We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Energy

Wednesday, July 23, 2008

Exelon Announces Second Quarter Results; Reaffirms Full-Year 2008 Earnings Guidance

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CHICAGO, Jul 23, 2008 (BUSINESS WIRE) ----Exelon Corporation's (Exelon) second quarter 2008 consolidated earnings prepared in accordance with GAAP were $748 million, or $1.13 per diluted share, compared with earnings of $702 million, or $1.03 per share, in the second quarter of 2007.

Exelon's adjusted (non-GAAP) operating earnings for the second quarter of 2008 were $746 million, or $1.13 per diluted share, compared with $700 million, or $1.03 per diluted share, for the same period in 2007. "Our strong second quarter results primarily reflected higher margins at Generation largely due to our first-rate operating performance. We also continue to realize the benefits of a large fleet of extremely well-run nuclear plants amid rising environmental pressures," said John W. Rowe, Exelon's chairman, president and CEO. "We recognize, however, that protecting these benefits requires that we actively meet our customers' needs for affordable energy in a climate constrained environment. As a result, last week we announced a comprehensive strategy to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions by 2020 with both efficiency and new sources of supply."

The increased level of second quarter 2008 earnings was primarily due to:

-- higher energy margins at Exelon Generation Company, LLC (Generation) due to increased nuclear output, largely reflecting fewer refueling and non-refueling outages, and increased average realized market prices;

-- increased revenue at Generation driven by certain long option positions in its proprietary trading portfolio;

-- a gain at Generation related to the settlement of a uranium supply agreement; and

-- increased transmission revenue reflecting Commonwealth Edison's (ComEd) 2007 transmission rate case, which became effective in May 2007.

The quarter-over-quarter earnings increase was partially offset by:

-- the effect of unfavorable weather conditions compared with last year in the ComEd service territory;

-- increased expense for uncollectible accounts at PECO Energy Company (PECO);

-- increased operating and maintenance expense, in part due to labor and materials inflation at Generation, ComEd and PECO; and

-- increased depreciation and amortization expense primarily related to the higher scheduled competitive transition charge (CTC) amortization at PECO.

Adjusted (non-GAAP) operating earnings for the second quarter of 2008 do not include the following items that were included in reported GAAP earnings (all after tax):

-- Mark-to-market gains of $62 million, or $0.09 per diluted share, primarily from Generation's economic hedging activities.

-- A charge of $45 million, or $0.07 per diluted share, for the costs associated with the Illinois electric rate settlement agreement.

-- Unrealized losses of $15 million, or $0.02 per diluted share, related to nuclear decommissioning trust fund investments.

Adjusted (non-GAAP) operating earnings for the second quarter of 2007 did not include the following items that were included in reported GAAP earnings (all after tax):

-- Mark-to-market losses of $13 million, or $0.02 per diluted share, primarily from Generation's economic hedging activities.

-- A charge of $14 million, or $0.02 per diluted share, for the costs associated with ComEd's initial Rate Relief and Assistance Initiative.

-- Earnings of $27 million, or $0.04 per diluted share, associated with investments in synthetic fuel-producing facilities, including the impact of mark-to-market losses associated with the related derivatives.

2008 Earnings Outlook

Exelon reaffirmed its adjusted (non-GAAP) operating earnings guidance range for 2008 of $4.00 to $4.40 per share. The outlook for 2008 adjusted (non-GAAP) operating earnings for Exelon and its subsidiaries excludes the following items:

-- mark-to-market adjustments from economic hedging activities

-- unrealized gains and losses from nuclear decommissioning trust fund investments

-- significant impairments of assets, including goodwill

-- significant changes in decommissioning obligation estimates

-- costs associated with the Illinois electric rate settlement agreement, including ComEd's previously announced customer rate relief programs

-- costs associated with ComEd's settlement with the City of Chicago

-- other unusual items

-- significant future changes to GAAP

Giving consideration to these factors, Exelon estimates GAAP earnings in 2008 will likely be in the range of $3.70 to $4.10 per share. Both Exelon's operating earnings and GAAP earnings guidance are based on the assumption of normal weather.

Second Quarter and Recent Highlights

-- Exelon 2020: A Low-Carbon Roadmap: On July 15, 2008, Exelon announced a comprehensive environmental plan that sets the standard for environmental action by a major U.S. energy utility. The plan, Exelon 2020, details an enterprise-wide approach and a host of initiatives being pursued by the Exelon companies to cut Exelon's greenhouse gas emissions and that of its customers, communities, suppliers and markets. Exelon 2020 sets a goal for Exelon to reduce, offset, or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. This is more than the company's total current carbon footprint and is equivalent to taking nearly 3 million cars off American roads and highways. Through Exelon 2020, Exelon is pursuing three broad strategies: reduce or offset its own carbon footprint, help customers and communities reduce their greenhouse gas emissions, and offer more low-carbon electricity in the marketplace.

-- Nuclear Operations: Generation's nuclear fleet, including its owned output from the Salem Generating Station operated by PSEG Nuclear LLC, produced 35,069 GWhs in the second quarter of 2008, compared with 34,350 GWhs in the second quarter of 2007. The Exelon-operated nuclear plants achieved a 95.8 percent capacity factor for the second quarter of 2008 compared with 93.6 percent for the second quarter of 2007. The Exelon-operated nuclear plants completed two scheduled refueling outages in the second quarter of 2008 (40 days), compared with completing three scheduled refueling outages in the second quarter of 2007 (55 days). Increased total nuclear output was also driven by a lower number of non-refueling outage days at the Exelon-operated plants, 3 days in the second quarter of 2008 versus 18 days in the second quarter of 2007. In addition, Generation's total nuclear output was negatively impacted by a higher number of refueling outage days at the co-owned Salem Generating Station in the second quarter of 2008 versus the second quarter of 2007.

-- Fossil and Hydro Operations: Generation's fossil fleet commercial availability was 92.8 percent in the second quarter of 2008, compared with 93.3 percent in the second quarter of 2007. The equivalent availability factor for the hydro facilities was 94.4 percent in the second quarter of 2008, compared with 91.0 percent in the second quarter of 2007, primarily driven by a Muddy Run canal outage in 2007.

-- ComEd Distribution Rate Case: On October 17, 2007, ComEd filed a request with the Illinois Commerce Commission (ICC) seeking approval to increase its delivery service revenue requirement by approximately $360 million to reflect ComEd's increased operating costs and continued substantial investment in its delivery system. The rate case filing is based on a 2006 test year. Various intervenors and the ICC Staff have filed testimony challenging the amount of the increase. The ICC Staff's rebuttal testimony, filed on April 10, 2008, indicated that ComEd's revenue increase should be approximately $262 million on an annual basis, primarily reflecting a stipulation reached with ComEd on several contested issues, including those associated with an Original Cost Audit report issued in April 2008. The stipulation is also subject to approval by the ICC. On April 21, 2008, ComEd filed its surrebuttal testimony, which included a $345 million revenue increase reflecting certain adjustments. ComEd's testimony also included informational data that reflected a $314 million increase reflecting the impacts of the stipulation and certain other reductions.

On July 10, 2008, the Administrative Law Judges (ALJ) issued a recommendation to the ICC for a $218 million revenue increase, including a 10.30 percent return on equity and a 45.04 percent equity ratio in the capital structure. The ALJs' proposed order does not recommend approval of the stipulation and recommends that the issues in the Original Cost Audit should be addressed on their individual merits in its own proceeding. The proposed order, if approved by the ICC, would also require ComEd to write off approximately $18 million (pre-tax) for the disallowance of certain plant costs, which would be partially offset by a benefit associated with certain previously incurred costs amounting to approximately $13 million (pre-tax). A final ICC order related to the 2007 rate filing is expected by mid-September 2008.

-- PECO Gas Distribution Rate Case: On March 31, 2008, PECO filed a petition before the Pennsylvania Public Utility Commission (PAPUC) for a $98 million increase to its delivery service revenue to fund critical infrastructure improvement projects for its natural gas delivery system. The increase will also fund additional programs for low-income customers as well as energy efficiency enhancements. If approved, the average monthly residential bill would increase by approximately 10.8 percent. On July 1, 2008, PECO received testimony submitted by various state and special interest parties opposing the level of the proposed rate increase. Testimony on behalf of the Pennsylvania Office of Consumer Advocate and the PAPUC's Office of Trial Staff, in PECO's estimate, suggests that PECO is entitled to increase its gas delivery service rates between approximately $50 and $60 million. PECO's rebuttal testimony is due on July 24, 2008 and hearings are scheduled to begin August 12, 2008. An ALJ recommended decision is anticipated by October 31, 2008. The PAPUC has a nine-month review process from the date of the initial filing and a final decision is expected by the end of 2008.

-- Financing Activities: On May 9, 2008, ComEd issued $50 million of Illinois Finance Authority Pollution Control Revenue Refunding Bonds Series 2008 D due March 1, 2020, and $91 million of Illinois Finance Authority Pollution Control Revenue Refunding Bonds Series 2008 F due March 1, 2017. Each issue is tax-exempt, variable weekly-rate bonds, and proceeds were used to refinance an equivalent amount of two series of tax-exempt, variable auction-rate bonds.

On June 27, 2008, ComEd issued $50 million of Illinois Finance Authority Series 2008 E tax-exempt, variable weekly-rate bonds. Proceeds were used to refinance a portion of three series of tax-exempt, variable auction-rate bonds, with the final series to be redeemed on July 29, 2008. In addition, on July 1, 2008, ComEd separately redeemed $100 million of tax-exempt, variable auction-rate bonds (Series 2002 A).

-- Credit Rating Action: On May 30, 2008, Fitch Ratings (Fitch) revised the rating outlook for Generation to positive from stable. A Fitch press release indicated that Generation's "credit profile is very strong and is expected to remain so for the foreseeable future." Exelon's, ComEd's and PECO's ratings outlooks remain stable.

OPERATING COMPANY RESULTS

Exelon Generation consists of owned and contracted electric generating facilities, wholesale energy marketing operations and competitive retail sales operations.

Second quarter 2008 net income was $653 million compared with $578 million in the second quarter of 2007. Second quarter 2008 net income included (all after tax) mark-to-market gains of $47 million from economic hedging activities, a charge of $44 million for the costs associated with the Illinois electric rate settlement and unrealized losses of $15 million related to nuclear decommissioning trust fund investments. Second quarter 2007 net income included (all after tax) mark-to-market losses of $13 million and a gain of $2 million related to the sale of Generation's 49.5 percent ownership interests in Termoelectrica del Golfo (TEG) and Termoelectrica Penoles (TEP), two generating facilities in Mexico. Excluding the impact of these items, Generation's net income in the second quarter of 2008 increased $76 million compared with the same quarter last year, primarily due to higher revenue, net of purchased power and fuel expense.

The quarter-over-quarter increase in net income was partially offset by:

-- higher operating and maintenance expense associated with inflationary and other cost pressures and continuing work on the license application submittal for a possible new nuclear plant in Texas;

-- increased depreciation and amortization expense; and

-- increased interest expense.

Generation's revenue, net of purchased power and fuel expense, increased by $177 million in the second quarter of 2008 compared with the second quarter of 2007 excluding the above-mentioned unusual items. The increase in revenue, net of purchased power and fuel expense, was driven primarily by:

-- higher nuclear output reflecting decreased refueling and non-refueling outage days;

-- higher average margins on energy sales;

-- increased revenue at Generation driven by certain long option positions in its proprietary trading portfolio; and

-- a gain related to the settlement of claims associated with a uranium supply agreement.

Generation's average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $40.53 per MWh in the second quarter of 2008 compared with $35.97 per MWh in the second quarter of 2007.

ComEd consists of the electricity transmission and distribution operations in northern Illinois.

ComEd recorded net income of $35 million in the second quarter of 2008, compared with net income of $29 million in the second quarter of 2007. Second quarter 2008 net income included an after-tax charge of $1 million for the costs associated with the Illinois electric rate settlement. Second quarter 2007 net income included an after-tax charge of $14 million for costs associated with ComEd's Rate Relief and Assistance Initiative. Excluding the impact of these items, ComEd's net income in the second quarter of 2008 decreased $7 million from the same quarter last year primarily due to:

-- the impact of unfavorable weather as compared with last year; and

-- higher operating and maintenance expense, which primarily reflected increased costs related to labor, materials and storms.

Partially offsetting items included:

-- increased transmission revenue as a result of ComEd's 2007 transmission rate case; and

-- post rate freeze period transition expenses at ComEd in 2007.

In the ComEd service territory in the second quarter of 2008, cooling degree-days were down 37 percent relative to the same period in 2007 and were 14 percent below normal. ComEd's total retail kWh deliveries decreased by 3.6 percent in 2008 as compared with 2007, with a 3.8 percent decrease in deliveries to the residential customer class, largely due to unfavorable weather. For ComEd, weather had an unfavorable after-tax impact of $12 million on second quarter 2008 earnings relative to 2007 and an unfavorable after-tax impact of $4 million relative to normal weather that was incorporated in earnings guidance. ComEd's second quarter 2008 revenues of $1,425 million remained relatively unchanged from $1,420 million in 2007.

The number of customers being served in the ComEd region increased by 0.6 percent over the second quarter of 2007, and weather-normalized kWh retail deliveries decreased by 0.2 percent over the second quarter of 2007.

PECO consists of the electricity transmission and distribution operations and the retail natural gas distribution business in southeastern Pennsylvania.

PECO's net income in the second quarter of 2008 was $58 million, a decrease from $96 million in the second quarter of 2007. This decline was primarily due to:

-- increased expense for uncollectible accounts; and

-- higher CTC amortization, which was in accordance with PECO's 1998 restructuring settlement with the PAPUC. As expected, the increase in amortization expense exceeded the increase in CTC revenues.

Partially offsetting items included:

-- lower interest expense due to a decrease in the outstanding debt balance to the PECO Energy Transition Trust as a result of scheduled principal payments.

In the PECO service territory in the second quarter of 2008, cooling degree-days were down 1 percent from 2007 and were 18 percent above normal, and heating degree-days decreased by 19 percent from 2007 and were 10 percent below normal. Retail gas deliveries were down 18 percent from the 2007 period. Second quarter 2008 revenues were $1,277 million, up from $1,269 million in 2007, primarily due to higher electricity delivery volume driven by an increase in customers across all customer classes partially offset by a decline in retail gas deliveries and the effects of unfavorable weather for electric and gas compared with 2007. For PECO, weather had an unfavorable after-tax impact of $3 million on second quarter 2008 earnings relative to 2007 and a favorable after-tax impact of $5 million relative to normal weather that was incorporated in earnings guidance.

The number of electric customers being served in the PECO region increased by 0.8 percent over the second quarter of 2007, with weather-normalized kWh growth of 0.6 percent over the second quarter of 2007.

Adjusted (non-GAAP) Operating Earnings

Adjusted (non-GAAP) operating earnings, which generally exclude significant one-time charges or credits that are not normally associated with ongoing operations, mark-to-market adjustments from economic hedging activities and unrealized gains and losses from nuclear decommissioning trust fund investments, are provided as a supplement to results reported in accordance with GAAP. Management uses such adjusted (non-GAAP) operating earnings measures internally to evaluate the company's performance and manage its operations. Reconciliation of GAAP to adjusted (non-GAAP) operating earnings for historical periods is attached. Additional earnings release attachments, which include the reconciliation on page 7, are posted on Exelon's Web site: www.exeloncorp.com and have been filed with the Securities and Exchange Commission on Form 8-K on July 23, 2008.

Conference call information: Exelon has scheduled a conference call for 11 AM ET (10 AM CT) on July 23, 2008. The call-in number in the U.S. and Canada is 800-690-3108, and the international call-in number is 973-935-8753. If requested, the conference ID number is 53980436. Media representatives are invited to participate on a listen-only basis. The call will be web-cast and archived on Exelon's Web site: www.exeloncorp.com. (Please select the Investor Relations page.)

Telephone replays will be available until August 6. The U.S. and Canada call-in number for replays is 800-642-1687, and the international call-in number is 706-645-9291. The conference ID number is 53980436.

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon's 2007 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 19; (2) Exelon's Second Quarter 2008 Quarterly Report on Form 10-Q (to be filed on July 23, 2008) in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements: Note 12; and (3) other factors discussed in filings with the Securities and Exchange Commission by Exelon, Generation, ComEd, and PECO (Companies). Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. None of the Companies undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this news release.

Exelon Corporation is one of the nation's largest electric utilities with approximately 5.4 million customers and $19 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.4 million customers in Illinois and Pennsylvania and natural gas to more than 480,000 customers in southeastern Pennsylvania. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.

 EXELON CORPORATION Reconciliation
   of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations (unaudited) (in millions, except per
   share data) Three Months Ended June 30, 2008 ---------------------------------------- Adjusted GAAP (a) Adjustments Non-GAAP
   -------- ----------- -------- Operating revenues $ 4,622 $ 72 (b) $ 4,694 Operating expenses Purchased power 1,166 (20)(c)
   1,146 Fuel 352 123 (c) 475 Operating and maintenance 1,086 - 1,086 Depreciation and amortization 402 - 402 Taxes other than
   income 186 - 186 ------- ----------- ------- Total operating expenses 3,192 103 3,295 ------- ----------- ------- Operating
   income 1,430 (31) 1,399 ------- ----------- ------- Other income and deductions Interest expense, net (214) - (214) Equity
   in losses of unconsolidated affiliates and investments (8) - (8) Other, net (40) 51 (d) 11 -------- ----------- ------- Total
   other income and deductions (262) 51 (211) -------- ----------- -------- Income from continuing operations before income taxes
   1,168 20 1,188 Income taxes 419 22 (b),(c),(d) 441 ------- ----------- ------- Income from continuing operations 749 (2) 747
   Loss from discontinued operations (1) - (1) -------- ----------- -------- Net income $ 748 $ (2) $ 746 ======= ===========
   ======= Earnings per average common share Basic: Income from continuing operations $ 1.14 $ - $ 1.14 Loss from discontinued
   operations - - - ------- ----------- ------- Net income $ 1.14 $ - $ 1.14 ======= =========== ======= Diluted: Income from
   continuing operations $ 1.13 $ - $ 1.13 Loss from discontinued operations - - - ------- ----------- ------- Net income $ 1.13
   $ - $ 1.13 ======= =========== ======= Average common shares outstanding Basic 657 657 Diluted 662 662 Effect of adjustments
   on earnings (loss) per average diluted common share recorded in accordance with GAAP: 2007 Illinois electric rate settlement
   (b) $ 0.07 Mark-to-market impact of economic hedging activities (c) (0.09) Unrealized gains and losses related to nuclear
   decommissioning trust funds (d) 0.02 Investments in synthetic fuel-producing facilities (e) - ----------- Total adjustments
   $ 0.00 =========== Three Months Ended June 30, 2007 -------------------------------------------- Adjusted GAAP (a) Adjustments
   Non-GAAP -------- ----------- -------- Operating revenues $ 4,501 $ 19 (b),(c) $ 4,520 Operating expenses Purchased power
   1,118 16 (c) 1,134 Fuel 522 (38)(c) 484 Operating and maintenance 1,062 (41)(b),(e) 1,021 Depreciation and amortization 369
   - 369 Taxes other than income 199 - 199 ------- ----------- -------- Total operating expenses 3,270 (63) 3,207 ------- -----------
   -------- Operating income 1,231 82 1,313 ------- ----------- -------- Other income and deductions Interest expense, net (214)
   1 (e) (213) Equity in losses of unconsolidated affiliates and investments (43) 39 (e) (4) Other, net 43 (12)(e),(f) 31 -------
   ----------- -------- Total other income and deductions (214) 28 (186) -------- ----------- -------- Income from continuing
   operations before income taxes 1,017 110 1,127 Income taxes 314 112 (b),(c),(e),(f) 426 ------- ----------- -------- Income
   from continuing operations 703 (2) 701 Loss from discontinued operations (1) - (1) -------- ----------- -------- Net income
   $ 702 $ (2) $ 700 ======= =========== ======== Earnings per average common share Basic: Income from continuing operations
   $ 1.04 $ - $ 1.04 Loss from discontinued operations - - - ------- ----------- -------- Net income $ 1.04 $ - $ 1.04 =======
   =========== ======== Diluted: Income from continuing operations $ 1.03 $ - $ 1.03 Loss from discontinued operations - - -
   ------- ----------- -------- Net income $ 1.03 $ - $ 1.03 ======= =========== ======== Average common shares outstanding Basic
   675 675 Diluted 680 680 Effect of adjustments on earnings (loss) per average diluted common share recorded in accordance with
   GAAP: 2007 Illinois electric rate settlement (b) $ 0.02 Mark-to-market impact of economic hedging activities (c) 0.02 Unrealized
   gains and losses related to nuclear decommissioning trust funds (d) - Investments in synthetic fuel- producing facilities
   (e) (0.04) ----------- Total adjustments $ - =========== (a) Results reported in accordance with accounting principles generally
   accepted in the United States (GAAP). (b) Adjustment to exclude the impact of the 2007 Illinois electric rate settlement.
   (c) Adjustment to exclude the mark-to-market impact of Exelon's economic hedging activities. (d) Adjustment to exclude the
   unrealized gains and losses associated with Generation's nuclear decommissioning trust (NDT) fund investments. (e) Adjustment
   to exclude the financial impact of Exelon's investments in synthetic fuel-producing facilities, including the impact of mark-to-market
   gains (losses) associated with the related derivatives. (f) Adjustment to exclude the gain related to the sale of Generation's
   ownership interest in Termoelectrica del Golfo (TEG) and Termoelectrica Penoles (TEP).

 EXELON CORPORATION Reconciliation
   of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations (unaudited) (in millions, except per
   share data) Six Months Ended June 30, 2008 ----------------------------------------- Adjusted GAAP (a) Adjustments Non-GAAP
   -------- ----------- -------- Operating revenues $ 9,139 $ 146 (b) $ 9,285 Operating expenses Purchased power 2,239 (96) (c)
   2,143 Fuel 890 287 (c) 1,177 Operating and maintenance 2,279 (4) (b) 2,275 Depreciation and amortization 799 - 799 Taxes other
   than income 379 - 379 -------- ----------- -------- Total operating expenses 6,586 187 6,773 -------- ----------- --------
   Operating income 2,553 (41) 2,512 -------- ----------- -------- Other income and deductions Interest expense, net (436) -
   (436) Equity in losses of unconsolidated affiliates and investments (13) - (13) Other, net (98) 165 (d) 67 -------- -----------
   -------- Total other income and deductions (547) 165 (382) -------- ----------- -------- Income from continuing operations
   before income taxes 2,006 124 2,130 Income taxes 676 88 (b),(c),(d) 764 -------- ----------- -------- Income from continuing
   operations 1,330 36 1,366 Income (loss) from discontinued operations (1) 1 (e) - -------- ----------- -------- Net income
   $ 1,329 $ 37 $ 1,366 ======== =========== ======== Earnings per average common share Basic: Income from continuing operations
   $ 2.02 $ 0.06 $ 2.08 Income (loss) from discontinued operations - - - -------- ----------- -------- Net income $ 2.02 $ 0.06
   $ 2.08 ======== =========== ======== Diluted: Income from continuing operations $ 2.01 $ 0.05 $ 2.06 Income (loss) from discontinued
   operations - - - -------- ----------- -------- Net income $ 2.01 $ 0.05 $ 2.06 ======== =========== ======== Average common
   shares outstanding Basic 658 658 Diluted 663 663 Effect of adjustments on earnings per average diluted common share recorded
   in accordance with GAAP: 2007 Illinois electric rate settlement (b) $ 0.14 Mark-to-market impact of economic hedging activities
   (c) (0.17) Unrealized gains and losses related to nuclear decommissioning trust funds (d) 0.08 Settlement of a tax matter
   at Generation related to Sithe (e) - Investments in synthetic fuel-producing facilities (f) - Sale of Generation's investments
   in TEG and TEP (g) - ----------- Total adjustments $ 0.05 =========== Six Months Ended June 30, 2007 ---------------------------------------------
   Adjusted GAAP (a) Adjustments Non-GAAP -------- ----------- -------- Operating revenues $9,330 $ 19 (b) $ 9,349 Operating
   expenses Purchased power 2,363 (145) (c) 2,218 Fuel 1,292 8 (c) 1,300 Operating and maintenance 2,120 (75) (b),(f) 2,045 Depreciation
   and amortization 738 - 738 Taxes other than income 395 - 395 -------- ----------- -------- Total operating expenses 6,908
   (212) 6,696 -------- ----------- -------- Operating income 2,422 231 2,653 -------- ----------- -------- Other income and
   deductions Interest expense, net (427) 3 (f) (424) Equity in losses of unconsolidated affiliates and investments (69) 63 (f)
   (6) Other, net 106 (47) (f),(g) 59 -------- ----------- -------- Total other income and deductions (390) 19 (371) --------
   ----------- -------- Income from continuing operations before income taxes 2,032 250 2,282 Income taxes 648 215 (b),(c),(f),(g)
   863 -------- ----------- -------- Income from continuing operations 1,384 35 1,419 Income (loss) from discontinued operations
   9 (5) (e) 4 -------- ----------- -------- Net income $1,393 $ 30 $ 1,423 ======== =========== ======== Earnings per average
   common share Basic: Income from continuing operations $ 2.05 $ 0.05 $ 2.10 Income (loss) from discontinued operations 0.02
   (0.01) 0.01 -------- ----------- -------- Net income $ 2.07 $ 0.04 $ 2.11 ======== =========== ======== Diluted: Income from
   continuing operations $ 2.04 $ 0.06 $ 2.10 Income (loss) from discontinued operations 0.01 (0.01) - -------- ----------- --------
   Net income $ 2.05 $ 0.05 $ 2.10 ======== =========== ======== Average common shares outstanding Basic 674 674 Diluted 679
   679 Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: 2007 Illinois electric
   rate settlement (b) $ 0.02 Mark-to-market impact of economic hedging activities (c) 0.12 Unrealized gains and losses related
   to nuclear decommissioning trust funds (d) - Settlement of a tax matter at Generation related to Sithe (e) (0.01) Investments
   in synthetic fuel- producing facilities (f) (0.07) Sale of Generation's investments in TEG and TEP (g) (0.01) -----------
   Total adjustments $ 0.05 =========== (a) Results reported in accordance with GAAP. (b) Adjustment to exclude the impact of
   the 2007 Illinois electric rate settlement. (c) Adjustment to exclude the mark-to-market impact of Exelon's economic hedging
   activities. (d) Adjustment to exclude the unrealized gains and losses associated with Generation's NDT fund investments. Beginning
   in the second quarter of 2008, reflects $66 million of an offsetting adjustment to other, net and income taxes related to
   the contractual elimination of unrealized gains and losses associated Generation's NDT fund investments, including $44 million
   recast from the first quarter of 2008. (e) Adjustment to exclude the settlement of a tax matter at Generation related to Sithe
   Energies, Inc. (Sithe). (f) Adjustment to exclude the financial impact of Exelon's investments in synthetic fuel-producing
   facilities, including the impact of mark-to-market gains (losses) associated with the related derivatives. (g) Adjustment
   to exclude the gain related to the sale of Generation's ownership interest in TEG and TEP.

SOURCE: Exelon Corporation

Exelon Corporation Chaka Patterson Investor Relations 312-394-7234 or Kathleen Cantillon Corporate Communications
   312-394-2794

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