of $50 million  from  higher  wholesale  revenue  attributable  to $199  million
associated with higher prices  partially offset by $149 million related to lower
volume.  Unregulated gas revenue increased  primarily as a result of $11 million
from wholesale sales of excess natural gas.                                     

Enterprises                                                                     
         The increase in Enterprises' operating revenue was attributable to $530
million  from the  acquisition  of thirteen  infrastructure  services  companies
during 2000 and 1999.                                                           

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Fuel and Purchased Power Expense                                                

                        2000           1999         $ Variance      % Variance
                        ----           ----         ----------      ----------
                       (in millions, except percentage data)
Energy Delivery        $   462        $   370         $    92            24.9%  
Generation               1,665          1,782            (117)           (6.6)% 
    -------        -------         -------
                      $ 2,127        $ 2,152         $   (25)           (1.2)%
    =======        =======         =======

Energy Delivery                                                                 
         Energy  Delivery's  increase in fuel and  purchased  power  expense was
primarily  attributable  to $73 million  from  additional  volume and  increased
prices related to gas, $13 million as a result of favorable  weather  conditions
and $4 million in additional PJM ancillary charges.                             

Generation                                                                      
         Generation's decrease in fuel and purchased power expense was primarily
attributable to $262 million principally related to reduced sales of competitive
retail  electric  generation  services  partially  offset by an increase of $120
million in the cost to supply Energy Delivery and an increase of $5 million from
wholesale operations principally related to $97 million as a result of increased
prices partially offset by $92 million as a result of decreased volume.         

Operating and Maintenance Expense                                               

                     2000         1999       $ Variance       % Variance
                     ----         ----       ----------       ----------
                 (in millions, except percentage data)
Energy Delivery        $  491        $  434        $   57             13.1%     
Generation                616           721          (105)           (14.6)%    
Enterprises               650           136           514            377.9%     
Corporate                  34           163          (129)           (79.1)%    
------        ------        ------
                  $1,791        $1,454        $  337             23.2%
======        ======        ======

Energy Delivery                                                                 
         Energy  Delivery's  increase in Operating and Maintenance (O&M) expense
was primarily  attributable to the direct  charging to the business  segments of
O&M expenses that were previously reported at PECO Corporate.                   

Generation                                                                      
         Generation's decrease in O&M expense was primarily  attributable to O&M
expenses related to the management  agreement for Clinton of $70 million in 1999
which has since been  terminated,  $15 million related to the abandonment of two
information  systems  implementations  in 1999,  $17  million  related  to lower
administrative  and general expenses related to the unregulated  retail sales of
electricity and $15 million related to lower joint-owner expenses.              

Enterprises                                                                     
         Enterprises' O&M expense increased $505 million from the infrastructure
services business as a result of acquisitions.                                  

Corporate                                                                       
         PECO Corporate's decrease in O&M expense was primarily  attributable to
expenses of $56  million  related to lower Year 2000  remediation  expenditures,
lower pension and postretirement  benefits expense of $31 million and the direct
charging to business  segments of O&M expenses that were previously  recorded at
Corporate.                                                                      

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Merger-Related Costs                                                            
         Merger-related  costs  charged  to income  in 2000  were  $248  million
consisting  of $132  million of direct  incremental  costs and $116  million for
employee costs.  Direct  incremental  costs represent  expenses  associated with
completing the merger,  including  professional  fees,  regulatory  approval and
settlement  costs, and settlement of compensation  arrangements.  Employee costs
represent estimated  severance payments and pension and postretirement  benefits
provided  under  Exelon's  Merger  Separation  Plan (MSP) for 642 eligible  PECO
employees who are expected to be  involuntarily  terminated  before October 2002
upon completion of integration activities for the merged companies.             

Depreciation and Amortization Expense                                           
         Depreciation and amortization expense increased $88 million, or 37%, to
$325 million in 2000. The increase was primarily  attributable to $57 million of
amortization  of PECO's CTC which  commenced in 2000 and $29 million  related to
depreciation  and  amortization   expense  associated  with  the  infrastructure
services business acquisitions.                                                 

Taxes Other Than Income                                                         
         Taxes other than income decreased $25 million,  or 10%, to $237 million
in 2000. The decrease was primarily  attributable  to lower real estate taxes of
$18  million  relating  to  a  change  in  tax  laws  for  utility  property  in
Pennsylvania  and $11  million  as a  result  of the  elimination  of the  gross
receipts  tax on natural gas sales net of an increase in gross  receipts  tax on
electric  sales.  This  decrease was  partially  offset by a  non-recurring  $22
million  capital stock tax credit related to a 1999  adjustment  associated with
the impact of PECO's 1997 restructuring charge.                                 

Interest Charges                                                                
         Interest  charges  consist of  interest  expense and  distributions  on
Company-Obligated  Mandatorily  Redeemable Preferred Securities of a Partnership
(COMRPS) . Interest  charges  increased $48 million,  or 12%, to $465 million in
2000.  The increase was  primarily  attributable  to interest on the  Transition
Bonds  issued to  securitize  PECO's  stranded  cost  recovery of $104  million,
partially  offset by the  reduction of PECO's  long-term  debt with the proceeds
from Transition Bonds, which reduced interest charges by $77 million.           

Equity in Earnings (Losses) of Unconsolidated Affiliates                        
         Equity in earnings (losses) of unconsolidated  affiliates  decreased $3
million,  or 8%, to losses of $41  million in 2000 as  compared to losses of $38
million  in 1999.  The  decrease  was  primarily  attributable  to $8 million of
additional  losses from  communications  joint ventures,  partially offset by $4
million of earnings from AmerGen as a result of the  acquisitions of Clinton and
TMI in December 1999 and Oyster Creek in September 2000.                        

Other Income and Deductions                                                     
         Other income and deductions  excluding  interest  charges and equity in
earnings (losses) of unconsolidated affiliates decreased $18 million, or 31%, to
$41 million in 2000 as compared  to $59 million in 1999.  The  decrease in other
income  and  deductions  was  primarily  attributable  to  the  writedown  of  a
communications  investment of $33 million, a $10 million gain on the disposal of
assets in 1999 and a decrease in interest income of $2 million.  These decreases
were partially offset by a $15 million  write-off in 1999 of the investment in a
cogeneration  facility in connection with the settlement of litigation and gains
on sales of investments of $13 million.                                         

Income Taxes                                                                    
        The effective tax rate was 35.7% in 2000 as compared to 36.6% in 1999.

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Extraordinary Items                                                             
         In 2000, PECO incurred extraordinary charges aggregating $6 million ($4
million,  net of tax)  related  to  prepayment  premiums  and the  write-off  of
unamortized  deferred  financing costs  associated with the early  retirement of
debt with a portion of the proceeds from the  securitization  of PECO's stranded
cost recovery in May 2000.                                                      

         In 1999, PECO incurred  extraordinary  charges  aggregating $62 million
($37 million,  net of tax) related to  prepayment  premiums and the write-off of
unamortized debt costs associated with the repayment and refinancing of debt.   

Cumulative Effect of a Change in Accounting Principle                           
         In 2000,  PECO recorded a benefit of $40 million ($24  million,  net of
tax)  representing  the cumulative  effect of a change in accounting  method for
nuclear  outage costs in  conjunction  with the  synchronization  of  accounting
policies in connection with the merger.                                         

Preferred Stock Dividends                                                       
         Preferred stock dividends  decreased $2 million, or 17%, to $10 million
as compared 1999. The decrease was attributable to the redemption of $37 million
of Mandatorily  Redeemable  Preferred Stock in August 1999 with a portion of the
proceeds from the issuance of Transition  Bonds. In addition,  PECO redeemed $19
million of Mandatorily Redeemable Preferred Stock in August 2000.               

Year Ended December 31, 1999 Compared To Year Ended December 31, 1998           

Net Income                                                                      

         Net income increased $69 million,  or 13%, to $582 million in 1999. The
increase in net income was  primarily  attributable  to lower  depreciation  and
amortization  expense  as a  result  of  the  full  amortization  in  1998  of a
regulatory  asset and the  absence  of  charges  associated  with  1998's  Early
Retirement  and Separation  Program.  These  increases were partially  offset by
lower  margins as a result of higher  fuel  prices,  an  increase in O&M expense
associated with infrastructure  service's business  acquisitions during 1999 and
increased  interest  expense  related to the  securitization  of PECO's stranded
costs.                                                                          

Operating Revenues                                                              
                    1999          1998       $ Variance       % Variance
                    ----          ----       ----------       ----------
                     (in millions, except percentage data)
Energy Delivery        $3,265        $3,799        $ (534)           (14.1)%    
Generation              2,097         1,513           584             38.6%     
Enterprises               116            13           103            792.3%     
------        ------        ------

                  $5,478        $5,325        $  153              2.9%
======        ======        ======

Energy Delivery                                                                 
         The decrease in Energy  Delivery's  operating  revenues  was  primarily
attributable to lower volume  associated with the effects of retail  competition
of $508  million  and  $278  million  related  to the 8%  across-the-board  rate
reduction  mandated  by the  settlement  of  PECO's  restructuring  case.  These
decreases  were  partially  offset by $149  million of PJM network  transmission
service  revenue  and $59  million  related  to  higher  volume  as a result  of
favorable  weather  conditions  as  compared to 1998.  PJM network  transmission
service  revenues and charges  which  commenced  April 1, 1998 were  recorded in
Generation in 1998 but were recognized by Energy Delivery in 1999 as a result of
FERC approval of the PJM regional  transmission  owners' rate case  settlements.
Stranded cost recovery was included in PECO's retail  electric  rates  beginning
January 1, 1999.  In addition,  gas  revenues  increased  $50 million  primarily
attributable to increased volume as a result of favorable weather  conditions of
$27 million and from new and existing customers of $20 million.                 

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Generation                                                                      
         The  increase  in   Generation's   operating   revenues  was  primarily
attributable  to $473 million from increased  volume in Pennsylvania as a result
of the  sale of  competitive  retail  electric  generation  services,  increased
wholesale  revenues of $133  million  from the  marketing  of excess  generation
capacity as a result of retail  competition and revenues of $99 million from the
sale of generation from Clinton to Illinois Power (IP),  partially offset by the
inclusion of $116 million of PJM network transmission service revenue in 1998.  

         Under the amended  management  agreement with IP, PECO was  responsible
for the payment of all direct O&M costs and direct  capital costs incurred by IP
and  allocable  to the  operation of Clinton.  These costs are  reflected in O&M
expenses.  IP was  responsible  for  fuel and  indirect  costs  such as  pension
benefits,  payroll taxes and property taxes. Following the restart of Clinton on
June 2, 1999,  and through  December  15,  1999,  PECO sold 80% of the output of
Clinton to IP. The remaining  output was sold by PECO in the  wholesale  market.
Under a separate  agreement with PECO, British Energy agreed to share 50% of the
costs and revenues associated with the management agreement.  Effective December
15, 1999,  AmerGen acquired Clinton.  Accordingly,  the results of operations of
Clinton have been  accounted for under the equity method of accounting in PECO's
Consolidated Statements of Income since the acquisition date.                   

Enterprises                                                                     
         The increase in Enterprises'  operating revenue was attributable to the
effects of the infrastructure services company acquisitions made in 1999.       

Fuel and Purchased Power Expense                                                

                   1999          1998      $ Variance       % Variance
                    ----          ----       ----------       ----------
                       (in millions, except percentage data)
Energy Delivery        $  370        $  191        $  179           93.7%       
Generation              1,782         1,620           162           10.0%       
------        ------        ------

                $2,152        $1,811        $  341           18.8%
======        ======        ======

Energy Delivery                                                                 
         Energy  Delivery's  increase in fuel and  purchased  power  expense was
attributable to $98 million of PJM network  transmission  service  charges,  $51
million of purchases in the spot market and $30 million of additional  volume as
a result of weather conditions.                                                 

Generation                                                                      
         Generation's increase in fuel and purchased power expense was primarily
attributable  to $565  million  related  to  increased  volume  from the sale of
competitive  electric generation services and a $36 million reserve related to a
power supply contract in  Massachusetts  as a result of higher than  anticipated
cost of supply in the New England power pool.  These  increases  were  partially
offset by $277 million of fuel savings from wholesale  operations as a result of
lower volume and efficient  operation of generating assets, the inclusion of PJM
network  transmission  service charges of $116 million in 1998, and the reversal
of $27 million in reserves associated with a cogeneration facility in connection
with the final  settlement of litigation and expected prices of electricity over
the  remaining  life of the  power  purchase  agreements  for the  facility.  In
addition,  the full  return to service of Salem in April  1998  resulted  in $19
million of fuel savings associated with a reduction in purchased power costs.   

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Operating and Maintenance Expense                                               

                     1999         1998       $ Variance       % Variance
                     ----         ----       ----------       ----------
               (in millions, except percentage data)
Energy Delivery        $  434        $  431        $    3              0.7%     
Generation                721           543           178             32.8%     
Enterprises               136            38            98            257.9%     
Corporate                 163           186           (23)           (12.4)%    
------        ------        ------

                  $1,454        $1,198        $  256             21.4%
======        ======        ======

Energy Delivery                                                                 
         Energy  Delivery's  O&M  expenses  included  $11 million of  additional
expenses  related to  restoration  activities as a result of Hurricane  Floyd in
1999 which were offset by lower electric transmission and distribution expenses.

Generation                                                                      
         Generation's  increase  in O&M  expense  was  primarily a result of $70
million  related  to  Clinton  operations  in  connection  with  the  management
agreement,  $24 million  related to the growth of Exelon Energy,  $15 million of
charges related to the abandonment of two information  systems  implementations,
$10  million  associated  with the Salem  inventory  write-off  for  excess  and
obsolete inventory,  and $7 million related to the true-up of 1998 reimbursement
of joint-owner expenses. These decreases were partially offset by $10 million of
lower O&M  expenses  as a result of the full return to service of Salem in April
1998.                                                                           

Enterprises                                                                     
         Enterprises'  increase in O&M expense was related to the infrastructure
services business acquisitions made in 1999.                                    

Corporate                                                                       
PECO  Corporate  costs  decreased  $17  million  primarily  as a result of lower
pension and postretirement  benefits expense  attributable to the performance of
the investments in PECO's pension plan.                                         

Depreciation and Amortization Expense                                           
         Depreciation and amortization  expense decreased $406 million,  or 63%,
to $237 million in 1999. The decrease in depreciation and  amortization  expense
was associated  with the December 1997  restructuring  charge through which PECO
wrote down a significant  portion of its generating plant and regulatory assets.
In connection with this restructuring  charge,  PECO reduced  generation-related
assets by $8.4 billion,  established  a regulatory  asset,  Deferred  Generation
Costs Recoverable in Current Rates of $424 million, which was fully amortized in
1998, and established an additional  regulatory asset, CTC, of $5.3 billion. CTC
is being amortized over an eleven-year period ending December 31, 2010.         

Taxes Other Than Income                                                         
         Taxes other than income  decreased $18 million,  or 6%, to $262 million
in 1999. The decrease in taxes other than income was primarily attributable to a
$34 million credit related to an adjustment of PECO's Pennsylvania capital stock
tax base as a result of the 1997  restructuring  charge,  partially offset by an
increase of $17 million in real estate  taxes as a result of changes in tax laws
for utility property in Pennsylvania.                                           

Interest Charges                                                                
         Interest  charges  increased  $55  million,  or 15%, to $417 million in
1999. The increase in interest charges was primarily attributable to interest on
the Transition Bonds issued to securitize  PECO's stranded cost recovery of $179
million,  partially  offset  by a $99  million  reduction  in  interest  charges
resulting from the use of  securitization  proceeds to retire long-term debt and
redeem COMRPS. In addition, PECO's ongoing program to reduce or refinance higher
cost, long-term debt reduced interest charges by $26 million.                   

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Equity in Earnings (Losses) of Unconsolidated Affiliates                        
         Equity in earnings (losses) of unconsolidated  affiliates increased $16
million or 30%,  to losses of $38  million in 1999 as  compared to losses of $54
million in 1998. The lower losses were primarily  attributable  to customer base
growth for communications joint ventures.                                       

Other Income and Deductions                                                     
         Other income and deductions,  excluding  interest charges and equity in
earnings (losses) of unconsolidated affiliates, increased $58 million, to income
of $59 million in 1999 as compared to income of $1 million in 1998. The increase
in other income and  deductions  was  primarily  attributable  to $28 million of
interest  income earned on the unused portion of stranded cost recovery prior to
application,  $14 million of gain on the sale of assets,  a $10 million donation
to a City of  Philadelphia  street  lighting  project  in 1998 and a $7  million
write-off of a  non-regulated  business  venture in 1998.  These  increases were
partially offset by a $15 million  write-off of an investment in connection with
the settlement of litigation.                                                   

Income Taxes                                                                    
         The  effective tax rate was 36.6% in 1999 as compared to 37.5% in 1998.
The decrease in the effective tax rate was primarily  attributable  to an income
tax benefit of approximately $11 million related to the favorable  resolution of
certain  outstanding  issues in  connection  with the  settlement of an Internal
Revenue  Service audit and tax benefits  associated with the  implementation  of
state tax planning strategies, partially offset by the non-recognition for state
income tax purposes of certain operating losses.                                

Extraordinary Items                                                             
         In 1999, PECO incurred  extraordinary  charges  aggregating $62 million
($37 million,  net of tax) related to  prepayment  premiums and the write-off of
unamortized debt costs associated with the repayment and refinancing of debt.   

         In 1998, PECO incurred  extraordinary  charges  aggregating $34 million
($20 million,  net of tax) related to  prepayment  premiums and the write-off of
unamortized debt costs associated with the repayment of debt.                   

Preferred Stock Dividends                                                       
         Preferred stock dividends decreased $1 million or 8%, to $12 million in
1999.  The  decrease  was  attributable  to the  redemption  of $37  million  of
Mandatorily  Redeemable  Preferred  Stock in August  1999 with a portion  of the
proceeds from the issuance of Transition Bonds.                                 

Liquidity and Capital Resources                                                 

         Cash flows from  operations  were $756  million in 2000 as  compared to
$895  million  in 1999 and  $1,499  million in 1998.  The  decrease  in 2000 was
principally attributable to changes in working capital of $343 million partially
offset by an increase in cash generated by operations of $204 million.          

         Cash flows used in  investing  activities  were $894 million in 2000 as
compared to $886 million in 1999 and $521 million in 1998.  The increase in 2000
was primarily  attributable  to increased  capital  expenditures of $58 million,
additional   other   investing   activities   of  $45  million  and   additional
infrastructure service business acquisitions of $23 million, partially offset by
$118 million of  investments  in and advances to joint ventures that occurred in
1999.                                                                           

         Cash flows provided by financing  activities were $213 million and $171
million  in 2000  and  1999,  respectively  and  cash  flows  used by  financing
activities of $963 million in 1998.  Cash flows from financing  activities  were
2000  primarily  reflect  PECO's  additional  securitization  of  stranded  cost
recovery and the use of related proceeds.                                       

         PECO's capital resources are primarily provided by internally generated
cash flows from  utility  operations  and,  to the  extent  necessary,  external
financing. In connection with its request to securitize an additional $1 billion
of its                                                                          

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stranded cost  recovery,  PECO agreed to provide its customers  with  additional
rate reductions of $60 million in 2001. Under the settlement  agreement  entered
into by PECO relating to the PUC's  approval of the merger,  PECO agreed to $200
million in aggregate  rate  reductions for all customers over the period January
1,  2002  through  2005  and  extended  the  cap  on  PECO's   transmission  and
distribution rates through December 31, 2006. These rate reductions will be more
than offset by the discontinuance of the 6%  across-the-board  rate reduction in
effect in 2000.                                                                 

         Capital   resources   are  used   primarily  to  fund  PECO's   capital
requirements, including construction,  repayments of maturing debt and preferred
securities and payment of common and preferred stock dividends. PECO's estimated
capital  expenditures in 2001 are  approximately  $260 million.  PECO's proposed
capital  expenditures  are  subject to periodic  review and  revision to reflect
changes in economic conditions and other factors.                               

         Under PUHCA and the Federal Power Act, PECO can only pay dividends from
retained or current  earnings.  At December 31, 2000, PECO had retained earnings
of $197 million.                                                                

         On  May 2,  2000,  PETT  issued  an  additional  $1  billion  aggregate
principal  amount  of  Transition  Bonds  to  securitize  a  portion  of  PECO's
authorized stranded cost recovery.  As a result, PECO has securitized a total of
$5 billion of its $5.26 billion of stranded  cost recovery  through the issuance
by PETT of Transition  Bonds.  The  Transition  Bonds are solely  obligations of
PETT,  secured  by  intangible   transition   property  sold  by  PECO  to  PETT
concurrently with the issuance of the Transition Bonds and certain other related
collateral,  but are included in the  consolidated  long-term debt of PECO. PECO
has used the proceeds from the  securitizations  to reduce PECO's stranded costs
and related  capitalization.  The proceeds of the Transition Bonds issued in May
2000 were used to repurchase 12 million  shares of common stock,  to retire $422
million  principal  amount  of debt,  to  repurchase  $50  million  of  accounts
receivable and to pay transaction expenses.                                     

         As a result of the issuance of the Transition Bonds and the application
of the  proceeds  thereof,  at  December  31,  2000,  PECO's  capital  structure
consisted of 23.9% common equity,  5.8% notes payable,  3.1% preferred stock and
COMRPS (which  comprised  1.8% of PECO's total  capitalization  structure),  and
67.2% long-term debt including  Transition Bonds issued by PETT (which comprised
73.8% of PECO's long-term debt).                                                

         PECO meets its short-term liquidity  requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities.  PECO,
along with  Exelon  and ComEd,  entered  into a $2 billion  unsecured  revolving
credit  facility  on December  20, 2000 with a group of banks.  PECO has an $800
million  sublimit  under this  364-day  credit  facility  and expects to use the
credit  facility  principally  to  support  its $800  million  commercial  paper
program.  This  credit  facility  requires  PECO to  maintain  a debt  to  total
capitalization  ratio of less than 65% or less (excluding  Transition Bonds). At
December 31, 2000, PECO's debt to total  capitalization  ratio on that basis was
48%.                                                                            

         At  December  31,  2000,  PECO had  outstanding  $163  million of notes
payable  consisting  principally  of  commercial  paper.  Also,  PECO had a $400
million   intercompany  payable  with  ComEd  bearing  interest  at  an  average
annualized interest rate for the period it was outstanding of 6.5%. In addition,
PECO had a $696 million note payable with Exelon,  incurred in  connection  with
the Sithe  acquisition.  The note is interest bearing with an average annualized
interest rate for the period it was outstanding of 7.6%.                        

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ComEd                                                                           

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                               
CONDITION AND RESULTS OF OPERATIONS                                             

General                                                                         

          On October 20, 2000,  ComEd became a 99.9% owned  subsidiary of Exelon
as a result of the transactions  relating to the merger of PECO and Unicom. As a
result of the merger,  ComEd's consolidated financial information for the period
after the merger has a  different  cost  basis  than that of  previous  periods.
Management  has based its  discussion  and analysis of results of operations for
2000 as compared to 1999 on the combined results of operations for the full year
of 2000.  Material  variances  caused  by the  different  cost  basis  have been
disclosed where applicable.                                                     

         Through December 31, 2000, ComEd operated as one business segment, that
of a  vertically  integrated  electric  utility.  During  January  2001,  Exelon
undertook a  restructuring  to separate  its  generation  and other  competitive
businesses  from  its  regulated  energy  delivery  business.  As  part  of  the
restructuring,  the non-regulated  operations and related assets and liabilities
of ComEd were  transferred  to  separate  subsidiaries  of Exelon.  As a result,
beginning   January  2001,  the  operations  of  ComEd  consist  of  its  retail
electricity distribution and transmission business in northern Illinois.        

         Under   Illinois   legislation,   as  of   December   31,   2000,   all
non-residential  customers  were  eligible to choose a new electric  supplier or
elect a power purchase option.  The power purchase option allows the purchase of
electric energy from ComEd at market-based prices. ComEd's residential customers
become  eligible to choose a new electric  supplier in May 2002.  As of December
31, 2000, over 9,500 non-residential  customers,  representing approximately 27%
of  ComEd's  retail  kilowatt-hour  sales  for the  twelve  months  prior to the
introduction  of retail  competition,  elected to receive their electric  energy
from an alternative  electric  supplier or chose the power purchase option.  For
additional  information,  see ITEM 1.  Business  - Energy  Delivery  and ITEM 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation - Exelon.                                                             

Significant Operating Trends                                                    

                                                        [Enlarge/Download Table]

Percentage of Total Operating Revenue                               Percentage Dollar Changes 
--------------------------------------                             ---------------------------
     2000      1999     1998                                       2000 vs.1999   1999 vs.1998
     ----      ----     ----                                       ------------   ------------
                                                                                              
     100%      100%     100%        Operating Revenue                    3%            (5)%   
     ----      ----     ----                                                                  

      28%       23%      26%        Fuel and Purchased Power            28%           (16)%   
      30%       35%      32%        Operating and Maintenance          (12)%            3%    
       1%       --       --         Merger-Related Costs               N.M.           N.M.    
      14%       12%      13%        Depreciation and Amortization       19%           (11)%   
       7%        7%      10%        Taxes Other Than Income              --           (27)%   
     ----      ----    -----                                                                  
      80%       77%      81%        Total Operating Expenses             7%            (9)%   

      20%       23%      19%        Operating Income                   (11)%           12%    
      ===      ====     -===                                                                  

N.M. - not meaningful                                                           

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Results of Operations                                                           

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999           

Net Income                                                                      

         Net Income increased $128 million, or 20% in 2000, before giving effect
to extraordinary items and non-recurring items. Net income,  inclusive of the $4
million and $28 million extraordinary items for 2000 and 1999, respectively, and
non-recurring items relating to merger-related  costs of $43 million , increased
$109 million, or 18% in 2000.                                                   

Operating Revenue                                                               

         Operating  revenue  was $7,012  million in 2000,  an  increase  of $219
million,  or 3% from 1999.  The  increase in  operating  revenue  was  primarily
attributable to a $467 million increase in sales for resale, partially offset by
a $266  million  reduction  in sales to retail  customers,  reflecting,  in both
cases,  the  migration  of  non-residential   customers  to  alternate  electric
suppliers  who purchased a portion of their supply  requirements  from ComEd and
also  reflecting  increased  sales  to  other  utilities  due to  the  increased
availability  of  nuclear  generation.  The  decrease  in retail  revenues  also
reflects the further  election of the power purchase  option by  non-residential
customers.  Kilowatt-hour sales increased 17% over 1999,  reflecting an increase
in kWh sales for resale of 77% and increased retail kWh sales of 3%.            

Fuel and Purchased Power Expense                                                

         Fuel and  purchased  power  expense  was  $1,977  million  in 2000,  an
increase of $428 million,  or 28% from 1999.  The increase in fuel and purchased
power expense was primarily  attributable  to the effects of the power  purchase
agreements  (PPAs) that ComEd  entered into upon the sale of its fleet of fossil
stations in December 1999,  which resulted in increased  purchased  power costs,
but lower fuel costs.                                                           

Operating and Maintenance Expense                                               

                                                        [Enlarge/Download Table]

                                2000         1999              $ Variance      % Variance
                                ----         ----              ----------      ----------
                                        (in millions, except percentage data)            
                                                                                         
Generation Stations            $   738       $1,004                $(266)           (26)%
Transmission and Distribution      458          355                  103             29 %
Customer-Related                   223          258                  (35)           (14)%
Other                              657          735                  (78)           (11)%
                                ------       ------                -----                 
                                $2,076       $2,352                $(276)           (12)%
                                ======       ======                =====                 

         The decrease in operating and maintenance (O&M) expenses related to the
generation  stations was primarily  attributable to a $220 million  reduction in
expenses as a result of the sale of the fossil  generation  stations in December
1999 and a $46 million  reduction in expenses  associated with shorter refueling
outages and fewer forced outages at nuclear generation stations.                

         The  increase in O&M  expenses  associated  with the  transmission  and
distribution  system was primarily  attributable to ComEd's increased efforts to
improve the reliability of its transmission and distribution system.            

         The  decrease  in  O&M  expenses   associated   with   customer-related
activities was primarily attributable to non-recurring costs incurred in 1999 to
address billing and collection problems encountered following the implementation
of a new customer information and billing system in July 1998.                  

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         The decrease in other O&M expenses was primarily  attributable to lower
general and administrative costs.                                               

Merger-Related Costs                                                            

         Merger-related  costs  charged  to  expense  in 2000  were $67  million
consisting  of $26  million  of direct  incremental  costs and $41  million  for
employee costs.  Direct incremental costs represent expenses directly associated
with completing the merger, including professional fees, regulatory approval and
other merger integration  costs.  Employee costs represent  estimated  severance
payments  provided  under  Exelon's  Merger  Separation  Plan (MSP) for eligible
employees  whose  positions  were  eliminated  before  October  20,  2000 due to
integration activities of the merged companies.                                 

Depreciation and Amortization Expense                                           

         Depreciation and amortization  expense increased $162 million,  or 19%,
to $998  million in 2000.  The  increase was  primarily  attributable  to a $220
million  increase  in  regulatory  asset  amortization  in  accordance  with the
earnings provisions of the Illinois  legislation,  goodwill  amortization of $23
million associated with the merger,  partially offset by an $81 million decrease
in  depreciation  expense  reflecting the fossil station sale and the fair value
adjustment  of ComEd's  nuclear  stations  associated  with the  application  of
purchase accounting upon completion of the merger on October 20, 2000.          

Taxes Other Than Income                                                         

   Taxes other than income taxes for 2000 were consistent with 1999.

Interest Charges                                                                

         Interest  charges  consist  of  interest  expense  and  provisions  for
dividends on  Company-Obligated  Mandatorily  Redeemable Preferred Securities of
Subsidiary  Trusts.  Interest charges for 2000 were  essentially  unchanged from
1999.                                                                           

Other Income and Deductions                                                     

         Other  income and  deductions,  excluding  interest  charges,  was $308
million for 2000,  an increase  of $248  million  from 1999.  The  increase  was
primarily  attributable to a $166 million increase in interest income on ComEd's
notes  receivables  with  affiliates  related  to the  sale  of  ComEd's  fossil
stations.  The increase  also reflects the effects of a $113 million gain on the
forward share  repurchase that occurred in 2000,  compared to a $44 million loss
recorded in 1999 on the same agreement.                                         

Income Taxes                                                                    

          The  effective  income tax rate was 31.1% in 2000 compared to 33.4% in
1999. The decrease in the effective tax rate was primarily  attributable  to the
effects of the gain on the forward share repurchase  agreement,  compared to the
loss that was  recorded  in 1999 on the same  agreement  both of which  were not
recognized for tax purposes. The decrease was partially offset by the investment
tax credit amortization recorded in 1999 related to the fossil station sale.    

Extraordinary Item                                                              

         ComEd  incurred   extraordinary  charges  aggregating  $6  million  ($4
million, net of tax) and $46 million ($28 million, net of tax) in 2000 and 1999,
respectively, consisting of prepayment premiums and the write-off of unamortized
deferred financing costs associated with the early retirement of debt.          

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Year Ended December 31, 1999 Compared To Year Ended December 31, 1998           

Net Income                                                                      

         Net income increased $57 million,  or 10% in 1999, before giving effect
to the  extraordinary  item in 1999.  Net income,  inclusive  of the $28 million
extraordinary item, increased $29 million, or 5% in 1999.                       

Operating Revenue                                                               

         Operating  revenue  was $6,793  million  for 1999,  a decrease  of $357
million,  or 5%, from 1998.  The  decrease in  operating  revenue was  primarily
attributable  to the impact of the 15% residential  base rate  reduction,  which
took effect on August 1, 1998, of $226 million and $174 million  associated with
the change in presentation  for certain state and municipal taxes from operating
revenue and tax expense to collections  recorded as  liabilities.  Kilowatt-hour
sales  increased 8% in 1999 compared to 1998  primarily due to a 59% increase in
sales for resale which  reflects  increased  availability  of lower cost nuclear
generation.                                                                     

Fuel and Purchased Power Expense                                                

         Fuel and  purchased  power  expense  was  $1,549  million  for 1999,  a
decrease of $304 million,  or 16%, from 1998. The decrease in fuel and purchased
power  expense  was  primarily  attributable  to  improved  nuclear  and  fossil
operating  performance,  which  reduced  the need to  purchase  power from other
parties.                                                                        

Operating and Maintenance Expense                                               

                                                        [Enlarge/Download Table]

                                1999       1998              $ Variance       % Variance
                                ----       ----              ----------       ----------
                                       (in millions, except percentage data)            
                                                                                        
Generation Stations            $1,004     $ 1,121                $(117)           (10)% 
Transmission and Distribution     355         278                   77             28%  
Customer-Related                  258         218                   40             18%  
Other                             735         657                   78             12%  
                               ------      ------              -------                  
                               $2,352      $2,274              $    78              3%  
                               ======      ======              =======                  

         The decrease in O&M expenses  associated  with the generation  stations
was primarily attributable to a $42 million reduction in plant refurbishment and
maintenance costs at the fossil generation  stations and a $75 million reduction
in expenses due to shorter  refueling  outages and fewer  forced  outages at the
nuclear generation stations.                                                    

         The increase in O&M expenses  associated with ComEd's  transmission and
distribution  system was primarily  attributable  to ComEd's system  improvement
initiatives in response to outages that occurred  during the summer of 1999. The
increase  also  reflects  service  restoration  and other  outage-related  costs
associated with the summer of 1999 heat wave.                                   

         The  increase  in  O&M  expenses   associated   with   customer-related
activities was primarily  attributable  to $35 million of costs incurred in 1999
to  address   billing  and  collection   problems   encountered   following  the
implementation of a new customer information and billing system in July 1998.   

         The  increase in other O&M expenses was  primarily  attributable  to an
increase of $68 million in ComEd's  estimated  environmental  liability  for the
remediation  of former  manufactured  gas plant sites,  and a $25 million charge
resulting from the settlement of issues associated with the franchise  agreement
between ComEd and the City of Chicago.                                          

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Depreciation and Amortization Expense                                           

         Depreciation and amortization expense decreased $102 million, or 11% to
$836  million in 1999.  The decrease was  primarily  attributable  to the fossil
station  sale.  Consistent  with the  provisions  of Illinois  legislation,  the
pre-tax  gain  on the  fossil  station  sale of  $2,587  million  resulted  in a
regulatory  liability,  which was used to recover regulatory assets.  Therefore,
the gain on the sale,  net of $43  million of  amortization  of  investment  tax
credits,  was recorded as a regulatory liability in the amount of $2,544 million
and amortized in the fourth quarter of 1999. The  amortization of the regulatory
liability and additional  regulatory  asset  amortization  of $2,456 million are
reflected  in  depreciation  and  amortization  expense on ComEd's  Consolidated
Statements  of Income  and  resulted  in a net  reduction  to  depreciation  and
amortization expense of $88 million.                                            

Taxes Other Than Income                                                         

         Taxes other than income  taxes  decreased by $191  million,  or 27%, to
$507 million in 1999. The decrease was primarily  attributable  to the change in
presentation  for  certain  state  and  municipal  taxes in the  amount  of $174
million.                                                                        

Interest Charges                                                                

         Interest  charges  increased  $100 million,  or 19%, to $632 million in
1999.  The increase in interest  charges was  primarily  attributable  to a full
year's effect of the issuance of the transitional trust notes in 1998, partially
offset by lower interest charges as a result of the retirement of long-term debt
with  a  portion  of  the  transitional  trust  note  proceeds.  For  additional
information, see ITEM 1. Business - Related Entities.                           

Other Income and Deductions                                                     

         Other income and deductions,  excluding interest charges, decreased $30
million,  or 33%, to $60 million in 1999.  The decrease was  attributed to a $44
million loss associated with the forward share repurchase agreement in 1999, and
a $34 million  decrease in gains on the disposal of assets,  partially offset by
the $45  million  increase in interest  income from the  investment  of the $3.4
billion  in  proceeds  from  transitional  trust  notes  issued in 1998 prior to
application to reduce capitalization.                                           

Income Taxes                                                                    

         The effective tax rate was 33.4% in 1999 compared to 37.1% in 1998. The
decrease in the effective tax rate was  primarily  attibutable  to the impact of
property  basis  differences  and increased  amortization  of the investment tax
credits  resulting  from  the  fossil  station  sale,  partially  offset  by the
unrealized  loss  on the  forward  share  repurchase  agreement,  which  was not
recognized for tax purposes.                                                    

Extraordinary Items                                                             

         ComEd  incurred  extraordinary  charges  aggregating  $46 million  ($28
million, net of tax) in 1999 consisting of prepayment premiums and the write-off
of unamortized  deferred financing costs associated with the early retirement of
debt.                                                                           

Liquidity and Capital Resources                                                 

         Cash flows provided by operations were $1,574 million,  $1,245 million,
and $1,552 million in 2000,  1999, and 1998  respectively.  The increase in cash
flows in 2000 was primarily  attributable  to an increase in cash generated from
operations and a non-recurring  $250 million  contribution  to an  environmental
trust in 1999.                                                                  

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         Cash flows used in  investing  activities  were $1,603  million in 2000
compared to cash flows  provided by investing  activities  of $1,144  million in
1999 and cash flows used by investing  activities of $1,135 million in 1998. The
decrease in cash flows in 2000 was primarily  attributable to proceeds  received
in  connection  with the sale of ComEd's  fossil  generation  stations of $4,886
million  in  1999,  partially  offset  by  $2,209  million  of  affiliate  notes
receivable in 1999.                                                             

         Cash flows used in financing  activities were $1,310 million and $3,939
million  in 2000 and 1999,  respectively,  compared  to cash flows  provided  by
financing  activities of $2,600 million in 1998. The decrease in cash flows used
in  financing   activities  in  2000  compared  to  1999  reflects   significant
retirements of long-term  debt,  redemptions of preferred  securities and common
stock forward  repurchases  in 1999  utilizing the proceeds from the issuance of
the transitional  trust notes in 1998,  partially offset by the issuance of $450
million of long-term debt in 2000.                                              

         ComEd's  capital   resources  are  primarily   provided  by  internally
generated  cash flows from  operations  and, to the extent  necessary,  external
financing.  Capital  resources  are  used  primarily  to  fund  ComEd's  capital
requirements, including construction,  repayments of maturing debt and preferred
securities and the payment of dividends.                                        

         For the year ended December 31, 2000,  capital  expenditures  for ComEd
were $1,406 million,  including  expenditures  related to its nuclear generation
facilities  which were  transferred  to Generation,  effective  January 1, 2001.
ComEd  estimates  that  it  will  spend  approximately  $900  million  in  2001,
principally for intensive  efforts to continue to improve the reliability of its
transmission and distribution systems. ComEd's proposed capital expenditures are
subject  to  periodic  review  and  revision  to  reflect  changes  in  economic
conditions and other factors.  ComEd  anticipates  that it will obtain  external
financing,   when  necessary,   through  borrowings  or  issuance  of  preferred
securities or capital contributions from Exelon.                                

         Under PUHCA and the  Federal  Power Act,  ComEd can only pay  dividends
from retained or current earnings.  However, the SEC has authorized ComEd to pay
up to $500 million in dividends  out of  additional  paid-in  capital,  provided
ComEd may not pay  dividends out of paid-in  capital after  December 31, 2002 if
its  common  equity  is less  than 30% of its  total  capitalization  (including
transitional  trust notes). At December 31, 2000, ComEd had retained earnings of
$133 million.                                                                   

         At December 31, 2000,  ComEd's  capital  structure  consisted of 53% of
long-term  debt,  45%  of  common  stock,  and  2% of  preferred  securities  of
subsidiaries. Long-term debt includes $2,720 million of transitional trust notes
constituting  obligations  of  certain  consolidated  special  purpose  entities
representing 20% of capitalization.                                             

         ComEd meets its short-term liquidity requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities. ComEd,
along with Exelon and PECO, entered into a $2 billion unsecured revolving credit
facility  with a group of banks.  ComEd has a $200 million  sublimit  under this
364-day credit  facility and expects to use the credit  facility  principally to
support its $200 million commercial paper program. This credit facility requires
ComEd to maintain a debt to total capitalization ratio of 65% or less (excluding
transitional  trust  notes).  At  December  31,  2000,  ComEd's  debt  to  total
capitalization ratio on that basis was 43%.                                     

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

Exelon                                                                          

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the information  appearing under the subheading  "Quantitative  and
Qualitative  Disclosures About Market Risk" under  "Management's  Discussion and
Analysis of Financial  Condition and Results of  Operations"  in Exhibit 99-2 to
Exelon's Current Report on Form 8-K dated March 16, 2001.                       

PECO                                                                            

         PECO is  exposed  to market  risks  associated  with  commodity  price,
credit and interest rates.                                                      

Commodity Price Risk                                          

         As part of Exelon's corporate restructuring,  PECO entered into a power
purchase  agreement with Generation to meet its retail customer  obligations for
generation  services at prices  consistent with prices amounts collected through
customer  rates.  As a result,  PECO's  exposure to commodity  price risk is not
material.                                                                       

Credit Risk                                                   

         PECO is  obligated  to  provide  service  to all  customers  within its
franchised  territory and, as a result,  has a broad customer base. For the year
ended December 31, 2000, PECO's ten largest customers represented  approximately
10% of its retail electric  revenues.  PECO manages credit risk using credit and
collection policies which are regulated by the PUC.                             

Interest Rate Risk                                            

         PECO uses a combination  of fixed rate and variable rate debt to reduce
interest rate exposure.  Interest rate swaps may be used to adjust exposure when
deemed appropriate,  based upon market conditions. These strategies are employed
to maintain the lowest cost of capital.  As of December 31, 2000, a hypothetical
10% increase in the interest  rates  associated  with  variable  rate debt would
result in an $2 million decrease in pre-tax earnings for 2001.                  

         PECO has  entered  into  interest  rate swaps to manage  interest  rate
exposure associated with two classes of floating rate Transition Bonds issued to
securitize  stranded cost  recovery.  At December 31, 2000,  these interest rate
swaps  had a fair  market  value  of $21  million  based  on the  present  value
difference between the contract and market rates at December 31, 2000.          

         The aggregate fair value of the Transition Bond derivative  instruments
that would have resulted from a hypothetical 50 basis point decrease in the spot
yield at December 31, 2000 is estimated  to be $17  million.  If the  derivative
instruments  had been terminated at December 31, 2000, this estimated fair value
represents the amount to be paid by PECO to the counterparties.                 

         The aggregate fair value of the Transition Bond derivative  instruments
that would have resulted from a hypothetical 50 basis point increase in the spot
yield at December 31, 2000 is estimated  to be $59  million.  If the  derivative
instruments  had been terminated at December 31, 2000, this estimated fair value
represents the amount to be paid by the counterparties to PECO.                 

         In February  2000,  PECO entered into forward  starting  interest  rate
swaps for a notional  amount of $1 billion in anticipation of the issuance of $1
billion of Transition  Bonds in the second  quarter of 2000.  In May 2000,  PECO
settled these forward starting  interest rate swaps and paid the  counterparties
$13  million  which was  deferred  and is being  amortized  over the life of the
Transition Bonds as an increase in interest expense.                            

ComEd                                                                           

         ComEd is exposed to market  risks  associated  with  commodity  prices,
credit and interest rates.                                                      

Commodity Price Risk                                          

         As part of Exelon's corporate  restructuring,  ComEd has entered into a
power purchase agreement with Generation to meet its retail customer obligations
at fixed  prices.  ComEd's  principal  exposure  to  commodity  price risk is in
relation to  revenues  collected  from  customers  who elect the power  purchase
option at market-based  prices, and CTC revenues which are calculated to provide
the  customer  with a credit for the  market  price for  electricity.  ComEd has
performed a  sensitivity  analysis to determine the net impact of a 10% decrease
in the  average  around-the-clock  market  price  of  electricity.  Because  the
decrease  in revenues  from  customers  electing  the power  purchase  option is
significantly offset by increased CTC revenues,  ComEd does not believe that its
exposure to such a market price decrease would be material.                     

Credit Risk                                                   

         ComEd is  obligated  to  provide  service to all  customers  within its
franchised territories and, as a result, has a broad customer base. For the year
ended December 31, 2000, ComEd's ten largest customers represented approximately
3% of its retail electric  revenues.  ComEd manages credit risk using credit and
collection policies which are regulated by the ICC.                             

Interest Rate Risk                                            

         ComEd uses a combination of fixed rate and variable rate debt to reduce
interest rate exposure.  As of December 31, 2000, a hypothetical 10% increase in
the interest rates associated with variable rate debt would result in a decrease
in pre-tax earnings for 2001 of less than $1 million.                           

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

Exelon                                                                          

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Consolidated  Statements of Income for the years 2000, 1999 and
1998;  Consolidated  Statements of Cash Flows for the years 2000, 1999 and 1998;
Consolidated  Balance  Sheets as of  December  31,  2000 and 1999;  Consolidated
Statements of Changes in Shareholders'  Equity and Comprehensive  Income for the
years  2000,  1999 and 1998;  and  Notes to  Consolidated  Financial  Statements
appearing in Exhibit 99-3 to Exelon's Current Report on Form 8-K dated March 16,
2001.                                                                           

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PECO                                                                            

 Report of Independent Accountants

To the Board of Directors and Shareholders                                      
of PECO Energy Company:                                                         

In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)(2)(i)  present fairly, in all material respects,  the
financial  position of PECO Energy  Company and Subsidiary  Companies  (PECO) at
December 31, 2000 and 1999,  and the results of their  operations and their cash
flows for each of the three  years in the  period  ended  December  31,  2000 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item  14(a)(2)(ii)  presents  fairly,  in all material
respects,  the information  set forth therein when read in conjunction  with the
related  consolidated  financial  statements.  These  financial  statements  and
financial  statement schedule are the  responsibility of PECO's management;  our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial  statement  schedule  based on our audits.  We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United  States of America,  which  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.                              

As discussed in Note 4 to the consolidated  financial  statements,  PECO changed
its method of accounting for nuclear outage costs in 2000.                      

PricewaterhouseCoopers LLP                                                      

Philadelphia, Pennsylvania                                                      
January 30, 2001, except for Note 22 PETT Refinancing,                          
for which the date is March 1, 2001                                             

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                            PECO Energy Company and Subsidiary Companies
                           Consolidated Statements of Income

                                                        [Enlarge/Download Table]

                                                                  For the Years Ended December 31,   
                                                               2000            1999           1998   
                                                             -------         -------         ------- 
                                                                          (In Millions)              
                                                                           -----------               
                                                                                                     
Operating Revenues                                           $ 5,950         $ 5,478         $ 5,325 

Operating Expenses                                                                                   
   Fuel and Purchased Power                                    2,127           2,152           1,811 
   Operating and Maintenance                                   1,791           1,454           1,198 
   Merger-Related Costs                                          248              --              -- 
   Early Retirement and Separation Program                        --              --             125 
   Depreciation and Amortization                                 325             237             643 
   Taxes Other Than Income                                       237             262             280 
                                                             -------         -------         ------- 
     Total Operating Expenses                                  4,728           4,105           4,057 
                                                             -------         -------         ------- 
Operating Income                                               1,222           1,373           1,268 
                                                             -------         -------         ------- 

Other Income and Deductions                                                                          
   Interest Expense                                             (457)           (396)           (331)
   Company-Obligated Mandatorily Redeemable Preferred                                                
     Securities of a Partnership, which holds Solely                                                 
     Subordinated Debentures of the Company                       (8)            (21)            (31)
   Equity in Earnings (Losses) of Unconsolidated Affiliates      (41)            (38)            (54)
   Other, Net                                                     41              59               1 
                                                             -------         -------         ------- 
     Total Other Income and Deductions                          (465)           (396)           (415)
                                                             -------         -------         ------- 
Income Before Income Taxes, Extraordinary Items and                                                  
   Cumulative Effect of a Change in Accounting Principle         757             977             853 
Income Taxes                                                     270             358             320 
                                                             -------         -------         ------- 
Income Before Extraordinary Items and Cumulative                                                     
   Effect Of a Change in Accounting Principle                    487             619             533 
Extraordinary Items (net of income taxes of $2, $25,                                                 
   and $14 for 2000, 1999, and 1998, respectively)                (4)            (37)            (20)
Cumulative Effect of a Change in Accounting                                                          
   Principle (net of income taxes of $16)                         24              --              -- 
                                                             -------         -------         ------- 
Net Income                                                       507             582             513 
Preferred Stock Dividends                                         10              12              13 
                                                             -------         -------         ------- 
Net Income on Common Stock                                   $   497         $   570         $   500 
                                                             =======         =======         ======= 


                            See Notes to Consolidated Financial Statements

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                            PECO Energy Company and Subsidiary Companies
                           Consolidated Statements of Cash Flows

                                                        [Enlarge/Download Table]

                                                                  For the Years Ended December 31,   
                                                                 --------------------------------    
                                                              2000             1999            1998  
                                                             -------         -------         ------- 
(In Millions)                                                                                        
                                                                                                     
Cash Flows from Operating Activities                                                                 
Net Income                                                   $   507         $   582         $   513 
Adjustments to reconcile Net Income to Net                                                           
  Cash Flows provided by Operating Activities:                                                       
   Depreciation and Amortization                                 437             358             765 
   Extraordinary Items (net of income taxes)                       4              37              20 
   Cumulative Effect of a Change in Accounting                                                       
     Principle (net of income taxes)                             (24)             --              -- 
   Provision for Uncollectible Accounts                           68              59              72 
   Deferred Income Taxes                                         118               7            (115)
   Merger-Related Costs                                          248              --              -- 
   Early Retirement and Separation Program                        --              --             125 
   Deferred Energy Costs                                         (79)             23               6 
   Equity in (Earnings) Losses of Unconsolidated Affiliates       41              38              54 
   Other Operating Activities                                     (6)              6             (22)
 Changes in Working Capital:                                                                         
   Accounts Receivable                                          (264)           (159)              3 
   Repurchase of Accounts Receivable                             (50)           (150)             -- 
   Inventories                                                   (45)            (43)             14 
   Accounts Payable, Accrued Expenses & Other                                                        
     Current Liabilities                                        (170)            149              63 
   Other Current Assets                                          (29)            (12)              1 
                                                             -------         -------         ------- 
Net Cash Flows provided by Operating Activities                  756             895           1,499 

Cash Flows from Investing Activities                                                                 
  Investment in Plant                                           (549)           (491)           (415)
  Exelon Infrastructure Services Acquisitions                   (245)           (222)             -- 
  Investments in and Advances to Joint Ventures                   --            (118)            (59)
  Contributions to Nuclear Decommissioning Trust Funds           (26)            (26)            (21)
  Other Investing Activities                                     (74)            (29)            (26)
                                                             -------         -------         ------- 
Net Cash Flows used in Investing Activities                     (894)           (886)           (521)

Cash Flows from Financing Activities                                                                 
  Issuance of Long-Term Debt, net of issuance costs            1,021           4,170              13 
  Common Stock Repurchases                                      (496)         (1,705)             -- 
  Retirement of Long-Term Debt                                  (557)         (1,343)           (842)
  Change in Intercompany Payable - Affiliates                    400              --              -- 
  Change in Notes Payable -- Bank                                 --            (388)            124 
  Redemption of COMRPS                                            --            (221)            (81)
  Issuance of COMRPS                                              --              --              78 
  Redemptions of Mandatorily Redeemable Preferred Stock          (19)            (37)             -- 
  Dividends on Preferred and Common Stock                       (167)           (208)           (236)
  Capital Lease Payments                                          --            (139)            (60)
  Other Financing Activities                                      31              42              41 
                                                             -------         -------         ------- 
Net Cash Flows provided by (used in) Financing Activities        213             171            (963)
                                                             -------         -------         ------- 
Increase in Cash and Cash Equivalents                             75             180              15 
Cash and Cash Equivalents at beginning of period                 228              48              33 
                                                             -------         -------         ------- 
Cash and Cash Equivalents at end of period                   $   303         $   228         $    48 
                                                             =======         =======         ======= 

                            See Notes to Consolidated Financial Statements

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                                PECO Energy Company and Subsidiary Companies
                               Consolidated Balance Sheets

                                                        [Enlarge/Download Table]

                                                                         At December 31,     
                                                                     2000             1999   
                                                                   --------         -------- 
                                                                          (In Millions)      
Assets                                                                                       
                                                                                             
Current Assets                                                                               
 Cash and Cash Equivalents                                         $    303         $    228 
 Accounts Receivable, net                                                                    
   Customer                                                             774              344 
   Other                                                                250              360 
 Inventories, at average cost                                                                
   Fossil Fuel                                                          135              113 
   Materials and Supplies                                               122               93 
 Other                                                                  195               83 
                                                                   --------         -------- 
   Total Current Assets                                               1,779            1,221 
                                                                   --------         -------- 

Property, Plant and Equipment, net                                    5,158            5,004 

Deferred Debits and Other Assets                                                             
 Regulatory Assets                                                    6,026            6,072 
 Nuclear Decommissioning Trust Funds                                    440              408 
 Investments                                                            847              130 
 Goodwill, net                                                          326              121 
 Other                                                                  200              131 
                                                                   --------         -------- 
   Total Deferred Debits and Other Assets                             7,839            6,862 
                                                                   --------         -------- 
Total Assets                                                       $ 14,776         $ 13,087 
                                                                   ========         ======== 

Liabilities and Shareholders' Equity                                                         
Current Liabilities                                                                          
 Notes Payable - Bank                                              $    163         $    163 
 Intercompany Payable - Affiliates                                    1,096               -- 
 Long-Term Debt Due Within One Year                                     553              128 
 Accounts Payable                                                       403              270 
 Accrued Expenses                                                       481              616 
 Deferred Income Taxes                                                   27               14 
 Other                                                                   95               95 
                                                                   --------         -------- 
   Total Current Liabilities                                          2,818            1,286 
                                                                   --------         -------- 

Long-Term Debt                                                        6,002            5,969 

Deferred Credits and Other Liabilities                                                       
 Deferred Income Taxes                                                2,532            2,411 
 Unamortized Investment Tax Credits                                     271              286 
 Pension Obligations                                                    281              213 
 Non-Pension Postretirement Benefits Obligation                         505              443 
 Other                                                                  427              385 
                                                                   --------         -------- 
Total Deferred Credits and Other Liabilities                          4,016            3,738 
                                                                   --------         -------- 

Company-Obligated Mandatorily Redeemable Preferred Securities                                
  of a Partnership, which holds Solely Subordinated Debentures of                            
  the Company                                                           128              128 
Mandatorily Redeemable Preferred Stock                                   37               56 

Commitments and Contingencies                                                                

Shareholders' Equity                                                                         
 Common Stock                                                         1,449            3,577 
 Preferred Stock                                                        137              137 
 Deferred Compensation                                                   (7)              (3)
 Retained Earnings (Accumulated Deficit)                                197             (100)
 Treasury Stock, at cost                                                 --           (1,705)
 Accumulated Other Comprehensive Income                                  (1)               4 
                                                                   --------         -------- 
   Total Shareholders' Equity                                         1,775            1,910 
                                                                   --------         -------- 
Total Liabilities and Shareholders' Equity                         $ 14,776         $ 13,087 
                                                                   ========         ======== 

                                See Notes to Consolidated Financial Statements

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                                                        [Enlarge/Download Table]


                                  PECO Energy Company and Subsidiary Companies                          
              Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income       

Year Ended December 31,                        2000                  1999                  1998         
-----------------------                        ----                  ----                  ----         
                                         Shares    Amount      Shares    Amount      Shares    Amount   
                                         ------    ------      ------    ------      ------    ------   
                                                 (dollars in millions and shares in thousands)          
                                                                                                        
Common Stock                                                                                            
Balance at Beginning of Year              225,354    $3,577     224,684    $3,558     222,547    $3,507 
Capital Stock Activity:                                                                                 
   Cancellation of Treasury Shares        (54,875)   (2,175)                   --                    -- 
   Long Term Incentive Plan Issuances                    47         670        19       2,137        51 
                                     ------------------------------------------------------------------ 
Balance at End of Year                    170,479    $1,449     225,354    $3,577     224,684    $3,558 

Preferred Stock without Mandatory Redemption                                                            
Balance at Beginning and End of Year        1,375      $137       1,375      $137       1,375      $137 

Deferred Compensation                                                                                   
Balance at Beginning of Year                            $(3)                  $--                   $-- 
Amortization                                              5                     2                    -- 
Long Term Incentive Plan Issuances                       (9)                   (5)                   -- 
                                                 ------------------------------------------------------ 
Balance at End of Year                                  $(7)                  $(3)                  $-- 

Retained Earnings (Accumulated Deficit)                                                                 
Balance at Beginning of Year                          $(100)                $(501)                $(781)
Net Income                                              507                   582                   513 
Dividends:                                                                                              
   Common Stock                                        (157)                 (196)                 (223)
   Preferred Stock                                      (10)                  (12)                  (13)
   Unicom Merger Consideration                          (45)                                            
Capital Stock Activity:                                                                                 
   Expenses of Capital Stock Activity                    --                    --                     3 
   Stock Forward Repurchase Contract                     (5)                   12                    (8)
   Long Term Incentive Plan Issuances                     7                    15                     8 
                                                 ------------------------------------------------------ 
Balance at End of Year                                 $197                 $(100)                $(501)

Treasury Shares                                                                                         
Balance at Beginning of Year               44,082   $(1,705)                  $--                   $-- 
Capital Stock Activity:                                                                                 
   Repurchase of Common Stock              11,950      (496)     22,610    (1,009)                   -- 
   Stock Forward Repurchase Contract                             21,489      (696)                      
   Long Term Incentive Plan Issuances        (195)        7                                             
   Stock Option Exercises                    (962)       19         (17)       --                    -- 
   Cancellation of Treasury Shares        (54,875)    2,175                    --                    -- 
                                          ------------------------------------------------------------- 
Balance at End of Year                         --       $--      44,082   $(1,705)                  $-- 

Accumulated Other Comprehensive Income                                                                  
Balance at Beginning of Year                             $4                   $--                   $-- 
Unrealized Gain (Loss) on Marketable Securities,                                                        
   net of  income taxes of $(3), $3, and $0 tax,                                                        
   respectively                                          (5)                    4                       
                                                 ------------------------------------------------------ 
Balance at End of Year                                  $(1)                   $4                   $-- 

Total Shareholder's Equity                           $1,775                $1,910                $3,194 
                                                     ======                ======                ====== 

Comprehensive Income                                                                                    
Net Income                                             $507                  $582                  $513 
Other Comprehensive Income, net of                                                                      
   income taxes                                          (5)                    4                    -- 
                                                 -----------           ----------            ---------- 
Total Comprehensive Income                             $502                  $586                  $513 
                                                 ==========            ==========            ========== 

                                See Notes to Consolidated Financial Statements

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PECO Energy Company and Subsidiary Companies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in millions, unless otherwise noted)

1. Significant Accounting Policies                                              

Description of Business                                                         
         Incorporated in  Pennsylvania  in 1929, PECO Energy Company (PECO),  is
engaged principally in the production, purchase, transmission,  distribution and
sale  of  electricity  to  residential,  commercial,  industrial  and  wholesale
customers  and  the  distribution  and  sale  of  natural  gas  to  residential,
commercial and industrial  customers.  Pursuant to the Pennsylvania  Electricity
Generation   Customer  Choice  and  Competition  Act   (Competition   Act),  the
Commonwealth  of  Pennsylvania  has required the  unbundling of retail  electric
services in Pennsylvania into separate generation, transmission and distribution
services  with  open  retail  competition  for  generation  services.  Since the
commencement  of  deregulation  in 1999,  PECO serves as the local  distribution
company  providing  electric  distribution  services in its  franchised  service
territory in southeastern Pennsylvania and bundled electric service to customers
who do not choose an alternate electric generation supplier.                    

         PECO also  engages  in the  wholesale  marketing  of  electricity  on a
national  basis.  Through  its Exelon  Energy  division,  PECO is a  competitive
generation supplier offering  competitive energy supply to customers  throughout
Pennsylvania.  PECO's infrastructure services subsidiary,  Exelon Infrastructure
Services,  Inc. (EIS), provides utility infrastructure  services to customers in
several regions of the United States. PECO owns a 50% interest in AmerGen Energy
Company,   LLC  (AmerGen),   a  joint  venture  with  British  Energy,  Inc.,  a
wholly-owned  subsidiary of British Energy plc (British Energy),  to acquire and
operate nuclear generating facilities.  PECO also participates in joint ventures
which provide communications  services in the Philadelphia  metropolitan region.
As a result of the  corporate  restructuring  effective  January 1, 2001,  these
operations were separated from the regulated energy delivery business.  See Note
22 - Subsequent Events - Restructuring.                                         

Basis of Presentation                                                           
         The consolidated  financial  statements of PECO include the accounts of
its   majority-owned   subsidiaries   after  the   elimination  of  intercompany
transactions.  PECO  accounts  for its 20% to 50%  owned  investments  and joint
ventures, in which it exerts significant  influence,  under the equity method of
accounting.  PECO consolidates its  proportionate  interest in its jointly owned
electric utility plants.  PECO accounts for its less than 20% owned  investments
under  the  cost  method  of  accounting.   Accounting  policies  for  regulated
operations are in accordance with those prescribed by the regulatory authorities
having  jurisdiction,  principally the  Pennsylvania  Public Utility  Commission
(PUC), the Federal Energy  Regulatory  Commission  (FERC) and the Securities and
Exchange  Commission  (SEC) under the Public Utility Holding Company Act of 1935
(PUHCA).                                                                        

         Exelon  Corporation  (Exelon),  formed as a wholly owned  subsidiary of
PECO in 1999,  became the parent  company of PECO when each share of outstanding
common  stock of PECO was  exchanged  for one  share of Exelon  common  stock in
connection with the merger. See Note 2 - Merger.                                

Accounting for the Effects of Regulation                                        
         PECO accounts for all of its regulated  electric and gas  operations in
accordance  with  Statement of  Financial  Accounting  Standards  (SFAS) No. 71,
"Accounting for the Effects of Certain Types of  Regulation,"  requiring PECO to
record the  financial  statement  effects of the rate  regulation  to which such
operations  are  currently  subject.  Use of SFAS No.  71 is  applicable  to the
utility  operations of PECO which meet the following  criteria:  (1) third-party
regulation of rates; (2) cost-based rates; and (3) a reasonable  assumption that
all costs will be recoverable from customers  through rates.  PECO believes that
it is probable that regulatory  assets  associated with these operations will be
recovered.  If a  separable  portion  of PECO's  business  no  longer  meets the
provisions of SFAS No. 71, PECO is required to eliminate the financial statement
effects of regulation for that portion.                                         

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Use of Estimates                                                                
         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.             

Revenues                                                                        
         Operating  revenues  are  recorded  as service is rendered or energy is
delivered to customers.  At the end of each month,  PECO accrues an estimate for
the unbilled amount of energy delivered or services provided to its electric and
gas  customers.  PECO  recognizes  contract  revenue and  profits on  long-term,
fixed-price     contracts    from    its    services     businesses    by    the
percentage-of-completion  method  of  accounting  based on costs  incurred  as a
percentage of estimated total costs of individual contracts.                    

Purchased Gas Adjustment Clause                                                 
         PECO's  natural  gas  rates are  subject  to a fuel  adjustment  clause
designed  to  recover  or refund  the  difference  between  the  actual  cost of
purchased  gas and the amount  included in base rates.  Differences  between the
amounts  billed to customers and the actual costs  recoverable  are deferred and
recovered  or  refunded  in future  periods  by means of  prospective  quarterly
adjustments to rates.                                                           

Nuclear Fuel                                                                    
         The cost of nuclear  fuel is  capitalized  and charged to fuel  expense
using the unit of production  method.  Estimated  costs of nuclear fuel disposal
are charged to fuel expense as the related fuel is consumed.                    

Depreciation, Amortization and Decommissioning                                  
         Depreciation is provided over the estimated  service lives of property,
plant and equipment on a straight line basis. Annual depreciation provisions for
financial reporting purposes,  expressed as a percentage of average service life
for each asset category are presented below:                                    

Asset Category                                        2000     1999     1998    
--------------                                        ----     ----     ----    

      Electric -- Transmission and Distribution    1.82%    1.83%    1.96%
      Electric -- Generation                       5.15%    5.12%    5.26%
      Gas                                          2.39%    2.36%    2.40%
      Common                                       2.10%    2.13%    4.54%
      Other Property and Equipment                 7.82%    8.61%    2.80%

         Amortization of regulatory  assets is provided over the recovery period
as specified  in the related  regulatory  agreement.  Goodwill  associated  with
acquisitions  is  being  amortized  on a  straight  line  basis  over 20  years.
Accumulated  amortization of goodwill was $10 million and $1 million at December
31, 2000 and 1999, respectively.                                                

         PECO's estimate of the costs for decommissioning its nuclear generating
stations is currently  included in regulated rates.  The amounts  recovered from
customers  are  deposited  in trust  accounts and invested for funding of future
costs for  current  plants.  PECO  accounts  for the  current  period's  cost of
decommissioning   its   operating   nuclear  units  by  recording  a  charge  to
depreciation expense and a corresponding liability in accumulated  depreciation.
PECO believes that the amounts being recovered from customers  through  electric
rates along with the  earnings on the trust  funds will be  sufficient  to fully
fund its decommissioning obligations.                                           

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Capitalized Interest                                                            
         PECO uses SFAS No. 34, "Capitalizing  Interest Costs," to calculate the
costs  during  construction  of debt  funds used to  finance  its  non-regulated
construction  projects.  PECO recorded  capitalized  interest of $2 million,  $6
million and $7 million in 2000, 1999 and 1998, respectively.                    

         Allowance for Funds Used During Construction (AFUDC) is the cost during
the period of construction of debt and equity funds used to finance construction
projects for regulated operations. AFUDC is recorded as a charge to Construction
Work in  Progress  and as a non-cash  credit to AFUDC which is included in Other
Income and Deductions.  The rates used for capitalizing AFUDC are computed under
a method prescribed by regulatory authorities.                                  

Income Taxes                                                                    
         Deferred Federal and state income taxes are provided on all significant
temporary   differences   between  book  bases  and  tax  bases  of  assets  and
liabilities,  transactions  that reflect taxable income in a year different from
book income and tax carryforwards.  Investment tax credits  previously  utilized
for income tax purposes have been deferred on PECO's Consolidated Balance Sheets
and are  recognized in book income over the life of the related  property.  PECO
and its subsidiaries file a consolidated  Federal income tax return with Exelon.
Income  taxes are  allocated  to PECO and each of its  subsidiaries  within  the
consolidated group based on the separate return method.                         

Gains and Losses on Reacquired Debt                                             
         Gains and  losses on  reacquired  debt are being  recognized  in PECO's
Consolidated  Statements  of Income as incurred.  Gains and losses on reacquired
debt related to regulated  operations  incurred  prior to January 1, 1998,  have
been  deferred  and are being  amortized  to  interest  expense  over the period
approved for ratemaking purposes.                                               

Comprehensive Income                                                            
         Comprehensive  income  includes  all changes in equity  during a period
except those resulting from  investments by and  distributions  to shareholders.
Comprehensive  income is reflected in PECO's Consolidated  Statements of Changes
in Shareholders' Equity and Comprehensive Income.                               

Cash and Cash Equivalents                                                       
         PECO  considers  all  temporary  cash  investments  purchased  with  an
original maturity of three months or less to be cash equivalents.               

Marketable Securities                                                           
         Marketable securities are classified as  available-for-sale  securities
and are reported at fair value,  with the  unrealized  gains and losses,  net of
tax,  reported in other  comprehensive  income.  Unrealized  gains and losses on
marketable  securities  held in the  nuclear  decommissioning  trust  funds  are
reported in accumulated depreciation. At December 31, 2000 and 1999, PECO had no
held-to-maturity or trading securities.                                         

Property, Plant and Equipment                                                   
         Property,  plant and equipment is recorded at cost.  PECO evaluates the
carrying value of property, plant and equipment and other long-term assets based
upon  current  and  anticipated  undiscounted  cash  flows,  and  recognizes  an
impairment  when it is probable that such estimated cash flows will be less than
the carrying value of the asset.  Measurement  of the amount of  impairment,  if
any, is based upon the difference  between  carrying  value and fair value.  The
cost of maintenance,  repairs and minor  replacements of property are charged to
maintenance expense as incurred.                                                

         Upon retirement, the cost of regulated property plus removal costs less
salvage value are charged to  accumulated  depreciation  in accordance  with the
provisions of SFAS No. 71. For  unregulated  property,  the cost and accumulated
depreciation of property,  plant and equipment retired or otherwise  disposed of
are removed from the related  accounts and included in the  determination of the
gain or loss on disposition.                                                    

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Capitalized Software Costs                                                      
         Costs incurred  during the  application  development  stage of software
projects  for  software  which is  developed  or obtained  for  internal use are
capitalized.  At December 31, 2000 and 1999,  capitalized software costs totaled
$131 million and $105 million,  respectively, net of $49 million and $32 million
of  accumulated  amortization,   respectively.   Such  capitalized  amounts  are
amortized  ratably  over the  expected  lives of the  projects  when they become
operational, not to exceed ten years.                                           

Retail and Wholesale Energy Commitments                                         
         In the normal  course of  business,  PECO  utilizes  contracts  for the
forward sale and purchase of energy to manage the  utilization  of its available
generating   capability  and  provision  of  wholesale   energy  to  its  retail
affiliates. PECO also utilizes energy option contracts and energy financial swap
arrangements  to limit the market price risk  associated with the forward energy
commodity  contracts.  Through  December 31, 2000,  PECO recognized any gains or
losses on forward commodity  contracts when the underlying  transactions  affect
earnings.  Revenues and expenses  associated  with market price risk  management
contracts are amortized over the terms of such contracts.                       

         At December 31, 2000, PECO's retail and wholesale  activities  included
short-term and long-term commitments,  which are carried at the lower of cost or
market,  to purchase and sell energy and  energy-related  products in the retail
and wholesale  markets with the intent and ability to deliver or take  delivery.
Revenue and expense  associated with energy commitments are reported at the time
the underlying physical transaction affects earnings.                           

Hedge Accounting                                                                
         Hedge accounting is applied only if the derivative  reduces the risk of
the  underlying  hedged item and is  designated  at inception  as a hedge,  with
respect  to the  hedged  item.  If a  derivative  instrument  ceased to meet the
criteria for deferral, any gains or losses are recognized in income.            

New Accounting Pronouncements                                                   
         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," to
establish  accounting and reporting standards for derivatives.  The new standard
requires  recognizing  all  derivatives  as either assets or  liabilities on the
balance sheet at their fair value and specifies  the  accounting  for changes in
fair value depending upon the intended use of the derivative.  In June 1999, the
FASB issued SFAS No. 137  "Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the  Effective  Date of FASB  Statement No. 133," which
delayed the effective date for SFAS No. 133 until fiscal years  beginning  after
June 15, 2000.  The effect of adopting SFAS No. 133 in the first quarter of 2001
will result in a cumulative  after-tax increase in net income of $17 million and
other  comprehensive  income of $21 million.  The adoption  will also impact the
assets and liabilities  recorded on the Consolidated  Balance Sheets of PECO and
may result in future  earnings  volatility.  See Note 22 -  Subsequent  Events -
Restructuring.  The  determination  of the  impact  of SFAS No.  133 is based on
current  interpretations  of SFAS  No.  133,  including  interpretations  of the
Derivatives  Implementation  Group of the  FASB,  related  to the  treatment  of
electricity  capacity  contracts.  If final guidance,  when issued,  changes the
treatment of electricity  capacity contracts,  the effects of the implementation
of SFAS No. 133 may differ from the amounts disclosed above.                    

         In  September  2000,  the FASB  issued SFAS No.  140,  "Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  Replacement  of FASB  Statement  No,  125."  This new  standard  revises  the
standards for accounting for  securitizations  and other  transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of the provisions of SFAS No. 125 without reconsideration. SFAS No. 140 provides
accounting  and  reporting  standards  for  transfers and servicing of financial
assets  and  extinguishments  of  liabilities.  SFAS No.  140 is  effective  for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after March 31, 2001 and should be applied prospectively.  At December
31, 2000, PECO did not anticipate  entering into any transactions  that would be
subject to the provisions of SFAS No. 140 when it becomes effective.            

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Reclassifications                                                               
         Certain  prior year  amounts  have been  reclassified  for  comparative
purposes. These reclassifications had no effect on net income.                  

2. Merger                                                                       

         On October 20, 2000,  Exelon became the parent  corporation for each of
PECO and  Commonwealth  Edison Company  (ComEd) as a result of the completion of
the  transactions  contemplated by an Agreement and Plan of Exchange and Merger,
as amended  (Merger  Agreement),  among PECO,  Unicom  Corporation  (Unicom) and
Exelon.  Pursuant to the Merger Agreement,  (a) each share of outstanding common
stock of PECO was  exchanged  for one  share of common  stock of  Exelon  (Share
Exchange) and (b) Unicom  merged with and into Exelon  (Merger and together with
the Share Exchange, Merger Transaction).  In the Merger Transaction,  each share
of the  outstanding  common stock of Unicom was  converted  into 0.875 shares of
common  stock of  Exelon  plus  $3.00  in  cash.  Also  pursuant  to the  Merger
Agreement,  PECO and Unicom  repurchased  approximately  $1.5  billion of common
stock prior to the closing of the Merger  Transaction,  with Unicom repurchasing
approximately   $1.0  billion  of  its  common  stock,  and  PECO   repurchasing
approximately  $500  million  of its  common  stock.  As a result  of the  Share
Exchange,  Exelon  became  the owner of all of the  common  stock of PECO.  As a
result of the Merger,  Unicom  ceased to exist and its  subsidiaries,  including
ComEd, became subsidiaries of Exelon.                                           

         PECO's  merger-related  costs  charged  to  expense  in 2000  were $248
million  consisting of $132 million of direct incremental costs and $116 million
for  employee  costs.  Direct  incremental  costs  represent  expenses  directly
associated with completing the Merger Transaction,  including professional fees,
regulatory  approval  and  settlement  costs,  and  settlement  of  compensation
arrangements.  Employee costs represent estimated severance payments and pension
and postretirement benefits provided under Exelon's Merger Separation Plan (MSP)
for eligible  employees who are expected to be involuntarily  terminated  before
October 2002 due to integration activities of the merged companies.             

         Approximately  642 positions have been identified to be eliminated as a
result of the Merger Transaction. PECO anticipates that $116 million of employee
costs will be funded from its pension and postretirement benefit plans.         

3. Acquisitions                                                                 

Sithe Energies, Inc. Acquisition                                                
         On December 18, 2000,  PECO acquired  49.9% of the  outstanding  common
stock of Sithe Energies,  Inc. (Sithe) through an intercompany  transaction with
Exelon  for $696  million  in cash and $8  million  of  acquisition  costs.  The
transaction   includes  an  option  to  purchase  the  remaining   common  stock
outstanding  exercisable  between December 2002 and December 2005, at a price to
be determined based on prevailing market conditions. See Note 20 - Related-Party
Transactions.                                                                   

         Sithe is an  independent  power  generator in North  America  utilizing
primarily  fossil and hydro  generation.  The  purchase  involves  approximately
10,000 megawatts (MW) of generation  consisting of 3,800 MW of existing merchant
generation,  2,500 MW under construction,  and another 3,700 MW of generation in
various  stages  of  development,  as well as  Sithe's  domestic  marketing  and
development   businesses.   The  generation  assets  are  located  primarily  in
Massachusetts and New York, but also include plants in Pennsylvania, California,
Colorado and Idaho, as well as Canada and Mexico.                               

Exelon Infrastructure Services Acquisitions                                     
         In  2000,  EIS,  an  unregulated  majority  owned  subsidiary  of PECO,
acquired the stock or assets of seven utility service contracting  companies for
an aggregate purchase price of approximately $245 million,  net of cash acquired
of  $9  million,   including  EIS  common  stock  valued  at  $14  million.  The
acquisitions                                                                    

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were accounted for using the purchase method of accounting. The initial estimate
of the excess of  purchase  price  over the fair  value of net  assets  acquired
(goodwill) was approximately $216 million.                                      

         The allocation of purchase  price to the fair value of assets  acquired
and liabilities assumed in these acquisitions is as follows:                    

Current Assets (net of cash acquired)                 $ 63                      
Property, Plant and Equipment                           17                      
Goodwill                                               216                      
Current Liabilities                                    (51)                     
                               -----
Total                                                $ 245                      
                               =====

         Goodwill  associated with these acquisitions is being amortized over 20
years.                                                                          

         At December 31, 2000 and 1999,  Current Assets includes $70 million and
$48  million,  respectively,  of Costs and  Earnings  in Excess of  Billings  on
uncompleted  contracts  and  Current  Liabilities  includes  $23  million and $9
million,   respectively,  of  Billings  and  Earnings  in  Excess  of  Costs  on
uncompleted contracts, related to EIS.                                          

AmerGen Energy Company, LLC                                                     
         In August 2000,  AmerGen completed the purchase of Oyster Creek Nuclear
Generating  Facility (Oyster Creek) from GPU, Inc. (GPU) for $10 million.  Under
the terms of the  purchase  agreement,  GPU agreed to fund  outage  costs not to
exceed $89  million,  including  the cost of fuel,  for a refueling  outage that
occurred in 2000.  AmerGen  will repay  these costs to GPU in nine equal  annual
installments  beginning  in August  2001.  In  addition,  AmerGen  assumed  full
responsibility for the ultimate  decommissioning of Oyster Creek. At the closing
of the sale, GPU provided funding for the decommissioning trust of $440 million.
In  conjunction  with this  acquisition,  AmerGen  has  received a fully  funded
decommissioning  trust fund which has been  computed  assuming  the  anticipated
costs to appropriately decommission Oyster Creek discounted to net present value
using the NRC's  mandated  rate of 2%.  AmerGen  believes that the amount of the
trust  fund and  investment  earnings  thereon  will be  sufficient  to meet its
decommissioning  obligation.  GPU is  purchasing  the  electricity  generated by
Oyster Creek pursuant to a three-year power purchase agreement.                 

4. Accounting Change                                                            

         During the fourth  quarter of 2000, as a result of the  synchronization
of accounting  policies with Unicom in connection  with the Merger  Transaction,
PECO changed its method of  accounting  for nuclear  outage costs to record such
costs as  incurred.  Previously,  PECO  accrued  these costs over the  operating
cycle. As a result of the change in accounting  method for nuclear outage costs,
PECO  recorded  income of $24 million,  net of income taxes of $16 million.  The
change is reported as a cumulative effect of a change in accounting principle on
PECO's Consolidated  Statements of Income as of December 31, 2000,  representing
the balance of the nuclear outage cost reserve at January 1, 2000.  Exclusive of
the  cumulative  effect  of a change  in  accounting  principle,  the  change in
accounting  method for nuclear  outage  costs did not have a material  impact on
PECO's financial position, results of operations or cash flows in 2000. On a pro
forma  basis,  PECO  reported  net  income  for 1999 and 1998  would  have  been
decreased by $6 million and increased by $11 million, respectively.             

5. Regulatory Issues                                                            

         In addition to retail competition for generation services,  PECO's 1998
settlement of its  restructuring  case mandated by the  Competition Act required
PECO to provide generation  services to customers who do not or cannot choose an
alternate  supplier through December 31, 2010 and established caps on generation
and  distribution  rates.  The settlement  also  authorized PECO to recover $5.3
billion of  stranded  costs and to  securitize  a portion of its  stranded  cost
recovery.                                                                       

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Customer Choice                                                                 
         The PUC's  Final  Restructuring  Order  provided  for the  phase-in  of
customer  choice  of  electric  generation  supplier  (EGS)  for all  customers:
one-third of the peak load of each customer class on January 1, 1999;  one-third
on January 2, 1999;  and the remaining  one-third on January 1, 2000.  The Final
Restructuring  Order also  established  market share thresholds to ensure that a
minimum number of residential and commercial  customers  choose an EGS or a PECO
affiliate. If less than 35% and 50% of residential and commercial customers have
chosen an EGS, including  residential customers assigned to an EGS as a provider
of last  resort  default  supplier,  by  January  1, 2001 and  January  1, 2003,
respectively, the number of customers sufficient to meet the necessary threshold
levels   shall  be  randomly   selected   and  assigned  to  an  EGS  through  a
PUC-determined  process.  On January 1, 2001,  the 35% threshold was met for all
three  customer  classes as a result of  agreements  assigning  customers to New
Power Company and Green Mountain as providers of last resort default service. At
December 31, 2000,  approximately  18% of PECO's  residential  load,  46% of its
commercial load and 42% of its industrial  load were purchasing  generation from
an alternative generation supplier.                                             

Rate Reductions and Caps                                                        
         Under the Final Restructuring  Order, retail electric rates were capped
at year-end 1996 levels (system-wide average of 9.96 cents/kilowatt-hour  (kWh))
through June 2005.  The Final  Restructuring  Order  required PECO to reduce its
retail electric rates by 8% from the 1996 system-wide average rate on January 1,
1999.  This rate  reduction  decreased to 6% on January 1, 2000 until January 1,
2001.  The  transmission  and  distribution  rate  component  was  capped  at  a
system-wide average rate of 2.98 cents/kWh through June 30, 2005.  Additionally,
generation rate caps, defined as the sum of the applicable transition charge and
energy and capacity charge, will remain in effect through 2010.                 

         On  March  16,  2000,  the PUC  issued  an  order  authorizing  PECO to
securitize  up to an  additional  $1 billion of its  authorized  stranded  costs
recovery.  In  accordance  with the terms of that order,  PECO will  provide its
retail  customers  with  rate  reductions  in the total  amount  of $60  million
beginning on January 1, 2001. This rate reduction will be effective for calendar
year 2001 only.                                                                 

         Under a comprehensive settlement agreement in connection with achieving
regulatory  approval of the Merger  Transaction,  PECO agreed to $200 million in
rate  reductions  for all customers in  Pennsylvania  over the period January 1,
2002  through  2005  and  extended  the  rate  caps on  PECO's  retail  electric
distribution charges through December 31, 2006.                                 

6. Supplemental Financial Information                                           

Supplemental Income Statement Information                                       

Taxes Other Than Income                                                         
          For the Years Ended December 31,
          --------------------------------
            2000                1999              1998
            ----                ----              ----
Gross receipts           $144                $155              $156             
Real estate                45                  72                51             
Payroll                    27                  28                30             
Other                      21                   7                43             
          ------              ------            ------
Total                    $237                $262              $280             
          ======              ======            ======

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Other, Net                                                                      

                                              For the years ended December 31,
                                              --------------------------------
                                            2000         1999         1998
                                            ----         ----         ----
Interest income                                $ 50         $ 52         $ 26   
Gain (loss) on disposition of assets, net       (20)          (1)          (5)  
Settlement of power purchase agreement            6           --           14   
AFUDC                                             2            4            4   
Other                                             3            4          (38)  
                                            ----         ----         ----
Total                                          $ 41         $ 59         $  1   
                                            ====         ====         ====

Supplemental Cash Flow Information                                              
                                      For the years ended December 31,
                                    2000        1999        1998
                                    ----        ----        ----
Cash paid during the year:                                                      
Interest (net of amount capitalized)        $431        $350        $385        
Income taxes (net of refunds)               $261        $304        $347        
Noncash investing and financing:                                                
Investment in Sithe                       $696          --          --      
Issuance of EIS stock                     $ 14        $ 11          --      
Capital lease obligations incurred          --          --        $ 38      

Depreciation and amortization:                                                  
Property, plant and equipment             $229        $207        $190      
Nuclear fuel                               112         104          62      
Regulatory assets                           57          --         424      
Decommissioning                             29          29          29      
Goodwill                                    10           1          --      
Leased property                             --          17          60      
                                    ----        ----        ----
                                    $437        $358        $765
                                    ====        ====        ====

Supplemental Balance Sheet Information                                          

Investments                                                                     
                                    December 31,
                                    2000              1999
                                    ----              ----
Investment in Sithe                            $704            $   --           
Energy services and other ventures               64                57           
Investment in AmerGen                            44                40           
Communications ventures                          35                24           
Marketable securities                            --                 9           
                                 -------          --------
Total                                          $847              $130           
                                 =======          ========

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Regulatory Assets                                                               
                                              December 31,
                                                 2000               1999
                                                 ----               ----
Competitive transition charge                     $ 5,218            $ 5,275    
Recoverable deferred income taxes (see Note 12)       661                638    
Loss on reacquired debt                                64                 71    
Compensated absences                                    5                  4    
Non-pension postretirement benefits                    78                 84    
                                              -------            -------
   Long-Term Regulatory Assets                  6,026              6,072
Deferred energy costs (current asset)                  86                  7    
                                              -------            -------
   Total                                      $ 6,112            $ 6,079
                                              =======            =======

         At December 31, 2000 and 1999, the Competitive  Transition Charge (CTC)
includes the unamortized balance of $4.8 billion and $3.9 billion, respectively,
of Intangible  Transition  Property (ITP) sold to PECO Energy  Transition  Trust
(PETT) in connection with the  securitization  of PECO's stranded cost recovery.
ITP  represents  the  irrevocable  right  of PECO  or its  assignee  to  collect
non-bypassable  charges from customers to recover  stranded costs.  During 2000,
PECO  securitized  an  additional  $1 billion of its  authorized  stranded  cost
recovery, and accordingly converted an additional $1 billion of CTC to ITP.     

7. Accounts Receivable                                                          

         Accounts  receivable -- Customer at December 31, 2000 and 1999 included
unbilled operating revenues of $180 million and $153 million,  respectively. The
allowance  for  uncollectible  accounts at  December  31, 2000 and 1999 was $131
million and $112 million, respectively.                                         

         Accounts  receivable  -- Other at December  31, 2000 and 1999  included
notes receivable from a communications investment in the amount of $153 million.
The  average  interest  rate on the  notes  receivable  was  6.22%  and 5.66% at
December 31, 2000 and 1999,  respectively.  Interest income related to the notes
receivable was $10 million and $6 million in 2000 and 1999, respectively.       

         PECO is party to an agreement with a financial  institution under which
it can sell or finance with limited  recourse an  undivided  interest,  adjusted
daily, in up to $225 million of designated  accounts  receivable  until November
2005.  At December 31, 2000,  PECO had sold a $225 million  interest in accounts
receivable,  consisting of a $185 million interest in accounts  receivable which
PECO accounted for as a sale under SFAS No. 125,  "Accounting  for Transfers and
Servicing of Financial  Assets and  Extinguishment  of  Liabilities,"  and a $40
million interest in  special-agreement  accounts receivable which were accounted
for as a long-term note payable. See Note 11 -- Long-Term Debt. PECO retains the
servicing  responsibility for these receivables.  The agreement requires PECO to
maintain the $225 million interest,  which, if not met, requires PECO to deposit
cash in order to satisfy such requirements.  At December 31, 2000 and 1999, PECO
met this requirement and was not required to make any cash deposits.            

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8. Property, Plant and Equipment                                                

         A summary of  property,  plant and  equipment by  classification  as of
December 31, 2000 and 1999 is as follows:                                       

                                                                [Download Table]

                                                         2000     1999 
                                                         ----     ---- 
                                                                       
Electric -- Transmission & Distribution                  $3,836  $3,953
Electric -- Generation                                    2,086   1,942
Gas                                                       1,181   1,176
Common                                                      408     408
Nuclear Fuel                                              1,664   1,551
Construction Work in Progress                               498     232
Leased Property                                               2       2
Other Property, Plant and Equipment                         197     152
                                                         ------  ------
   Total Property, Plant and Equipment                    9,872   9,416
Less Accumulated Depreciation (including accumulated                   
   amortization of nuclear fuel of $1,445 and $1,281 in                
   2000 and 1999, respectively)                           4,714   4,412
                                                         ------  ------
Property, Plant and Equipment, net                       $5,158  $5,004
                                                         ======  ======

9. Jointly Owned Electric Utility Plant                                         

PECO's  ownership  interests in jointly owned electric utility plant at December
31, 2000, were as follows:                                                      

                                                        [Enlarge/Download Table]

                                           Production Plants                Transmission 
                           Peach Bottom   Salem      Keystone  Conemaugh  and Other Plant
Operator                       PECO       PSEG         Sithe     Sithe       Various Co. 
--------                       ----       ----         -----     -----       ----------- 
                                                                                         
Participating interest        46.25%     42.59%       20.99%    20.72%       21% to 43%  
PECO's share:                                                                            
Utility plant                   $378      $  3         $120      $190          $ 80      
Accumulated depreciation        $214      $  3         $ 94      $118          $ 31      
Construction work in progress   $ 41      $ 41         $  4      $ 10          $ --      

         PECO's undivided  ownership interests are financed with PECO funds and,
when  placed  in  service,   all   operations  are  accounted  for  as  if  such
participating interests were wholly owned facilities.                           

         On  September  30,  1999,  PECO  reached an  agreement  to  purchase an
additional 7.51% ownership  interest in Peach Bottom Atomic Power Station (Peach
Bottom) from Atlantic City Electric  Company and Delmarva  Power & Light Company
for $18 million.  On December 24, 2000,  PECO completed the purchase of Delmarva
Power & Light  Company's  3.755%  interest in Peach  Bottom for $9 million.  The
purchase of Atlantic City Electric Company's ownership interest is still pending
regulatory approval which is expected in 2001.                                  

10. Notes Payable - Banks                                                       

                                                2000      1999      1998
                                                ----      ----      ----
Average borrowings                                  $186      $242      $209    
Average interest rates, computed on daily basis     6.62%     5.62%     5.83%   
Maximum borrowings outstanding                      $500      $728      $525    
Average interest rates, at December 31              7.18%     6.80%     6.17%   

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         PECO, along with Exelon and ComEd,  entered into a $2 billion unsecured
revolving  credit facility on December 20, 2000 with a group of banks.  PECO has
an $800  million  sublimit  under the  364-day  facility  and expects to use the
credit  facility  principally  to  support  its $800  million  commercial  paper
program.  At  December  31,  2000 and  1999,  the  amount  of  commercial  paper
outstanding  was $161 million and $142  million,  respectively.  At December 31,
1999, PECO had $21 million of borrowings on lines of credit.                    

11. Long-Term Debt                                                              

                                                        [Enlarge/Download Table]

                                                                   Maturity         At December 31,
                                                      Rates          Date          2000       1999 
                                                      -----          ----          ----       ---- 
                                                                                                   
PETT Transition Bonds Series 1999-A:                                                               
         Fixed rates                               5.48%-6.13%   2001-2008(a)    $2,706     $2,826 
         Floating rates                           6.955%-7.03%   2004-2007(a)     1,132      1,132 

PETT Transition Bonds Series 2000-A:               7.18%-7.65%   2001-2009(a)     1,000         -- 

First and Refunding Mortgage Bonds (b) (c):                                                        
         Fixed rates                              5.625%-10.25%    2001-2024      1,148      1,538 
         Floating rates                               4.28%        2011-2015        154        154 

Notes payable                                         7.25%        2003-2004         14         38 
Pollution control notes:                                                                           
         Floating rates                               4.28%        2012-2034        369        369 

Notes payable - accounts                                                                           
      receivable agreement                            6.66%          2005            40         49 
                                                                               --------   -------- 
Total Long-Term Debt (d)                                                          6,563      6,106 
      Unamortized debt discount and premium, net                                     (8)        (9)
      Due within one year                                                          (553)      (128)
                                                                              ---------   -------- 
Long-Term Debt                                                                   $6,002     $5,969 
                                                                              =========   ======== 

(a) The maturity date  represents  the expected  final payment date which is the
date when all principal and interest of the related class of transition bonds is
expected  to be paid  in  full in  accordance  with  the  expected  amortization
schedule for the applicable class. The date when all principal and interest must
be paid  in full  for  the  PETT  Series  1999-A  Transition  Bonds  and  2000-A
Transition Bonds are 2003 through 2009 and 2003 through 2010, respectively.  The
current portion of transition bonds is based upon the expected maturity date.   

(b) Utility plant of PECO is subject to the lien of its mortgage indenture.     

(c) Includes  first  mortgage  bonds issued  under the PECO  mortgage  indenture
securing pollution control notes.                                               

(d) Long-term debt maturities in the period 2001 through 2005 and thereafter are
as follows:                                                                     

2001                   $    553                           
2002                        639                           
2003                        920                           
2004                        518                           
2005                        617                           
Thereafter                3,316                           
--------    
Total                    $6,563                           
======  

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         In 1999,  PECO  entered  into  treasury  forwards  associated  with the
anticipated  issuance of Series 2000-A  Transition  Bonds. On May 2, 2000, these
instruments were settled with net proceeds to the  counterparties of $13 million
which  has been  deferred  and is being  amortized  over the life of the  Series
2000-A  Transition  Bonds as an  increase to interest  expense  consistent  with
PECO's hedge accounting policy. In 1998, PECO entered into treasury forwards and
forward starting interest rate swaps to manage interest rate exposure associated
with the anticipated  issuance of Series 1999-A  Transition  Bonds. On March 18,
1999,  these  instruments  were settled with net proceeds to PECO of $80 million
which were deferred and are being  amortized  over the life of the Series 1999-A
Transition Bonds as a reduction of interest expense consistent with PECO's hedge
accounting  policy.  At December 31, 2000 and 1999, the unamortized net gain was
$51 million and $71 million, respectively.                                      

         In 2000, 1999 and 1998, PECO incurred extraordinary charges aggregating
$6 million ($4 million,  net of tax), $62 million ($37 million,  net of tax) and
$34 million ($20 million,  net of tax),  respectively,  consisting of prepayment
premiums and the write-off of unamortized  deferred  financing costs  associated
with the early retirement of debt.                                              

12. Income Taxes                                                                

Income tax expense (benefit) is comprised of the following components:          

                                                        [Enlarge/Download Table]

                                                                                      
                                                  For the Year Ended December 31,     
                                             2000              1999              1998 
--------------------------------------------------------------------------------------
Included in operations:                                                               
Federal                                                                               
     Current                                 $ 181           $  293            $  358 
     Deferred                                   91                6              (109)
     Investment tax credit, net                (15)             (14)              (18)
State                                                                                 
     Current                                     2               72                95 
     Deferred                                   11                1                (6)
                                           --------         --------         ---------
                                             $ 270           $  358            $  320 
                                           ========         ========         =========

Included in extraordinary item:                                                       
Federal                                                                               
     Current                                 $  (2)          $  (19)           $  (11)
State                                                                                 
     Current                                    --               (6)               (3)
                                           --------         --------         ---------
                                             $  (2)          $  (25)           $  (14)
                                           ========         ========         =========

Included in cumulative effect of a change in accounting principle:                    
Federal                                                                               
     Deferred                              $    13          $    --          $     -- 
State                                                                                 
     Deferred                                    3               --                -- 
                                           --------         --------         ---------
                                           $    16          $    --          $     -- 
                                           ========         ========         =========

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The total income tax provisions,  excluding  extraordinary  items and cumulative
effect of a change in accounting  principle,  differed from amounts  computed by
applying the federal statutory tax rate to pretax income as follows:            

                                                        [Enlarge/Download Table]

                                                 For the Year Ended December 31,      
                                             2000              1999              1998 
------------------------------------------------------------------------------------- 
                                                                                      
Income Before Extraordinary Items and                                                 
Cumulative Effect of a Change in                                                      
    Accounting Principle                     $ 487            $ 619             $ 533 
Income Taxes                                   270              358               320 
                                             -----            -----             ----- 
Income Before Income Taxes,                                                           
    Extraordinary Items and Cumulative                                                
    Effect of a Change in Accounting                                                  
      Principle                              $ 757            $ 977             $ 853 
                                             =====            =====             ===== 
Income taxes on above at Federal                                                      
  statutory rate of 35%                      $ 265            $ 342             $ 299 
Increase (decrease) due to:                                                           
    Property basis differences                   5               (8)              (10)
    State income taxes, net of Federal income                                         
      tax benefit                                9               46                58 
    Amortization of investment tax credit      (15)             (14)              (18)
    Prior period income taxes                    4               (7)              (13)
    Other, net                                   2               (1)                4 
                                            ------           -------           ------ 
Income Taxes                                 $ 270            $ 358             $ 320 
                                             =====            =====             ===== 
Effective income tax rate                    35.7%            36.6%             37.5% 
                                             =====            =====             ===== 

Provisions for deferred income taxes consist of the tax effects of the following
temporary differences:                                                          

                                                        [Enlarge/Download Table]

                                                 For the Year Ended December 31,       
                                             2000              1999               1998 
-------------------------------------------------------------------------------------  
                                                                                       
Depreciation and amortization                $ 135            $  23              $ 140 
Deferred generation charges recoverable        (23)              --               (175)
Transition bond hedge                           29              (29)                -- 
Deferred energy costs                           10               (9)                (2)
Retirement and separation programs             (39)               7                (51)
Merger cost                                    (25)              --                 -- 
Alternative minimum tax credits                 (3)              --                (42)
Other                                           18               15                 15 
                                            ------           ------            ------- 
      Subtotal                                 102                7               (115)
Cumulative effect of a change in                                                       
     accounting principle                       16               --                 -- 
                                            ------          -------           -------- 
Total                                         $118           $    7              $(115)
                                            ======          =======           ======== 

The tax effect of temporary  differences  giving rise to PECO's net deferred tax
liability as of December 31, 2000 and 1999 is as follows:                       

                                                                [Download Table]

                                                        2000      1999 
                                                        ----      ---- 
Nature of temporary difference:                                        
                                                                       
Plant basis difference                                 $2,839   $2,703 
Deferred investment tax credit                            271      286 
Deferred debt refinancing costs                            34       37 
Deferred pension and postretirement obligations          (187)    (148)
Other, net                                               (127)    (167)
                                                       ------   ------ 
     Deferred income taxes (net) on the balance sheet  $2,830   $2,711 
                                                       ======   ====== 

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         In  accordance  with  SFAS No.  71,  PECO has  recorded  a  recoverable
deferred  income tax asset of $661 million and $638 million at December 31, 2000
and 1999, respectively.  These balances are applicable only to regulated assets,
as a result of the discontinuance of SFAS No. 71 for PECO's electric  generation
operations.  These  recoverable  deferred  income taxes include the deferred tax
effects associated  principally with liberalized  depreciation  accounted for in
accordance  with the  ratemaking  policies  of the PUC,  as well as the  revenue
impacts thereon, and assume continued recovery of these costs in future rates.  

         The Internal  Revenue Service is currently  auditing PECO's Federal tax
returns for 1996  through  1999.  The current  audits are not expected to have a
material  adverse effect on the financial  condition or results of operations of
PECO.                                                                           

13. Retirement Benefits                                                         

         PECO and its  subsidiaries  have a  defined  benefit  pension  plan and
postretirement  benefit plans applicable to essentially all employees.  Benefits
under these plans reflect each employee's compensation, years of service and age
at retirement.  Funding is based upon actuarially determined  contributions that
take into account the amount  deductible for income tax purposes and the minimum
contribution required under the Employee Retirement Income Security Act of 1974,
as amended. The following provides a reconciliation of benefit obligations, plan
assets and funded status of the plans.                                          

                                                        [Enlarge/Download Table]

                                                                       Pension Benefits      Other Postretirement Benefits
                                                                     2000           1999          2000            1999    
                                                                   -------         -------      -------         -------   
Change in Benefit Obligation:                                                                                             
                                                                                                                          
Net benefit obligation at beginning of year                        $ 2,054         $ 2,310      $   798         $   848   
Service cost                                                            24              29           18              19   
Interest cost                                                          158             154           66              57   
Plan amendments                                                         --              25           --              --   
Actuarial (gain)loss                                                   140            (300)          69             (77)  
Curtailments/Settlements                                               (74)             --            4              --   
Special termination benefits                                            96              --           11              --   
Gross benefits paid                                                   (168)           (164)         (44)            (49)  
                                                                   -------         -------      -------         -------   

Net benefit obligation at end of year                              $ 2,230         $ 2,054      $   922         $   798   
                                                                   =======         =======      =======         =======   

Change in Plan Assets:                                                                                                    
Fair value of plan assets at beginning of year                     $ 2,982         $ 2,745      $   244         $   223   
Actual return on plan assets                                           190             400            8              20   
Employer contributions                                                   1               1           54              50   
Plan participants' contributions                                        --              --            1              --   
Gross benefits paid                                                   (168)           (164)         (44)            (49)  
                                                                   -------         -------      -------         -------   
 Fair value of plan assets at end of year                          $ 3,005         $ 2,982      $   263         $   244   
                                                                   =======         =======      =======         =======   

Funded status at end of year                                       $   775         $   928      $  (659)        $  (554)  
Unrecognized net actuarial (gain)loss                                 (960)         (1,129)          36             (43)  
Unrecognized prior service cost                                         77              85           --              --   
Unrecognized net transition obligation (asset)                         (21)            (26)         122             154   
                                                                   -------         -------      -------         -------   

Net amount recognized at end of year                               $  (129)        $  (142)     $  (501)        $  (443)  
                                                                   =======         =======      =======         =======   

Amounts recognized in the consolidated balance sheets consist of:                                                         
 Prepaid benefit cost                                              $   152         $    71            4             N/A   
 Accrued benefit cost                                                 (281)           (213)        (505)           (443)  
                                                                   -------         -------      -------         -------   
Net amount recognized at end of year                               $  (129)        $  (142)     $  (501)        $  (443)  
                                                                   =======         =======      =======         =======   

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                                                        [Enlarge/Download Table]

                                                      Pension Benefits                Other Postretirement Benefits            
                                                    --------------------        ----------------------------------------       
                                                    2000    1999    1998        2000             1999               1998       
                                                    ----    ----    ----        ----             ----               ----       
Weighted-average assumptions as of December 31,                                                                                
                                                                                                                               
Discount rate                                       7.60%   8.00%   7.00%        7.60%           8.00%              7.00%      
Expected return on plan assets                      9.50%   9.50%   9.50%        8.00%           8.00%              8.00%      
Rate of compensation increase                       5.00%   5.00%   5.00%        4.30%           5.00%              5.00%      
Health care cost trend on covered charges            N/A     N/A     N/A         7.00%           8.00%              6.50%      
                                                                              decreasing        decreasing        decreasing   
                                                                              to ultimate       to ultimate       to ultimate  
                                                                              trend of 5.0%     trend of 5.0%     trend of 5.0%
                                                                              in 2005           in 2006           in 2002      

                                                      Pension Benefits                Other Postretirement Benefits            
                                                    --------------------        ----------------------------------------       
                                             2000          1999         1998          2000           1999          1998        
                                             ----          ----         ----          ----           ----          ----        
Components of net periodic benefit                                                                                             
 cost (benefit):                                                                                                               
Service cost                                  $25           $29           $30           $18           $19           $18        
Interest cost                                 158           154           154            66            57            54        
Expected return on assets                    (238)         (222)         (210)          (18)          (16)          (13)       
Amortization of:                                                                                                               
 Transition obligation (asset)                 (5)           (4)           (5)           12            12            15        
 Prior service cost                             7             5             6            --            --            --        
 Actuarial (gain)loss                         (26)           (8)           (7)           --            --            --        
Curtailment charge (credit)                   (12)           --           (62)           24            --            53        
Settlement charge (credit)                    (16)           --           (13)           --            --            --        
                                            -----         -----         -----         -----         -----         -----        
 Net periodic benefit cost (benefit)        $(107)         $(46)        $(107)         $102           $72          $127        
                                            =====         =====         =====         =====         =====         =====        

Special termination benefit charge            $96         $  --          $114           $11         $  --           $30        
                                            =====         =====         =====         =====         =====         =====        

                                                                [Download Table]

                                                                                    
Sensitivity of retiree welfare results:                                             
Effect of a one percentage point increase in assumed health care cost trend         
  on total service and interest cost components                              $   11 
  on postretirement benefit obligation                                       $  102 
Effect of a one percentage point decrease in assumed health care cost trend         
   on total service and interest cost components                             $   (9)
   on postretirement benefit obligation                                      $  (85)

         Prior  service  cost is  amortized  on a  straight  line basis over the
average remaining service period of employees expected to receive benefits under
the plans.                                                                      

         During 2000, costs were recognized for special termination  benefits in
connection  with the enhanced  retirement  and  severance  benefits  provided to
employees  expected  to be  terminated  as a result of the  Merger  Transaction.
Special  termination  benefits  of  $96  million  represent  PECO's  accelerated
separation  and enhanced  benefits under the MSP. In addition,  PECO  recognized
settlement and  curtailment  credits of $28 million in connection  with the MSP.
During 1999, all retirees and beneficiaries who began receiving benefit payments
prior to January 1, 1994 were granted a cost-of-living adjustment resulting in a
$25 million  increase in the projected  benefit  obligation.  During 1998, costs
were  recognized  for  special  termination  benefits  in  connection  with  the
retirement  incentives and enhanced  severance benefits provided under the Early
Retirement and Separation Program.                                              

         PECO  provides  certain  health care and life  insurance  benefits  for
retired  employees.  PECO employees  become  eligible for these benefits if they
retire  from  PECO  with ten  years of  service.  Certain  benefits  for  active
employees are provided by several  insurance  companies whose premiums are based
upon the benefits paid during the year.                                         

         PECO  sponsors  savings  plans for the majority of its  employees.  The
plans  allow  employees  to  contribute  a  portion  of their  pretax  income in
accordance with specified guidelines.  PECO matches a percentage of the employee
contribution up to certain limits.  The cost of PECO's matching  contribution to
the savings plans totaled $11 million, $7 million, and $7 million in 2000, 1999,
and 1998, respectively.                                                         

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14. Preferred and Preference Stock                                              

         At December 31, 2000 and 1999,  Series  Preference Stock, no par value,
consisted of 100,000,000 shares authorized, of which no shares were outstanding.
At  December  31,  2000 and 1999,  cumulative  Preferred  Stock,  no par  value,
consisted of 15,000,000 shares authorized and the amounts set forth below:      

                                                        [Enlarge/Download Table]

                                                                     At December 31,                  
                                                         -------------------------------------------- 
                                            Current      Shares Outstanding              Amount       
                                            Redemption   ------------------             -------       
                                            Price (a)     2000         1999          2000       1999  
                                            ---------     ----         ----          ----       ----  
Series (without mandatory redemption)                                                                 
                                                                                                      
$4.68                                        $104.00      150,000     150,000        $ 15         $ 15
$4.40                                        $112.50      274,720     274,720          27           27
$4.30                                        $102.00      150,000     150,000          15           15
$3.80                                        $106.00      300,000     300,000          30           30
$7.48                                        (b)          500,000     500,000          50           50
                                                        ---------   ---------         ---          ---
                                                        1,374,720   1,374,720         137          137
Series (with mandatory redemption)                                                                    
$6.12                                        (c)          370,800     556,200          37           56
                                                        ---------   ---------         ---          ---
Total preferred stock                                   1,745,520   1,930,920        $174         $193
                                                        =========   =========         ===          ===
<FN>                                                                                                  
(a)  Redeemable,  at the option of PECO,  at the  indicated  dollar  amounts per                      
share, plus accrued dividends.                                                                        
(b) None of the shares of this series are subject to  redemption  prior to April                      
1, 2003.                                                                                              
(c) PECO  exercised  its right to double (to 370,800  shares,  from the original                      
185,400 share  requirement)  the first annual sinking fund  requirement  for the                      
$6.12  Series on August 2, 1999.  PECO made the annual  sinking  fund payment of                      
$18.5 million on August 2, 2000. Future annual sinking fund requirements in 2001                      
and 2002 are $18.5 million.                                                                           
</FN>                                                                                                 

15. Company-Obligated Mandatorily Redeemable Preferred Securities of a          
Partnership                                                                     

         At December 31, 2000 and 1999, PECO Energy Capital, L.P. (Partnership),
a Delaware limited partnership of which a wholly owned subsidiary of PECO is the
sole general partner, had outstanding  Company-Obligated  Mandatorily Redeemable
Preferred  Securities  of a  Partnership  (COMRPS) as set forth in the following
table:                                                                          

                                                        [Enlarge/Download Table]

                                                                        At December 31,           
                                                           ---------------------------------------
                     Mandatory                             Trust Receipts Outstanding      Amount 
                    Redemption Distribution  Liquidation   --------------------------      -------
Series                  Date      Rate        Value        2000        1999        2000      1999 
------                  ----      ----        -----        ----        ----        ----      ---- 
                                                                                                  
PECO Energy                                                                                       
  Capital Trust II      2037      8.00%         $ 25      2,000,000  2,000,000    $  50     $  50 
PECO Energy                                                                                       
  Capital Trust III     2028      7.38%       $1,000         78,105     78,105       78        78 
                                                          ---------  ---------    -----     ------
Total                                                     2,078,105  2,078,105    $ 128     $  128
                                                          =========  =========    =====     ======

         The  securities  issued by the PECO trusts  represent  COMRPS  having a
distribution rate and liquidation value equivalent to the trust securities.  The
COMRPS are the sole assets of these  trusts and  represent  limited  partnership
interests of the Partnership. Each holder of a trust's securities is entitled to
withdraw the  corresponding  number of COMRPS from the trust in exchange for the
trust  securities  so held.  Each  series  of  COMRPS  is  supported  by  PECO's
deferrable interest subordinated debentures, held by the Partnership, which bear
interest  at rates  equal to the  distribution  rates on the  related  series of
COMRPS.                                                                         

         The interest  expense on the debentures is included in Other Income and
Deductions in PECO's Consolidated Statements of Income and is deductible for tax
purposes.                                                                       

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16. Common Stock                                                                

         At December 31, 2000 and 1999, common stock without par value consisted
of  500,000,000   shares  authorized  and  170,478,507  and  181,271,692  shares
outstanding, respectively.                                                      

Stock Repurchase                                                                

         In January 2000, in connection with the Merger Agreement,  PECO entered
into a forward  purchase  agreement to purchase $500 million of its common stock
from time to time.  Settlement of this forward purchase agreement was, at PECO's
election, on a physical, net share or net cash basis. In May 2000, PECO utilized
the proceeds from the  securitization of a portion of its stranded cost recovery
to physically  settle this agreement,  resulting in the repurchase of 12 million
shares of common stock for $496 million.  In connection  with the  settlement of
this  agreement,  PECO  received  $1 million  in  accumulated  dividends  on the
repurchased shares and paid $6 million of interest.                             

         During 1997, PECO's Board of Directors  authorized the repurchase of up
to 25 million shares of its common stock from time to time through  open-market,
privately  negotiated  and/or other types of transactions in conformity with the
rules of the SEC.  Pursuant to these  authorizations,  PECO entered into forward
purchase  agreements to be settled from time to time, at PECO's  election,  on a
physical,  net share or net cash basis.  PECO  utilized  the  proceeds  from the
securitization  of a portion of its stranded  cost recovery in the first quarter
of 1999 to physically settle these  agreements,  resulting in the purchase of 21
million  shares  of  common  stock  for $696  million.  In  connection  with the
settlement  of these  agreements,  PECO  received  $18  million  in  accumulated
dividends on the repurchased shares and paid $6 million of interest.            

17. Financial Instruments                                                       

         Fair  values  of  financial  instruments,  including  liabilities,  are
estimated  based on quoted  market  prices for the same or similar  issues.  The
carrying amounts and fair values of PECO's financial  instruments as of December
31, 2000 and 1999 were as follows:                                              

                                                        [Enlarge/Download Table]

                                                   2000                     1999           
                                         -----------------------   ------------------------
                                          Carrying                 Carrying                
                                          Amount       Fair Value  Amount       Fair Value 
                                                                                           
Non-derivatives:                                                                           
Assets                                                                                     
     Cash and cash equivalents              $  303        $  303    $  228        $  228   
     Trust accounts for decommissioning                                                    
       nuclear plants                       $  440        $  440    $  408        $  408   
     Marketable securities                      --            --    $    9        $    9   
Liabilities                                                                                
     Long-term debt (including amounts due                                                 
       within one year)                     $6,555        $6,797    $6,097        $5,822   
COMRPS                                      $  128        $  122    $  128        $  117   
Mandatorily Redeemable Preferred Stock         $37           $30       $56           $43   
Derivatives:                                                                               
     Interest rate swaps                        --          $(19)       --           $36   
     Forward interest rate swaps                --          $ 40        --           $66   

         Financial  instruments which potentially subject PECO to concentrations
of credit risk consist  principally of cash  equivalents  and customer  accounts
receivable.  PECO places its cash equivalents with high-credit quality financial
institutions.  Generally,  such investments are in excess of the Federal Deposit

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Insurance  Corporation  limit.  Concentrations  of credit  risk with  respect to
customer accounts receivable are limited due to PECO's large number of customers
and their dispersion across many industries.                                    

         The fair value of derivatives  generally reflects the estimated amounts
that PECO would receive or pay to terminate the contracts at the reporting date,
thereby  taking  into  account the  current  unrealized  gains or losses of open
contracts. Dealer quotes are available for all of PECO's derivatives.           

         PECO has entered into  interest  rate swaps  relating to two classes of
floating rate transition bonds in the aggregate  notional amount of $1.1 billion
with an average  interest  rate of 6.65%.  PECO has also  entered  into  forward
starting interest rate swaps relating to two classes of floating rate transition
bonds in the aggregate  notional amount of $1.1 billion with an average interest
rate of 6.01%.  In  anticipation  of the  refinancing  of a  portion  of its two
variable  rate series of  transition  bonds in the first  quarter of 2001,  PECO
settled $318  million of the forward  starting  interest  rate swaps in December
2000.  The notional  amount of  derivatives  do not  represent  amounts that are
exchanged by the parties and,  thus, are not a measure of PECO's  exposure.  The
amounts  exchanged  are  calculated  on the basis of the  notional  or  contract
amounts,  as well as on the  other  terms of the  derivatives,  which  relate to
interest rates and the volatility of these rates.                               

         PECO  would  be  exposed  to  credit-related  losses  in the  event  of
non-performance  by the counterparties  that issued the derivative  instruments.
PECO does not expect that counterparties to the interest rate swaps will fail to
meet these obligations,  given their high credit ratings. The credit exposure of
derivatives  contracts  is  represented  by the fair value of  contracts  at the
reporting  date.   PECO's  interest  rate  swaps  are  documented  under  master
agreements.  Among other things,  these agreements  provide for a maximum credit
exposure for both parties.  Payments are required by the appropriate  party when
the maximum limit is reached.                                                   

18. Commitments and Contingencies                                               

Capital Commitments                                                             
         PECO  estimates  that it will  spend  approximately  $260  million  for
capital expenditures and other investments in 2001.                             

Nuclear Insurance                                                               
         The  Price-Anderson  Act limits the liability of nuclear reactor owners
for claims that could arise from a single  incident.  The current  limit is $9.5
billion  and is subject to change to account for the  effects of  inflation  and
changes in the number of  licensed  reactors.  Through  its  subsidiaries,  PECO
carries the  maximum  available  commercial  insurance  of $200  million and the
remaining  $9.3  billion  is  provided  through  mandatory  participation  in  a
financial  protection  pool. Under the  Price-Anderson  Act, all nuclear reactor
licensees can be assessed up to $89 million per reactor per incident, payable at
no more than $10 million per reactor per incident per year.  This  assessment is
subject to inflation and state premium  taxes.  In addition,  the U.S.  Congress
could impose revenue-raising measures on the nuclear industry to pay claims.    

         PECO   carries   property   damage,   decontamination   and   premature
decommissioning  insurance  for each station loss  resulting  from damage to its
nuclear plants.  In the event of an accident,  insurance  proceeds must first be
used for reactor stabilization and site decontamination. If the decision is made
to  decommission  the  facility,  a portion of the  insurance  proceeds  will be
allocated to a fund, which PECO is required by the Nuclear Regulatory Commission
(NRC) to maintain,  to provide for decommissioning the facility.  PECO is unable
to predict the timing of the availability of insurance  proceeds to PECO and the
amount of such proceeds which would be available. Under the terms of the various
insurance  agreements,  PECO  could be  assessed  up to $20  million  for losses
incurred at any plant insured by the insurance  companies.  PECO is self-insured
to the extent  that any losses  may exceed the amount of  insurance  maintained.
Such losses could have a material adverse effect on PECO's  financial  condition
and results of operations.                                                      

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         Additionally, through its subsidiaries, PECO is a member of an industry
mutual insurance  company that provides  replacement power cost insurance in the
event of a major accidental  outage at a nuclear  station.  The premium for this
coverage is subject to assessment  for adverse loss  experience.  PECO's maximum
share of any assessment is $8 million per year.                                 

         In addition,  PECO participates in the American Nuclear Insurers Master
Worker Program,  which provides coverage for worker tort claims filed for bodily
injury caused by a nuclear energy accident. This program was modified, effective
January 1, 1998,  to provide  coverage  to all  workers  whose  "nuclear-related
employment" began on or after the commencement date of reactor operations.  PECO
will not be  liable  for a  retrospective  assessment  under  this  new  policy.
However,  in the event losses incurred under the small number of policies in the
old program exceed accumulated reserves, a maximum retroactive  assessment of up
to $12 million could apply.                                                     

See Note 22 - Subsequent Events - Restructuring.                                

Nuclear Decommissioning and Spent Fuel Storage                                  
         PECO's current estimate of its nuclear facilities' decommissioning cost
is $1.7 billion.  Decommissioning costs are recoverable through regulated rates.
Under rates in effect  through  December 31, 2000,  PECO  collected and expensed
approximately  $29 million in 2000 from  customers  which was accounted for as a
component of depreciation expense and accumulated depreciation.  At December 31,
2000 and 1999,  $412 million and $383  million,  respectively,  were included in
accumulated  depreciation.  In order to fund future  decommissioning  costs,  at
December  31,  2000  and  1999,   PECO  held  $440  million  and  $408  million,
respectively,  in trust  accounts  which are included as  Investments  in PECO's
Consolidated  Balance Sheets and include both net unrealized and realized gains.
Net  unrealized  gains  of $41  million  and  $45  million,  respectively,  were
recognized in accumulated  depreciation in PECO's Consolidated Balance Sheets at
December 31, 2000 and 1999, respectively.  Net realized gains of $10 million and
$14  million  were  also  recognized  in  accumulated   depreciation  in  PECO's
Consolidated  Balance Sheets at December 31, 2000 and 1999,  respectively.  PECO
believes that the amounts being recovered from customers through regulated rates
and earnings on nuclear  decommissioning trust funds will be sufficient to fully
fund the unrecorded portion of its decommissioning obligation.                  

         Under the Nuclear Waste Policy Act of 1982 (NWPA), the U.S.  Department
of Energy (DOE) is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and  high-level  radioactive  waste
(SNF).  PECO, as required by the NWPA,  signed a contract with the DOE (Standard
Contract)  to  provide  for  disposal  of  SNF  from  their  respective  nuclear
generating stations. In accordance with the NWPA and the Standard Contract, PECO
pays the DOE one mill ($.001) per  kilowatt-hour  of net nuclear  generation for
the  cost of  nuclear  fuel  long-term  storage  and  disposal.  This fee may be
adjusted  prospectively in order to ensure full cost recovery.  The NWPA and the
Standard  Contract  required the DOE to begin taking possession of SNF generated
by nuclear  generating  units by no later than January 1998.  The DOE,  however,
failed to meet that  deadline  and its  performance  is  expected  to be delayed
significantly.  The DOE's current  estimate for opening an SNF facility is 2010.
This extended delay in SNF acceptance by the DOE has led to PECO's consideration
of additional dry storage alternatives.                                         

         In July 2000,  PECO entered into an agreement  with the DOE relating to
the Peach  Bottom  nuclear  generating  station to address the DOE's  failure to
begin removal of SNF in January 1998 as required by the Standard Contract. Under
that  agreement,  the DOE agrees to provide  PECO with  credits  against  PECO's
future  contributions  to the  nuclear  waste  fund  over the next ten  years to
compensate  PECO for SNF storage costs  incurred as a result of the DOE's breach
of the contract.  The agreement also provides that, upon PECO's request, the DOE
will take title to the SNF and the  interim  storage  facility  at Peach  Bottom
provided  certain  conditions  are met. In November 2000,  eight  utilities with
nuclear power plants filed a Joint  Petition for Review against the DOE with the
United  States Court of Appeals for the Eleventh  Circuit  seeking to invalidate
that portion of the  agreement  providing  for credits to PECO  against  nuclear
waste fund  payments on the ground  that such  provision  is a violation  of the
NWPA. PECO has intervened as a defendant in that case, which is ongoing.        

See Note 22 - Subsequent Events - Restructuring.                                

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Energy Commitments                                                              
         PECO's wholesale operations include the physical delivery and marketing
of power obtained through its generation  capacity,  and long,  intermediate and
short-term  contracts.  PECO  maintains  a net  positive  supply of  energy  and
capacity,  through  ownership of generation  assets and power purchase and lease
agreements,  to protect it from the potential  operational failure of one of its
owned or contracted power generating  units. PECO has also contracted for access
to additional  generation through bilateral long-term power purchase agreements.
These  agreements are firm  commitments  related to power generation of specific
generation  plants  and/or  are  dispatchable  in  nature  -  similar  to  asset
ownership.  PECO enters into power  purchase  agreements  with the  objective of
obtaining   low-cost  energy  supply  sources  to  meet  its  physical  delivery
obligations to its customers.  PECO has also purchased firm transmission  rights
to ensure that it has  reliable  transmission  capacity to  physically  move its
power  supplies  to meet  customer  delivery  needs.  The  intent  and  business
objective  for the use of its capital  assets and  contracts  is to provide PECO
with  physical  power  supply to enable it to  deliver  energy to meet  customer
needs. Except for hedging purposes, PECO does not use financial contracts in its
wholesale marketing  activities.  In 2001, PECO anticipates the use of financial
contracts to manage the risk surrounding trading for profit activities.         

         PECO has entered into bilateral long-term  contractual  obligations for
sales  of  energy  to  load-serving  entities,   including  electric  utilities,
municipalities,  electric cooperatives,  and retail load aggregators.  PECO also
enters  into  contractual  obligations  to deliver  energy to  wholesale  market
participants  who primarily focus on the resale of energy products for delivery.
PECO provides  delivery of its energy to these  customers  through access to its
transmission assets or rights for firm transmission.                            

         In addition,  PECO has entered into long-term power purchase agreements
with  Independent  Power  Producers  (IPP) under which PECO makes fixed capacity
payments to the IPP in return for exclusive rights to the energy and capacity of
the  generating  units  for a fixed  period.  The terms of the  long-term  power
purchase  agreements enable PECO to supply the fuel and dispatch energy from the
plants.                                                                         

         At December 31, 2000,  PECO had long-term  commitments,  in millions of
megawatt-hours  (MWh) and dollars,  relating to the purchase and sale of energy,
capacity  and  transmission  rights from  unaffiliated  utilities  and others as
expressed in the tables below:                                                  

  Power Only
     -------------------------------------------
   Purchases                   Sales
   ---------                   -----
       MWh    Dollars           MWh      Dollars
       ---    -------           ---      -------
2001                  16      $335             27     $   705               
2002                   9       131             10         257               
2003                   7        94              9         228               
2004                   5        71              4         110               
2005                   4        61              4         109               
Thereafter             5        81              3          72               
               ----                     ------
Total                         $773                     $1,481               
               ====                     ======

Capacity          Capacity       Transmission       
Purchases           Sales      Rights Purchases     
in Dollars        in Dollars       in Dollars         
----------        ----------       ----------         
2001         $  167             $  32              $  100                   
2002            307                21                  35                   
2003            334                16                  32                   
2004            325                 3                  25                   
2005            297                 3                  25                   
Thereafter    4,399                 8                  79                   
------              ----                ----      
Total        $5,829              $ 83                $296                   
======              ====                ====      

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         In 1997, PECO entered into a power supply contract in Massachusetts. In
1999,  PECO  determined  that,  based  upon  anticipated  prices  of  energy  in
Massachusetts  through the remaining life of the power supply  contract,  it had
incurred a loss of approximately $36 million.                                   

         In 1999,  PECO  entered  into a final  settlement  of  litigation  that
resulted in a  restructuring  of power  purchase  agreements  between PECO and a
cogeneration  facility.  The  settlement  also required  PECO to contribute  its
partnership  interest in the  cogeneration  facility to the remaining  partners.
Accordingly,  PECO recorded a charge to earnings of $15 million for the transfer
of its partnership  interest which is recorded in Other Income and Deductions on
PECO's  Consolidated  Statements of Income. The settlement also resolved related
litigation  with  Westinghouse  Power  Generation and the Chase  Manhattan Bank.
Subsequently,  in 1999, PECO revised its estimate for losses associated with the
cogeneration  facility power purchase agreements and reversed  approximately $26
million of reserves,  which consisted  principally of the remaining balance of a
reserve previously recognized in 1997.                                          

See Note 22 - Subsequent Events - Restructuring.                                

Environmental Issues                                                            
         PECO's  operations  have  in the  past  and may in the  future  require
substantial  capital  expenditures in order to comply with  environmental  laws.
Additionally,  under Federal and state  environmental  laws,  PECO,  through its
subsidiaries,  is generally  liable for the costs of  remediating  environmental
contamination  of  property  now or  formerly  owned  by  PECO  and of  property
contaminated  by hazardous  substances  generated by PECO. PECO owns or leases a
number of real estate parcels,  including parcels on which its operations or the
operations of others may have resulted in  contamination by substances which are
considered  hazardous  under  environmental  laws.  PECO has identified 28 sites
where former  manufactured  gas plant (MGP) activities have or may have resulted
in  actual  site  contamination.  PECO is  currently  involved  in a  number  of
proceedings relating to sites where hazardous substances have been deposited and
may be subject to additional proceedings in the future.                         

         As of December 31, 2000 and 1999,  PECO had accrued $54 million and $57
million,  respectively,  for environmental  investigation and remediation costs,
including $30 million and $32 million,  respectively,  for MGP investigation and
remediation,  that currently can be reasonably estimated. PECO cannot reasonably
estimate  whether it will incur other  significant  liabilities  for  additional
investigation  and remediation  costs at these or additional sites identified by
PECO,   environmental  agencies  or  others,  or  whether  such  costs  will  be
recoverable from third parties.                                                 

Leases                                                                          
       Minimum future operating lease payments as of December 31, 2000 were:

2001                                        $  49                               
2002                                           43                               
2003                                           43                               
2004                                           30                               
2005                                           33                               
Remaining years                               543                               
               ---

Total minimum future lease payments          $741                               
              ====

         Rental expense under operating leases totaled $36 million, $54 million,
and $69 million in 2000, 1999, and 1998, respectively.                          

See Note 22 - Subsequent Events - Restructuring.              

Early Retirement and Separation Program                                         
         At December  31,  1998,  PECO  incurred a charge of $125  million  ($74
million,  net of income taxes) for its Early  Retirement and Separation  Program
relating to 1,157  employees.  The  estimated  cost of  separation  benefits was

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approximately $47 million.  Retirement benefits of approximately $78 million are
being paid to the retirees over their lives.  All cash  payments  related to the
Early Retirement and Separation Program were funded through the assets of PECO's
Service Annuity Plan. The Early Retirement and Separation  Program terminated on
June 30, 2000.                                                                  

Litigation                                                                      

Cajun  Electric  Power  Cooperative,  Inc. On May 27,  1998,  the United  States
Department of Justice,  on behalf of the Rural Utilities Service and the Chapter
11 Trustee for the Cajun  Electric Power  Cooperative,  Inc.  (Cajun),  filed an
action  claiming  breach of contract  against PECO in the United States District
Court for the Middle District of Louisiana arising out of PECO's  termination of
the contract to purchase Cajun's interest in the River Bend nuclear power plant.
This action seeks the full purchase  price of the 30% interest in the River Bend
nuclear plant, $50 million, plus interest and consequential  damages. While PECO
cannot  predict  the  outcome  of this  matter,  PECO  believes  that it validly
exercised its right of termination and did not breach the agreement.            

Pennsylvania  Real Estate Tax Appeals PECO is involved in tax appeals  regarding
two of its nuclear  facilities,  Limerick  (Montgomery  County) and Peach Bottom
(York  County).  PECO is also  involved  in the tax appeal for Three Mile Island
Unit No. 1 Nuclear  Generating  Facility (Dauphin County) through AmerGen.  PECO
does not  believe  the  outcome of these  matters  will have a material  adverse
effect on PECO's results of operations or financial condition.                  

General  PECO is involved in various  other  litigation  matters.  The  ultimate
outcome of such  matters,  while  uncertain,  is not expected to have a material
adverse effect on PECO's financial condition or results of operations.          

19. Segment Information                                                         

         PECO  evaluates  the  performance  of its  business  segments  based on
Earnings  Before  Interest  Expense  and Income  Taxes  (EBIT).  PECO's  general
corporate  expenses and certain  non-recurring  expenses  are excluded  from the
internal  evaluation  of  reportable  segment  performance.   General  corporate
expenses  include the cost of executive  management,  corporate  accounting  and
finance,  information  technology,  risk  management,  human resources and legal
functions and employee benefits.                                                

         Energy Delivery  consists of the retail  electricity  distribution  and
transmission   business  in  southeastern   Pennsylvania  and  the  natural  gas
distribution  business.  Generation consists of electric generating  facilities,
power  marketing  operations,   and  PECO's  interests  in  Sithe  and  AmerGen.
Enterprises   consists  of   competitive   retail  energy   sales,   energy  and
infrastructure services, communications and related investments. An analysis and
reconciliation  of  PECO's  business  segment   information  to  the  respective
information in the consolidated financial statements are as follows:            

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                                                        [Enlarge/Download Table]

          Energy                                            Intersegment             
         Delivery   Generation   Enterprises   Corporate      Revenues   Consolidated
         --------   ----------   -----------  -----------    ---------   ------------
                                                                                     
Revenues:                                                                            
2000      $3,373      $2,803        $697      $    --           $(923)      $5,950   
1999      $3,265      $2,896        $116      $    --           $(799)      $5,478   
1998      $3,799      $2,523         $12      $    --         $(1,009)      $5,325   
EBIT:                                                                                
2000      $1,231        $375        $(69)       $(315)(a)     $    --       $1,222   
1999      $1,386        $239        $(41)       $(190)        $    --       $1,394   
1998      $1,378        $233       $(139)       $(257)(a)     $    --       $1,215   
Depreciation and Amortization:                                                       
2000        $195         $99         $31      $    --         $    --         $325   
1999        $108        $125          $4      $    --         $    --         $237   
1998        $533        $110       $  --      $    --                                
                                                              $    --         $643   
Capital Expenditures:                                                                
2000        $219        $243         $64          $23         $    --         $549   
1999        $205        $245          $1          $40         $    --         $491   
1998        $175        $205          $6          $29         $    --         $415   
Total Assets:                                                                        
2000     $13,100      $1,648        $991        $(963)        $    --      $14,776   
1999     $10,306      $1,734        $640         $407         $    --      $13,087   
1998      $9,759      $1,687        $217         $385         $    --      $12,048   
<FN>                                                                                 
(a) Includes non-recurring items of $248 million for merger-related  expenses in     
2000 and $125 million in 1998 for the Early Retirement and Separation Program.       
</FN>                                                                                

         Equity in losses of  communications  investments  of $45  million,  $38
million, and $54 million for 2000, 1999, and 1998, respectively, are included in
the Enterprises  business unit's EBIT. Equity in earnings (losses) of AmerGen of
$4 million and $(0.5) million for 2000 and 1999,  respectively,  are included in
Generation's EBIT.                                                              

20. Related-Party Transactions                                                  

         At December 31, 2000, PECO had a $696 million note payable  maturing on
or before June 30, 2001, with Exelon,  which is reflected in current liabilities
in PECO's Consolidated  Balance Sheets. The average annual interest rate on this
note for the period it was  outstanding was 7.6%. At December 31, 2000, PECO had
a $400  million  intercompany  payable  with ComEd,  which is also  reflected in
current  liabilities in PECO's  Consolidated  Balance Sheets. The average annual
interest rate on this note for the period was 6.5%.                             

         PECO incurred $45 million of merger costs that were directly associated
with the  acquisition of Unicom on behalf of Exelon prior to the Share Exchange.
These costs  consisted  principally of investment  banker,  legal and accounting
fees.  Immediately  after the Share Exchange,  PECO transferred these costs as a
dividend to Exelon for inclusion in the  application  of purchase  accounting to
the Unicom assets acquired and liabilities assumed.                             

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21. Quarterly Data (Unaudited)                                                  

         The data shown  below  include  all  adjustments  which PECO  considers
necessary for a fair presentation of such amounts:                              

                                                        [Enlarge/Download Table]

                                                                   Income (Loss) Before                            
                                                                 Extraordinary Items and                           
                            Operating            Operating        Cumulative Effect of a                Net        
                            Revenues              Income        Change in Accounting Principle      Income (Loss)  
                         2000    1999       2000         1999       2000           1999          2000          1999
                         ----    ----       ----         ----       ----           -----         ----          ----
                                                                                                                   
Quarter ended:                                                                                                     
March 31 .............  $1,352  $1,267   $343(a)(b)      $365     $166(a)(b)      $157          $195(a)(b)    $157 
June 30 ..............  $1,385  $1,213   $313(a)(b)      $245     $124(a)(b)      $ 96          $118(a)(b)    $ 69 
September 30 .........  $1,629  $1,729   $449(a)(b)      $471     $238(a)(b)      $231          $235(a)(b)    $231 
December 31 ..........  $1,584  $1,269   $117(a)(b)      $292     $(41)(a)(b)     $135          $(41)(a)      $125 

<FN>                                                                                                               
(a) Reflects incremental merger expenses of $11 million, $9 million, $13 million                                   
and $215 million  ($129  million,  net of tax) for each of the four  quarters in                                   
2000, respectively, which were reflected in Operating and Maintenance expense.                                     

(b)  Reflects a  Cumulative  Effect of a Change in  Accounting  Principle of $24                                   
million as a result of PECO's change in accounting method for nuclear outages to                                   
recognize such expense as incurred rather than accrued over the operating cycle.                                   
See Note 4 - Accounting  Change.  The effects of the change in accounting method                                   
were $29  million,  $(3)  million,  and $(2)  million in each of the first three                                   
quarters of 2000, respectively.                                                                                    
</FN>                                                                                                              

22. Subsequent Event                                                            

Restructuring                                                                   
         During  January 2001,  Exelon  undertook a corporate  restructuring  to
separate PECO's generation and other  competitive  businesses from its regulated
energy  delivery  business.  As part  of the  restructuring,  the  non-regulated
operations  and  related  assets  and  liabilities  of  PECO,  representing  the
Generation  and  Enterprises  business  segments  were  transferred  to separate
subsidiaries of Exelon.  As a result,  beginning January 2001, the operations of
PECO consist of its retail electricity distribution and transmission business in
southeastern  Pennsylvania and its natural gas distribution  business located in
the Pennsylvania  counties  surrounding the City of Philadelphia.  In connection
with the  transfer,  PECO entered  into a power  purchase  agreement  (PPA) with
Generation.  Under the terms of the PPA, PECO will obtain all of its supply from
Generation  through 2010. Also,  under the terms of the transfer,  PECO assigned
its rights and  obligations  under  various PPAs and fuel supply  agreements  to
Generation. Generation will supply power to PECO from the transferred generation
assets, assigned PPAs and other market sources.                                 

         As  a  result  of  the  corporate  restructuring,   certain  risks  and
commitments that have been disclosed in Note 18 - Commitments and  Contingencies
and the future  financial  condition  and  results  of  operations  will  change
significantly.  On a  prospective  basis,  PECO will not be subject to the risks
associated  with nuclear  insurance,  decommissioning,  spent fuel  disposal and
energy commitments, other than its purchase power agreement with Generation. See
Note 19 - Segment Information for additional financial information.             

PETT Refinancing                                                                
         On March 1, 2001,  PECO refinanced $805 million of floating rate Series
1999-A  Transition  Bonds through the issuance by PETT of fixed-rate  transition
bonds.                                                                          

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ComEd                                                                           

 Report of Independent Accountants

To the Board of Directors and Shareholders of                                   
Commonwealth Edison Company:                                                  

In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)(3)(i)  present fairly, in all material respects,  the
financial  position of  Commonwealth  Edison  Company and  Subsidiary  Companies
(ComEd) at December 31, 2000, and the results of their operations and their cash
flows for the periods  from  January 1, 2000  through  October 19, 2000 and from
October 20, 2000 through  December  31,  2000,  in  conformity  with  accounting
principles  generally accepted in the United States of America. In addition,  in
our opinion,  the financial  statement  schedule  listed in the index  appearing
under Item  14(a)(3)(ii) for the year ended December 31, 2000,  presents fairly,
in all  material  respects,  the  information  set  forth  therein  when read in
conjunction with the related consolidated financial statements.  These financial
statements  and the  financial  statement  schedule  are the  responsibility  of
ComEd's  management;  our  responsibility  is to  express  an  opinion  on these
financial  statements and financial  statement  schedule based on our audit.  We
conducted our audit of these  statements in accordance  with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.          

As  discussed  in Note 2 to the  consolidated  financial  statements,  effective
October 20, 2000, Exelon  Corporation  acquired Unicom  Corporation,  the parent
company of ComEd, in a business  combination  accounted for as a purchase.  As a
result of the acquisition, the consolidated financial information for the period
after the  acquisition  is presented on a different cost basis than that for the
periods before the acquisition and therefore, is not comparable.                

PricewaterhouseCoopers LLP                                                      

Chicago, Illinois                                                               
January 30, 2001                                                                

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Report Of Independent Public Accountants

To the Shareholders of Commonwealth Edison Company:                             

         We  have  audited  the  accompanying   consolidated  balance  sheet  of
Commonwealth Edison Company (an Illinois  corporation) and Subsidiary  Companies
as of December 31, 1999, and the related consolidated statements of income, cash
flows, and changes in shareholders'  equity and comprehensive income for each of
the two years in the period ended December 31, 1999. These financial  statements
and the  schedule  referred  to below are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.                                    

         We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.                                                                

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the financial position of Commonwealth Edison
Company and  Subsidiary  Companies as of December  31, 1999,  and the results of
their  operations  and their  cash flows for each of the two years in the period
ended  December 31, 1999, in conformity  with  accounting  principles  generally
accepted in the United States.                                                  

         Our audits were made for the purpose of forming an opinion on the basic
financial   statements  taken  as  a  whole.  The  schedule  listed  under  Item
14(a)(3)(ii) for each of the two years in the period ended December 31, 1999, is
presented  for the  purposes  of  complying  with the  Securities  and  Exchange
Commission's  rules  and is not part of the  basic  financial  statements.  This
schedule has been subjected to the auditing  procedures applied in the audits of
the  basic  financial  statements  and,  in our  opinion,  fairly  states in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.                    

                                       Arthur Andersen LLP

Chicago, Illinois                                                               
January 31, 2000                                                                

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                                                        [Enlarge/Download Table]

                                       Commonwealth Edison Company and Subsidiary Companies                                       
                                                 Consolidated Statements of Income                                                

                                                                         For the period                         For the           
                                                                   Oct. 20 -    |     Jan. 1 -                 Years Ended        
                                                                    Dec. 31     |     Oct. 19                 December 31,        
                                                                      2000      |      2000              1999              1998   
                                                                    -------     |     -------           -------           ------- 
                                                                                |           (In Millions)                         
                                                                                |                                                 
                                                                                |                                                 
Operating Revenues                                                  $ 1,310     |     $ 5,702           $ 6,793           $ 7,150 
Operating Expenses                                                              |                                                 
  Fuel and Purchased Power                                              322     |       1,655             1,549             1,853 
  Operating and Maintenance                                             423     |       1,653             2,352             2,274 
  Merger-Related Costs                                                   14     |          53              --                --   
  Depreciation and Amortization                                         130     |         868               836               938 
  Taxes Other Than Income                                                83     |         425               507               698 
                                                                    -------     |     -------           -------           ------- 
                                                                                |                                                 
     Total Operating Expenses                                           972     |       4,654             5,244             5,763 
                                                                                |     -------           -------           ------- 
Operating Income                                                        338     |       1,048             1,549             1,387 
                                                                                |     -------           -------           ------- 
Other Income and Deductions                                                     |                                                 
  Interest Expense                                                     (127)    |        (469)             (602)             (502)
  Provision for Dividends on Company-Obligated                                  |                                                 
    Mandatorily Redeemable Preferred Securities of                              |                                                 
    Subsidiary Trusts Holding Solely the Company's                              |                                                 
    Subordinated Debt Securities                                         (6)    |         (24)              (30)              (30)
  Other, Net                                                             31     |         277                60                90 
                                                                    -------     |     -------           -------           ------- 
                                                                                |                                                 
                                                                                |                                                 
  Total Other Income and Deductions                                    (102)    |        (216)             (572)             (442)
                                                                    -------     |     -------           -------           ------- 
Income Before Income Taxes and Extraordinary Items                      236     |         832               977               945 
Income Taxes                                                            103     |         229               326               351 
                                                                    -------     |     -------           -------           ------- 
                                                                                |                                                 
Income Before Extraordinary Items                                       133     |         603               651               594 
Extraordinary Items (net of income taxes of $2 and $18                          |                                                 
 for  the periods ending  Oct. 19, 2000 and Dec. 31, 1999,                      |                                                 
 respectively)                                                         --       |          (4)              (28)             --   
                                                                    -------     |     -------           -------           ------- 
                                                                                |                                                 
Net Income                                                              133     |         599               623               594 
Preferred and Preference Stock Dividends                               --       |           3                24                57 
                                                                    -------     |     -------           -------           ------- 
                                                                                |                                                 
Net Income on Common Stock                                          $   133     |     $   596           $   599           $   537 
                                                                    =======     |     =======           =======           ======= 

                                          See Notes to Consolidated Financial Statements                                          

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Commonwealth Edison Company and Subsidiary Companies
 Consolidated Statements of Cash Flows

                                                        [Enlarge/Download Table]


                                                                     For the period                                                
                                                        --------------------------------------                                     
                                                         Oct. 20 - Dec. 31  |   Jan.1 - Oct. 19    For the Years Ended December 31,
                                                                 2000       |       2000              1999             1998        
                                                                 ----       |       ----              ----             ----        
                                                                            |                                                      
                                                                            |           (In Millions)                              
Cash Flows from Operating Activities                                        |                                                      
 Net Income                                                    $   133      |     $   599           $   623           $   594      
 Adjustments  to  reconcile  Net Income to Net                              |                                                      
  Cash Flows  provided by Operating Activities:                             |                                                      
   Depreciation and Amortization                                   174      |       1,012               902               954      
   Extraordinary Items (net of income taxes)                        --      |           4                28                --      
   (Gain)/loss on Forward Share Arrangements                        --      |        (113)               44                --      
   Provision for Uncollectible Accounts                             16      |          30                87                61      
   Deferred Income Taxes                                            72      |         886            (1,378)              103      
   Merger-Related Costs                                             14      |          53                --                --      
   Early Retirement and Separation Program                          --      |          28               (62)               10      
   Contribution to Environmental Trust                              --      |          --              (250)               --      
   Recovery of Coal Reserve Regulatory Assets                       --      |          --               198               108      
   Other Operating Activities                                      (69)     |         (10)              (77)               29      
  Changes in Working Capital:                                               |                                                      
    Accounts Receivable                                            (61)     |          86              (171)             (547)     
    Inventories                                                     97      |          17                (6)                8      
    Accounts Payable & Accrued Expenses                            (52)     |      (1,175)            1,183                90      
    Other Current Assets & Liabilities                             176      |        (343)              124               142      
                                                               -------      |     -------           -------           -------      
Net Cash Flows provided by Operating Activities                    500      |       1,074             1,245             1,552      
                                                                            |                                                      
Cash Flows from Investing Activities                                        |                                                      
  Investment in Plant                                             (196)     |      (1,210)           (1,337)           (1,095)     
  Plant Removals, net                                              (11)     |         (14)              (75)              (87)     
  Sales of Generating Plants                                        --      |          --             4,886               177      
  Contributions to Nuclear Decommissioning Trust Funds             (89)     |         (39)              (90)             (137)     
  Intercompany Receivables from Affiliates                        (417)     |         302            (2,209)               --      
  Other Investments                                                (63)     |         125               (39)               --      
  Other Investing Activities                                        --      |           9                 8                 7      
                                                               -------      |     -------           -------           -------      
                                                                            |                                                      
Net Cash Flows (used in) provided by Investing                              |                                                      
  Activities                                                      (776)     |        (827)            1,144            (1,135)     
                                                                            |                                                      
Cash Flows from Financing Activities                                        |                                                      
  Issuance of Long-Term Debt, net of issuance costs                 --      |         450                --             3,605      
  Common Stock Repurchases                                          --      |        (153)             (115)               --      
  Retirement of Long-Term Debt                                     (84)     |        (755)           (1,558)             (498)     
  Change in Short-Term Debt                                         --      |          (5)             (272)              118      
  Redemption of Preferred Securities of Subsidiaries                --      |         (71)             (534)              (34)     
  Dividends on Capital Stock                                       (95)     |        (260)             (392)             (430)     
  Common Stock Forward Repurchases                                  --      |         (67)             (813)               (7)     
  Nuclear Fuel Lease Principal Payments                             --      |        (270)             (255)             (255)     
  Proceeds from the Sale/Leaseback of Nuclear Fuel                  --      |          --                --               101      
                                                               -------      |     -------           -------           -------      
Net Cash Flow (used in)  provided by Financing                              |                                                      
  Activities                                                      (179)     |      (1,131)           (3,939)            2,600      
                                                               -------      |     -------           -------           -------      
                                                                            |                                                      
Cash, Cash Equivalents and Restricted Cash:                                 |                                                      
Increase (Decrease)                                               (455)     |        (884)           (1,550)            3,017      
Balance at beginning of period                                     656      |       1,540             3,090                73      
                                                               -------      |     -------           -------           -------      
Balance at end of period                                       $   201      |     $   656           $ 1,540           $ 3,090      
                                                               =======      |     =======           =======           =======      

See Notes to Consolidated Financial Statements

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Commonwealth Edison Company and Subsidiary Companies
 Consolidated Balance Sheets

                                                        [Enlarge/Download Table]

                                                               At December 31,       
                                                          2000                1999   
                                                        --------           --------  
                        Assets                                  (In Millions)        
                                                                 -----------         
                                                                      |              
Current Assets                                                        |              
 Cash and Cash Equivalents                              $    141      |     $  1,255 
 Restricted Cash                                              60      |          285 
 Accounts Receivable, net                                             |              
   Customer                                                  970      |        1,134 
   Other                                                     279      |        1,005 
 Inventories, at average cost                                         |              
   Fossil Fuel                                                12      |           14 
   Materials and Supplies                                    174      |          220 
 Deferred Income Taxes                                        89      |           55 
 Intercompany Receivable from Affiliate                      400      |           -- 
 Other                                                       285      |           77 
                                                        --------      |     -------- 
   Total Current Assets                                    2,410      |        4,045 
                                                        --------      |     -------- 
                                                                      |              
Property, Plant and Equipment, net                         7,657      |       11,993 
                                                                      |              
Deferred Debits and Other Assets                                      |              
 Regulatory Assets                                         1,110      |        1,326 
 Nuclear Decommissioning Trust Funds                       2,669      |        2,547 
 Investments                                                 175      |          141 
 Goodwill, net                                             4,766      |           -- 
 Notes Receivable from Affiliates                          1,316      |        2,451 
 Other                                                       178      |           73 
                                                        --------      |     -------- 
   Total Deferred Debits and Other Assets                 10,214      |        6,538 
                                                        --------      |     -------- 
Total Assets                                            $ 20,281      |     $ 22,576 
                                                        ========      |     ======== 
                                                                      |              
                 Liabilities and Shareholders' Equity                 |              
                                                                      |              
Current Liabilities                                                   |              
 Notes Payable, Bank                                    $     --      |     $      5 
 Long-Term Debt Due Within One Year                          348      |          732 
 Accounts Payable                                            597      |          415 
 Accrued Expenses                                            148      |          120 
 Accrued Interest                                            222      |          215 
 Accrued Taxes                                               162      |        1,421 
 Other                                                       329      |          519 
                                                        --------      |     -------- 
   Total Current Liabilities                               1,806      |        3,427 
                                                        --------      |     -------- 
                                                                      |              
Long-Term Debt                                             6,882      |        6,962 
                                                                      |              
Deferred Credits and Other Liabilities                                |              
 Deferred Income Taxes                                     1,837      |        2,456 
 Unamortized Investment Tax Credits                           59      |          485 
 Nuclear Decommissioning Liability for Retired Plants      1,301      |        1,260 
 Pension Obligations                                         285      |          477 
 Non-Pension Postretirement Benefits Obligation              315      |          442 
 Other                                                     1,285      |        1,336 
                                                        --------      |     -------- 
   Total Deferred Credits and Other Liabilities            5,082      |        6,456 
                                                        --------      |     -------- 
                                                                      |              
Mandatorily Redeemable Preference Stock                       --      |           69 
                                                                      |              
Company-Obligated Mandatorily Redeemable Preferred                    |              
 Securities of Subsidiary Trusts Holding the Company's                |              
 Subordinated Debt Securities                                328      |          350 
                                                                      |              
Commitments and Contingencies                                         |              
                                                                      |              
Shareholders' Equity                                                  |              
 Common Stock                                              2,678      |        2,678 
 Preferred and Preference Stock                                7      |            9 
 Other Paid in Capital                                     5,388      |        2,211 
 Retained Earnings                                           133      |          433 
 Treasury Stock, at cost                                  (2,023)     |          (27)
 Accumulated Other Comprehensive Income                       --      |            8 
                                                        --------      |     -------- 
   Total Shareholders' Equity                              6,183      |        5,312 
                                                        --------      |     -------- 
Total Liabilities and Shareholders' Equity              $ 20,281      |     $ 22,576 
                                                        ========      |     ======== 

See Notes to Consolidated Financial Statements

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                                                        [Enlarge/Download Table]

                                       Commonwealth Edison Company and Subsidiary Companies                                     
                              Statement of Changes in Shareholders' Equity and Comprehensive Income                             

Year Ended December 31,                                   2000                       1999                          1998         
-----------------------                                   ----                       ----                          ----         
                                                  Shares        Amount       Shares          Amount       Shares          Amount
                                                  ------        ------       ------          ------       ------          ------
                                                                          (dollars in millions and shares in thousands)         
                                                                                                                                
Common Stock                                                                                                                    
Balance at Beginning of Year                      214,238      $  2,678       214,236      $  2,678       214,228      $  2,678 
  Conversion of $1.425 Preferred Stock                  4            --             2            --             8            -- 
                                                 --------      --------      --------      --------      --------      -------- 
Balance at End of Year                            214,242      $  2,678       214,238      $  2,678       214,236      $  2,678 

Preferred and Preference Stock                                                                                                  
Balance at Beginning of Year                           57      $      9        13,561      $    524        13,566      $    507 
  Preferred and Preference Stock Redemptions          (56)           (2)      (13,504)         (515)           (8)           -- 
  Preference Stock Issuance                                          --                          --             3            17 
                                                 --------      --------      --------      --------      --------      -------- 
Balance at End of Year                                  1      $      7            57      $      9        13,561      $    524 

Other Paid in Capital                                                                                                           
Balance at Beginning of Year                                   $  2,211                      $2,208                      $2,208 
  Capital Stock and Warrant Expense                                  --                           3                          -- 
                                                               --------                                                         
Balance at October 19, 2000                                       2,211                                                         
-----------------------------------------------------------------------------                                                   
  Merger Fair Value Adjustment                                    3,177                                                         
                                                               --------                    --------                    -------- 
Balance at End of Year                                          $ 5,388                      $2,211                      $2,208 

Retained Earnings                                                                                                               
Balance at Beginning of Year                                   $    433                    $    177                    $    (19)
  Net Income                                                        599                         623                         594 
  Dividends:                                                                                                                    
     Common Stock                                                  (238)                       (342)                       (343)
     Preferred and Preference Stock                                  (1)                         (9)                        (55)
  Capital Stock Activity:                                                                                                       
     Expenses of Capital Stock Activity                              (1)                        (16)                         -- 
                                                              ---------                                                         
Balance at October 19, 2000                                         792                                                         
  Merger Fair Value Adjustment                                     (792)                                                        
  Net Income for Post Merger Period                                                                                             
    (from October 20, 2000 to December 31, 2000)                    133                                                         
                                                               --------                    --------                    -------- 
Balance at End of Year                                         $    133                    $    433                     $   177 

Treasury Shares                                                                                                                 
Balance at Beginning of Year                          264      $    (27)          179      $     (7)           --       $    -- 
  Capital Stock Activity:                                                                                                       
     Repurchase of Common Stock                     3,964          (153)           85           (20)          179            (7)
     Stock Forward Repurchase Contract             26,268          (993)                         --            --            -- 
                                                 --------      --------                                                         
Balance at October 19, 2000                        30,496        (1,173)                                                        
-----------------------------------------------------------------------------                                                   
  Repurchase of Common Stock                       19,941          (850)                                                        
                                                 --------      --------      --------      --------      --------      -------- 
Balance at End of Year                             50,437       $(2,023)          264      $    (27)          179       $    (7)

Accumulated Other Comprehensive Income                                                                                          
Balance at Beginning of Year                                   $      8                    $     --                     $    -- 
  Unrealized Gain(Loss) on Marketable Securities,                                                                               
     net of income tax of $0 and $5, respectively                    (2)                          8                          -- 
                                                            ------------                                                        
Balance at October 19, 2000                                           6                                                         
-----------------------------------------------------------------------------                                                   
  Merger Fair Value Adjustment                                       (6)                                                        
                                                               --------                    --------                    -------- 
Balance at End of Year                                         $     --                    $      8                     $    -- 

Total Shareholders' Equity                                     $  6,183                    $  5,312                      $5,580 
                                                               ========                    ========                    ======== 

Comprehensive Income                                                                                                            
Net Income                                                     $    732                    $    623                     $   594 
  Other Comprehensive Income, net of income tax                      --                           8                          -- 
                                                               --------                    --------                    -------- 
Total Comprehensive Income                                     $    732                    $    631                     $   594 
                                                               ========                    ========                    ======== 

                                          See Notes to Consolidated Financial Statements                                        

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Commonwealth Edison Company and Subsidiary Companies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in millions, unless otherwise noted)

1. Significant Accounting Policies                                              

Description of Business                                                         
         Commonwealth  Edison  Company  (ComEd)  is engaged  principally  in the
production, purchase, transmission,  distribution and sale of electricity to 3.5
million  retail  customers.  ComEd's retail  electric  service  territories  are
located  principally  in  northern  Illinois  including   metropolitan  Chicago,
spanning an area of  approximately  11,300 square miles.  ComEd  operates as one
business segment,  that of a vertically integrated electric utility. See Note 19
-  Subsequent  Event,   regarding  Exelon  Corporation's   (Exelon's)  corporate
restructuring.                                                                  

Basis of Presentation                                                           
         The consolidated  financial statements of ComEd include the accounts of
ComEd,  Commonwealth Edison Company of Indiana, Inc. , Edison Development Canada
Inc. , ComEd  Financing  I and ComEd  Financing  II , ComEd  Funding  LLC (ComEd
Funding),  and ComEd  Transitional  Funding  Trust (ComEd  Funding  Trust).  All
significant  intercompany  transactions  have  been  eliminated.   Although  the
accounts of ComEd Funding and ComEd  Funding  Trust,  which are Special  Purpose
Entities  (SPEs),  are included in the  consolidated  financial  statements,  as
required by generally accepted accounting  principles (GAAP),  ComEd Funding and
ComEd Funding Trust are separate  legal  entities from ComEd.  The assets of the
SPEs are not available to creditors of ComEd and the transitional  property held
by the  SPEs  are  not  assets  of  ComEd.  Accounting  policies  for  regulated
operations are in accordance with those prescribed by the regulatory authorities
having  jurisdiction,  principally the Illinois  Commerce  Commission (ICC), the
Federal  Energy  Regulatory  Commission  (FERC) and the  Securities and Exchange
Commission (SEC) under the Public Utility Holding Company Act of 1935 (PUHCA).  

         ComEd,  a regulated  electric  utility,  is a principal  subsidiary  of
Exelon,  which  owns  99.9% of  ComEd  common  stock.  ComEd  was the  principal
subsidiary of Unicom  Corporation  (Unicom) prior to the merger with Exelon. See
Note 2 - Merger.  The  merger was  accounted  for using the  purchase  method of
accounting  in  accordance  with GAAP.  The effects of the  purchase  method are
reflected  on  the  financial  statements  of  ComEd  as  of  the  merger  date.
Accordingly,  the financial statements presented for the period after the merger
reflect  a new  basis of  accounting.  ComEd's  financial  statements  for 2000,
separated  by a  bold  black  line,  are  presented  for  periods  prior  to and
subsequent to the merger.                                                       

Accounting for the Effects of Regulation                                        
         ComEd accounts for its regulated electric operations in accordance with
Statement of Financial  Accounting  Standards (SFAS) No. 71, "Accounting for the
Effects  of  Certain  Types of  Regulation,"  requiring  ComEd to  record in the
financial statement the effects of the rate regulation to which these operations
are  currently  subject.  Use of  SFAS  No.  71 is  applicable  to  the  utility
operations of ComEd that meet the following criteria: (1) third-party regulation
of rates; (2) cost-based  rates; and (3) a reasonable  assumption that all costs
will be  recoverable  from customers  through  rates.  ComEd believes that it is
probable  that  regulatory  assets  associated  with  these  operations  will be
recovered.  If a  separable  portion of  ComEd's  business  no longer  meets the
provisions  of SFAS No.  71,  ComEd  is  required  to  eliminate  the  financial
statement effects of regulation for that portion.                               

Use of Estimates                                                                
         The  preparation  of  financial  statements  in  conformity  with  GAAP
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.                                                           

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Revenues                                                                        
         Operating  revenues  are  generally  recorded as service is rendered or
energy is delivered to  customers.  At the end of each month,  ComEd  accrues an
estimate for the unbilled amount of energy delivered or services provided to its
customers.                                                                      

Nuclear Fuel                                                                    
         The cost of nuclear  fuel is  capitalized  and charged to fuel  expense
using the unit of production  method.  Estimated  costs of nuclear fuel disposal
are charged to fuel expense as the related fuel is consumed.                    

Depreciation, Amortization and Decommissioning                                  
         Depreciation is provided over the estimated  service lives of property,
plant, and equipment on a straight line basis.  Annual  depreciation  provisions
for financial reporting  purposes,  expressed as a percentage of average service
life for each asset category are presented below:                               

            Asset Category                           2000  |   1999     1998
            --------------                           ----  |   ----     ----
                                           |
        Electric -- Transmission and Distribution     5.95% |   3.24%    3.23%
        Electric -- Generation                        4.87% |   2.20%    2.79%
        Other Property and Equipment                  8.51% |   5.71%    5.22%

         Regulatory assets are amortized over a recovery period specified in the
related legislation or regulatory agreement. Goodwill associated with the merger
is being amortized on a straight line basis over 40 years.  See Note 2 - Merger.
Accumulated amortization of goodwill was $23 million at December 31, 2000.      

         ComEd's  estimate  of  the  costs  for   decommissioning   its  nuclear
generating  stations is  currently  included  in  regulated  rates.  The amounts
recovered  from  customers  are  deposited  in trust  accounts  and invested for
funding of future costs for current and retired  plants.  ComEd accounts for the
current period's cost of  decommissioning  by recording a charge to depreciation
expense  and a  corresponding  liability  in  accumulated  depreciation  for its
operating  nuclear  units and a reduction to  regulatory  assets for its retired
units.  ComEd believes that the amounts being  recovered from customers  through
electric  rates along with the earnings on the trust funds will be sufficient to
fully fund its decommissioning obligations.                                     

Capitalized Interest                                                            
         ComEd uses SFAS No. 34,  Capitalizing  Interest Costs, to calculate the
costs  during  construction  of debt  funds used to  finance  its  non-regulated
construction  projects.  ComEd recorded  capitalized interest of $5 million, $22
million and $28 million in 2000, 1999 and 1998, respectively.                   

         Allowance  for Funds  Used  During  Construction  (AFUDC)  is the cost,
during the  period of  construction,  of debt and  equity  funds used to finance
construction projects for regulated operations. AFUDC is recorded as a charge to
Construction  Work in  Progress  and as a  non-cash  credit  to  AFUDC  which is
included in Other Income and Deductions.  The rates used for capitalizing  AFUDC
are computed under a method prescribed by regulatory authorities.               

Income Taxes                                                                    
         Deferred Federal and state income taxes are provided on all significant
temporary   differences   between  book  bases  and  tax  bases  of  assets  and
liabilities,  transactions  that reflect taxable income in a year different from
book income and tax  carryforwards.  Investment tax credits  previously used for
income tax purposes have been deferred on ComEd's  Consolidated  Balance  Sheets
and are recognized in book income over the life of the related  property.  ComEd
files a consolidated  Federal and state income tax returns with Exelon,  and was
previously  included in Unicom's  consolidated  income tax returns.  Current and
deferred  income taxes of the  consolidated  group are  allocated to ComEd as if
ComEd filed separate income tax returns.                                        

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Gains and Losses on Reacquired Debt                                             
         Gains  and  losses  on  reacquired   debt  are  recognized  in  ComEd's
Consolidated  Statements  of Income as incurred.  Gains and losses on reacquired
debt related to regulated  operations  incurred  prior to January 1, 1998,  have
been  deferred  and are being  amortized  to  interest  expense  over the period
approved for ratemaking purposes.                                               

Comprehensive Income                                                            
         Comprehensive  income  includes  all changes in equity  during a period
except those resulting from  investments by and  distributions  to shareholders.
Comprehensive income is reflected in ComEd's Consolidated  Statements of Changes
in Shareholders' Equity and Comprehensive Income.                               

Cash and Cash Equivalents                                                       
         ComEd  considers  all  temporary  cash  investments  purchased  with an
original maturity of three months or less to be cash equivalents.               

Restricted Cash                                                                 
         Restricted  cash reflects unused cash proceeds from the issuance of the
transitional  trust notes and escrowed  cash to be applied to the  principal and
interest payment on the transitional trust notes.                               

Marketable Securities                                                           
         Marketable securities are classified as  available-for-sale  securities
and are reported at fair value,  with the  unrealized  gains and losses,  net of
tax,  reported in other  comprehensive  income.  Unrealized  gains and losses on
marketable  securities  held in the  nuclear  decommissioning  trust  funds  are
reported in accumulated  depreciation  for operating units and as a reduction of
regulatory assets for retired units. At December 31, 2000 and 1999, ComEd had no
held-to-maturity or trading securities.                                         

Property, Plant and Equipment                                                   
         Property,  plant and equipment is recorded at cost. ComEd evaluates the
carrying value of property, plant and equipment and other long-term assets based
upon  current  and  anticipated  undiscounted  cash  flows,  and  recognizes  an
impairment  when it is probable that such estimated cash flows will be less than
the carrying value of the asset.  Measurement  of the amount of  impairment,  if
any, is based upon the difference  between  carrying  value and fair value.  The
cost of maintenance,  repairs and minor  replacements of property are charged to
maintenance expense as incurred.                                                

         Upon retirement, the cost of regulated property plus removal costs less
salvage,  are  charged  to  accumulated  depreciation  in  accordance  with  the
provisions of SFAS No. 71. For  unregulated  property,  the cost and accumulated
depreciation of property,  plant and equipment retired or otherwise  disposed of
are removed from the related  accounts and included in the  determination of the
gain or loss on disposition.                                                    

Capitalized Software Costs                                                      
         Costs incurred  during the  application  development  stage of software
projects  which are developed or obtained for internal use are  capitalized.  At
December 31, 2000 and 1999,  capitalized software costs totaled $154 million and
$112  million,  respectively,  net of $4  million  and $12  million  accumulated
amortization,  respectively. Such capitalized amounts are amortized ratably over
the expected lives of the projects when they become  operational,  not to exceed
10 years. Certain capitalized software is being amortized over 15 years pursuant
to regulatory approval.                                                         

Retail and Wholesale Energy Commitments                                         
         In the normal  course of business,  ComEd  utilizes  contracts  for the
forward sale and purchase of energy to manage the  utilization  of its available
generating   capability  and  provision  of  wholesale   energy  to  its  retail
affiliates.  ComEd also utilizes  energy option  contracts and energy  financial
swap  arrangements  to limit the market price risk  associated  with the forward
energy  commodity   contracts.   Through  December  31,  2000,  ComEd  generally
recognized  any  gains  or  losses  on  forward  commodity  contracts  when  the
underlying transactions affected earnings. Revenues and expenses associated with
market price risk  management  contracts  are  amortized  over the terms of such
contracts.                                                                      

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New Accounting Pronouncements                                                   

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," to
establish  accounting and reporting standards for derivatives.  The new standard
requires  recognizing  all  derivatives  as either assets or  liabilities on the
balance sheet at their fair value and specifies  the  accounting  for changes in
fair value depending upon the intended use of the derivative.  In June 1999, the
FASB issued SFAS No. 137  "Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the  Effective  Date of FASB  Statement No. 133," which
delayed the effective date for SFAS No. 133 until fiscal years  beginning  after
June 15, 2000.  The effect of adopting SFAS No. 133 in the first quarter of 2001
is not expected to have a material effect on ComEd's financial statements.      

         In  September  2000,  the FASB  issued SFAS No.  140,  "Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  Replacement  of FASB  Statement  No,  125."  This new  standard  revises  the
standards for accounting for  securitizations  and other  transfers of financial
assets and collateral and requires certain disclosures, but it carries over most
of the provisions of SFAS No. 125 without reconsideration. SFAS No. 140 provides
accounting  and  reporting  standards  for  transfers and servicing of financial
assets  and  extinguishments  of  liabilities.  SFAS No.  140 is  effective  for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after March 31, 2001 and should be applied prospectively.  At December
31, 2000,  ComEd did not anticipate  entering into any significant  transactions
that  would  be  subject  to the  provisions  of SFAS No.  140  when it  becomes
effective.                                                                      

Reclassifications                                                               
         Certain  prior year  amounts  have been  reclassified  for  comparative
purposes. These reclassifications had no effect on net income.                  

2. Merger                                                                       

         On October  20,  2000,  Exelon  became the parent  corporation  of PECO
Energy  Company  (PECO)  and  ComEd  as  a  result  of  the  completion  of  the
transactions  contemplated  by an Agreement and Plan of Exchange and Merger,  as
amended (Merger Agreement),  among PECO, Unicom Corporation (Unicom) and Exelon.
Pursuant to the Merger  Agreement,  Unicom merged with and into Exelon (Merger).
In the  Merger,  each  share  of the  outstanding  common  stock of  Unicom  was
converted  into 0.875 shares of common stock of Exelon plus $3.00 in cash.  As a
result of the Merger,  Unicom  ceased to exist and its  subsidiaries,  including
ComEd, became subsidiaries of Exelon.                                           

         The Merger was accounted for using the purchase  method of  accounting.
Purchase  transactions  resulting in one entity  becoming  substantially  wholly
owned by the  acquiror  establish  a new  basis of  accounting  in the  acquired
entity's records for the purchased  assets and  liabilities.  Thus, the purchase
price has been  allocated to the  underlying  assets  purchased and  liabilities
assumed  based on their  estimated  fair values at the  acquisition  date.  As a
result of the  application of the purchase  method of accounting,  the following
fair value adjustments,  including the elimination of accumulated  depreciation,
retained  earnings  and other  comprehensive  income,  were  recorded in ComEd's
Consolidated Balance Sheets on October 20, 2000:                                

Increase (Decrease) in Assets                                 
-----------------------------                                 
  Property, Plant and Equipment, net                      $(4,790)
 Goodwill                                                  4,789
 Other Assets                                                106

(Increase) Decrease in Liabilities                            
----------------------------------                            
and Shareholders' Equity                              
------------------------                              
 Deferred Income Taxes                                     1,645
 Unamortized Investment Tax Credits                          401
  Merger Severance Liability                                 (307)
 Pension and Postretirement Benefit Obligations              459
 Long-Term Debt and Preferred Securities                     116
  Other Liabilities                                           (40)
  Other Paid in Capital                                    (3,177)
 Retained Earnings                                           792
 Accumulated Other Comprehensive Income                        6

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Reductions  to the carrying  value of  property,  plant and  equipment  balances
primarily  reflect  the fair value of the  nuclear  generating  assets  based on
discounted  cash  flow  analyses  and  independent  appraisals.  Adjustments  to
deferred income taxes, long-term debt and preferred securities, and other assets
and liabilities were recorded based on the estimate of fair market value.       

Reductions to unamortized  investment  tax credits  represents the adjustment of
nuclear generating asset investment tax credits to fair value.  Merger severance
obligations  relating  to  ComEd's  employee  exit costs  were  recorded  in the
purchase  price  allocation.  Reductions to pension and  postretirement  benefit
obligations  primarily reflect  elimination of unrecognized net actuarial gains,
prior service costs and transition obligations.                                 

Goodwill represents the purchase price allocation to ComEd of the cost in excess
of net assets acquired in the Merger, which will be amortized over forty years. 

Merger-Related Costs                                                            
         In connection  with the Merger,  ComEd  recorded  certain  reserves for
restructuring costs. Costs incurred prior to the Merger were charged to expense.
Costs  incurred  subsequent  to  the  Merger  were  reflected  as  part  of  the
application of purchase accounting and did not affect results of operations.    

         ComEd's  Merger-related  costs  charged  to  expense  in 2000  were $67
million  consisting of $26 million of direct  incremental  costs and $41 million
for  employee  costs.  Direct  incremental  costs  represent  expenses  directly
associated with completing the Merger,  including  professional fees, regulatory
approval and other merger integration costs.  Employee costs represent estimated
severance  payments  provided under Exelon's  Merger  Separation  Plan (MSP) for
eligible  employees whose positions were eliminated  before October 20, 2000 due
to integration activities of the merged companies.                              

         Included in the purchase price allocation is a liability for exit costs
of $307 million for  additional  employee  costs and  additional  liabilities of
approximately  $32 million for estimated  costs of exiting  business  activities
that were not compatible with the strategic  business  direction of Exelon.  The
employee costs include employee  severance,  actuarially  determined pension and
postretirement  costs,  and relocation and other benefits of $128 million,  $158
million and $21 million, respectively. The involuntary terminations are a result
of merger integration and reengineering of processes,  primarily in the areas of
corporate support,  generation,  and energy delivery. The $307 million estimated
liability  is subject to a final  determination  of the level of  benefits to be
provided  to a portion of the  employees  whose  positions  are  expected  to be
eliminated  as a result  of the  Merger  but who are not  eligible  for the MSP.
Adjustments  to the liability to reflect final  determination  of benefit levels
will be recorded as an adjustment to goodwill.                                  

         Approximately  2,300 positions have been identified to be eliminated as
a result of the Merger.  ComEd  anticipates  that $167 million of employee costs
will be  funded  from its  pension  and  postretirement  benefit  plans and $181
million will be funded from general  corporate  funds. At December 31, 2000, the
reserve balance for employee  severance,  relocation and other benefits was $144
million, which is reflected in other current liabilities in ComEd's Consolidated
Balance Sheets, and is expected to be expended by October 2002.                 

3. Fossil Plant Sale                                                            

          In December 1999,  ComEd  completed the sale of its fossil  generating
assets to Edison Mission Energy, an Edison International subsidiary (EME), for a
cash purchase price of $4.8 billion. The fossil generating assets represented an
aggregate generating capacity of approximately 9,772 megawatts.                 

         Just  prior  to  the  consummation  of the  fossil  plant  sale,  ComEd
transferred  these  assets to an  affiliate,  Unicom  Investment,  Inc.  (Unicom
Investment). In consideration for the transferred assets, Unicom Investment paid
ComEd consideration  totaling approximately $4.8 billion in the form of a demand
note in the amount of approximately  $2.4 billion and an  interest-bearing  note
with a maturity of twelve                                                       

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years.  Unicom  Investment  immediately  sold the fossil plant assets to EME, in
consideration of which Unicom Investment received  approximately $4.8 billion in
cash from EME.  Immediately  after its  receipt  of the cash  payment  from EME,
Unicom  Investment  paid the demand  note in full.  Unicom  Investment  used the
remainder of the cash  received from EME to fund other  business  opportunities,
including the share repurchases. Of the cash received by ComEd, $1.8 billion was
used to pay the costs and taxes associated with the fossil plant sale, including
ComEd's  contribution of $250 million of the proceeds to an environmental  trust
as required by Illinois  legislation.  The remainder of the demand note proceeds
was  available  to  ComEd  to  fund,   among  other  things,   transmission  and
distribution  projects,  nuclear generation station projects,  and environmental
and other initiatives.                                                          

         The sale  produced an after-tax  gain of  approximately  $1.6  billion,
after  recognizing  commitments  associated  with certain coal contracts of $350
million,  employee-related  costs  of  $112  million  and  contributing  to  the
environmental  trust.  The coal contract costs include the  amortization  of the
remaining  balance of ComEd's  regulatory asset for unrecovered coal reserves of
$178 million and the recognition of $172 million of settlement  payments related
to the above-market  portion of coal purchase  commitments ComEd assigned to EME
at market value upon  completion of the fossil plant sale.  The severance  costs
included  pension and  postretirement  welfare  benefit  curtailment and special
termination  benefit  costs  of  $51  million  and  transition,  separation  and
retention  payments of $61  million.  A total of 1,730 fossil  station  employee
positions were  eliminated  upon completion of the fossil plant sale on December
15, 1999. The employees whose  positions were  eliminated have been  terminated.
Consistent with the provisions of Illinois legislation,  the pre-tax gain on the
sale of $2,587  million  resulted in a regulatory  liability,  which was used to
recover  regulatory  assets.  Therefore,  the gain on the  sale,  excluding  $43
million of amortization of investment tax credits,  was recorded as a regulatory
liability in the amount of $2,544 million and amortized in the fourth quarter of
1999. The  amortization  of the regulatory  liability and additional  regulatory
asset   amortization  of  $2,456  million  are  reflected  in  depreciation  and
amortization expense on ComEd's Consolidated Statements of Income.              

4. Regulatory Issues                                                            

         In 2000, the phased process to implement  competition into the electric
industry continued as mandated by the requirements of Illinois legislation.     

Customer Choice                                                                 
         As of December 31, 2000, all non-residential customers were eligible to
choose a new electric  supplier or elect the power purchase  option which allows
the  purchase of  electric  energy from ComEd at  market-based  prices.  ComEd's
residential  customers become eligible to choose a new electric  supplier in May
2002.  As  of  December  31,  2000,   over  9,500   non-residential   customers,
representing  approximately  27% of ComEd's retail  kilowatt-hour  sales for the
twelve months prior to the  introduction of retail  competition,  had elected to
receive  their  electric  energy from an  alternative  electric  supplier or had
chosen  the power  purchase  option.  ComEd is unable to predict  the  long-term
impact of customer choice on results of operations.                             

Rate Reductions and Caps                                                        
         The Illinois  legislation  also  provided a 15%  residential  base rate
reduction  effective  August 1, 1998 with an additional 5% residential base rate
reduction to be implemented in October 2001. Notwithstanding the rate reductions
and subject to certain earnings tests, a rate freeze will generally be in effect
until at least January 1, 2005. A utility may request a rate increase during the
rate  freeze  period  only when  necessary  to ensure  the  utility's  financial
viability. Under the Illinois legislation, if the earned return on common equity
of a utility during this period exceeds an  established  threshold,  one-half of
the excess earnings must be refunded to customers.  The threshold rate of return
on common  equity is based on the  30-Year  Treasury  Bond rate plus 8.5% in the
years 2000  through  2004.  Earnings  for  purposes of ComEd's  rate cap include
ComEd's  net  income   calculated  in  accordance  with  GAAP  and  may  include
accelerated  amortization of regulatory assets and the amortization of goodwill.
As a result of the  Illinois  legislation,  at December  31,  2000,  ComEd had a
regulatory asset with an unamortized  balance of $385 million that it expects to
fully recover and                                                               

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amortize by the end of 2003.  The  utility's  earned return on common equity and
the  threshold  return on common  equity  for  ComEd  are each  calculated  on a
two-year  average basis.  The earnings  sharing  provision is applicable only to
ComEd's  earnings.  ComEd did not trigger the earnings sharing provision in 2000
and does not currently expect to trigger the earnings sharing  provisions in the
years 2001 through 2004.                                                        

5. Supplemental Financial Information                                           

Supplemental Income Statement Information                                       

                                                        [Enlarge/Download Table]

Taxes Other Than Income                                                                          
                                                For the period                 For the           
                                          Oct. 20 -    |      Jan. 1 -         Years Ended       
                                           Dec. 31     |      Oct. 19         December 31,       
                                             2000      |       2000      1999              1998  
                                           -------     |      -------   -------           -------
                                                       |                                         
Gross receipts                               $  15     |         $ 72      $101             $268 
Real estate                                     22     |          101       114              124 
Payroll                                         12     |           57        70               70 
Illinois electric distribution tax              22     |           83       114              110 
Municipal compensation                          15     |           69        73               89 
Other                                           (3)    |           43        35               37 
                                              ----     |         ----      ----             ---- 
         Total                                $ 83     |         $425      $507             $698 
                                              ====     |         ====      ====             ==== 

Other, Net                                                                                       

                                                For the period                 For the           
                                          Oct. 20 -    |      Jan. 1 -         Years Ended       
                                           Dec. 31     |      Oct. 19         December 31,       
                                             2000      |       2000      1999              1998  
                                           -------     |      -------   -------           -------
Interest income                               $ 38     |         $188     $  60           $   15 
Gain (loss) on forward share repurchases        --     |          113       (44)             --- 
Gain (loss) on disposition of assets, net       --     |          (31)       13               47 
AFUDC                                           --     |           19        22               16 
Other                                           (7)    |          (12)        9               12 
                                              ----     |         ----     -----           ------ 
              Total                           $ 31     |         $277     $  60           $   90 
                                              ====     |         ====     =====           ====== 

Supplemental Cash Flow Information                                                               

                                                For the period                 For the           
                                          Oct. 20 -    |      Jan. 1 -         Years Ended       
                                           Dec. 31     |      Oct. 19         December 31,       
                                             2000      |       2000      1999              1998  
                                           -------     |      -------   -------           -------
Cash paid during the year:                                                                       
Interest (net of amount capitalized)        $   88     |       $  418    $  588           $  440 
Income taxes (net of refunds)               $   11     |       $1,190    $  485           $  302 
Noncash investing and financing:                       |                                         
    Capital lease obligations incurred          --     |           --    $    2           $  106 
    Common stock repurchase                 $  850     |       $   --        --               -- 
                                                       |                                         
    Depreciation and amortization:                     |                                         
        Property, plant and equipment       $   95     |       $  530    $  706           $  783 
        Nuclear fuel                            44     |          144        66               16 
        Regulatory assets                       (4)    |          270        46               65 
        Decommissioning                         16     |           68        84               90 
        Goodwill                                23     |           --        --               -- 
                                            ------     |       ------    ------           ------ 
             Total                          $  174     |       $1,012    $  902           $  954 
                                            ======     |       ======    ======           ====== 

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Supplemental Balance Sheet Information                                          

Regulatory Assets                                                               
                                      December 31,
                                          2000      |         1999
                                          ----      |         ----
Nuclear decommissioning costs                 $   719      |      $   699       
Recoverable transition costs                      385      |          660       
Loss on reacquired debt                            35      |           39       
Deferred taxes                                   ( 29)     |         (72)       
                                       -------      |      -------
    Total                              $ 1,110      |      $ 1,326
                                       =======      |      =======

6. Accounts Receivable                                                          

         Receivables from customers  included $29 million and $103 million as of
December  31, 2000 and 1999,  respectively,  in estimated  unbilled  revenue for
service that has been  provided to  customers,  but for which bill  issuance was
delayed  beyond the normal date of  issuance.  The  December  31, 1999  accounts
receivable  balance reflects temporary billing and collection delays experienced
following the implementation of a new customer billing and information system in
July 1998. ComEd recorded  increased  provisions for  uncollectible  accounts to
recognize the estimated  portion of the receivables  that are not expected to be
recoverable.  Such  provisions  increased  O&M  expenses  by $35 million in 1999
compared to normally expected levels.  The allowance for uncollectible  accounts
at December  31, 2000 and 1999 was $60  million and $49  million,  respectively.
Receivables  from  customers as of December 31, 2000 and 1999 also included $318
million and $294  million,  respectively,  for estimated  unbilled  revenues for
electric  service that has been  provided to customers  subsequent to the normal
billing date and prior to the end of the reporting period.                      

7. Property, Plant and Equipment                                                

A summary of property,  plant and equipment by classification as of December 31,
2000 and 1999 is as follows:                                                    

                                                 2000    |          1999
                                                 ----    |          ----
Electric -- Transmission & Distribution             $5,612   |      $  9,289    
Electric -- Generation                               1,957   |        13,826    
Nuclear Fuel                                           677   |         2,030    
Construction Work in Progress                          683   |           654    
Plant Held for Future Use                               50   |            44    
Other Property, Plant and Equipment                    912   |         1,194    
                                                ------   |       -------
Total Property, Plant and Equipment              $9,891   |       $27,037 
  Less Accumulated Depreciation                  2,234   |        15,044
                                                ------   |       -------
Property, Plant and Equipment, net                  $7,657   |       $11,993    
                                                ======   |       =======

         Accumulated  depreciation includes accumulated  amortization of nuclear
fuel  of  $52  million  and  $1,315  million,   respectively,  as  well  as  the
decommissioning liability for operating units of $2.1 billion as of December 31,
2000 and 1999. See Note 2 - Merger.                                             

8. Jointly Owned Electric Utility Plant                                         

         ComEd has a 75% undivided ownership interest in the Quad Cities nuclear
generating station. ComEd's net plant investment of $120 million at December 31,
2000,  reflects  $38  million  in  construction  in  progress  and $2 million in
accumulated depreciation.  ComEd's undivided ownership interest is financed with
its funds, and is accounted for as if such  participating  interest was a wholly
owned facility.                                                                 

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9. Notes Payable - Banks                                                        

                                                  2000      1999      1998
                                                  ----      ----      ----
Average borrowings                                   $214        $7     $  32   
Average interest rates, computed on daily basis      6.56%     7.75%      7.82% 
Maximum borrowings outstanding                       $494        $8      $208   
Average interest rates, at December 31                 --%     8.33%      7.60% 

         Along with Exelon and PECO,  ComEd entered into a $2 billion  unsecured
revolving credit facility on December 20, 2000 with a group of banks.  ComEd has
a $200 million sublimit under the 364-day facility and expects to use the credit
facility principally to support its $200 million commercial paper program. There
was no  outstanding  debt under this  credit  facility  or  commercial  paper at
December 31, 2000.                                                              

10. Long-Term Debt                                                              

                                                        [Enlarge/Download Table]

                                                                Maturity        At December 31,  
                                                      Rates       Date         2000   |    1999  
                                                      -----       ----         ----   |    ----  
                                                                                      |          
ComEd Transitional Trust                                                              |          
Notes Series 1998-A:                               5.29%-5.74%  2001-2008     $2,720  |   $3,070 
                                                                                      |          
First and refunding mortgage bonds (a) (b):                                           |          
         Fixed rates                              4.40%-9.875%  2002-2023      3,112  |    3,587 
                                                                                      |          
Notes payable                                      6.40%-9.20%  2002-2018      1,366  |      916 
Pollution control bonds:                                                              |          
         Fixed rates                                 5.875%       2007            46  |       47 
         Floating rates                               4.93%     2009-2014         92  |       92 
                                                                                      |          
Sinking fund debentures                           2.875%-4.75%  2001-2011         27  |       31 
                                                                           ---------  | -------- 
                                                                                      |          
Total Long-Term Debt (c)                                                       7,363  |    7,743 
      Unamortized debt discount and premium, net                                (133) |      (49)
      Due within one year                                                       (348) |     (732)
                                                                           ---------  | -------- 
Long-Term Debt                                                                $6,882  |   $6,962 
                                                                           =========  | ======== 

(a) Utility plant of ComEd is subject to the liens of its mortgage indenture.   

(b) Includes  pollution  control  bonds secured by first  mortgage  bonds issued
under ComEd's mortgage indenture.                                               

(c) Long-term debt maturities in the period 2001 through 2005 and thereafter are
as follows:                                                                     

2001                    $   348                           
2002                        845                           
2003                        695                           
2004                        578                           
2005                        805                           
Thereafter                4,092                           
-------   
Total                    $7,363                           
======  

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         In 2000 and 1999, ComEd incurred  extraordinary  charges aggregating $6
million ($4 million,  net of tax),  and $46 million ($28  million,  net of tax),
respectively,   consisting  of  prepayment   premiums  and  the   write-offs  of
unamortized  deferred  financing costs  associated with the early  retirement of
debt.                                                                           

11. Income Taxes                                                                

Income tax expense (benefit) is comprised of the following components:          

                                                        [Enlarge/Download Table]


                                         For the period                   For the           
                                   Oct. 20 -    |      Jan. 1 -           Years Ended       
                                    Dec. 31     |      Oct. 19           December 31,       
                                      2000      |       2000        1999              1998  
                                    -------     |      -------     -------           -------
                                                |                                           
Included in operations:                         |                                           
Federal                                                                                     
     Current                        $    24     |      $  (520)   $  1,466          $   244 
     Deferred                            57     |          729      (1,135)              80 
     Investment tax credit, net          --     |          (25)        (78)             (40)
State                                           |                                           
     Current                              7     |         (112)        316               44 
     Deferred                            15     |          157        (243)              23 
                                  ---------     |    ---------   ---------        --------- 
                                    $   103     |      $   229   $     326          $   351 
                                  =========     |    =========   =========        ========= 
                                                |                                           
Included in extraordinary items:                |                                           
Federal                                         |                                           
     Current                      $      --     |    $      (2)  $     (15)       $      -- 
State                                           |                                           
     Current                             --     |           --          (3)              -- 
                                  ---------     |    ---------   ---------        --------- 
                                  $      --     |    $      (2)  $     (18)       $      -- 
                                  =========     |    =========   =========        ========= 

The total income tax provisions,  excluding  extraordinary items,  differed from
amounts computed by applying the Federal statutory tax rate to pre-tax income as
follows:                                                                        

                                                        [Enlarge/Download Table]


                                                For the period                 For the           
                                          Oct. 20 -    |      Jan. 1 -         Years Ended       
                                           Dec. 31     |      Oct. 19         December 31,       
                                             2000      |       2000      1999              1998  
                                           -------     |      -------   -------           -------
                                                       |                                         
Income Before Extraordinary Items          $   133     |      $   603   $   651          $   594 
Income Taxes                                   103     |          229       326              351 
                                           -------     |      -------   -------          ------- 
Income Before Income Taxes and                         |                                         
       Extraordinary Items                 $   236     |      $   832   $   977          $   945 
                                           =======     |      =======   =======          ======= 
Income taxes on above at Federal                       |                                         
  statutory rate of 35%                    $    81     |      $   292   $   342          $   331 
Increase (decrease) due to:                            |                                         
    Property basis differences                  (4)    |          (31)      (21)               2 
    State income taxes, net of Federal                 |                                         
        income tax benefit                      14     |           30        48               44 
    Amortization of investment tax credit       --     |          (19)      (49)             (26)
    Unrealized loss (gain) on forward                  |                                         
        share  repurchase agreement             --     |          (40)       15               -- 
    Other, net                                  12     |           (3)       (9)              -- 
                                           -------     |      -------   -------          ------- 
Income Taxes                               $   103     |      $   229   $   326          $   351 
                                           =======     |      =======   =======          ======= 
Effective income tax rate                     43.6%    |         27.5%     33.4%            37.1%
                                           =======     |      =======   =======          ======= 

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Provisions for deferred income taxes consist of the tax effects of the following
temporary differences:                                                          

                                                        [Enlarge/Download Table]


                                           For the period                 For the           
                                     Oct. 20 -    |      Jan. 1 -         Years Ended       
                                      Dec. 31     |      Oct. 19         December 31,       
                                        2000      |       2000      1999              1998  
                                      -------     |      -------   -------           -------
                                                  |                                         
Depreciation and amortization         $    48     |      $   397   $(1,226)        $    41  
Deferred gain on like kind exchange        --     |          466        --              --  
Retirement and separation programs          8     |           (5)      (44)            (27) 
Uncollectible accounts                     (7)    |            2        (8)             (5) 
Reacquired debt                            --     |           (1)       (3)             (2) 
Environmental clean-up costs               (8)    |            1       (27)             --  
Obsolete inventory                          1     |          (15)       (1)             12  
Satisfaction of coal contracts             --     |           68       (68)             --  
Other nuclear operating costs              --     |           --        33              48  
Other                                      30     |          (27)      (34)             36  
                                      -------     |      -------   -------         -------  
      Total                           $    72     |      $   886   $(1,378)        $   103  
                                      =======     |      =======   =======         =======  

The tax effect of temporary  differences giving rise to ComEd's net deferred tax
liability as of December 31, 2000 and 1999 is as follows:                       

                                                                [Download Table]

                                                            For the Period      
                                                       -----------------------  
                                                        2000      |       1999  
                                                       -------    |     ------- 
                                                                  |             
Nature of temporary difference:                                   |             
Plant basis difference                                 $ 1,638    |     $ 3,078 
Deferred investment tax credit                              59    |         485 
Deferred debt refinancing costs                             14    |          15 
Deferred gain on like kind exchange                        466    |          -- 
Deferred pension and postretirement obligations           (250)   |        (376)
Other, net                                                (120)   |        (316)
                                                       -------    |     ------- 
     Deferred income taxes (net) on the balance sheet  $ 1,807    |     $ 2,886 
                                                       =======    |     ======= 

         The Internal Revenue Service is currently  auditing ComEd's Federal tax
returns for 1996 through  1999.  The current  audits are not expected to have an
adverse impact on the financial condition or results of operations of ComEd.    

12. Retirement Benefits                                                         

         ComEd have defined  benefit  pension plans and  postretirement  benefit
plans  applicable to its regular  employees.  Benefits under these plans reflect
each employee's compensation, years of service and age at retirement. Funding is
based upon  actuarially  determined  contributions  that take into  account  the
amount deductible for income tax purposes and the minimum contribution  required
under the  Employee  Retirement  Income  Security Act of 1974,  as amended.  The
following  provides a  reconciliation  of benefit  obligations,  plan assets and
funded status of the plans.                                                     

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                                                        [Enlarge/Download Table]

                                                     Pension Benefits     Other Postretirement Benefits
                                                     ----------------     -----------------------------
                                                  2000            1999         2000            1999    
                                                -------         -------      -------         -------   
                                                                                                       
Change in Benefit Obligation:                                                                          
Net benefit obligation at beginning of year     $ 4,119         $ 4,326      $ 1,169         $ 1,236   
Service cost                                         70             120           33              41   
Interest cost                                       310             285           88              82   
Plan participants' contributions                     --              --           --               4   
Actuarial (gain)loss                                 91            (433)          76            (170)  
Special termination benefits                        125              62           42              27   
Gross benefits paid                                (255)           (241)         (54)            (51)  
                                                -------         -------      -------         -------   
Net benefit obligation at end of year           $ 4,460         $ 4,119      $ 1,354         $ 1,169   
                                                =======         =======      =======         =======   
Change in Plan Assets:                                                                                 
Fair value of plan assets at beginning of year  $ 4,266         $ 4,015      $   949         $   865   
Actual return on plan assets                        (24)            489           (2)            107   
Employer contributions                                5               3           32              24   
Plan participants' contributions                     --              --            4               4   
Gross benefits paid                                (255)           (241)         (58)            (51)  
                                                -------         -------      -------         -------   
Fair value of plan assets at end of year        $ 3,992         $ 4,266      $   925         $   949   
                                                =======         =======      =======         =======   

Funded status at end of year                    $  (468)        $   147      $  (429)        $  (220)  
Miscellaneous adjustment                             --              --            6              --   
Unrecognized net actuarial (gain)loss               183            (494)         108            (539)  
Unrecognized prior service cost                      --             (51)          --              41   
Unrecognized net transition obligation (asset)       --             (79)          --             276   
                                                -------         -------      -------         -------   
Accrued benefit recognized at end of year       $  (285)        $  (477)     $  (315)        $  (442)  
                                                =======         =======      =======         =======   
                                                        [Enlarge/Download Table]

                                                    Pension Benefits              Other Postretirement Benefits          
                                                  --------------------      ----------------------------------------     
                                                  2000    1999    1998         2000       1999               1998        
                                                  ----    ----    ----         ----       ----               ----        
Weighted-average assumptions as of December 31,                                                                          
                                                                                                                         
Discount rate                                    7.60%    6.75%    7.00%       7.60%      6.75%             7.00%        
Expected return on plan assets                   9.50%    9.25%    9.50%      9.220%      8.97%             9.20%        
Rate of compensation increase                    4.00%    4.00%    4.00%        N/A        N/A               N/A         
Health care cost trend on covered charges         N/A      N/A      N/A        7.00%      8.00%             8.50%        
                                                                          decreasing      decreasing        decreasing   
                                                                          to ultimate     to ultimate       to ultimate  
                                                                          trend of 5.0%   trend of 5.0%     trend of 5.0%
                                                                          in 2005         in 2005           in 2002      
                                                        [Enlarge/Download Table]

                                                Pension Benefits        Other Postretirement Benefits  
                                              --------------------   ----------------------------------
                                       2000       1999        1998     2000       1999        1998     
                                       ----       ----        ----     ----       ----        ----     
Components of net periodic benefit                                                                     
 cost (benefit):                                                                                       
                                                                                                       
Service cost                           $  70      $ 120      $ 115    $  33      $  41      $  38      
Interest cost                            310        285        273       88         82         78      
Expected return on assets               (394)      (362)      (342)     (85)       (76)       (69)     
Amortization of:                                                                                       
 Transition obligation (asset)            (9)       (13)       (12)      16         22         22      
 Prior service cost                       (1)        (4)        (4)       3          4          4      
 Actuarial (gain)loss                     (5)         3          2      (17)       (14)       (14)     
Curtailment charge                        --         16         --       --         35         --      
Settlement charge                         --         --         --       --          1          6      
                                       -----      -----      -----    -----      -----      -----      
  Net periodic benefit cost (benefit)  $ (29)     $  45      $  32    $  38      $  95      $  65      
                                       =====      =====      =====    =====      =====      =====      
Special termination benefit charge     $   4        $--      $  --    $   5      $  --      $  --      
                                       =====      =====      =====    =====      =====      =====      

                                                        [Enlarge/Download Table]

Sensitivity of retiree welfare results:                                                  
                                                                                         
Effect of a one  percentage  point increase in assumed health care cost trend on         
  total  service and interest  cost  components                                   $   23 
  on  postretirement  benefit  obligation                                         $  223 
Effect of a one  percentage  point decrease in assumed health care cost trend on         
   total service and interest cost components                                     $  (18)
   on postretirement benefit obligation                                           $ (177)

         Prior  service  cost is  amortized  on a  straight-line  basis over the
average remaining service period of employees expected to receive benefits under
the plans.                                                                      

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         Pension and postretirement  benefits expense for the periods January 1,
2000 to October 19,  2000,  and  October  20,  2000 to December  31, 2000 was $5
million and $4 million, respectively.                                           

         During 2000, costs were recognized for special termination  benefits in
connection  with the enhanced  retirement  and  severance  benefits  provided to
employees  expected  to  be  terminated  as a  result  of  the  Merger.  Special
termination  benefits of $125 million  represent ComEd's  accelerated  liability
increase,  including $25 million for plan  enhancements,  under the MSP.  During
1999,  $62 million of costs were  recognized  for special  termination  benefits
related to the reduction in the number of employees  resulting  from the sale of
the fossil stations.                                                            

         ComEd  provides  certain  health care and life  insurance  benefits for
retired  employees.  Employees become eligible for these benefits if they retire
no earlier  than age 55 with ten years of service.  Certain  benefits for active
employees are provided by several  insurance  companies whose premiums are based
upon the benefits paid during the year.                                         

         Additionally,  ComEd maintains a nonqualified  supplemental  retirement
plan that covers any excess pension benefits that would be payable to management
employees under the qualified plan but which are limited by the Internal Revenue
Code.  The fair value of plan assets  excludes $24 million held in grantor trust
as of December 31, 2000 for the payment of benefits under the supplemental  plan
and $9 million  held in a grantor  trust as of December 31, 2000 for the payment
of postretirement medical benefits.                                             

         ComEd  sponsors  savings  plans which allows  employees to contribute a
portion of their base pay in accordance with specified guidelines. ComEd matches
a percentage  of the employee  contribution  up to certain  limits.  The cost of
ComEd's  matching  contribution  to the savings plans  totaled $31 million,  $32
million, and $32 million in 2000, 1999, and 1998, respectively.                 

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13. Preferred Securities                                                        

Preferred and Preference Stock                                                  

At December 31, 2000 and 1999, there were 51,773 and 56,291 authorized shares of
$1.425  convertible  preferred  stock,  respectively,  6,810,451  and  7,510,451
authorized  shares of preference  stock,  respectively,  and 850,000 and 850,000
authorized shares of prior preferred stock, respectively.                       

                                                        [Enlarge/Download Table]

                                                                     At December 31,            
                                                        ----------------------------------------
                                             Current    Shares Outstanding            Amount    
                                            Redemption  ------------------           -------    
                                              Price      2000       1999         2000       1999
                                            ---------    ----       ----         ----       ----
                                                                                                
Without mandatory redemption                                                                    
   $1.425 convertible preferred stock,                                                          
     cumulative, without par value            $42.00       --      56,291        $--         $ 2
   Preference stock, non-cumulative,                                                            
      without par value                                 1,120       1,120          7           7
                                                        -----     -------        ---         ---
                                                        1,120      57,411        $ 7         $ 9
                                                        =====      ======        ===         ===
With mandatory redemption                                                                       
    Series $6.875 preference stock, cumulative,                                                 
        without par value                                  --     700,000         --         $69
                                                        -----     -------        ---         ---

Total preferred and preference stock                    1,120     757,411        $ 7         $78
                                                        =====     =======        ===         ===

Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary     
Trusts Holding Solely the Company's Subordinated Debt Securities                

At December 31, 2000 and 1999,  subsidiary  trusts of ComEd had  outstanding the
following securities:                                                           

                                                        [Enlarge/Download Table]

                                                                              At December 31,             
                                                             -------------------------------------------- 
                       Mandatory                             Trust Receipts Outstanding        Amount     
                      Redemption  Distribution  Liquidation  --------------------------        ------     
Series                    Date       Rate         Value          2000          1999        2000      1999 
------                    ----       ----         -----          ----          ----        ----      ---- 
                                                                                                          

ComEd Financing I        2035        8.48%       $   25        8,000,000    8,000,000      $ 200      $200
ComEd Financing II       2027        8.50%        1,000          150,000      150,000        150       150
Unamortized Discount                                                  --           --        (22)       --
                                                               ---------    ---------      -----      ----
       Total                                                   8,150,000    8,150,000      $ 328      $350
                                                               =========    =========      =====      ====

         ComEd  Financing I and ComEd  Financing II are wholly owned  subsidiary
trusts of ComEd. The sole assets of each ComEd trust are subordinated deferrable
interest debt securities  issued by ComEd bearing  interest rates  equivalent to
the distribution rate of the related trust security.                            

         The interest  expense on the  deferrable  interest  debt  securities is
included in Other Income and  Deductions in ComEd's  Consolidated  Statements of
Income and is deductible for tax purposes.                                      

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14. Common Stock                                                                

         At  December  31, 2000 and 1999,  common  stock with a $12.50 par value
consisted of 250,000,000 and 250,000,000  shares  authorized and 163,805,000 and
213,974,000 shares outstanding, respectively.                                   

         At December  31, 2000 and 1999,  74,988 and  75,692,  respectively,  of
ComEd common stock purchase warrants were outstanding.  The warrants entitle the
holders to convert such warrants into common stock of ComEd at a conversion rate
of one share of common stock for three  warrants.  At December 31, 2000,  24,996
shares of common stock were reserved for the conversion of warrants.            

Forward Purchase Agreements                                                     
         In the fourth  quarter of 1998,  ComEd entered into a forward  purchase
arrangement  with  Unicom for the  repurchase  of $200  million of ComEd  common
stock.  This  contract,  which was accounted  for as an equity  instrument as of
December 31, 1999, was settled on a net cash basis in February  1999,  resulting
in a $16  million  reduction  to common  stock  equity on  ComEd's  Consolidated
Balance Sheets.                                                                 

         In January 2000, ComEd physically  settled the forward share repurchase
arrangements  it had with Unicom for the repurchase of 26.3 million ComEd common
shares.  Prior to  settlement,  the repurchase  arrangements  were recorded as a
receivable on ComEd's  Consolidated Balance Sheets based on the aggregate market
value of the shares under the  arrangements.  In 1999, net unrealized  losses of
$44  million  (after-tax)  were  recorded  related  to  the  arrangements.   The
settlement  of the  arrangements  in  January  2000  resulted  in a gain of $113
million  (after-tax),  which was  recorded  in the first  quarter  of 2000.  The
settlement of the  arrangements  resulted in a reduction in ComEd's  outstanding
common shares and common stock equity, effective January 2000.                  

Stock Repurchases                                                               
         During the first quarter of 2000, ComEd repurchased four million of its
common shares from Unicom for $153 million using proceeds from the 1998 issuance
of transitional trust notes.                                                    

         In the fourth quarter of 2000,  ComEd  repurchased  19.9 million of its
common shares from Unicom in exchange for an $850 million note receivable  ComEd
held from Unicom Investment.                                                    

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15. Financial Instruments                                                       

Fair values of financial instruments, including liabilities, are estimated based
on quoted market prices for the same or similar issues. The carrying amounts and
fair values of ComEd's  financial  instruments  as of December 31, 2000 and 1999
were as follows:                                                                

                                                        [Enlarge/Download Table]

                                                   2000            |            1999           
                                         -----------------------   |  ------------------------ 
                                          Carrying                 |   Carrying                
                                          Amount       Fair Value  |    Amount       Fair Value
                                                                   |                           
Non-derivatives:                                                   |                           
Assets                                                             |                           
     Cash, cash equivalents and                                    |                           
       restricted cash                        $201          $201   |     $1,540        $1,540  
     Trust accounts for decommissioning                            |                           
       nuclear plants                       $2,669        $2,669   |     $2,547        $2,547  
     Marketable securities                     $33           $33   |        $34           $34  
Liabilities                                                        |                           
     Long-term debt (including amounts                             |                           
     due within one year)                   $7,230        $7,455   |     $7,694        $7,525  
Company-Obligated Mandatorily                                      |                           
   Redeemable Preferred Securities            $328          $347   |       $350          $339  
Derivatives:                                                       |                           
     Energy Swap Contract                      $34           $34   |        $--           $--  

         Financial instruments which potentially subject ComEd to concentrations
of credit risk consist  principally of cash  equivalents  and customer  accounts
receivable. ComEd places its cash equivalents with high-credit quality financial
institutions.  Generally,  such investments are in excess of the Federal Deposit
Insurance  Corporation  limit.  Concentrations  of credit  risk with  respect to
customer  accounts  receivable  are  limited  due to  ComEd's  large  number  of
customers and their dispersion across many industries.                          

16. Commitments and Contingencies                                               

Capital Commitments                                                             
         ComEd  estimates  that it will spend  approximately  $900  million  for
capital expenditures in 2001.                                                   

Nuclear Insurance                                                               
         The  Price-Anderson  Act limits the liability of nuclear reactor owners
for claims that could arise from a single  incident.  The current  limit is $9.5
billion  and is subject to change to account for the  effects of  inflation  and
changes in the number of licensed reactors.  ComEd carried the maximum available
commercial  insurance of $200 million and the remaining $9.3 billion is provided
through  mandatory  participation  in a  financial  protection  pool.  Under the
Price-Anderson  Act,  all nuclear  reactor  licensees  can be assessed up to $89
million  per  reactor  per  incident,  payable at no more than $10  million  per
reactor per incident per year. This assessment is subject to inflation and state
premium  taxes.  In addition,  the U.S.  Congress  could impose  revenue-raising
measures on the nuclear industry to pay claims.                                 

         ComEd   carried   property   damage,   decontamination   and  premature
decommissioning  insurance  for each station loss  resulting  from damage to its
nuclear plants.  In the event of an accident,  insurance  proceeds must first be
used for reactor stabilization and site decontamination. If the decision is made
to  decommission  the  facility,  a portion of the  insurance  proceeds  will be
allocated  to a  fund,  which  ComEd  was  required  by the  Nuclear  Regulatory
Commission (NRC) to maintain, to provide for decommissioning the facility. Under
the terms of the various insurance agreements, ComEd could have been assessed up
to $49  million  for  losses  incurred  at any plant  insured  by the  insurance
companies.  ComEd was  self-insured  to the extent  that any  losses  might have

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exceeded  the  amount of  insurance  maintained.  Such  losses  could have had a
material  adverse  effect  on  ComEd's   financial   condition  and  results  of
operations.                                                                     

         ComEd was a member  of an  industry  insurance  company  that  provides
replacement  power cost insurance in the event of a major accidental outage at a
nuclear  station.  The premium for this  coverage is subject to  assessment  for
adverse loss experience. ComEd's maximum share of any assessment was $10 million
per year.                                                                       

         In addition, ComEd participated in the American Nuclear Insurers Master
Worker Program,  which provides coverage for worker tort claims filed for bodily
injury  caused by the  nuclear  energy  accident.  This  program  was  modified,
effective  January 1, 1998, to provide  coverage to all workers whose  "nuclear-
related  employment"  began  on  or  after  the  commencement  date  of  reactor
operations.  ComEd will not be liable for a retrospective  assessment under this
new policy.  However,  in the event  losses  incurred  under the small number of
policies in the old program exceed accumulated  reserves,  a maximum retroactive
assessment of up to $38 million could apply. See Note 19 - Subsequent Events for
information regarding a restructuring that Exelon effected in January 2001.     

Nuclear Decommissioning and Spent Fuel Storage                                  
         ComEd's  current  estimate of its nuclear  facilities'  decommissioning
cost is $5.2 billion.  Decommissioning  costs are recoverable  through regulated
rates.  Under  rates  in  effect  through  December  31,  2000,  ComEd  expensed
approximately  $84 million in 2000 collected from customers  which was accounted
for as a component of  depreciation  expense and  accumulated  depreciation  for
operating  units and regulatory  assets for retired units.  At December 31, 2000
and 1999,  $2.1 billion was included in  accumulated  depreciation.  In order to
fund future  decommissioning  costs,  at December 31, 2000 and 1999,  ComEd held
$2.7  billion  and $2.5  billion,  respectively,  in trust  accounts  which  are
included in ComEd's  Consolidated Balance Sheets and include both net unrealized
and realized  gains.  Net  unrealized  gains of $499  million and $581  million,
respectively,   were   recognized  in   accumulated   depreciation   in  ComEd's
Consolidated  Balance  Sheets at December 31, 2000 and 1999,  respectively.  Net
realized  gains of $608  million  and  $502  million  were  also  recognized  in
accumulated  depreciation in ComEd's Consolidated Balance Sheets at December 31,
2000 and 1999,  respectively.  ComEd  believes that the amounts being  recovered
from customers through  regulated rates and earnings on nuclear  decommissioning
trust  funds  will be  sufficient  to fully fund the  unrecorded  portion of its
decommissioning obligation.                                                     

         In connection with the transfer of ComEd's nuclear generating  stations
to Exelon Generation Company,  LLC (Generation),  ComEd asked the ICC to approve
the continued recovery of decommissioning  costs after the transfer. On December
20, 2000,  the ICC issued an order finding that the ICC has the legal  authority
to permit ComEd to continue to recover  decommissioning costs from customers for
the six-year term of the power purchase agreements between ComEd and Generation.
Under the ICC order,  ComEd is  permitted  to recover  $73 million per year from
customers for decommissioning for the years 2001 through 2004. In 2005 and 2006,
ComEd can recover up to $73 million annually,  depending upon the portion of the
output  of  the  former  ComEd  nuclear   stations  that  ComEd  purchases  from
Generation.  Subsequent  to  2006,  there  will  be  no  further  recoveries  of
decommissioning  costs  from  customers.  The ICC order also  provides  that any
surplus funds after the nuclear stations are decommissioned  must be refunded to
customers.  The amount of recovery in the ICC order is less than the $84 million
annual amount ComEd recovered in 2000. The ICC order is currently pending appeal
in the Illinois Appellate Court.                                                

         Under the Nuclear Waste Policy Act of 1982 (NWPA), the U.S.  Department
of Energy (DOE) is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and  high-level  radioactive  waste
(SNF).  ComEd,  as  required  by the NWPA,  signed a contract  with the DOE (the
Standard  Contract)  to  provide  for  the  disposal  of SNF  from  its  nuclear
generating  stations.  In accordance with NWPA and the Standard Contract,  ComEd
pays the DOE one mill ($.001) per kilowatthour of net nuclear generation for the
cost of nuclear fuel  long-term  storage and disposal.  This fee may be adjusted
prospectively  in order to ensure full cost recovery.  The NWPA and the Standard
Contract  required DOE to begin taking  possession  of SNF  generated by nuclear
generating  units by no later than January,  1998. The DOE,  however,  failed to
meet that deadline and its performance is expected to be delayed  significantly.

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The DOE's  current  estimate for opening such a facility is 2010.  This extended
delay  in  spent  nuclear  fuel  acceptance  by  the  DOE  has  led  to  ComEd's
consideration of additional dry storage alternatives.                           

         On July 30,  1998,  ComEd filed a complaint  against the United  States
Government  (Government) in the United States Court of Federal Claims seeking to
recover damages caused by the DOE's failure to honor its contractual  obligation
to begin disposing of SNF in January 1998. ComEd  subsequently moved for partial
summary judgment on liability on its breach of contract claim. In August,  2000,
the United  States Court of Appeals  decided two other similar cases against the
Government,  rejecting  the  Government's  jurisdictional  defense and  granting
partial  summary  judgment on liability  for the  plaintiff  utilities in one of
those cases.  The Court later  denied the  Government's  request for  rehearing.
Following that ruling, ComEd and seven other utility plaintiffs filed motions in
their  respective  cases in the Court of  Federal  Claims  to set a  coordinated
discovery schedule on damages. On January 8, 2001, the Government filed a motion
to  reassign  all of the SNF  cases to one  Court of  Federal  Claims  judge for
purposes of  consolidating  the cases to address  certain damage  issues.  Those
motions  are all pending  before the Court.  ComEd has also  requested  that the
Court grant its pending summary  judgment  motion on liability,  particularly in
light of the Court of Appeal's decision in August 2000.                         

         The Standard Contract with the DOE also requires ComEd to pay the DOE a
one-time fee applicable to nuclear generation through April 6, 1983. Pursuant to
the Contract,  ComEd has elected to pay the one-time fee of $277  million,  with
interest to the date of payment,  just prior to the first delivery of SNF to the
DOE. As of December 31, 2000,  the  liability  for the one-time fee with related
interest was $810 million.                                                      

Energy Commitments                                                              
         ComEd's  wholesale   operations   include  the  physical  delivery  and
marketing  of  power  obtained  through  its  generation  capacity,   and  long,
intermediate and short-term contracts.  ComEd maintains a net positive supply of
energy and capacity,  through  ownership of generation assets and power purchase
agreements. These agreements are firm commitments related to power generation of
specific generation plants and/or are dispatchable in nature.  ComEd enters into
power purchase agreements with the objective of obtaining low-cost energy supply
sources to meet its physical  delivery  obligations to its customers.  ComEd has
also  purchased  firm  transmission  rights  to  ensure  that  it  has  reliable
transmission  capacity to  physically  move its power  supplies to meet customer
delivery  needs.  The intent and business  objective  for the use of its capital
assets and contracts is to provide ComEd with physical power supply to enable it
to deliver energy to meet customer  needs.  Except for hedging  purposes,  ComEd
does not use financial contracts in its wholesale marketing activities.         

         ComEd has entered into bilateral long-term contractual  obligations for
sales  of  energy  to  load-serving  entities,   including  electric  utilities,
municipalities,  and electric  cooperatives.  ComEd also enters into contractual
obligations to deliver  energy to wholesale  market  participants  who primarily
focus on the resale of energy products for delivery.  ComEd provides delivery of
its  energy to these  customers  through  access to its  transmission  assets or
rights for firm transmission.                                                   

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At December 31, 2000, ComEd had long-term  commitments,  in millions of megawatt
hours  (MWh) and  dollars,  relating  to the  purchase  and sale of  energy  and
capacity  purchases  and  transmission  rights from  unaffiliated  utilities and
others as expressed in the following tables:                                    

      Power Only
      ------------------------------------------
 Purchases                   Sales
       MWh    Dollars           MWh      Dollars
2001                   1     $  27              9        $135               
2002                   2        36              8         114               
2003                   2        41              6          99               
2004                 ---       ---              4          80               
2005                 ---       ---              2          39               
Thereafter           ---       ---              1          15               
               ----                       ----
Total                         $104                       $482               
               ====                       ====

     Capacity                   Transmission
   Purchases                   Purchases
   in Dollars                 in Dollars
2001                 $   689                      $  20                     
2002                     575                         --                     
2003                     452                         --                     
2004                     453                         --                     
2005                     117                         --                     
Thereafter               800                         --                     
-------                      -----
Total                $ 3,086                      $  20                     
=======                      =====

Environmental Issues                                                            
         ComEd's  operations  have in the  past  and may in the  future  require
substantial  capital  expenditures in order to comply with  environmental  laws.
Additionally,  under Federal and state  environmental  laws,  ComEd is generally
liable for the costs of remediating environmental  contamination of property now
or formerly owned by ComEd and of property  contaminated by hazardous substances
generated  by ComEd.  ComEd  owns a number  of real  estate  parcels,  including
parcels on which its operations or the operations of others may have resulted in
contamination by substances which are considered  hazardous under  environmental
laws.  ComEd has identified 44 sites where former  manufactured  gas plant (MGP)
activities  have or may have  resulted  in actual site  contamination.  ComEd is
currently involved in a number of proceedings  relating to sites where hazardous
substances  have been deposited and may be subject to additional  proceedings in
the future.                                                                     

         As of December  31, 2000 and 1999,  ComEd had accrued  $117 million and
$100  million,  respectively,  (reflecting  discount  rates  of 5.5%  and  6.5%,
respectively)  for  environmental  investigation  and remediation  costs.  These
reserves  included  $110  million  and  $93  million,   respectively,   for  MGP
investigation  and remediation.  Such estimates,  reflecting the effects of a 3%
inflation  rate before the  effects of  discounting  were $170  million and $182
million at December 31, 2000 and 1999,  respectively.  ComEd  cannot  reasonably
estimate  whether it will incur other  significant  liabilities  for  additional
investigation  and remediation  costs at these or additional sites identified by
ComEd,  environmental  agencies  or  others,  or  whether  such  costs  will  be
recoverable from third parties.                                                 

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Leases                                                                          
Minimum future operating lease payments as of December 31, 2000 were:           

2001                                           $ 29                   
2002                                             34                   
2003                                             32                   
2004                                             30                   
2005                                             26                   
Remaining years                                  77                   
                            ----
Total minimum future lease  payments                $228                        
                            ====

         Rental expense under operating leases totaled $30 million, $45 million,
and $60 million in 2000, 1999 and 1998, respectively.                           

Litigation                                                                      

         FERC Municipal Request for Refund. Three of ComEd's wholesale municipal
customers filed a complaint and request for refund with FERC alleging that ComEd
failed to properly  adjust their rates, as provided for under the terms of their
electric service contracts,  and to track certain refunds made to ComEd's retail
customers in the years 1992 through 1994. In the third quarter of 1998, the FERC
granted the complaint and directed that refunds be made,  with  interest.  ComEd
filed a request for  rehearing.  On January 11,  2001,  FERC issued its Order on
Rehearing Requesting Submission of Additional Information.  Responsive pleadings
have been filed by all parties and final FERC action is still  pending.  ComEd's
management  believes an adequate reserve has been established in connection with
the case.                                                                       

         Service Interruptions. In August 1999, three class action lawsuits were
filed,  and  subsequently  consolidated,  in the Circuit  Court of Cook  County,
Illinois,  seeking damages for personal  injuries,  property damage and economic
losses from ComEd related to a series of service  interruptions that occurred in
the summer 1999.  The combined  effect of these  interruptions  resulted in over
168,000  customers  losing  service  for more  than 4 hours.  Conditional  class
certification  has been  approved by the Court for the sole purpose of exploring
settlement talks. A hearing on a motion filed by ComEd to dismiss the complaints
is  expected  in the second  quarter of 2001.  A portion  of any  settlement  or
verdict  may be  covered by  insurance  and  discussions  with the  carrier  are
ongoing.  ComEd's management believes adequate reserves have been established in
connection with these cases.                                                    

         Reliability  Investigation.  In 1999,  the ICC opened an  investigation
regarding the design and reliability of ComEd's  transmission  and  distribution
system,  which was expanded  during 2000 to include a circuit  breaker fire that
occurred  in October  2000 at a ComEd  substation.  The ICC has  issued  several
reports in that  investigation  covering  the summer 1999 outages as well as the
transmission and distribution system. These reports include  recommendations and
an  implementation  timetable.  The  recommendations  are not legally binding on
ComEd,  however,  the ICC may enforce them through litigation.  Two more reports
are anticipated in early 2001, and the  investigation is expected to conclude by
mid-2001.  Since  summer  1999,  ComEd  has  devoted  significant  resources  to
improving the reliability of its transmission and distribution  system.  ComEd's
management believes that the likelihood of a successful material claim resulting
from the investigation is remote.                                               

         Retail Rate Law. In 1996, several developers of non-utility  generating
facilities filed litigation against various Illinois officials claiming that the
enforcement  against  those  facilities of an amendment to Illinois law removing
the entitlement of those facilities to state-subsidized payments for electricity
sold to ComEd after March 15, 1996  violated  their rights under the Federal and
state constitutions, and against ComEd for a declaratory order that their rights
under their  contracts with ComEd were not affected by the amendment.  On August
4, 1999, the Illinois  Appellate Court held that the developers'  claims against
the State were premature,  and the Illinois Supreme Court denied leave to appeal
that ruling. Developers of both facilities have since filed amended complaints  

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repeating their  allegations that ComEd breached the contracts in question,  and
requesting  damages for such breach, in the amount of the difference between the
state-subsidized  rate  and  the  amount  ComEd  was  willing  to  pay  for  the
electricity. ComEd intends to vigorously contest this matter.                   

         Chicago Franchise.  In March 1999, ComEd reached a settlement agreement
with the City of Chicago to end the  arbitration  proceeding  between  ComEd and
Chicago  regarding  the  January  1, 1992  franchise  agreement.  As part of the
settlement  agreement,  ComEd and  Chicago  agreed to a revised  combination  of
ongoing work under the franchise  agreement and new initiatives that will result
in  defined  transmission  and  distribution  expenditures  by ComEd to  improve
electric services in Chicago.  The settlement  agreement  provided that ComEd be
subject to  liquidation  damages if the projects  were not  completed by various
dates,  unless it was prevented  from doing so by events  beyond its  reasonable
control.  In addition,  ComEd and Chicago  established an Energy Reliability and
Capacity  Account,  into which ComEd  deposited $25 million during 1999 and 2000
and has conditionally agreed to deposit $25 million at the end of the years 2001
and 2002, to help ensure an adequate and reliable electric supply for Chicago.  

         Other Tax Issues. The Illinois  Department of Revenue has issued notice
of tax liability to ComEd alleging deficiencies in Illinois invested capital tax
payments for the years 1988-1997.  The alleged deficiencies,  including interest
and penalties,  totaled approximately $54 million as of December 31, 2000. ComEd
has protested the notices,  and the matter is currently  pending.  Interest will
continue to accumulate on the alleged tax deficiencies.                         

         General.  ComEd is involved in various other  litigation  matters.  The
ultimate  outcome of such matters,  while  uncertain,  is not expected to have a
material adverse effect on ComEd's financial condition or results of operations.

17. Related-Party Transactions                                                  

         ComEd has a $400 million  intercompany  receivable from PECO,  which is
reflected in current assets in ComEd's  Consolidated  Balance Sheets at December
31, 2000.  ComEd also has notes  receivable  with affiliates of $1.3 billion and
$2.5 billion  respectively,  at December 31, 2000 and 1999 primarily relating to
the fossil  plant sale,  and  included in  deferred  debits and other  assets in
ComEd's  Consolidated  Balance  Sheets.  Interest  income  earned  on this  note
receivable was $176 million and $9 million for the years ended December 31, 2000
and 1999.  Both  receivables  are under terms  comparable to those that would be
available from unaffiliated parties.                                            

18. Quarterly Data (Unaudited)                                                  

The data shown below include all adjustments which ComEd considers necessary for
a fair presentation of such amounts:                                            

                                                        [Enlarge/Download Table]

                    Operating            Operating          Income Before              Net       
                     Revenue              Income         Extraordinary Items         Income      
                2000         1999    2000         1999    2000         1999     2000        1999 
                ----         ----    ----         ----    ----         ----     ----        ---- 
                                                                                                 
Quarter ended                                                                                    
March 31       $1,661       $1,539  $  266       $  309  $  195       $   97  $  192       $   69
June 30        $1,816       $1,696  $  351       $  278  $  148       $  119  $  146       $  119
September 30   $2,092       $2,071  $  365       $  613  $  196       $  287  $  197       $  287
December 31    $1,443       $1,487  $  404       $  349  $  197       $  148  $  197       $  148

19. Subsequent Event                                                            

         During  January 2001,  Exelon  undertook a corporate  restructuring  to
separate its  generation  and other  competitive  businesses  from its regulated
energy delivery business.  As part of the restructuring,  the generation related
assets and  liabilities of ComEd were  transferred  to a separate  subsidiary of
Exelon,  Generation,  in return for ComEd common stock.  As a result,  beginning
January  2001,  the  operations  of  ComEd  consist  of its  retail  electricity
distribution and transmission business in Northern Illinois.                    

         In connection  with the transfer,  ComEd entered into a power  purchase
agreement (PPA) with  Generation.  Under the terms of the PPA, ComEd will obtain
all of its power supply from  Generation  through 2004. In 2005 and 2006,  ComEd
will  obtain all of its power  supply  from  Generation,  up to the  capacity of
ComEd's transferred nuclear generating plants.  ComEd will obtain any additional
supply required from market sources in 2005 and 2006, and subsequent to 2006,   

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will  obtain  all of  its  supply  from  market  sources,  which  could  include
Generation. Also, under the terms of the transfer, ComEd assigned its rights and
obligations  under  various  PPAs  and fuel  supply  agreements  to  Generation.
Generation  will supply power to ComEd from the transferred  nuclear  generating
plants,  assigned  PPAs,  and other  market  sources.  The PPA sets forth energy
prices for the full term of the agreement.                                      

         As  a  result  of  the  corporate  restructuring,   certain  risks  and
commitments that have been disclosed in Note 16 - Commitments and Contingencies,
and the future  financial  condition  and  results  of  operations  will  change
significantly.  On a prospective  basis,  ComEd will not be subject to the risks
associated  with nuclear  insurance,  decommissioning,  spent fuel  disposal and
energy  commitments,  other  than its PPA with  Generation.  Total net assets of
approximately $1.6 billion, subject to final determination,  were transferred to
Generation as of January 1, 2001 pursuant to the corporate restructuring.       

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          

Exelon and PECO                                                                 

None.                                                         

ComEd                                                                           

         On  November  28,  2000,  the Board of  Directors  of  Exelon  selected
PricewaterhouseCoopers LLP (PwC) as the independent accountant of Exelon and its
subsidiaries,  including ComEd.  PwC was the independent  accountant of PECO and
its  subsidiaries  prior to the Unicom merger,  and Arthur  Andersen LLP (Arthur
Andersen) was the certifying  accountant for Unicom and ComEd.  Arthur  Andersen
was  dismissed  by ComEd on  November  28,  2000.  The  Exelon  Audit  Committee
participated in and approved the decision to engage PwC.                        

         The reports of Arthur Andersen on the financial statements of ComEd for
the past two years  ended  December  31,  1999,  and the interim  periods  ended
September  30, 2000,  contained no adverse  opinion or disclaimer of opinion and
were not  qualified  or modified as to  uncertainty,  audit scope or  accounting
principle.  In  connection  with its audits for the two most recent fiscal years
and through November 27, 2000, there were no disagreements  with Arthur Andersen
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure, or auditing scope or procedure,  which disagreements if not resolved
to the  satisfaction of Arthur Andersen would have caused them to make reference
thereto in their report on the financial statements for such years.             

         During the two most recent fiscal years and through  November 28, 2000,
ComEd consulted with PwC regarding the  application of accounting  principles to
two related transactions that were completed in 2000. In June 2000, prior to the
initiation of the auditor selection  process that led to the accountant  changes
described  above,  ComEd  received  written  advice  from PwC,  who was also the
financial advisor regarding two like-kind exchange transactions involving one of
ComEd's  affiliates,  Unicom  Investment  Inc.  PwC was asked to report to ComEd
pursuant to AICPA  Statement  of Auditing  Standards  No. 50 on the  appropriate
application of United States  generally  accepted  accounting  principles to the
proposed like-kind  exchange  transactions.  Concurrently,  ComEd requested that
Arthur  Andersen review the proposed  accounting for the proposed  transactions,
and Arthur Andersen concurred with the accounting  conclusions  proposed by PwC.
PwC's reports  providing  accounting  conclusions were presented in two separate
letters dated June 9, 2000 and June 22, 2000,  which were filed as Exhibits 99-1
and 99-2, respectively,  to a Current Report on Form 8-K dated November 28, 2000
that ComEd filed, which exhibits are incorporated herein by this reference.     

         ComEd requested that Arthur Andersen furnish it with a letter addressed
to the  SEC  stating  whether  or  not  it  agreed  with  substantially  similar
statements  as the foregoing  contained in the Current  Report on Form 8-K dated
November 28, 2000. A copy of that letter,  dated  November 29, 2000 was filed as
Exhibit 16 to that Form 8-K. PwC was also provided an  opportunity to comment on
the contents of the disclosures made in the Form 8-K, and no comments were made.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                     

Exelon                                                                          

         The information  required by Item 10 relating to directors and nominees
for  election  as  directors  at  Exelon's  Annual  Meeting of  shareholders  is
incorporated  herein by reference to the information under the heading "BOARD OF
DIRECTORS"  on pages  7-10 and "OTHER  INFORMATION  - Section  16(a)  Beneficial
Ownership  Reporting  Compliance"  on  page  32  in  Exelon's  definitive  Proxy
Statement  (2001 Exelon Proxy  Statement)  filed with the SEC on March 23, 2001,
pursuant  to  Regulation  14A under the  Securities  Exchange  Act of 1934.  The
information  required  by Item 10 relating  to  executive  officers is set forth
above in ITEM 1. Business - Executive Officers of Exelon, ComEd and PECO.       

PECO                                                                            

         The information  required by Item 10 relating to directors and nominees
for  election  as  directors  at  PECO's  annual  meeting  of   shareholders  is
incorporated herein by reference to information under the subheadings "Nominees"
and "Security  Ownership of Certain  Beneficial Owners and Management" under the
heading  "Item A:  Election  of  Directors"  in  PECO's  definitive  Information
Statement  (2001 PECO  Information  Statement) to be filed with the SEC prior to
April 30, 2001,  pursuant to Regulation 14C under the Securities Exchange Act of
1934. The information  required by Item 10 relating to executive officers is set
forth above in ITEM 1. Business - Executive Officers of Exelon, ComEd and PECO. 

ComEd                                                                           

         The information  required by Item 10 relating to directors and nominees
for  election  as  directors  at  ComEd's  annual  meeting  of  shareholders  is
incorporated herein by reference to information under the subheadings "Nominees"
and "Security  Ownership of Certain  Beneficial Owners and Management" under the
heading  "Item A:  Election  of  Directors"  in ComEd's  definitive  Information
Statement (2001 ComEd  Information  Statement) to be filed with the SEC prior to
April 30, 2001,  pursuant to Regulation 14C under the Securities Exchange Act of
1934. The information  required by Item 10 relating to executive officers is set
forth above in ITEM 1. Business - Executive Officers of Exelon, ComEd and PECO. 

ITEM 11. EXECUTIVE COMPENSATION                                                 

Exelon                                                                          

         The information required by Item 11 is incorporated herein by reference
to the  information  labeled  "Board  Compensation"  and pages 20-30 in the 2001
Exelon Proxy Statement.                                                         

PECO                                                                            

         The information required by Item 11 is incorporated herein by reference
to the  paragraph  labeled  "Compensation  of  Directors"  under the  subheading
"Additional  Information  Concerning Board of Directors" under the heading "Item
A:  Election of  Directors"  and the  paragraphs  under the  heading  "Executive
Compensation"  (other than the  paragraphs  under the  subheading  "Compensation
Committee Report on Executive Compensation") in 2001 PECO Information Statement.

ComEd                                                                           

         The information required by Item 11 is incorporated herein by reference
to the  paragraph  labeled  "Compensation  of  Directors"  under the  subheading
"Additional  Information  Concerning Board of Directors" under the heading "Item
A:  Election of  Directors"  and the  paragraphs  under the  heading  "Executive
Compensation"  (other than the  paragraphs  under the  subheading  "Compensation
Committee  Report on  Executive  Compensation")  in the 2001  ComEd  Information
Statement.                                                                      

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

Exelon                                                                          

         The information required by Item 12 is incorporated herein by reference
to the stock ownership  information under the heading "BENEFICIAL  OWNERSHIP" on
page 6 in the 2001 Exelon Proxy Statement.                                      

PECO                                                                            

         The information required by Item 12 is incorporated herein by reference
to the stock ownership  information under the subheading  "Security Ownership of
Certain Beneficial Owners and Management" under the heading "Item A: Election of
Directors" in the 2001 PECO Information Statement.                              

ComEd                                                                           

         The information required by Item 12 is incorporated herein by reference
to the stock ownership  information under the subheading  "Security Ownership of
Certain Beneficial Owners and Management" under the heading "Item A: Election of
Directors" in the 2001 ComEd Information Statement.                             

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

Exelon                                                                          

         The information required by Item 13 is incorporated herein by reference
to the information labeled "OTHER INFORMATION - Transactions with Management" in
the 2001 Exelon Proxy Statement.                                                

PECO and ComEd                                                                  

None.                                                         

 PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K       

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Report of Independent Accountants on
Financial Statement Schedule

To the Board of Directors and Shareholders                                      
of Exelon Corporation:                                                      

Our audits of the consolidated  financial  statements  referred to in our report
dated January 30, 2001,  except for Note 21 PETT  Refinancing for which the date
is March 1, 2001,  appearing in the 2000 Annual Report to Shareholders of Exelon
Corporation (which report and consolidated financial statements are incorporated
by reference in this Annual  Report on Form 10-K) also  included an audit of the
financial  statement  schedule listed in Item 14(a)(1)(ii) of this Form 10-K. In
our opinion,  this financial statement schedule presents fairly, in all material
respects,  the information  set forth therein when read in conjunction  with the
related consolidated financial statements.                                      

PricewaterhouseCoopers LLP                                                      

Chicago, Illinois                                                               
January 30, 2001                                                                

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(a) Financial Statements and Financial Statement Schedules                      

(1)  Exelon                                                           

(i)  Financial Statements                                   

                  Consolidated Statements of Income for the years 2000, 1999 and
1998                                        

                  Consolidated Statements of Cash Flows for the years 2000, 1999
and 1998                                    

                Consolidated Balance Sheets as of December 31, 2000 and 1999

                  Consolidated Statements of Changes in Shareholders' Equity and
          Comprehensive Income for the years 2000, 1999 and 1998

Notes to Consolidated Financial Statements  

(ii) Financial Statement Schedule                           

                                                        [Enlarge/Download Table]

                                     EXELON CORPORATION AND SUBSIDIARY COMPANIES                             

                                   Schedule II - Valuation and Qualifying Accounts                           
                                                    (in millions)                                            

Column A                                   Column B               Column C            Column D    Column E   
--------                                   --------               --------            --------    --------   
                                                                  Additions                                  
                                                           ----------------------                            
                                                           Charged                                           
                                          Balance at        to Cost        Charged                           
                                          Beginning          and           to Other                Balance at
Description                                of Year         Expenses        Accounts   Deductions  End of Year
-----------                                -------         --------        --------   ----------  -----------
                                                                                                             
FOR THE YEAR ENDED DECEMBER 31, 2000                                                                         

Allowance for Uncollectible Accounts          $ 112          $  87          $  59(a)    $ 58(b)      $200    
                                              =====          =====          =====       ====         ====    

Reserve for:                                                                                                 
    Merger-Related Costs                      $  --          $  --          $ 149(c)    $  5         $144    
                                              =====          =====          =====       ====         ====    

    Injuries and Damages                      $  23          $   9          $  48(d)    $ 11(e)      $ 69    
                                              =====          =====          =====       ====         ====    

    Environmental Investigation and                                                                          
      Remediation                             $  57          $  26          $  98(c)    $ 10(f)      $171    
                                              =====          =====          =====       ====         ====    

    Obsolete Materials                        $  --          $  48          $  55(c)    $  3         $100    
                                              =====          =====          =====       ====         ====    

FOR THE YEAR ENDED DECEMBER 31, 1999                                                                         

Allowance for Uncollectible Accounts          $ 122          $  59          $  --       $ 69(b)      $112    
                                              =====          =====          =====       ====         ====    

Reserve for:                                                                                                 
    Injuries and Damages                      $  27          $   7          $  --       $ 11(e)      $ 23    
                                              =====          =====          =====       ====         ====    

    Environmental Investigation and                                                                          
      Remediation                             $  60          $  --          $  --       $  3(f)      $ 57    
                                              =====          =====          =====       ====         ====    

FOR THE YEAR ENDED DECEMBER 31, 1998                                                                         

Allowance for Uncollectible Accounts          $ 134          $  72          $  --       $ 84(b)      $122    
                                              =====          =====          =====       ====         ====    

Reserve for:                                                                                                 
    Injuries and Damages                      $  33          $   5          $  --       $ 11(e)      $ 27    
                                              =====          =====          =====       ====         ====    

    Environmental Investigation and                                                                          
      Remediation                             $  63          $  --          $  --       $  3(f)      $ 60    
                                              =====          =====          =====       ====         ====    

<FN>                                                                                                         
(a)  Includes  October 20, 2000 opening balance of former Unicom  Corporation of                             
     $48 million.                                                                                            
(b)  Write-off of individual accounts receivable.                                                            
(c)  Reflects October 20, 2000 opening balance of former Unicom Corporation.                                 
(d)  Includes  October 20, 2000 opening balance of former Unicom  Corporation of                             
     $47 million.                                                                                            
(e)  Payments of claims and related costs.                                                                   
(f)  Expenditures for site investigation and remediation.                                                    
</FN>                                                                                                        

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(2)  PECO                                                             

(i)  Financial Statements                                   

                  Consolidated Statements of Income for the years 2000, 1999 and
1998                                        

                  Consolidated Statements of Cash Flows for the years 2000, 1999
and 1998                                    

                Consolidated Balance Sheets as of December 31, 2000 and 1999

                  Consolidated Statements of Changes in Shareholders' Equity and
          Comprehensive Income for the years 2000, 1999 and 1998

Notes to Consolidated Financial Statements  

(ii) Financial Statement Schedule                           

                                                        [Enlarge/Download Table]

                                     PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES                           

                                   Schedule II - Valuation and Qualifying Accounts                          
                                                    (in millions)                                           

Column A                                   Column B               Column C           Column D    Column E   
--------                                   --------               --------           --------    --------   
                                                                  Additions                                 
                                                           ----------------------                           
                                                           Charged                                          
                                          Balance at        to Cost        Charged                          
                                          Beginning          and           to Other               Balance at
Description                                of Year         Expenses        Accounts  Deductions  End of Year
-----------                                -------         --------        --------  ----------  -----------
                                                                                                            
FOR THE YEAR ENDED DECEMBER 31, 2000                                                                        

Allowance for Uncollectible Accounts          $112          $   68          $   --      $ 49(a)      $131   
                                              ====          ======          ======      ====         ====   

Reserve for:                                                                                                
    Injuries and Damages                      $ 23          $    7          $   --      $  9(b)      $ 21   
                                              ====          ======          ======      ====         ====   

    Environmental Investigation and                                                                         
      Remediation                             $ 57          $   --          $   --      $  3(c)      $ 54   
                                              ====          ======          ======      ====         ====   

FOR THE YEAR ENDED DECEMBER 31, 1999                                                                        

Allowance for Uncollectible Accounts          $122          $   59          $   --      $ 69(a)      $112   
                                              ====          ======          ======      ====         ====   

Reserve for:                                                                                                
    Injuries and Damages                      $ 27          $    7          $   --      $ 11(b)      $ 23   
                                              ====          ======          ======      ====         ====   

    Environmental Investigation and                                                                         
      Remediation                             $ 60          $   --          $   --      $  3(c)      $ 57   
                                              ====          ======          ======      ====         ====   

FOR THE YEAR ENDED DECEMBER 31, 1998                                                                        

Allowance for Uncollectible Accounts          $134          $   72          $   --      $ 84(a)      $122   
                                              ====          ======          ======      ====         ====   

Reserve for:                                                                                                
    Injuries and Damages                      $ 33          $    5          $   --      $ 11(b)      $ 27   
                                              ====          ======          ======      ====         ====   

    Environmental Investigation and                                                                         
      Remediation                             $ 63          $   --          $   --      $  3(c)      $ 60   
                                              ====          ======          ======      ====         ====   

<FN>                                                                                                        
(a)      Write-off of individual accounts receivable.                                                       
(b)      Payments of claims and related costs.                                                              
(c)      Expenditures for site investigation and remediation.                                               
</FN>                                                                                                       

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(3)  ComEd                                                            

(i)  Financial Statements                                   

                  Consolidated Statements of Income for the years 2000, 1999 and
1998                                        

                  Consolidated Statements of Cash Flows for the years 2000, 1999
and 1998                                    

                Consolidated Balance Sheets as of December 31, 2000 and 1999

                  Consolidated Statements of Changes in Shareholders' Equity and
          Comprehensive Income for the years 2000, 1999 and 1998

Notes to Consolidated Financial Statements  

(ii) Financial Statement Schedule                           

                                                        [Enlarge/Download Table]
                                 COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES                          

                                   Schedule II - Valuation and Qualifying Accounts                             
                                                    (in millions)                                              

Column A                                   Column B               Column C             Column D     Column E   
--------                                   --------               --------             --------     --------   
                                                                  Additions                                    
                                                           ----------------------                              
                                                           Charged                                             
                                          Balance at        to Cost        Charged                             
                                          Beginning          and           to Other                  Balance at
Description                                of Year         Expenses        Accounts    Deductions   End of Year
-----------                                -------         --------        --------    ----------   -----------
                                                                                                               

FOR THE YEAR ENDED DECEMBER 31, 2000                                                                           

Allowance for Uncollectible Accounts            $  49          $  46          $  11        $ 46          $ 60  
                                                =====          =====          =====        ====          ====  

Reserve for:                                                                                                   
    Merger-Related Costs                        $  --          $  --          $ 149        $  5          $144  
                                                =====          =====          =====        ====          ====  

    Injuries and Damages                        $  55          $  10          $   5        $ 22(a)       $ 48  
                                                =====          =====          =====        ====          ====  

    Environmental Investigation and                                                                            
      Remediation                               $ 100          $  26          $  --        $  9(b)       $117  
                                                =====          =====          =====        ====          ====  

    Obsolete Materials                          $  27          $  57          $  19        $  5          $ 98  
                                                =====          =====          =====        ====          ====  

FOR THE YEAR ENDED DECEMBER 31, 1999                                                                           

Allowance for Uncollectible Accounts            $  48          $  89          $  --        $ 88          $ 49  
                                                =====          =====          =====        ====          ====  

Reserve for:                                                                                                   
    Injuries and Damages                        $  47          $  28          $   7        $ 27(a)       $ 55  
                                                =====          =====          =====        ====          ====  

    Environmental Investigation and                                                                            
      Remediation                               $  32          $  74          $  --        $  6(b)       $100  
                                                =====          =====          =====        ====          ====  

    Obsolete Materials                          $  24          $  19          $  --        $ 16          $ 27  
                                                =====          =====          =====        ====          ====  

    Closing Costs for Zion Station (c)          $  79          $  --          $  --        $ 79          $ --  
                                                =====          =====          =====        ====          ====  

FOR THE YEAR ENDED DECEMBER 31, 1998                                                                           

Allowance for Uncollectible Accounts            $  18          $  61          $  --        $ 31          $ 48  
                                                =====          =====          =====        ====          ====  

Reserve for:                                                                                                   
    Injuries and Damages                        $  49          $  10          $   9        $ 21(a)       $ 47  
                                                =====          =====          =====        ====          ====  

    Environmental Investigation and                                                                            
      Remediation                               $  32          $   7          $  --        $  7(b)       $ 32  
                                                =====          =====          =====        ====          ====  

    Obsolete Materials                          $  42          $  24          $  --        $ 42          $ 24  
                                                =====          =====          =====        ====          ====  

    Closing Costs for Zion Station (c)          $ 194          $  --          $  --        $115          $ 79  
                                                =====          =====          =====        ====          ====  

<FN>                                                                                                           
(a)  Payments of claims and related costs.                                                                     
(b)  Expenditures for site investigation and remediation.                                                      
(c)  Estimated  closing  costs  related to the  permanent  cessation  of nuclear                               
     generation operations and retirement of facilities at ComEd's Zion Station.                               
</FN>                                                                                                          

                  The individual  financial statements and schedules of Exelon's
         and ComEd's nonconsolidated wholly owned subsidiaries have been omitted
         from  their  respective   Annual  Reports  on  Form  10-K  because  the
         investments are not material in relation to their respective  financial
         positions or results of operations. As of December 31, 2000, the assets
         of the nonconsolidated  subsidiaries,  in the aggregate, were less than
         1% of Exelon's and ComEd's  consolidated  assets.  The 2000 revenues of
         the nonconsolidated  subsidiaries,  in the aggregate, were less than 1%
of Exelon's and ComEd's consolidated annual revenues.         

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(b)  Reports on Form 8-K                                              

(1)  Exelon                                                 

                  Exelon  filed  Current  Reports  on Form 8-K during the fourth
quarter of 2000 regarding the following items:                

Date of  Earliest                                             
Event Reported        Description of Item Reported            
        ----------------------------------------------------------------------
         October 20, 2000     "ITEM 2.  ACQUISITION  OR  DISPOSITION  OF ASSETS"
                              regarding the  completion of the merger among PECO
   and Unicom into Exelon.

         October 20, 2000     "ITEM 7. FINANCIAL STATEMENT,  PRO FORMA FINANCIAL
                              INFORMATION  AND  EXHIBITS"   includes   financial
              statements of businesses acquired.

         October 30, 2000     "ITEM 5. OTHER EVENTS" regarding a presentation at
                              the  Edison  Electric   Institute  Fall  Financial
                              Conference  to  explain  the  merger  of PECO  and
  Unicom to form Exelon.

         November 15, 2000    "ITEM 5. OTHER EVENTS" regarding a presentation at
                              Exelon's Investor Conference to explain the merger
                              of PECO and  Unicom to form  Exelon  and  Exelon's
          strategy and earnings targets.

         November 28, 2000    "ITEM  4.   CHANGE  IN   REGISTRANT'S   CERTIFYING
                              ACCOUNTANT"  regarding the selection of PwC as the
                              independent   accountant   of   Exelon   and   its
                              subsidiaries,  effective immediately. The exhibits
                              under "ITEM 7.  FINANCIAL  STATEMENT  AND EXHIBIT"
                              include  Arthur  Andersen's  letter  to the SEC of
                              changing   accountants   and  PwC's  Statement  of
                              Auditing Standard No. 50 dated June 9 and June 22,
2000.               

         December 11, 2000    "ITEM 5. OTHER EVENTS"  regarding the announcement
                              by  Exelon  Enterprises,   a  division  of  Exelon
                              Corporation,  and Exelon Infrastructure  Services,
                              Inc. (EIS), a business unit of Exelon Enterprises,
                              that EIS  acquired  three  utility and  industrial
                              infrastructure  services  companies  and  signed a
                              definitive agreement to purchase a fourth company.
                              The exhibits  under "ITEM 7.  FINANCIAL  STATEMENT
                              AND  EXHIBITS"  includes the press  release  dated
December 11, 2000.  

         December 19, 2000    "ITEM   5.   OTHER   EVENTS"    regarding Exelon's
                       acquisition of 49.9% of the stock of Sithe.

         December 20, 2000    "ITEM 5. OTHER  EVENTS"  regarding  ICC issuing an
                              order to permit  ComEd to continue the recovery of
                              decommissioning   costs  from   customers   for  a
six-year period.    

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(2)  PECO                                                   

                  PECO  filed  Current  Reports  on Form 8-K  during  the fourth
quarter of 2000 regarding the following items:                

Date of  Earliest                                             
Event Reported        Description of Item Reported            
        ----------------------------------------------------------------------

         October 19, 2000     "ITEM 5. OTHER  EVENTS"  regarding the approval by
                              the SEC of the merger between PECO and Unicom into
Exelon.             

         October 20, 2000     "ITEM 5. OTHER EVENTS" regarding the completion of
                           the merger between PECO and Unicom into Exelon.

         October 24, 2000     "ITEM 5. OTHER EVENTS"  regarding  PECO's earnings
                  release for the third quarter of 2000.

(3)  ComEd                                                  

                  ComEd  filed  Current  Reports  on Form 8-K during  the fourth
quarter of 2000 regarding the following items:                

Date of  Earliest                                             
Event Reported        Description of Item Reported            
        ----------------------------------------------------------------------

         October 19, 2000     "ITEM 5. OTHER  EVENTS"  regarding the approval by
                              the SEC of the merger between PECO and Unicom into
Exelon.             

         October 20, 2000     "ITEM 5. OTHER EVENTS" regarding the completion of
                           the merger between PECO and Unicom into Exelon.

         November 28, 2000    "ITEM  4.   CHANGE  IN   REGISTRANT'S   CERTIFYING
                              ACCOUNTANT"  regarding the selection of PwC as the
                              independent   accountant   of   Exelon   and   its
                              subsidiaries,  effective immediately. The exhibits
                              under "ITEM 7.  FINANCIAL  STATEMENT  AND EXHIBIT"
                              include  Arthur  Andersen's  letter  to the SEC of
                              changing   accountants   and  PwC's  Statement  of
                              Auditing Standard No. 50 dated June 9 and June 22,
2000.               

         December 20, 2000    "ITEM 5. OTHER EVENTS"  regarding ComEd's proposal
                              to transfer its nuclear  generating  stations to a
                              new   subsidiary   of  Exelon  and  the  continual
                              recovery  of   decommissioning   costs  after  the
proposed transfer.  

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(c)  Exhibits                                                         

         Certain of the following exhibits are incorporated  herein by reference
under Rule  12b-32 of the  Securities  and  Exchange  Act of 1934,  as  amended.
Certain other  instruments  which would otherwise be required to be listed below
have not been so listed because such instruments do not authorize  securities in
an amount which exceeds 10% of the total assets of the applicable registrant and
its  subsidiaries on a consolidated  basis and each of the registrants  agree to
furnish a copy of any such instrument to the Commission upon request.           

Exhibit No.   Description                                                       
--------------------------------------------------------------------------------

2-1           Amended  and  Restated  Agreement  and Plan of Merger  dated as of
              October 20, 2000,  among PECO Energy Company,  Exelon  Corporation
              and Unicom Corporation (File No. 1-01401, PECO Energy Company Form
        10-Q for the quarter ended September 30, 2000, Exhibit 2-1).

3-1           Articles  of  Incorporation  of Exelon  Corporation  (Registration
Statement No. 333-37082, Form S-4, Exhibit 3-1).    

3-2           Bylaws  of  Exelon   Corporation   (Registration   Statement   No.
333-37082, Form S-4, Exhibit 3-2).                  

3-3           Amended  and  Restated  Articles of  Incorporation  of PECO Energy
Company.                                            

3-4           Bylaws of PECO  Energy  Company,  adopted  February  26,  1990 and
              amended  January  26,  1998  (File No.  1-01401,  1997 Form  10-K,
Exhibit 3-2).                                       

3-5           Restated Articles of Incorporation of Commonwealth  Edison Company
              effective  February 20, 1985,  including  Statements of Resolution
              Establishing  Series,  relating to the  establishment of three new
              series of Commonwealth  Edison Company  preference  stock known as
              the "$9.00 Cumulative  Preference  Stock," the "$6.875  Cumulative
              Preference  Stock" and the "$2.425  Cumulative  Preference  Stock"
(File No. 1-1839, 1994 Form 10-K, Exhibit 3-2).     

3-6           Bylaws of  Commonwealth  Edison  Company,  effective  September 2,
1998, as amended through October 20, 2000.          

4-1           364-day  Credit  Agreement,  dated as of December 19, 2000,  among
              Exelon  Corporation,  Commonwealth  Edison Company and PECO Energy
              Company as Borrowers, certain banks named therein as Lenders, Bank
              One, N.A., as Administrative Agent, Credit Suisse First Boston and
              First Union  National  Bank, as  Documentation  Agents,  Citibank,
              N.A., as Syndication Agent and Banc One Capital Markets,  Inc., as
Lead Arranger and Sole Book Runner.                 

4-2           Term Loan  Agreement,  dated as of October 13, 2000,  among Exelon
              Corporation,  as borrower,  and certain banks named therein,  Bank
              One, N.A., as Administrative Agent, Credit Suisse First Boston, as
              Documentation  Agent,  and Citibank,  N.A., as  Syndication  Agent
              (File No.  1-16169,  Report on Form 8-K dated  October  20,  2000,
Exhibit 99.2).                                      

4-3           First  and  Refunding  Mortgage  dated  May 1,  1923  between  The
              Counties  Gas and  Electric  Company  (predecessor  to PECO Energy
              Company) and Fidelity Trust Company, Trustee (First Union National
     Bank, successor), (Registration No. 2-2281, Exhibit B-1).

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4-3-1         Supplemental   Indentures  to  PECO  Energy  Company's  First  and
Refunding Mortgage:                                 

              Dated as of           File Reference                 Exhibit No.
              --------------------- ------------------------------ -----------
         May 1, 1927           2-2881                         B-1(c)
         March 1, 1937         2-2881                         B-1(g)
         December 1, 1941      2-4863                         B-1(h)
         November 1, 1944      2-5472                         B-1(i)
         December 1, 1946      2-6821                         7-1(j)
          September 1, 1957     2-13562                        2(b)-17
          May 1, 1958           2-14020                        2(b)-18
          March 1, 1968         2-34051                        2(b)-24
       March 1, 1981         2-72802                        4-46
       March 1, 1981         2-72802                        4-47
         December 1, 1984      1-01401, 1984 Form 10-K        4-2(b)
          April 1, 1991         1-01401, 1991 Form 10-K        4(e)-76
          December 1, 1991      1-01401, 1991 Form 10-K        4(e)-77
          April 1, 1992         1-01401, March 31, 1992        4(e)-79
   Form 10-Q
          June 1, 1992          1-01401, June 30, 1992         4(e)-81
   Form 10-Q
          July 15, 1992         1-01401, June 30, 1992         4(e)-83
   Form 10-Q
          September 1, 1992     1-01401, 1992 Form 10-K        4(e)-85
          March 1, 1993         1-01401, 1992 Form 10-K        4(e)-86
          May 1, 1993           1-01401, March 31, 1993        4(e)-88
   Form 10-Q
          May 1, 1993           1-01401, March 31, 1993        4(e)-89
   Form 10-Q
          August 15, 1993       1-01401, Form 8-A dated        4(e)-92
         August 19, 1993
          November 1, 1993      1-01401, Form 8-A dated        4(e)-95
          October 27, 1993
          May 1, 1995           1-01401, Form 8-K dated        4(e)-96
      May 24, 1995

4-4           Exelon Dividend Reinvestment and Stock Purchase Plan.             

4-5           Mortgage of  Commonwealth  Edison  Company to  Illinois  Merchants
              Trust Company,  Trustee (Harris Trust and Savings Bank, as current
              successor  Trustee),  dated July 1, 1923,  Supplemental  Indenture
              thereto  dated  August 1, 1944,  and  amendments  and  supplements
              thereto dated, respectively,  August 1, 1946, April 1, 1953, March
              31, 1967, April 1,1967,  July 1, 1968,  October 1, 1968,  February
              28, 1969, May 29, 1970, June 1, 1971, May 31, 1972, June 15, 1973,
              May 31, 1974, June 13, 1975, May 28, 1976, and June 3, 1977. (File
No. 2-60201, Form S-7, Exhibit 2-1).                

4-5-1         Supplemental  Indentures  to  aforementioned  Commonwealth  Edison
Mortgage.                                           

           Dated as of           File Reference                Exhibit No.
             --------------------- ----------------------------- -------------
      May 17, 1978          2-99665, Form S-3                4-3
      August 31, 1978       2-99665, Form S-3                4-3
      June 18, 1979         2-99665, Form S-3                4-3
      June 20, 1980         2-99665, Form S-3                4-3
      April 16, 1981        2-99665, Form S-3                4-3
      April 30, 1982        2-99665, Form S-3                4-3
      April 15, 1983        2-99665, Form S-3                4-3
      April 13, 1984        2-99665, Form S-3                4-3
      April 15, 1985        2-99665, Form S-3                4-3
      April 15, 1986        33-6879, Form S-3                4-9
       June 15, 1990         33-38232, Form S-3               4-12
       June 1, 1991          33-40018, Form S-3               4-12
       October 1, 1991       33-40018, Form S-3               4-13
       October 15, 1991      33-40018, Form S-3               4-14
       February 1, 1992      1-1839, 1991 Form 10-K           4-18
       May 15, 1992          33-48542, Form S-3               4-14
       July 15, 1992         33-53766, Form S-3               4-13
       September 15, 1992    33-53766, Form S-3               4-14
       February 1, 1993      1-1839, 1992 Form 10-K           4-14
       April 1, 1993         33-64028, Form S-3               4-12
       April 15, 1993        33-64028, Form S-3               4-13
      June 15, 1993         1-1839,  Form 8-K  dated May     4-1
21, 1993

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      July 1, 1993          1-1839,  Form 8-K  dated May     4-2
21, 1993
      July 15, 1993         1-1839,    Form   10-Q   for     4-1
                    quarter ended June 30, 1993.
       January 15, 1994      1-1839, 1993 Form 10-K           4-15
       December 1, 1994      1-1839, 1994 Form 10-K           4-16
       June 1, 1996          1-1839, 1996 Form 10-K           4-16

4-5-2         Instrument  of  Resignation,   Appointment  and  Acceptance  dated
              January 31, 1996,  under the provisions of the Mortgage dated July
              1, 1923,  and  Indentures  Supplemental  thereto (File No. 1-1839,
1995 Form 10-K, Exhibit 4-28).                      

4-5-3         Instrument  dated as of January 31,  1996,  for trustee  under the
              Mortgage  dated July 1, 1923 and Indentures  Supplemental  thereto
(File No. 1-1839, 1995 Form 10-K, Exhibit 4-29).    

4-6           Indentures of  Commonwealth  Edison  Company to The First National
              Bank of Chicago,  Trustee (Amalgamated Bank of Chicago, as current
              successor Trustee),  dated April 1, 1949, October 1, 1949, October
              1, 1950,  October 1,  1954,  January 1, 1958,  January 1, 1959 and
             December 1, 1961 (File No. 1-1839, 1982 Form 10-K, Exhibit 4-20).

4-7           Indenture  dated as of  September  1,  1987  between  Commonwealth
              Edison Company and Citibank, N.A., Trustee relating to Notes (File
No. 1-1839, Form S-3, Exhibit 4-13).                

4-7-1         Supplemental  Indenture to Indenture dated September 1, 1987 dated
      July 14, 1989 (File No. 33-32929, Form S-3, Exhibit 4-16).

4-7-2         Supplemental Indenture to Indenture dated September 1, 1987, dated
           January 1, 1997 (File No. 1-1839, 1999 Form 10K, Exhibit 4-21).

4-7-3         Supplemental  Indenture to  Indenture  dated  September  20, 1987,
dated September 1, 2000.                            

10-1          Stock Purchase Agreement among Exelon (Fossil) Holdings,  Inc., as
              Buyer and The  Stockholders of Sithe  Energies,  Inc., as Sellers,
              and Sithe Energies,  Inc. (File No.  0-16844,  PECO Energy Company
              Form 10-Q for the quarter ended September 30, 2000, Exhibit 10-1).

10-2          Amended   and   Restated   Employment   Agreement   among   Unicom
              Corporation,  Commonwealth  Edison  Company and John W. Rowe (File
              No. 1-16169,  Exelon  Corporation  Form 10-Q for the quarter ended
September 30, 2000, Exhibit 10-2).                  

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10-3          PECO Energy Company Deferred Compensation and Supplemental Pension
             Benefit Plan*  (Registration  Statement No. 333-49780,  Form S-8,
Exhibit 4-2).                                       

10-4          PECO Energy Company  Management  Group Deferred  Compensation  and
              Supplemental  Pension  Benefit Plan*  (Registration  Statement No.
333-49780, Form S-8, Exhibit 4-3).                  

10-5          PECO  Energy  Company  Unfunded  Deferred  Compensation  Plan  for
              Directors*  (Registration  Statement  No.  333-49780,   Form  S-8,
Exhibit 4-4).                                       

10-6          Exelon   Corporation   Long-Term   Incentive  Plan   (Registration
              Statement No.  333-37082,  Post-Effective  Amendment No. 1 to Form
S-4, Exhibit 4-2). *                                

10-6-1        First Amendment to Exelon Corporation Long Term Incentive Plan.*  

10-7          PECO Energy Company Management Incentive  Compensation Plan* (File
No. 1-01401, 1997 Proxy Statement, Appendix A).     

10-8          PECO  Energy   Company  1998  Stock  Option  Plan*   (Registration
              Statement No.  333-37082,  Post-Effective  Amendment No. 1 to Form
S-4, Exhibit 4-3).                                  

10-9          PECO Energy Company Employee Savings Plan (Registration  Statement
              No. 333-37082, Post-Effective Amendment No. 1 to Form S-4, Exhibit
4-4)                                                

10-10         Second  Amended  and  Restated  Trust  Agreement  for PECO  Energy
              Transition Trust (File No. 333-58055, PECO Energy Transition Trust
Report on Form 8-K dated May 2, 2000, Exhibit 4.1). 

10-11         Intangible  Transition  Property Sale Agreement  dated as of March
              25,1999,  as amended and restated as of May 2, 2000,  between PECO
              Energy  Transition  Trust  and  PECO  Energy  Company.  (File  No.
              333-58055,  PECO Energy  Transition Trust Report on Form 8-K dated
May 2, 2000, Exhibit 10.1).                         

10-11-1       Amendment No. 1 to Intangible  Transition  Property Sale Agreement
              dated as of March 25,  1999,  as amended and restated as of May 2,
              2000  (File No.  1-01401,  PECO  Energy  Company  and PECO  Energy
     Transition Trust Report on Form 8-K dated March 1, 2001).

10-12         Master Servicing  Agreement dated as of March 25, 1999, as amended
              and  restated as of May 2, 2000,  between  PECO Energy  Transition
              Trust and PECO Energy Company.  (File No.  333-58055,  PECO Energy
              Transition  Trust  Current  Report on Form 8-K dated May 2,  2000,
Exhibit 10.2).                                      

10-12-1       Amendment No. 1 to Master  Servicing  Agreement  dated as of March
              25,  1999,  as amended  and  restated  as of May 2, 2000 (File No.
              1-01401,  PECO Energy  Company and PECO  Energy  Transition  Trust
Report on Form 8-K dated March 1, 2001).            

10-13         Joint  Petition  for  Full  Settlement  of PECO  Energy  Company's
              Restructuring  Plan and  Related  Appeals  and  Application  for a
              Qualified  Rate Order and  Application  for Transfer of Generation
              Assets  dated  April  29,  1998.   (Registration   Statement   No.
333-58055, Exhibit 10.3).                           

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10-14         Joint  Petition  for  Full  Settlement  of PECO  Energy  Company's
              Application  for  Issuance of Qualified  Rate Order Under  Section
              2812 of the Public Utility Code dated March 8, 2000 (Amendment No.
     1 to Registration Statement No. 333-31646, Exhibit 10.4).

10-15         Unicom Corporation Amended and Restated Long-Term Incentive Plan* 
              (File No.  1-11375,  Unicom Proxy  Statement  dated April 7, 1999,
Exhibit A).                                         

10-15-1       First  Amendment to Unicom  Corporation  Amended and Restated Long
              Term Incentive Plan* (Registration  Statement No. 333-49780,  Form
S-8, Exhibit 4-8).                                  

10-15-2       Second Amendment to Unicom  Corporation  Amended and Restated Long
              Term Incentive Plan* (Registration  Statement No. 333-49780,  Form
S-8, Exhibit 4-9).                                  

10-16         Unicom Corporation General Provisions  Regarding 1996 Stock Option
              Awards  Granted  under  the  Unicom   Corporation   and  Long-Term
              Incentive  Plan*  (File Nos.  1-11375 and 1-1839,  1996 Form 10-K,
Exhibit 10-9).                                      

10-17         Unicom Corporation General Provisions Regarding 1996B Stock Option
              Awards Granted under the Unicom  Corporation  Long-Term  Incentive
              Plan*  (File Nos.  1-11375  and  1-1839,  1996 Form 10-K,  Exhibit
10-8).                                              

10-18         Unicom  Corporation  General  Provisions  Regarding  Stock  Option
              Awards Granted under the Unicom  Corporation  Long-Term  Incentive
Plan* (Effective July 10, 1997).                    

10-19         Unicom  Corporation Deferred  Compensation  Unit Plan, as amended*
          (File Nos. 1-11375 and 1-1839, 1995 Form 10-K, Exhibit 10-12).

10-20         Commonwealth  Edison  Deferred   Compensation  Plan* (included  in
Article Five of Exhibit 3-5 above).                 

10-21         Unicom  Corporation  Retirement  Plan for  Directors, as  amended*
           (Registration Statement No. 333-49780, Form S-8, Exhibit 4-12).

10-22         Commonwealth  Edison Company  Retirement  Plan for  Directors,  as
              amended* (Registration  Statement No. 333-49780, Form S-8, Exhibit
4-13).                                              

10-23         Unicom  Corporation  1996  Directors' Fee Plan* (File No. 1-11375,
    Unicom Proxy Statement dated April 8, 1996, Appendix A).

10-23-1       Second  Amendment to Unicom  Corporation 1996  Directors Fee Plan*
           (Registration Statement No. 333-49780, Form S-8, Exhibit 4-11).

10-24         Employment  Agreement dated November 1, 1997 between  Commonwealth
              Edison Company and Oliver D. Kingsley,  Jr. (File Nos. 1-11375 and
1-1839, 1998 Form 10-K, Exhibit 10-22).             

10-25         Change  in   Control   Agreement   between   Unicom   Corporation,
              Commonwealth  Edison Company and certain senior  executives  (File
    Nos. 1-11375 and 1-1839, 1998 Form 10-K, Exhibit 10-24).

10-25-1       Forms of Change in Control  Agreement  Between PECO Energy Company
and Certain Employees.                              

10-26         Commonwealth  Edison Company Executive  Group Life Insurance Plan*
(File No. 1-1839, 1980 Form 10-K, Exhibit 10-3).    

10-26-1       Amendment to the Commonwealth  Edison Company Executive Group Life
           Insurance Plan* (File No. 1-1839, 1981 Form 10K, Exhibit 10-4).

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10-26-2       Amendment to the Commonwealth  Edison Company Executive Group Life
              Insurance  Plan dated  December 12, 1986* (File No.  1-1839,  1986
Form 10-K, Exhibit 10-6).                           

10-26-3       Amendment to the Commonwealth  Edison Company Executive Group Life
              Insurance  Plan  to  implement   program  of  "split  dollar  life
              insurance"  dated  December 13, 1990* (File No. 1-1839,  1990 Form
10-K, Exhibit 10-10).                               

10-26-4       Amendment to  Commonwealth  Edison  Company  Executive  Group Life
              Insurance  Plan to  stabilize  the  death  benefit  applicable  to
              participants  dated July 22,  1992*  (File No.  1-1839,  1992 Form
10-K, Exhibit 10-13).                               

10-27         Commonwealth  Edison Company  Supplemental  Management  Retirement
   Plan* (File No. 1-1839, 1998 Form 10-K, Exhibit 10-29).

10-27-1       First Amendment to the  Commonwealth  Edison Company  Supplemental
Management Retirement Plan.*                        

10-28         Commonwealth Edison Company Excess Benefit Savings Plan* (File No.
              1-1839,  Form  10-Q for the  quarter  ended  September  30,  1998,
Exhibit 10-1).                                      

10-28-1       Amendment No. 1 to  Commonwealth  Edison  Company  Excess  Benefit
              Savings Plan dated May 24, 1995* (File No. 1-1839, 1995 Form 10-K,
Exhibit 10-30).                                     

10-28-2       Amendment No. 2 to  Commonwealth  Edison  Company  Excess  Benefit
              Savings Plan effective as of September 1, 1997*  (File No. 1-1839,
1997 Form 10-K, Exhibit 10-34).                     

10-29         Commonwealth   Edison   Company   Savings  and   Investment  Plan*
          (Registration Statement No. 333-10613, Form S-8, Exhibit 4-4).

10-29-1       Amendment Nos. 1 through 6 to Commonwealth Edison Employee Savings
              and Investment Plan*  (Registration  Statement No. 333-49780, Form
S-8, Exhibit 4-15).                                 

10-30         Unicom  Corporation  Stock Bonus Deferral Plan* (File Nos. 1-11375
              and 1-1839,  Form 10-Q for the quarter  ended  September 30, 1998,
Exhibit 10-3).                                      

10-30-1       First  Amendment to the Unicom  Corporation  Stock Bonus  Deferral
Plan.*                                              

10-30-2       Second Amendment to the Unicom  Corporation  Stock Bonus  Deferral
Plan.*                                              

10-31         Form  of  Stock  Award  Agreement  under  the  Unicom  Corporation
              Long-Term Incentive Plan* (File Nos. 1-11375 and 1-1839, 1997 Form
10-K, Exhibit 10-37).                               

10-32         Amended and  Restated  Key  Management  Severance  Plan for Unicom
              Corporation and  Commonwealth  Edison Company dated March 8, 1999*
(File No. 1-1839, 1999 Form 10-K, Exhibit 10-38).   

10-32-1       First  Amendment  to  the  Amended  and  Restated  Key  Management
Severance Plan.*                                    

16            Arthur  Andersen  Letter to  Securities  and  Exchange  Commission
              regarding the change in certifying  accountant  (File No. 1-01839,
              Exelon  Corporation  Report on Form 8-K dated  November  28, 2000,
Exhibit 16).                                        

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18-1          Letter  from   PricewaterhouseCoopers   LLP  addressed  to  Exelon
     Corporation concerning a change in accounting principles.

18-2          Letter from  PricewaterhouseCoopers  LLP  addressed to PECO Energy
 Company concerning a change in accounting principles.

21            Subsidiaries                                                      

21-1  Exelon Corporation                        
21-2  PECO Energy Company                       
21-3  Commonwealth Edison Company               

23            Consent of Independent Accountants                                

23-1   Exelon Corporation                       
23-2   PECO Energy Company                      
23-3-1 Commonwealth Edison Company              
23-3-2 Commonwealth Edison Company              

99            Exelon  Corporation's  Current  Report on Form 8-K dated March 16,
2001, File No. 1-16169.                             

_________________                                                               

*  Compensatory  plan or  arrangements  in which  directors  or  officers of the
applicable registrant participate and which are not available to all employees. 

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SIGNATURES                                                                      

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Chicago
and State of Illinois on the 30 day of March, 2001.                             

EXELON CORPORATION

              By:  /s/  Corbin A. McNeill, Jr.
                                  --------------------------------------------
           Name:  Corbin A. McNeill, Jr.
                             Title:  Chairman and Co-Chief Executive Officer

   By:  /s/ John W. Rowe
                                  --------------------------------------------
Name: John W. Rowe
                              Title:  President and Co-Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated on the 30 day of March, 2001.                   

Signature              Title                                          

/s/ Corbin A. McNeill, Jr.  Chairman and Co-Chief Executive Officer and Director
-----------------------     (Co-Chief Executive Officer)                        
Corbin A. McNeill, Jr.                                                          

/s/ John W. Rowe           President and Co-Chief Executive Officer and Director
-----------------------    (Co-Chief Executive Officer)                         
John W. Rowe                                                                    

This annual report has also been signed below by Corbin A. McNeill, Jr. and John
W. Rowe,  Attorneys-in-Fact,  on behalf of the  following  Directors on the date
indicated:                                                                      

EDWARD A. BRENNAN                       RICHARD H. GLANTON  
CARLOS H. CANTU                         ROSEMARIE B. GRECO  
DANIEL L. COOPER                        EDGAR D. JANNOTTA   
M. WALTER D'ALESSIO                     JOHN M. PALMS, PH.D.
BRUCE DEMARS                            JOHN W. ROGERS, JR. 
G. FRED DIBONA, JR.                     RONALD RUBIN        
SUE L. GIN                              RICHARD L. THOMAS   

By: /s/ Corbin A. McNeill, Jr.                    March 30, 2001                
--------------------------                                              
Name:  Corbin A. McNeill, Jr.                                                   
Title:  Chairman and Co-Chief Executive Officer                                 

By: /s/ John W. Rowe                              March 30, 2001                
-----------------------                                                 
Name:  John W. Rowe                                                             
Title:  President and Co-Chief Executive Officer                                

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SIGNATURES                                                                      

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by the  undersigned,  thereunto  duly  authorized,  in the  city of
Philadelphia and Commonwealth of Pennsylvania on the 30th day of March, 2001.   

PECO ENERGY COMPANY 

            By: /s/ Corbin A. McNeill, Jr.
                --------------------------
           Name:  Corbin A. McNeill, Jr.
                           Title:  President, Co-Chief Executive Officer
          and Chairman

  By: /s/ John W. Rowe
             -----------------------
 Name:  John W. Rowe
                Title:  Co-Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated on the 30th day of March, 2001.      

Signature                              Title                  

/s/ Corbin A. McNeill, Jr        President, Co-Chief Executive Officer          
-----------------------          and Chairman                                   
Corbin A. McNeill, Jr.                                                          

/s/ John W. Rowe                 Co-Chief Executive Officer                     
-----------------------                                                         
John W. Rowe                                                                    

/s/ Pamela B. Strobel            Director                                       
---------------------------                                                     
Pamela B. Strobel                                                               

/s/ Ruth Ann M. Gillis           Director                                       
---------------------------                                                     
Ruth Ann M. Gillis                                                              

/s/ Kenneth G. Lawrence          Director                                       
---------------------------                                                     
Kenneth G. Lawrence                                                             

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SIGNATURES                                                                      

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of Chicago
and State of Illinois on the 30th day of March, 2001.                           

 COMMONWEALTH EDISON COMPANY

  By: /s/ John W. Rowe
             -----------------------
 Name:  John W. Rowe
                           Title:  President, Co-Chief Executive Officer
          and Chairman

            By: /s/ Corbin A. McNeill, Jr.
                --------------------------
           Name:  Corbin A. McNeill, Jr.
                Title:  Co-Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated on the 30th day of March, 2001.      

Signature                                   Title             

/s/ John W. Rowe                 President, Co-Chief Executive Officer          
-----------------------          and Chairman                                   
John W. Rowe                                                                    

/s/ Corbin A. McNeill, Jr        Co-Chief Executive Officer                     
-----------------------                                                         
Corbin A. McNeill, Jr.                                                          

/s/ Pamela B. Strobel            Director                                       
---------------------------                                                     
Pamela B. Strobel                                                               

/s/ Ruth Ann M. Gillis           Director                                       
---------------------------                                                     
Ruth Ann M. Gillis                                                              

/s/ Kenneth G. Lawrence          Director                                       
---------------------------                                                     
Kenneth G. Lawrence                                                             

127 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		9/30/35		28
		1/15/27		28
		12/31/10		9		66			10-K,  11-K,  4,  5
		12/31/06		10		67			10-K,  11-K,  4,  5
		6/30/05		9		67			10-Q,  4,  425,  8-K,  8-K/A,  U-9C-3
		1/1/05		8		96
		12/31/04		8					10-K,  11-K,  4,  5,  U-13-60,  U-9C-3,  U5S
		5/31/04		26
		5/1/03		26		27			4,  U-13-60,  U5S
		4/1/03		76
		1/1/03		12		67
		12/31/02		36		54			10-K,  10-K/A,  11-K,  5,  U-9C-3,  U5S
		1/1/02		10		67
		12/15/01		12
		6/30/01		83					10-Q
		4/30/01		3		114			S-3/A
Filed on:		4/2/01							35-CERT,  U-6B-2
		4/1/01		2
		3/31/01		24		94			10-Q
		3/30/01		129
		3/23/01		3		114			DEF 14A
		3/21/01		35
		3/16/01		3		128			8-K
		3/5/01		25
		3/1/01		2		125			8-K
		2/21/01		12
		1/30/01		56		116			8-K
		1/11/01		35		110
		1/8/01		108
		1/1/01		11		112
For Period End:		12/31/00		1		119			10-K/A,  11-K,  U-13-60,  U5S,  U5S/A
		12/24/00		16		70
		12/20/00		19		121			8-K
		12/19/00		120		122			8-K
		12/18/00		65					8-K
		12/11/00		120					8-K
		12/1/00		30
		11/29/00		12		113			8-K
		11/28/00		113		127			8-K
		11/27/00		113					POS AMC
		11/15/00		120					8-K,  8-K/A
		10/31/00		12					8-K
		10/30/00		120					8-K
		10/24/00		121					8-K
		10/20/00		5		122			8-A12B/A,  8-K,  8-K/A,  U5A
		10/19/00		85		121			8-K
		10/13/00		122
		9/30/00		113		124			10-Q
		9/23/00		27
		9/15/00		24
		9/1/00		124
		8/2/00		76
		7/1/00		13
		6/30/00		82					10-Q
		6/22/00		113		121			8-K
		6/15/00		64		94
		6/9/00		113					U-1
		5/2/00		28		125			8-K
		3/16/00		67					8-K,  U-1
		3/8/00		126
		2/24/00		35
		1/31/00		86					8-K
		1/17/00		7
		1/1/00		9		103
		12/31/99		41		119			10-K,  10-K/A,  11-K,  U-3A-2
		12/20/99		7
		12/15/99		45		96			8-K
		10/1/99		8
		9/30/99		16		70			10-Q,  10-Q/A
		8/30/99		7
		8/4/99		35		110
		8/2/99		76
		7/6/99		7
		6/2/99		45
		5/25/99		26					DEF 14C
		4/7/99		126
		3/25/99		27		125			8-K
		3/18/99		72
		3/8/99		127					8-K
		1/2/99		67
		1/1/99		9		67
		12/31/98		44		119			10-K,  11-K,  U-3A-2
		12/16/98		29
		11/5/98		25
		10/28/98		28
		9/30/98		127					10-Q
		9/24/98		26
		9/2/98		122
		8/1/98		8		96
		7/30/98		108					10-Q
		7/21/98		29
		6/26/98		25
		6/23/98		27
		5/27/98		34		82
		4/29/98		125
		4/1/98		44
		1/31/98		16
		1/26/98		122					8-K
		1/1/98		18		107
		12/31/97		35					10-K,  10-K405,  11-K,  U-3A-2,  U-3A-2/A
		11/1/97		126
		9/1/97		127
		7/10/97		126					8-K,  SC 13G/A
		1/24/97		28					8-K
		1/1/97		124
		12/31/96		9					10-K,  10-K405,  U-3A-2
		11/20/96		28
		4/18/96		25
		4/8/96		126					DEF 14C
		3/15/96		35		110
		1/31/96		124
		9/26/95		28
		7/21/95		28
		7/19/95		25
		5/24/95		123		127			8-K,  DEF 14C
		1/1/94		75
		10/27/93		123
		8/19/93		123
		6/30/93		124
		7/22/92		127
		1/1/92		111
									List all Filings

6 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/21/24  Exelon Corp.                      10-K       12/31/23  322:89M
 2/21/24  PECO Energy Co.                   S-3ASR      2/21/24    7:651K                                   Toppan Merrill/FA
 2/14/23  Exelon Corp.                      10-K       12/31/22  279:68M
 8/03/22  Exelon Corp.                      S-3ASR      8/03/22   18:1.5M                                   Toppan Merrill/FA
 2/25/22  Exelon Corp.                      10-K       12/31/21  313:198M
 2/24/21  Exelon Corp.                      10-K       12/31/20  310:85M