UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended March 31, 2002
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>

       Commission File           Name of Registrant; State of Incorporation; Address of        IRS Employer
       Number                    Principal Executive Offices; and Telephone Number             Identification Number
       ---------------------     ----------------------------------------------------------    ------------------------
<S>                             <C>                                                            <C>
       1-16169                   EXELON CORPORATION                                            23-2990190
                                 (a Pennsylvania corporation)
                                 10 South Dearborn Street - 37th Floor
                                 P.O. Box 805379
                                 Chicago, Illinois 60680-5379
                                 (312) 394-7398
       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
       1-1401                    PECO ENERGY COMPANY                                           23-0970240
                                 (a Pennsylvania corporation)
                                 P.O. Box 8699
                                 2301 Market Street
                                 Philadelphia, Pennsylvania 19101-8699
                                 (215) 841-4000
       333-85496                 EXELON GENERATION COMPANY, LLC                                23-3064219
                                 (a Pennsylvania limited liability company)
                                 300 Exelon Way
                                 Kennett Square, Pennsylvania 19348
                                 (610) 765-8200
</TABLE>

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing  requirements  for the past 90 days.  Yes [X] No [_],  except  for Exelon
Generation Company, LLC which became an effective registrant on April 24, 2002.

         The number of shares  outstanding of each registrant's  common stock as
of May 3, 2002 was as follows:

<TABLE>
<CAPTION>
<S>                                                                                                       <C>
        Exelon Corporation Common Stock, without par value                                                322,006,807
        Commonwealth Edison Company Common Stock, $12.50 par value                                        127,016,382
        PECO Energy Company Common Stock, without par value                                               170,478,507
        Exelon Generation Company, LLC                                                                 not applicable
</TABLE>

                                       1
<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Page No.
<S>                                                                                                               <C>
  Filing Format                                                                                                   3
  Forward-Looking Statements                                                                                      3

  PART I.   FINANCIAL INFORMATION                                                                                 4
  ITEM 1.   FINANCIAL STATEMENTS                                                                                  4
                  Exelon Corporation
                           Condensed Consolidated Statements of Income and Comprehensive Income                   5
                           Condensed Consolidated Balance Sheets                                                  6
                           Condensed Consolidated Statements of Cash Flows                                        8
                  Commonwealth Edison Company
                           Condensed Consolidated Statements of Income and Comprehensive Income                   9
                           Condensed Consolidated Balance Sheets                                                 10
                           Condensed Consolidated Statements of Cash Flows                                       12
                  PECO Energy Company
                           Condensed Consolidated Statements of Income and Comprehensive Income                  13
                           Condensed Consolidated Balance Sheets                                                 14
                           Condensed Consolidated Statements of Cash Flows                                       16
                  Exelon Generation Company, LLC
                           Condensed Consolidated Statements of Income and Comprehensive Income                  17
                           Condensed Consolidated Balance Sheets                                                 18
                           Condensed Consolidated Statements of Cash Flows                                       20
                  Notes to Condensed Consolidated Financial Statements                                           21

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS                                                                             40
                  Exelon Corporation                                                                             40
                  Commonwealth Edison Company                                                                    54
                  PECO Energy Company                                                                            61
                  Exelon Generation Company, LLC                                                                 69

  ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                            74

  PART II.  OTHER INFORMATION                                                                                    78
  ITEM 1.   LEGAL PROCEEDINGS                                                                                    78
  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                  78
  ITEM 5.   OTHER INFORMATION                                                                                    78
  ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                                     80

SIGNATURES                                                                                                       83
</TABLE>


                                       2
<PAGE>


Filing Format
         This   combined   Form  10-Q  is  being  filed   separately  by  Exelon
Corporation,  Commonwealth  Edison  Company,  PECO  Energy  Company  and  Exelon
Generation Company, LLC (Registrants).  Information contained herein relating to
any individual  registrant has been filed by such  registrant on its own behalf.
No registrant makes any  representation as to information  relating to any other
registrant.

Forward-Looking Statements
         Except for the historical  information contained herein, certain of the
matters discussed in this Report are forward-looking statements that are subject
to risks and  uncertainties.  The  factors  that could cause  actual  results to
differ materially include those discussed herein as well as those listed in Note
7 of Notes to Condensed  Consolidated  Financial Statements,  those discussed in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Outlook"  in Exelon  Corporation's  2001  Annual  Report,  and other
factors discussed in filings with the Securities and Exchange  Commission by the
Registrants.  Readers  are  cautioned  not to  place  undue  reliance  on  these
forward-looking statements,  which apply only as of the date of this Report. The
Registrants  undertake  no  obligation  to  publicly  release  any  revision  to
forward-looking  statements to reflect events or circumstances after the date of
this Report.


                                       3
<PAGE>



















                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS































                                       4

<PAGE>

<TABLE>
<CAPTION>

EXELON CORPORATION

                                      EXELON CORPORATION AND SUBSIDIARY COMPANIES
                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)
                                                                                       Three Months Ended March 31,
(in millions, except per share data)                                                             2002          2001
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>          <C>
OPERATING REVENUES                                                                            $ 3,870      $  3,823

OPERATING EXPENSES
     Fuel and Purchased Power                                                                   1,621         1,320
     Purchase Power from Affiliate                                                                 56            10
     Operating and Maintenance                                                                  1,067         1,058
     Depreciation and Amortization                                                                335           378
     Taxes Other Than Income                                                                      186           168
----------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                                                3,265         2,934
----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                                                  605           889
----------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                                            (249)         (292)
     Distributions on Preferred Securities of Subsidiaries                                        (11)          (11)
     Equity in Earnings of Unconsolidated Affiliates, net                                          13            18
     Other, net                                                                                    28            55
----------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                                                       (219)         (230)
----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
   OF CHANGES IN ACCOUNTING PRINCIPLES                                                            386           659
INCOME TAXES                                                                                      148           272
----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                                          238           387
CUMULATIVE  EFFECT OF CHANGES IN ACCOUNTING  PRINCIPLES  (net of income taxes of
   $90 and $8 for the three
   months ended March 31, 2002 and 2001, respectively)                                           (230)           12
----------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                                          8           399
----------------------------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
       SFAS 133 Transition Adjustment                                                              --            44
       Cash Flow Hedge Fair Value Adjustment                                                      (58)          (21)
       Unrealized Gain (Loss) on Marketable Securities, net                                       (15)         (124)
----------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                                                  (73)         (101)
----------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME (LOSS)                                                             $   (65)     $    298
----------------------------------------------------------------------------------------------------------------------

AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic                                                321           320
----------------------------------------------------------------------------------------------------------------------
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted                                              323           324
----------------------------------------------------------------------------------------------------------------------

EARNINGS PER AVERAGE COMMON SHARE:
     BASIC:
     Income Before Cumulative Effect of Changes in Accounting Principles                      $  0.74      $   1.21
     Cumulative Effect of Changes in Accounting Principles                                      (0.72)         0.04
----------------------------------------------------------------------------------------------------------------------
     Net Income                                                                               $  0.02      $   1.25
----------------------------------------------------------------------------------------------------------------------

     DILUTED:
     Income Before Cumulative Effect of Changes in Accounting Principles                      $  0.73      $   1.19
     Cumulative Effect of Changes in Accounting Principles                                      (0.71)         0.04
----------------------------------------------------------------------------------------------------------------------
     Net Income                                                                               $  0.02      $   1.23
----------------------------------------------------------------------------------------------------------------------

DIVIDENDS PER COMMON SHARE                                                                    $  0.44      $   0.55
----------------------------------------------------------------------------------------------------------------------



                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                           5
<PAGE>

<TABLE>
<CAPTION>

                                      EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)


                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                                                     <C>               <C>
     Cash and Cash Equivalents                                                          $     696         $     485
     Restricted Cash                                                                          237               372
     Accounts Receivable, net                                                               1,962             2,115
     Receivable from Unconsolidated Affiliate                                                  73                44
     Inventories, at average cost                                                             457               471
     Other                                                                                    482               295
---------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                               3,907             3,782
---------------------------------------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                                                         14,059            13,781

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                                                      6,338             6,423
     Nuclear Decommissioning Trust Funds                                                    3,161             3,165
     Investments                                                                            1,782             1,666
     Goodwill, net                                                                          4,971             5,335
     Other                                                                                    685               708
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                                            16,937            17,297
---------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                            $  34,903         $  34,860
---------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                           6
<PAGE>


<TABLE>
<CAPTION>
                                      EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)


                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Notes Payable                                                                      $     438         $     360
     Long-Term Debt Due within One Year                                                     1,613             1,406
     Accounts Payable                                                                       1,078               964
     Accrued Expenses                                                                       1,133             1,182
     Other                                                                                    499               505
----------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          4,761             4,417
----------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                             12,609            12,876

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  4,335             4,303
     Unamortized Investment Tax Credits                                                       312               316
     Nuclear Decommissioning Liability for Retired Plants                                   1,367             1,353
     Pension Obligation                                                                       318               334
     Non-Pension Postretirement Benefits Obligation                                           860               847
     Spent Nuclear Fuel Obligation                                                            847               843
     Other                                                                                    830               728
----------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       8,869             8,724
----------------------------------------------------------------------------------------------------------------------

PREFERRED SECURITIES OF SUBSIDIARIES                                                          613               613

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           6,950             6,930
     Deferred Compensation                                                                     (1)               (2)
     Retained Earnings                                                                      1,073             1,200
     Accumulated Other Comprehensive Income                                                    29               102
----------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                         8,051             8,230
----------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  34,903         $  34,860
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                           7

<PAGE>


<TABLE>
<CAPTION>
                                      EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                2002              2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                                         $       8           $   399
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          427               490
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)            230               (12)
       Provision for Uncollectible Accounts                                                    29                30
       Deferred Income Taxes                                                                   67                65
       Deferred Energy Costs                                                                   34               (29)
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                          (13)              (18)
       Net Realized Losses on Nuclear Decommissioning Trust Funds                              10                15
       Other Operating Activities                                                             111               (33)
     Changes in Working Capital:
       Accounts Receivable                                                                     58                57
       Inventories                                                                             13                60
       Accounts Payable, Accrued Expenses and Other Current Liabilities                        (7)             (164)
       Other Current Assets                                                                  (134)              (63)
-----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                               833               797
-----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                     (560)             (447)
     Acquisitions - Enterprises, net of cash acquired                                          --               (38)
     Proceeds from Nuclear Decommissioning Trust Funds                                        580               333
     Investment in Nuclear Decommissioning Trust Funds                                       (605)             (354)
     Note Receivable from Unconsolidated Affiliate                                            (46)               --
     Other Investing Activities                                                                (6)              (11)
-----------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                  (637)             (517)
-----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                               408               827
     Retirement of Long-Term Debt                                                            (471)           (1,029)
     Change in Short-Term Debt                                                                 78               257
     Dividends on Common Stock                                                               (141)             (176)
     Change in Restricted Cash                                                                135               104
     Proceeds from Stock Option Exercises                                                      18                36
     Other Financing Activities                                                               (12)               --
-----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Financing Activities                                                15                19
-----------------------------------------------------------------------------------------------------------------------


INCREASE IN CASH AND CASH EQUIVALENTS                                                         211               299


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              485               526
-----------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $     696           $   825
-----------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION
Noncash Investing and Financing Activities:
     Regulatory Asset Fair Value Adjustment                                                    --           $   347


                                See Notes to Condensed Consolidated Financial Statements

</TABLE>

                                                           8
<PAGE>



COMMONWEALTH EDISON COMPANY

<TABLE>
<CAPTION>
                                  COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)
                                                                                       Three Months Ended March 31,
(in millions)                                                                                    2002          2001
---------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S>                                                                                            <C>          <C>
     Operating Revenues                                                                        $1,304       $ 1,404
     Operating Revenues from Affiliates                                                            11            42
---------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                                               1,315         1,446
---------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Purchased Power                                                                                6             1
     Purchased Power from Affiliate                                                               532           608
     Operating and Maintenance                                                                    195           186
     Operating and Maintenance from Affiliates                                                     42            32
     Depreciation and Amortization                                                                135           167
     Taxes Other Than Income                                                                       73            72
---------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                                                  983         1,066
---------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                                                  332           380
---------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                                            (126)         (141)
     Distributions on Company-Obligated
       Mandatorily Redeemable Preferred Securities of
       Subsidiary Trusts Holding Solely the Company's
       Subordinated Debt Securities                                                                (7)           (7)
     Interest Income from Affiliates                                                                8            28
     Other, net                                                                                     6             9
---------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                                                       (119)         (111)
---------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                                                        213           269

INCOME TAXES                                                                                       84           123
---------------------------------------------------------------------------------------------------------------------

NET INCOME ON COMMON STOCK                                                                     $  129       $   146
---------------------------------------------------------------------------------------------------------------------


COMPREHENSIVE INCOME (LOSS)
     Net Income                                                                                $  129       $   146
     Other Comprehensive Income (Loss) (net of income taxes):
         Cash Flow Hedge Fair Value Adjustment                                                     (2)           --
       Unrealized Gain (Loss) on Marketable Securities                                             --            (4)
---------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                                                   (2)           (4)
---------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME                                                                     $  127       $   142
---------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                           9
<PAGE>


<TABLE>
<CAPTION>

                                  COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)



                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                                                     <C>               <C>
     Cash and Cash Equivalents                                                          $      82         $      23
     Restricted Cash                                                                           61                41
     Accounts Receivable, net                                                                 821               832
     Receivables from Affiliates                                                              159                95
     Inventories, at average cost                                                              46                56
     Deferred Income Taxes                                                                     30                52
     Other                                                                                     15                15
----------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                               1,214             1,114
----------------------------------------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                                                          7,433             7,351

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                                                        646               667
     Investments                                                                               56                64
     Goodwill, net                                                                          4,895             4,902
     Receivables from Affiliates                                                            1,314             1,314
     Other                                                                                    290               304
----------------------------------------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                                             7,201             7,251
----------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                            $  15,848         $  15,716
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                          10
<PAGE>


<TABLE>
<CAPTION>
                                  COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)


                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Long-Term Debt Due within One Year                                                 $     849         $     849
     Accounts Payable                                                                         194               144
     Accrued Expenses                                                                         331               374
     Payables to Affiliates                                                                   257               307
     Other                                                                                    205               212
---------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,836             1,886
---------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              5,954             5,850

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  1,710             1,671
     Unamortized Investment Tax Credits                                                        54                55
     Pension Obligation                                                                       157               151
     Non-Pension Postretirement Benefits Obligation                                           147               146
     Payables to Affiliates                                                                   282               297
     Other                                                                                    248               248
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       2,598             2,568
---------------------------------------------------------------------------------------------------------------------

COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY THE COMPANY'S
SUBORDINATED DEBT SECURITIES                                                                  329               329

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           2,048             2,048
     Preference Stock                                                                           7                 7
     Other Paid-in Capital                                                                  5,065             5,057
     Receivable from Parent                                                                  (906)             (937)
     Retained Earnings                                                                        268               257
     Treasury Stock, at cost                                                               (1,344)           (1,344)
     Accumulated Other Comprehensive Income (Loss)                                             (7)               (5)
---------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                         5,131             5,083
---------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  15,848         $  15,716
---------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>



                                                          11
<PAGE>

<TABLE>
<CAPTION>
                                  COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                     <C>               <C>
     Net Income                                                                         $     129         $     146
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          135               167
       Provision for Uncollectible Accounts                                                    11                 7
       Deferred Income Taxes                                                                   53                 3
       Other Operating Activities                                                              36                19
     Changes in Working Capital:
       Accounts Receivable                                                                     --                38
       Inventories                                                                             10                 8
       Accounts Payable, Accrued Expenses and Other Current Liabilities                         1                70
       Changes in Receivables and Payables to Affiliates, net                                 (90)               33
       Other Current Assets                                                                    --                 1
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities                                               285               492
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                     (182)             (234)
     Notes Receivable from Affiliate                                                           --                48
     Other Investing Activities                                                                --                (3)
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                  (182)             (189)
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                               400                --
     Retirement of Long-Term Debt                                                            (297)              (89)
     Dividends on Common Stock                                                               (118)              (63)
     Change in Restricted Cash                                                                (20)               (2)
     Other Financing Activities                                                                (9)               --
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Financing Activities                                                   (44)             (154)
----------------------------------------------------------------------------------------------------------------------


INCREASE IN CASH AND CASH EQUIVALENTS                                                          59               149
----------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               23               141
----------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                              $      82         $     290
----------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Net Assets Transferred as a result of Restructuring, net of Note Payable           $      --         $   1,306
     Receivable from Parent                                                             $      --         $   1,062
     Regulatory Asset Fair Value Adjustment                                             $      --         $     347


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>



                                                          12
<PAGE>



PECO ENERGY COMPANY

<TABLE>
<CAPTION>
                                      PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                    2002          2001
----------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S>                                                                                            <C>          <C>
     Operating Revenues                                                                        $1,017       $ 1,048
     Operating Revenues from Affiliates                                                             3             3
----------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                                               1,020         1,051
----------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Fuel and Purchased Power                                                                     183           244
     Purchased Power from Affiliate                                                               303           244
     Operating and Maintenance                                                                    128           129
     Operating and Maintenance from Affiliates                                                      8             3
     Depreciation and Amortization                                                                112           101
     Taxes Other Than Income                                                                       59            43
----------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                                                  793           764
----------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                                                  227           287
----------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                                             (95)         (105)
     Interest Expense - Affiliate                                                                  --            (5)
     Company-Obligated Mandatorily Redeemable Preferred
       Securities of a Partnership, which holds Solely
       Subordinated Debentures of the Company                                                      (2)           (2)
     Other, net                                                                                     1            15
----------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                                                        (96)          (97)
----------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                                                        131           190

INCOME TAXES                                                                                       42            68
----------------------------------------------------------------------------------------------------------------------

NET INCOME                                                                                         89           122
----------------------------------------------------------------------------------------------------------------------
     Preferred Stock Dividends                                                                     (2)           (2)
NET INCOME ON COMMON STOCK                                                                     $   87       $   120
----------------------------------------------------------------------------------------------------------------------


OTHER COMPREHENSIVE INCOME
     Net Income                                                                                    89           122
     Other Comprehensive Income (Loss) (net of income taxes):
       SFAS 133 Transition Adjustment                                                              --            40
       Cash Flow Hedge Fair Value Adjustment                                                        2           (18)
----------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income                                                           2            22
----------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME                                                                     $   91       $   144
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                          13
<PAGE>


<TABLE>
<CAPTION>

                                      PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)


                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                                                     <C>               <C>
     Cash and Cash Equivalents                                                          $      31         $     32
     Restricted Cash                                                                          170              323
     Accounts Receivable, net                                                                 303              319
     Receivables from Affiliates                                                                6                8
     Inventories, at average cost                                                              44               79
     Prepaid Taxes                                                                            133                1
     Other                                                                                     26               58
----------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                                 713              820
----------------------------------------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                                                          4,075            4,047

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                                                      5,692            5,756
     Investments                                                                               24               24
     Pension Asset                                                                             34               13
     Other                                                                                     81               85
----------------------------------------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                                             5,831            5,878
----------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                            $  10,619         $ 10,745
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                          14
<PAGE>


<TABLE>
<CAPTION>

                                      PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)



                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Notes Payable                                                                      $     159         $     101
     Payables to Affiliates                                                                   145               194
     Long-Term Debt Due within One Year                                                       752               548
     Accounts Payable                                                                          50                54
     Accrued Expenses                                                                         313               397
     Deferred Income Taxes                                                                     27                27
     Other                                                                                     29                21
----------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,475             1,342
----------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              5,074             5,438

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                                                  2,985             2,938
     Unamortized Investment Tax Credits                                                        26                27
     Non-Pension Postretirement Benefits Obligation                                           261               239
     Payables to Affiliates                                                                    44                44
     Other                                                                                    114               110
----------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       3,430             3,358
----------------------------------------------------------------------------------------------------------------------

COMPANY-OBLIGATED MANDATORILY REDEEMABLE
     PREFERRED SECURITIES OF A PARTNERSHIP,
     WHICH HOLDS SOLEY SUBORDINATED
     DEBENTURES OF THE COMPANY                                                                128               128
MANDATORILY REDEEMABLE PREFERRED STOCK                                                         19                19

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                                           1,911             1,912
     Receivable from Parent                                                                (1,848)           (1,878)
     Preferred Stock                                                                          137               137
     Retained Earnings                                                                        272               270
     Accumulated Other Comprehensive Income                                                    21                19
----------------------------------------------------------------------------------------------------------------------
         Total Shareholders' Equity                                                           493               460
----------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $  10,619         $  10,745
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>



                                                          15
<PAGE>

<TABLE>
<CAPTION>
                                      PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                      <C>               <C>
     Net Income                                                                          $     89          $    122
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          112               101
       Provision for Uncollectible Accounts                                                    19                18
       Deferred Income Taxes                                                                   46                55
       Deferred Energy Costs                                                                   34               (29)
       Other Operating Activities                                                               2                 8
     Changes in Working Capital:
       Accounts Receivable                                                                     (3)              (53)
       Changes in Receivables and Payables to Affiliates, net                                 (17)              (99)
       Inventories                                                                             35                45
       Accounts Payable, Accrued Expenses and Other Current Liabilities                       (83)              (95)
       Other Current Assets                                                                  (134)             (118)
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Operating Activities                                     100               (45)
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                      (62)              (57)
     Other Investing Activities                                                                (3)               11
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                   (65)              (46)
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Retirement of Long-Term Debt                                                            (160)             (923)
     Issuance of Long-Term Debt                                                                --               805
     Change in Short-Term Debt                                                                 58               173
     Change in Payable to Affiliate                                                            --               (46)
     Dividends on Preferred and Common Stock                                                  (87)              (47)
     Change in Restricted Cash                                                                153               106
     Settlement of Interest Rate Swap Agreements                                               --                31
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Financing Activities                                     (36)               99
----------------------------------------------------------------------------------------------------------------------


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                               (1)                8

Cash Transferred in Restructuring                                                              --               (31)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               32                49
----------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $     31          $     26
----------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Net Assets Transferred as a result of Restructuring,
       net of Receivable from Affiliates                                                 $     --          $  1,608
     Contribution of Receivable from Parent                                              $     --          $  1,983


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                          16
<PAGE>



EXELON GENERATION COMPANY, LLC

<TABLE>
<CAPTION>
                                EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                    2002          2001
----------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
<S>                                                                                            <C>          <C>
     Operating Revenues                                                                        $1,083       $   914
     Operating Revenues from Affiliates                                                           892           714
----------------------------------------------------------------------------------------------------------------------
         Total Operating Revenues                                                               1,975         1,628
----------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
     Fuel and Purchased Power                                                                   1,270           800
     Purchased Power from Affliates                                                                72            18
     Operating and Maintenance                                                                    428           397
     Operating and Maintenance Expense from Affiliates                                              4             7
     Depreciation and Amortization                                                                 63            92
     Taxes Other Than Income                                                                       49            46
----------------------------------------------------------------------------------------------------------------------
         Total Operating Expense                                                                1,886         1,360
----------------------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                                                   89           268
----------------------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                                             (17)          (18)
     Interest Expense from Affiliates                                                              --           (15)
     Equity in Earnings of Unconsolidated Affiliates                                               23            26
     Other, net                                                                                    16             4
----------------------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                                                         22            (3)
----------------------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
   CHANGES IN ACCOUNTING PRINCIPLES                                                               111           265

INCOME TAXES                                                                                       45           107
----------------------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                                           66           158

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                                              13           12
----------------------------------------------------------------------------------------------------------------------

NET INCOME                                                                                     $   79       $   170
----------------------------------------------------------------------------------------------------------------------

OTHER COMPREHENSIVE  INCOME  (LOSS)  (net of income  taxes)
     Other  Comprehensive Income (Loss):
       SFAS 133 Transition Adjustment                                                              --             4
       Unrealized Loss on Marketable Securities                                                    (9)         (120)
       Cash Flow Hedge Fair Value Adjustment                                                      (74)           (1)
----------------------------------------------------------------------------------------------------------------------
         Total Other Comprehensive Income (Loss)                                                  (83)         (117)
----------------------------------------------------------------------------------------------------------------------

TOTAL COMPREHENSIVE INCOME (LOSS)                                                              $   (4)      $    53
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>



                                                          17
<PAGE>


<TABLE>
<CAPTION>

                                EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)


                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
---------------------------------------------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
<S>                                                                                     <C>               <C>
     Cash and Cash Equivalents                                                          $     355         $     224
     Accounts Receivable, net                                                                 422               466
     Receivables from Affiliates                                                              241               339
     Inventories, at average cost                                                             343               307
     Other                                                                                     89                65
---------------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                               1,450             1,401
---------------------------------------------------------------------------------------------------------------------

PROPERTY, PLANT AND EQUIPMENT, NET                                                          2,173             2,003

DEFERRED DEBITS AND OTHER ASSETS
     Nuclear Decommissioning Trust Funds                                                    3,161             3,165
     Investments                                                                              904               859
     Notes Receivable from Affiliates                                                         277               291
     Deferred Income Taxes                                                                    352               297
     Other                                                                                    188               223
---------------------------------------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                                             4,882             4,835
---------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                            $   8,505         $   8,239
---------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>


                                                          18
<PAGE>



<TABLE>
<CAPTION>
                                EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      (Unaudited)



                                                                                        March 31,      December 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND MEMBER'S EQUITY

CURRENT LIABILITIES
<S>                                                                                     <C>               <C>
     Long-Term Debt Due within One Year                                                 $       5         $       4
     Accounts Payable                                                                         675               585
     Accrued Expenses                                                                         399               303
     Deferred Income Taxes                                                                      7                 7
     Other                                                                                    183               171
----------------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                          1,269             1,070
----------------------------------------------------------------------------------------------------------------------

LONG-TERM DEBT                                                                              1,020             1,021

DEFERRED CREDITS AND OTHER LIABILITIES
     Unamortized Investment Tax Credits                                                       232               234
     Nuclear Decommissioning Liability                                                      1,367             1,353
     Pension Obligation                                                                       104               118
     Non-Pension Postretirement Benefits Obligation                                           385               384
     Spent Nuclear Fuel Obligation                                                            847               843
     Other                                                                                    349               280
----------------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                                       3,284             3,212
----------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES

MEMBER'S EQUITY
     Membership Interest                                                                    2,368             2,368
     Undistributed Earnings                                                                   550               471
     Accumulated Other Comprehensive Income                                                    14                97
----------------------------------------------------------------------------------------------------------------------
         Total Member's Equity                                                              2,932             2,936
----------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND MEMBER'S EQUITY                                                   $   8,505         $   8,239
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>



                                                          19
<PAGE>


<TABLE>
<CAPTION>
                                EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (Unaudited)

                                                                                       Three Months Ended March 31,
(in millions)                                                                                2002              2001
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                      <C>               <C>
     Net Income                                                                          $     79          $    170
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                          155               192
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)            (13)              (12)
       Provision for Uncollectible Accounts                                                     2                 3
       Deferred Income Taxes                                                                   (2)              (13)
       Deferred Energy Costs                                                                   --                --
       Equity in (Earnings) Losses of Unconsolidated Affiliates                               (23)              (26)
       Net Realized Losses on Nuclear Decommissioning Trust Funds                              10                15
       Other Operating Activities                                                              40               (38)
     Changes in Working Capital:
       Accounts Receivable                                                                     53                37
       Changes in Receivables and Payables to Affiliates, net                                 144                12
       Inventories                                                                            (37)                4
       Accounts Payable, Accrued Expenses and Other Current Liabilities                       127                35
       Other Current Assets                                                                   (26)              (17)
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Operating Activities                                     509               362
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                     (288)             (118)
     Proceeds from Nuclear Decommissioning Trust Funds                                        580               333
     Investment in Nuclear Decommissioning Trust Funds                                       (605)             (354)
     Note Receivable from Affiliate                                                           (46)               --
     Other Investing Activities                                                               (20)               --
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities                                                  (379)             (139)
----------------------------------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Retirement of Long-Term Debt                                                               1                --
     Distribution to Member                                                                    --               (36)
----------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Financing Activities                                       1               (36)
----------------------------------------------------------------------------------------------------------------------


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                              131               187
----------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              224                --
----------------------------------------------------------------------------------------------------------------------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $    355          $    187
----------------------------------------------------------------------------------------------------------------------


                                See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                          20
<PAGE>


                   EXELON CORPORATION AND SUBSIDIARY COMPANIES
              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                  PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
             EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
          COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Dollars in millions, except per share data, unless otherwise noted)

1.   BASIS OF PRESENTATION (Exelon, ComEd, PECO and Generation)
         The  accompanying  condensed  consolidated  financial  statements as of
March 31, 2002 and for the three  months then ended are  unaudited,  but include
all adjustments that Exelon Corporation  (Exelon),  Commonwealth  Edison Company
(ComEd),   PECO  Energy  Company  (PECO)  and  Exelon  Generation  Company,  LLC
(Generation)  consider  necessary for a fair  presentation  of their  respective
financial statements.  All adjustments are of a normal, recurring nature, except
as otherwise disclosed.  The year-end condensed  consolidated balance sheet data
were  derived  from  audited  financial   statements  but  do  not  include  all
disclosures  required  by  generally  accepted  accounting  principles.  Certain
prior-year  amounts  have been  reclassified  for  comparative  purposes.  These
reclassifications  had no effect  on net  income or  shareholders'  or  member's
equity. These notes should be read in conjunction with the Notes to Consolidated
Financial  Statements of Exelon,  ComEd and PECO included in or  incorporated by
reference  in Item 8 of their  Annual  Report  on Form  10-K for the year  ended
December  31,  2001  and the  Notes  to  Consolidated  Financial  Statements  in
Generation's  Form S-4 registration  statement  declared  effective on April 24,
2002 by the Securities and Exchange  Commission (SEC),  (Generation's Form S-4).
See ITEM 8. Exhibits and Reports on Form 8-K.


2. CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING  PRINCIPLES  (Exelon,  ComEd, PECO
and Generation)
         In  2001,  the  Financial   Accounting  Standard  Board  (FASB)  issued
Statement of Accounting  Standard (SFAS) No. 141, "Business  Combinations" (SFAS
No. 141),  which requires that all business  combinations be accounted for under
the purchase  method of  accounting  and  establishes  criteria for the separate
recognition of intangible assets acquired in business combinations. SFAS No. 141
is  effective  for  business  combinations  initiated  after June 30,  2001.  In
addition,  SFAS No. 141 requires that unamortized  negative  goodwill related to
pre-July 1, 2001  purchases be recognized  as a change in  accounting  principle
concurrent  with the adoption of SFAS No. 142,  "Goodwill  and Other  Intangible
Assets"  (SFAS No. 142).  At December  31, 2001,  AmerGen  Energy  Company,  LLC
(AmerGen), an equity-method investee of Generation,  had $43 million of negative
goodwill, net of accumulated  amortization,  recorded on its balance sheet. Upon
AmerGen's  adoption of SFAS No. 141 in January 2002,  Generation  recognized its
proportionate share of income of $22 million ($13 million,  net of income taxes)
as a cumulative effect of a change in accounting principle.

         Exelon,  ComEd and  Generation  adopted  SFAS No.  142 as of January 1,
2002.  SFAS No. 142  establishes  new  accounting  and  reporting  standards for
goodwill  and  intangible  assets.   Exelon  does  not  have  significant  other
intangible assets recorded on its balance sheet. Under SFAS No. 142, goodwill is
no longer subject to amortization; however, goodwill is subject to an assessment
for  impairment  using a two-step fair value based test, the first step of which
must  be  performed  at  least  annually,   or  more  frequently  if  events  or

                                       21
<PAGE>

circumstances  indicate that goodwill might be impaired. The first step compares
the fair value of a reporting unit to its carrying amount,  including  goodwill.
If the carrying amount of the reporting unit exceeds its fair value,  the second
step is performed.  The second step compares the carrying amount of the goodwill
to the fair value of the  goodwill.  If the fair value of  goodwill is less than
the carrying  amount,  an impairment loss is reported as a reduction to goodwill
and a charge to operating expense,  except at the transition date, when the loss
is reflected as a cumulative effect of a change in accounting principle.

         As of December 31, 2001, Exelon's Condensed Consolidated Balance Sheets
reflected   approximately   $5.3   billion  in  goodwill   net  of   accumulated
amortization,  including  $4.9 billion of net goodwill  related to the merger of
Unicom  and PECO  recorded  on ComEd's  Consolidated  Balance  Sheets,  with the
remainder related acquisitions by Exelon Enterprises Company, LLC (Enterprises).
The first step of the transitional  impairment  analysis  indicated that ComEd's
goodwill  was not  impaired  but that an  impairment  did exist with  respect to
goodwill  recorded in  Enterprises'  reporting  units.  Exelon's  infrastructure
services business (InfraSource),  the energy services business (Exelon Services)
and the competitive retail energy sales business (Exelon Energy) were determined
to be those reporting units of Enterprises which had goodwill allocated to them.
The  second  step of the  analysis,  which  compared  the fair  value of each of
Enterprises'  reporting  units'  goodwill to the carrying  value at December 31,
2001,  indicated a total goodwill impairment of $357 million ($243 million,  net
of income  taxes and  minority  interest).  The fair  value of the  Enterprises'
reporting units was determined using discounted cash flow models  reflecting the
expected range of future cash flow outcomes  related to each of the  Enterprises
reporting units over the life of the model.  These cash flows were discounted to
2002 using a  risk-adjusted  discount  rate.  The  impairment  was recorded as a
cumulative  effect of a change in  accounting  principle in the first quarter of
2002.

         The changes in the carrying  amount of goodwill by  reportable  segment
for the three months ended March 31, 2002 are as follows:

<TABLE>
<CAPTION>
                                                         Energy
                                                       Delivery      Enterprises             Total
-----------------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>               <C>
Balance as of January 1, 2002                         $   4,902        $     433         $   5,335
Impairment losses                                            --             (357)             (357)
Settlement of pre-merger income tax contingency              (7)              --                (7)
-----------------------------------------------------------------------------------------------------
Balance as of March 31, 2002                          $   4,895        $      76         $   4,971
-----------------------------------------------------------------------------------------------------
</TABLE>

         The March 31, 2002 Energy  Delivery  goodwill  relates to ComEd and the
remaining  Enterprises  goodwill  relates to the  InfraSource  and Exelon Energy
reporting units. Consistent with SFAS No. 142, the of remaining goodwill will be
reviewed for  impairment on an annual basis or more  frequently  if  significant
events occur that could indicate that an impairment exists.




                                       22
<PAGE>

         The components of the net  transitional  impairment  loss recognized in
the first  quarter  of 2002 as a  cumulative  effect  of a change in  accounting
principle are as follows:

<TABLE>
<CAPTION>
Exelon
-------------------------------------------------------------------------------------------------
<S>                                                                              <C>
  Enterprises goodwill impairment (net of income taxes of $103 million)           $      (254)
Minority interest (net of income taxes of $4 million)                                      11
Elimination of AmerGen negative goodwill (net of income taxes of $9 million)               13
-------------------------------------------------------------------------------------------------
Total cumulative effect of a change in accounting principle                       $      (230)
-------------------------------------------------------------------------------------------------

Generation
-------------------------------------------------------------------------------------------------
Elimination of AmerGen negative goodwill (net of income taxes of $9 million)
    recorded as cumulative effect of a change in accounting principle             $        13
-------------------------------------------------------------------------------------------------
</TABLE>

         The  following  table sets forth  Exelon's  and  ComEd's net income and
earnings  per common  share for the three  months ended March 31, 2002 and 2001,
respectively,  adjusted to exclude 2001 amortization expense related to goodwill
that is no longer being amortized.

Exelon
<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                      -----------------------------
                                                                                             2002              2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>               <C>
Reported income before cumulative effect
     of changes in accounting principles                                                 $    238          $    387
Cumulative effect of changes in accounting principles                                        (230)               12
-----------------------------------------------------------------------------------------------------------------------
Reported net income                                                                             8               399
Goodwill amortization                                                                          --                39
-----------------------------------------------------------------------------------------------------------------------
Adjusted net income                                                                      $      8          $    438
-----------------------------------------------------------------------------------------------------------------------

Basic earnings per common share:
    Reported income before cumulative effect
       of changes in accounting principles                                               $   0.74          $   1.21
    Cumulative effect of changes in accounting principles                                   (0.72)             0.04
-----------------------------------------------------------------------------------------------------------------------
    Reported net income                                                                      0.02              1.25
    Goodwill amortization                                                                      --              0.12
-----------------------------------------------------------------------------------------------------------------------
    Adjusted net income                                                                  $   0.02          $   1.37
-----------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share:
    Reported income before cumulative effect of
       changes in accounting principles                                                  $   0.73          $   1.19
    Cumulative effect of changes in accounting principles                                   (0.71)             0.04
-----------------------------------------------------------------------------------------------------------------------
    Reported net income                                                                      0.02              1.23
    Goodwill amortization                                                                      --              0.12
-----------------------------------------------------------------------------------------------------------------------
    Adjusted net income                                                                  $   0.02          $   1.35
-----------------------------------------------------------------------------------------------------------------------



                                       23
<PAGE>

ComEd
                                                                                       Three Months Ended March 31,
                                                                                      -----------------------------
                                                                                             2002              2001
-----------------------------------------------------------------------------------------------------------------------
Reported income before cumulative effect
     of a change in accounting principle                                                    $ 129             $ 146
Cumulative effect of change in a accounting principle                                          --                --
-----------------------------------------------------------------------------------------------------------------------
Reported net income                                                                           129               146
Goodwill amortization                                                                          --                32
-----------------------------------------------------------------------------------------------------------------------
Adjusted net income                                                                         $ 129             $ 178
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

Generation

         The cessation of the  amortization  of negative  goodwill of AmerGen on
January  1, 2002 did not have a material  impact on  Generation's  reported  net
income for the three months ended March 31, 2002.

Exelon, PECO and Generation
         On January  1,  2001,  Generation  recognized  a  non-cash  gain of $12
million,  net of income  taxes,  in earnings and deferred a non-cash  gain of $4
million, net of income taxes, in accumulated other comprehensive income and PECO
deferred a non-cash  gain of $40 million,  net of income taxes,  in  accumulated
other comprehensive income. SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133) applies to all derivative instruments and
requires  that such  instruments  be recorded on the balance  sheet either as an
asset or a liability measured at their fair value through earnings, with special
accounting permitted for certain qualifying hedges.


3.  REGULATORY ISSUES (Exelon, ComEd and PECO)
         On April 1, 2002, the Illinois  Commerce  Commission  issued an interim
order in ComEd's Delivery  Services Rate Case. The order sets new delivery rates
for  residential  customers  choosing  a new  retail  electric  supplier  or the
Purchase  Power Option  (PPO) which allows the purchase of electric  energy from
ComEd at market-based rates. The new rates are effective May 1, 2002 when retail
choice for residential customers begins.  Traditional bundled rates - rates paid
by residential  customers that retain ComEd as their electricity  supplier - are
not affected by this Order and will remain frozen  through  2004.  The rates for
business  customers taking delivery  services are not impacted by the order. The
potential  revenue impact of the interim order is not expected to be material in
2002.

         As  permitted  by  the  Pennsylvania   Electric  Competition  Act,  the
Pennsylvania  Department  of  Revenue  has  calculated  a 2002  Revenue  Neutral
Reconciliation  (RNR)  adjustment  to the  gross  receipts  tax rate in order to
neutralize the impact of electric  restructuring  on its tax revenues.  The 2002
RNR adjustment  increases the gross receipts tax rate which will increase PECO's
annual  revenues and tax obligations by  approximately  $50 million per year. In
January 2002, the Pennsylvania  Public Utility Commission (PUC) approved the RNR
adjustment to the gross receipts tax rate collected  from  customers.  Effective
January 1, 2002, PECO implemented the change in the gross receipts tax rate.



                                       24
<PAGE>

4.  EARNINGS PER SHARE (Exelon)
         Diluted earnings per share are calculated by dividing net income by the
weighted average shares of common stock  outstanding,  including shares issuable
upon exercise of stock options  outstanding  under  Exelon's  stock option plans
considered to be common stock equivalents.  The following table shows the effect
of these stock options on the weighted average number of shares outstanding used
in calculating diluted earnings per share (in millions):
                                                 Three Months Ended March 31,
                                                          2002           2001
------------------------------------------------------------------------------
Average common shares outstanding                          321            320
Assumed exercise of stock options                            2              4
------------------------------------------------------------------------------
Average diluted common shares outstanding                  323            324
------------------------------------------------------------------------------

5.  SEGMENT INFORMATION (Exelon)
         Exelon operates in three business segments: energy delivery, generation
and enterprises.  Energy delivery  consists of the operations of ComEd and PECO.
Beginning in 2002,  Exelon evaluates the performance of its business segments on
the basis of net income. Exelon's segment information for the three months ended
March 31,  2002 as  compared to the same period in 2001 and as of March 31, 2002
and December 31, 2001 is as follows:

<TABLE>
<CAPTION>
                                                                                    Corporate and
                                       Energy                                        Intersegment
                                     Delivery       Generation     Enterprises       Eliminations      Consolidated
--------------------------------------------------------------------------------------------------------------------
Revenues:
<S>                                  <C>              <C>               <C>              <C>               <C>
    2002                              $ 2,335          $ 1,975           $ 490            $ (930)           $ 3,870
    2001                                2,497            1,628             667              (969)             3,823
Net Income:
    2002                               $  215            $  79          $ (271)           $  (15)             $   8
    2001                                  266              170             (25)              (12)               399
Total Assets:
    March 31, 2002                   $ 26,467          $ 8,505         $ 1,373          $ (1,442)          $ 34,903
    December 31, 2001                  26,448            8,239           1,699            (1,526)            34,860
--------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       25
<PAGE>


6. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Exelon, ComEd, PECO and
Generation)

         During  the  three  months  ended  March  31,  2002  and  2001,  Exelon
recognized net losses in other  comprehensive  income relating to mark-to-market
(MTM) adjustments of contracts designated as cash flow hedges as follows:

<TABLE>
<CAPTION>
                                       ComEd              PECO        Generation      Enterprises           Exelon
----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>            <C>                <C>              <C>
2002                                       7                 6              (122)              17               (92)
2001                                      --                --                (1)              --                (1)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         During  the three  months  ended  March 31,  2002 and 2001,  Generation
recognized  net gains of $2  million  and $16  million,  respectively,  on power
purchase and sale  contracts not  designated  as cash flow hedges,  in Operating
Revenues and Fuel and  Purchased  Power  Expense in the  Condensed  Consolidated
Statements  of Income and  Comprehensive  Income.  During the three months ended
March 31, 2002 and 2001, no amounts were  reclassified  from  accumulated  other
comprehensive  income into earnings as a result of forecasted  energy  commodity
transactions  or forecasted  financing  transactions  no longer being  probable.
During the three  months  ended March 31, 2002 and 2001,  PECO  reclassified  no
amount  and a net  gain of $6  million,  respectively,  to other  income  in the
Condensed  Consolidated  Statements  of Income and  Comprehensive  Income,  as a
result of the  discontinuance of cash flow hedges related to certain  forecasted
transactions that were no longer probable of occurring.

         As of March 31, 2002,  deferred  net gains and  (losses) on  derivative
instruments  accumulated  in  other  comprehensive  income  are  expected  to be
reclassified to earnings during the next twelve months are as follows:

<TABLE>
<CAPTION>
                                       ComEd              PECO        Generation      Enterprises           Exelon
----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>               <C>               <C>             <C>
2002                                       1                15                (7)               3               12
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         Amounts in accumulated other  comprehensive  income related to interest
rate cash flows are  reclassified  into  earnings when the  forecasted  interest
payment occurs.  Amounts in accumulated  other  comprehensive  income related to
energy commodity cash flows are  reclassified  into earnings when the forecasted
purchase or sale of the energy commodity occurs.

         Generation   classifies   investments   in  the  trust   accounts   for
decommissioning nuclear plants as available-for-sale.  The following tables show
the fair values, gross unrealized gains and losses and amortized costs bases for
the securities held in these trust accounts.




                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                                                                     March 31, 2002
                                                    ---------------------------------------------------------------
                                                                           Gross            Gross
                                                     Amortized        Unrealized       Unrealized         Estimated
                                                          Cost             Gains           Losses        Fair Value
---------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>              <C>               <C>
Equity securities                                    $   1,651         $     150        $    (257)        $   1,544
Debt securities
    Government obligations                                 975                20               (5)              990
    Other debt securities                                  641                10              (24)              627
---------------------------------------------------------------------------------------------------------------------
Total debt securities                                    1,616                30              (29)            1,617
---------------------------------------------------------------------------------------------------------------------
Total available-for-sale securities                  $   3,267         $     180        $    (286)        $   3,161
---------------------------------------------------------------------------------------------------------------------
</TABLE>

         Unrealized gains and losses are recognized in Accumulated Depreciation,
Regulatory  Assets and Accumulated  Other  Comprehensive  Income in Generation's
Condensed Consolidated Balance Sheet.

         For the three months ended March 31,  2002,  proceeds  from the sale of
decommissioning  trust  investments and gross realized gains and losses on those
sales were $580 million, $18 million and $32 million, respectively.

         Net  realized  losses of $4  million  were  recognized  in  Accumulated
Depreciation in Generation's  Consolidated  Balance Sheets at March 31, 2002 and
$10  million  of net  realized  losses  were  recognized  in  Other  Income  and
Deductions  in  Generation's  Condensed  Consolidated  Statements  of Income and
Comprehensive  Income for the three  month  period  ended  March 31,  2002.  The
available-for-sale securities held at March 31, 2002 have an average maturity of
eight to ten years.  The cost of these securities was determined on the basis of
specific identification.


7.  COMMITMENTS AND CONTINGENCIES (Exelon, ComEd, PECO and Generation)
         For   information    regarding   capital    commitments   and   nuclear
decommissioning  and spent fuel storage,  see the Commitments and  Contingencies
Note in the Consolidated  Financial Statements of Exelon, ComEd and PECO for the
year ended December 31, 2001 and Generation's S-4.

Environmental Liabilities
         Exelon has  identified  72 sites where  former  manufactured  gas plant
(MGP) activities have or may have resulted in actual site  contamination.  As of
March 31, 2002, Exelon had accrued $144 million for environmental  investigation
and remediation costs that currently can be reasonably estimated, including $121
million  for  MGP  investigation  and  remediation.   Exelon,  ComEd,  PECO  and
Generation cannot predict whether they will incur other significant  liabilities
for additional  investigation and remediation costs at these or additional sites
identified  by  environmental  agencies or others,  or whether such costs may be
recoverable from third parties.

         ComEd had accrued $99 million  (discounted)  as of March 31, 2002,  for
environmental  investigation  and  remediation  costs  which  currently  can  be
reasonably  estimated.  This reserve included $94 million for MGP  investigation
and remediation.



                                       27
<PAGE>

         PECO had accrued $35 million  (undiscounted)  as of March 31, 2002, for
environmental  investigation  and  remediation  costs  which  currently  can  be
reasonably   estimated,   including  $27  million  for  MGP   investigation  and
remediation.

         Generation had accrued $10 million (undiscounted) as of March 31, 2002,
for  environmental  investigation and remediation cost, none of which relates to
MGP investigation and remediation.

Energy Commitments
         As of March 31, 2002,  Exelon and Generation had long-term  commitments
relating  to the net  purchase  and sale of energy,  capacity  and  transmission
rights from unaffiliated utilities and others, including Midwest Generation, LLC
and AmerGen,  an  unconsolidated  affiliate of  Generation,  as expressed in the
following table:

<TABLE>
<CAPTION>
                                    Capacity        Power Only        Power Only     Purchases from         Transmission
                                   Purchases             Sales         AmerGen       Non-Affiliates     Rights Purchases
----------------------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>             <C>                  <C>                  <C>
2002                             $       840       $     2,210     $       201          $     1,330          $        91
2003                                   1,214             1,391             261                  506                   31
2004                                   1,222               809             315                  144                   15
2005                                     406               231             241                   78                   15
2006                                     406               122             241                   63                    5
Thereafter                             3,657                22           2,171                  252                   --
----------------------------------------------------------------------------------------------------------------------------
Total                            $     7,745       $     4,785     $     3,430          $     2,373          $       157
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

         In connection with the 2001 corporate restructuring, ComEd entered into
a purchase power  agreement (PPA) with  Generation.  Under the terms of the PPA,
Generation has agreed to supply all of ComEd's load  requirements  through 2004.
Prices  for  this  energy  vary  depending  upon  the  time of day and  month of
delivery.  During 2005 and 2006, ComEd's PPA is a partial requirements agreement
under which ComEd will  purchase  all of its required  energy and capacity  from
Generation,  up to the  available  capacity  of the  nuclear  generating  plants
formerly owned by ComEd and  transferred  to Generation.  Under the terms of the
PPA, Generation is responsible for obtaining any required  transmission service.
The PPA also  specifies that prior to 2005,  ComEd and  Generation  will jointly
determine and agree on a market-based  price for energy  delivered under the PPA
for 2005 and 2006.  In the event that the parties  cannot agree to  market-based
prices  for  2005 and  2006  prior to July 1,  2004,  ComEd  has the  option  of
terminating  the  PPA  effective  December  31,  2004.  ComEd  will  obtain  any
additional  supply required from market sources in 2005 and 2006, and subsequent
to 2006, will obtain all of its supply from market sources,  which could include
Generation.

         In connection with the 2001 corporate restructuring,  PECO entered into
a PPA with Generation.  Under the terms of the PPA, PECO obtains the majority of
its electric supply from Generation through 2010. Also, under the restructuring,
PECO  assigned  its rights and  obligations  under  various PPAs and fuel supply
agreements to Generation. Generation supplies power to PECO from the transferred
generation assets, assigned PPAs and other market sources.




                                       28
<PAGE>

         Under terms of the 2001  corporate  restructuring,  ComEd will remit to
Generation any amounts  collected from customers for  decommissioning.  Under an
agreement  effective  September  2001, PECO will remit to Generation any amounts
collected from customers for decommissioning.

Litigation
ComEd
         Chicago Franchise.  In March 1999, ComEd reached a settlement agreement
with the City of Chicago  (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 provides that ComEd would
be subject to  liquidated  damages if the projects are 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 each of the
years 1999 through 2001 and has  conditionally  agreed to deposit $25 million at
the end of 2002,  to help ensure an adequate  and reliable  electric  supply for
Chicago.

         FERC Municipal Request for Refund. Three of ComEd's wholesale municipal
customers  filed a complaint  and  request  for refund  with the Federal  Energy
Regulatory  Commission  (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,  FERC
granted the complaint and directed that refunds be made,  with  interest.  ComEd
filed a request for rehearing.  On April 30, 2001, FERC issued an order granting
rehearing in which it determined that its 1998 order had been erroneous and that
no refunds  were due from ComEd to the  municipal  customers.  On June 29, 2001,
FERC  denied  the  customers'  requests  for  rehearing  of the  order  granting
rehearing.  In August  2001,  each of the three  wholesale  municipal  customers
appealed  the April 30,  2001 FERC order to the  Federal  circuit  court,  which
consolidated the appeals for the purposes of briefing and decision.  In November
2001,  the  court  suspended   briefing   pending   court-initiated   settlement
discussions.

         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.  The  developers  also  filed  suit  against  ComEd  for a
declaratory judgment 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
ComEd was willing to pay for the electricity. ComEd is contesting this matter.




                                       29
<PAGE>

         Service Interruptions. In August 1999, three class action lawsuits were
filed against ComEd, and subsequently consolidated, in the Circuit Court of Cook
County,  Illinois  seeking  damages for personal  injuries,  property damage and
economic  losses 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  was  approved  by the court  for the sole  purpose  of  exploring
settlement talks.  ComEd filed a motion to dismiss the complaints.  On April 24,
2001, the court dismissed four of the five counts of the consolidated  complaint
without prejudice and the sole remaining count was dismissed in part. On June 1,
2001, the plaintiffs filed a second amended consolidated complaint and ComEd has
filed an  answer.  A portion  of any  settlement  or  verdict  may be covered by
insurance;  discussions  with  the  carrier  are  ongoing.  Exelon's  management
believes adequate reserves have been established in connection with these cases.

         Enron. As a result of Enron Corp.'s  bankruptcy  proceeding,  ComEd has
potential  monetary  exposure for its 366 customer  accounts that were served by
Enron Energy  Services (EES) as a billing agent.  EES has rejected its contracts
with these accounts,  with the exception of approximately 100 accounts for which
EES retains its billing  agency.  ComEd is working to ensure that customers know
what  amounts  are owed to ComEd on accounts  for which EES has been  removed as
billing agent,  and has obtained  updated billing  addresses for these accounts.
With regard to the  accounts for which EES retains its billing  agency,  ComEd's
total amount  outstanding is not material.  Because that amount is owed to ComEd
by individual customers,  it is not part of the bankrupt Enron's estate. The ICC
has rescinded EES's authority to act as an alternative retail energy supplier in
Illinois.  However,  EES never  served as a  supplier,  as  opposed to a billing
agent, to any of ComEd's retail accounts.

ComEd and Generation
         Godley Park  District  Litigation.  On April 18, 2001,  the Godley Park
District  filed  suit in Will  County  Circuit  Court  against  ComEd and Exelon
alleging  that oil  spills  at  Braidwood  Station  have  contaminated  the Park
District's water supply.  The complaint sought actual damages,  punitive damages
of $100 million and statutory penalties.  The court dismissed all counts seeking
punitive damages and statutory penalties, and the plaintiff has filed an amended
complaint  before the court.  Exelon is  contesting  the  liability  and damages
sought by the plaintiff.

Generation
         Cotter  Corporation  Litigation.  During  1989 and 1991,  actions  were
brought  in  Federal  and  state  courts  in  Colorado  against  ComEd  and  its
subsidiary,   Cotter  Corporation  (Cotter),  seeking  unspecified  damages  and
injunctive  relief based on allegations  that Cotter  permitted  radioactive and
other  hazardous  material  to be  released  from its mill into  areas  owned or
occupied by the plaintiffs,  resulting in property damage and potential  adverse
health effects. In 1994, a Federal jury returned nominal dollar verdicts against
Cotter on eight plaintiffs' claims in the 1989 cases, which verdicts were upheld
on appeal.  The remaining  claims in the 1989 actions were settled or dismissed.
In 1998,  a jury  verdict  was  rendered  against  Cotter  in favor of 14 of the
plaintiffs in the 1991 cases, totaling  approximately $6 million in compensatory
and punitive  damages,  interest and medical  monitoring.  On appeal,  the Tenth
Circuit Court of Appeals  reversed the jury  verdict,  and remanded the case for
new trial.  These  plaintiffs'  cases were  consolidated  with the  remaining 26
plaintiffs'  cases,  which  had not  been  tried.  The  consolidated  trial  was




                                       30
<PAGE>

completed  on June 28,  2001.  The jury  returned a verdict  against  Cotter and
awarded $16.3  million in various  damages.  On November 20, 2001,  the District
Court  entered  an  amended  final  judgment  which  included  an  award of both
pre-judgment and post-judgment interests, costs, and medical monitoring expenses
which total $43.3 million.  This matter is being appealed by Cotter in the Tenth
Circuit Court of Appeals. Cotter will vigorously contest the award.

         In November 2000,  another trial  involving a separate  sub-group of 13
plaintiffs,  seeking $19  million in damages  plus  interest  was  completed  in
federal district court in Denver. The jury awarded nominal damages of $42,500 to
11 of 13  plaintiffs,  but awarded no damages for any personal  injury or health
claims,  other than requiring Cotter to perform  periodic medical  monitoring at
minimal cost. The plaintiffs  appealed the verdict to the Tenth Circuit Court of
Appeals.

         On February 18, 2000, ComEd sold Cotter to an unaffiliated third party.
As part of the sale, ComEd agreed to indemnify Cotter for any liability incurred
by Cotter as a result of these  actions,  as well as any  liability  arising  in
connection  with the West Lake  Landfill  discussed  in the next  paragraph.  In
connection with Exelon's 2001 corporate  restructuring,  the  responsibility  to
indemnify  Cotter for any liability  related to these matters was transferred by
ComEd to Generation.  Exelon's  management  believes adequate reserves have been
established in connection with these proceedings.

         The United  States  Environmental  Protection  Agency (EPA) has advised
Cotter  that  it  is  potentially   liable  in  connection   with   radiological
contamination  at a site known as the West Lake Landfill in Missouri.  Cotter is
alleged to have disposed of approximately  39,000 tons of soils mixed with 8,700
tons of leached  barium  sulfate  at the site.  Cotter,  along with three  other
companies  identified by the EPA as potentially  responsible  parties (PRPs), is
reviewing a draft feasibility  study that recommends  capping the site. The PRPs
are also  engaged in  discussions  with the State of Missouri  and the EPA.  The
estimated costs of remediation for the site are $10 to $15 million. Once a final
feasibility  study is complete and a remedy  selected,  it is expected  that the
PRPs will agree on an  allocation  of  responsibility  for the  costs.  Until an
agreement is reached, Exelon cannot predict its share of the costs.

         Pennsylvania Real Estate Tax Appeals. Exelon is involved in tax appeals
regarding two of its nuclear facilities, Limerick Generating Station (Montgomery
County) and Peach Bottom  Atomic Power  Station  (York  County),  and one of its
fossil facilities,  Eddystone (Delaware County).  Exelon is also involved in the
tax appeal for Three Mile Island (Dauphin County) through  AmerGen.  Exelon does
not believe the outcome of these matters will have a material  adverse effect on
Exelon's results of operations or financial condition.

General
         Exelon,  ComEd,  PECO and  Generation  are  involved  in various  other
litigation matters. The ultimate outcome of such matters, as well as the matters
discussed above,  while  uncertain,  are not expected to have a material adverse
effect on its respective financial condition or results of operations.




                                       31
<PAGE>

8.  MERGER-RELATED COSTS (Exelon, ComEd, PECO and Generation)
         In association  with the October 20, 2000 merger of Unicom  Corporation
(the former parent company of ComEd) and PECO (Merger),  Exelon recorded certain
reserves for restructuring costs. The reserves associated with PECO were charged
to expense,  while the reserves  associated with Unicom were recorded as part of
the application of purchase accounting and did not affect results of operations.

         Merger-related  costs  charged to  expense  in 2000 were $276  million,
consisting  of $124 million for PECO  employee  costs and $152 million of direct
incremental   costs.   Direct  incremental  costs  represent  expenses  directly
associated with completing the Merger,  including  professional fees, regulatory
approval and  settlement  costs,  and settlement of  compensation  arrangements.
Employee   costs   represent   estimated   severance   costs  and   pension  and
postretirement  benefits  provided under Exelon's  merger  separation  plans for
eligible  employees  who are  expected  to be  involuntarily  terminated  before
December 2002 due to integration activities of the merged companies.

         The  purchase  price  allocation  as of December  31,  2000  included a
liability  of  $307  million  for  Unicom  employee  costs  and  liabilities  of
approximately  $39  million  for  estimated  costs of exiting  various  business
activities  of  former  Unicom  activities  that  were not  compatible  with the
strategic business direction of Exelon.
         During 2001, Exelon finalized its plans for consolidation of functions,
including  negotiation  of an  agreement  with  the  union  regarding  severance
benefits to union  employees  and recorded  adjustments  to the  purchase  price
allocation as follows:

<TABLE>
<CAPTION>
                                                                        Original             2001          Adjusted
                                                                        Estimate      Adjustments       Liabilities
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>               <C>
Employee severance payments                                            $     128        $      33         $     161 (a)
Actuarially determined pension and postretirement costs                      158              (11)              147 (b)
Relocation and other severance                                                21                9                30 (a)
-------------------------------------------------------------------------------------------------------------------------
Total Unicom - Employee Cost                                           $     307        $      31         $     338
-------------------------------------------------------------------------------------------------------------------------
<FN>
(a)  The  increase  is a  result  of the  identification  in 2001 of  additional
     positions to be eliminated.
(b)  The  reduction  results from lower  estimated  pension and post  retirement
     welfare benefits reflecting revised actuarial estimates.
</FN>
</TABLE>

         Additional employee severance costs of $48 million primarily related to
PECO employees were charged to expense in 2001. Exelon  anticipates that a total
of $281 million of employee costs will be funded from pension and postretirement
benefit plans.



                                       32
<PAGE>

         The  following  table  provides a  reconciliation  of the  reserve  for
employee severance and relocation costs associated with the merger:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
<S>                                                                               <C>
Employee severance and relocation reserve as of October 20, 2000                   $     149
Additional reserve                                                                        42
------------------------------------------------------------------------------------------------
Adjusted employee severance and relocation reserve                                       191
Payments to employees (October 2000-December 2001)                                       (77)
Payments to employees (January 2002-March 2002)                                          (15)
------------------------------------------------------------------------------------------------
Employee severance and relocation reserve as of March 31, 2002                     $      99
------------------------------------------------------------------------------------------------
</TABLE>

         As part of the January 2001  corporate  restructuring,  portions of the
employee  severance and  restructuring  reserve were  transferred  from ComEd to
Generation,  Enterprises and BSC.  Approximately  $62 million and $30 million of
the employee  severance and  relocation  reserve as of March 31, 2002 relates to
ComEd and Generation, respectively, and is reflected on the Consolidated Balance
Sheets of those entities.

         Approximately  3,300 Unicom and PECO positions have been  identified to
be eliminated as a result of the merger.  Exelon has terminated  1,745 employees
as of March 31, 2002 of which 284 were  terminated in the first quarter of 2002.
The remaining positions are expected to be eliminated by the end of 2002.


9.  LONG-TERM DEBT (Exelon and ComEd)
         On March 13, 2002,  ComEd  issued $400 million of 6.15% First  Mortgage
Bonds,  due March 15, 2012.  On March 21, 2002,  ComEd  redeemed $200 million of
8.625% First Mortgage Bonds at the redemption  price of 103.84% of the principal
amount plus  accrued  interest.  These bonds had a maturity  date of February 1,
2022. The $400 million bond issuance was a replacement of the $200 million bonds
called on March 21, 2002 and the $196 million  9.875% First Mortgage Bonds which
were called in November 2001.

         In  connection  with the  issuance  of $400  million of First  Mortgage
Bonds,  ComEd  settled  forward  starting  interest  rate swaps in the aggregate
amount  of $375  million  resulting  in a $9  million  loss  recorded  in  other
comprehensive  income, which is being amortized over the expected remaining life
of the related debt.

10.  SALE OF ACCOUNTS RECEIVABLE  (Exelon and PECO)
         PECO is party to an agreement,  which expires in November 2005,  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. As of March 31, 2002, PECO had sold a $225 million interest
in  accounts  receivable,  consisting  of a $163  million  interest  in accounts
receivable that PECO accounted for as a sale under SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  Replacement  of  FASB  Statement  No.  125"  and a $62  million  interest  in
special-agreement  accounts  receivable  which were accounted for as a long-term
note payable.  PECO retains the servicing  responsibility for these receivables.




                                       33
<PAGE>

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
March 31, 2002, PECO met this  requirement and was not required to make any cash
deposits.


11.  RELATED-PARTY TRANSACTIONS (Exelon, ComEd, PECO and Generation)
Exelon and Generation
         In February 2002,  Generation entered into an agreement to loan AmerGen
up to $75 million at an  interest  rate equal to the  1-month  London  Interbank
Offering Rate plus 2.25%.  As of March 31, 2002,  $46 million had been loaned to
AmerGen. The loan is due November 30, 2002.

         Generation  has entered into PPAs dated  December 18, 2001 and November
22, 1999 with  AmerGen.  Under the 2001 PPA,  Generation  has agreed to purchase
from AmerGen all the energy from Unit No. 1 at Three Mile Island Nuclear Station
from January 1, 2002 through December 31, 2014.  Under the 1999 PPA,  Generation
has agreed to purchase  from  AmerGen all of the  residual  energy from  Clinton
Nuclear Power  Station  (Clinton),  through  December 31, 2002.  Currently,  the
residual output  approximates 25% of the total output of Clinton.  For the three
months ended March 31, 2002 and 2001, the amount of purchased  power recorded in
Fuel and Purchased Power in the Condensed Consolidated  Statements of Income and
Comprehensive Income is $56 million and $10 million,  respectively.  As of March
31, 2002 and December 31, 2001,  Generation  had a payable of $19 million and $3
million, respectively, resulting from these PPAs.

         Under a service  agreement  dated  March 1, 1999,  Generation  provides
AmerGen with certain  operation and support  services to the nuclear  facilities
owned by AmerGen.  This  service  agreement  has an  indefinite  term and may be
terminated by Generation or AmerGen on 90 days notice. Generation is compensated
for these  services in an amount agreed to in the work order,  but not less than
the higher of fully  allocated  costs for  performing the services or the market
price. For the three months ended March 31, 2002 and 2001, the amount charged to
AmerGen for these services was $14 million and $16 million,  respectively. As of
March 31, 2002 and December 31, 2001, Generation had a receivable of $46 million
and $47 million, respectively, resulting from these services.

ComEd
         ComEd  had a note  receivable  from  Unicom  Investments  Inc.  of $1.3
billion at March 31, 2002 and December 31, 2001,  relating to the December  1999
fossil  plant sale,  which is included  in deferred  debits and other  assets in
ComEd's Condensed  Consolidated  Balance Sheets.  Interest income earned on this
note  receivable  was $8 million and $23  million,  respectively,  for the three
months ended March 31, 2002 and 2001.  Interest  receivable due on this note was
$8  million  and  $24  million  at  March  31,  2002  and   December  31,  2001,
respectively,   and  is  included  in  Current   Assets  on  ComEd's   Condensed
Consolidated Balance Sheets.

         Interest income earned on the $352 million outstanding  receivable from
PECO as of March 31,  2001 was $5 million for the three  months  ended March 31,
2001. This receivable was repaid in the second quarter of 2001.




                                       34
<PAGE>

         At March 31, 2002 and December  31, 2001,  ComEd had a $906 million and
$937 million non-interest bearing receivable, respectively, from Exelon relating
to the 2001 Corporate restructuring. This receivable is reflected as a reduction
of Shareholders' Equity in ComEd's Condensed  Consolidated Balance Sheets and is
expected to be settled over the years 2002 through 2008.

         ComEd had a  short-term  payable of $59  million at March 31,  2002 and
December 31, 2001,  and a long-term  payable of $275 million and $291 million at
March 31, 2002 and December  31, 2001,  respectively,  to  Generation  primarily
representing   ComEd's  legal  requirements  to  remit  collections  of  nuclear
decommissioning  costs  from  customers  to  Generation.  These  liabilities  to
Generation were included in Current  Liabilities and Deferred  Credits and Other
Liabilities, respectively, on ComEd's Condensed Consolidated Balance Sheets.

         ComEd paid common  stock  dividends  to Exelon of $118  million and $63
million  for the  three  months  ended  March  31,  2002  and  March  31,  2001,
respectively.

         Effective  January 1, 2001,  ComEd entered into a PPA with  Generation.
Intercompany  power  purchases  pursuant to the PPA for the three  months  ended
March  31,  2002 and  March  31,  2001  were  $532  million  and  $608  million,
respectively.  At March 31, 2002 and December 31, 2001, there was a $166 million
and $183 million  payable,  respectively,  to Generation  for the PPA as well as
other  services  provided  which is included in Current  Liabilities  on ComEd's
Condensed Consolidated Balance Sheets.

         ComEd provided electric,  transmission, and other ancillary services to
Generation  and  Enterprises.  These services were recorded in revenues were $11
million and $42 million for the three  months ended March 31, 2002 and March 31,
2001,  respectively.  At March 31, 2002 and December  31,  2001,  there was a $4
million and $26 million receivable,  respectively,  for services provided, which
is included in Current Assets on ComEd's Condensed Consolidated Balance Sheets.

         ComEd  receives a variety of  corporate  support  services  from Exelon
Business Services Company (BSC), including legal, human resources, financial and
information  technology  services.  Such  services,  provided at cost  including
applicable overhead, were $40 million and $30 million for the three months ended
March 31, 2002 and March 31,  2001,  respectively,  of which $39 million and $28
million,  respectively,  was included in Operating and Maintenance (O&M) expense
on ComEd's Condensed Consolidated  Statements of Income and Comprehensive Income
and $1 million and $2 million,  respectively, was capitalized. At March 31, 2002
and  December  31,  2001,  there  was a $21  million  and $14  million  payable,
respectively,  to BSC  for  services  provided  which  is  included  in  Current
Liabilities on ComEd's Condensed Consolidated Balance Sheets.

         ComEd  receives  transmission  related  services  under  contracts with
InfraSource,  Inc., formerly Exelon Infrastructure  Services, Inc. Such services
totaling $7 million and $9 million for the three months ended March 31, 2002 and
March 31, 2001, respectively, were capitalized.



                                       35
<PAGE>

         In 2001,  ComEd  contracted  with  Exelon  Services  to provide  energy
conservation  services  to ComEd  customers.  The costs were $3  million  and $4
million  for the  three  months  ended  March  31,  2002  and  March  31,  2001,
respectively, and were included in O&M expense on ComEd's Condensed Consolidated
Statements of Income and Comprehensive Income.

         In order to facilitate  payment  processing,  ComEd  processes  certain
invoice payments on behalf of Generation and BSC.  Receivables at March 31, 2002
and December 31, 2001 from  Generation for such service totaled $119 million and
$21  million,  respectively,  and from BSC totaled $24 million and $19  million,
respectively,   and  were  included  in  Current  Assets  on  ComEd's  Condensed
Consolidated Balance Sheets.

PECO
         Effective  January 1, 2001,  Exelon  contributed to PECO a $2.0 billion
non-interest  bearing  receivable  from Exelon's  related to the 2001  corporate
restructuring.  This  receivable  is reflected  as a reduction of  Shareholders'
Equity in PECO's  Condensed  Consolidated  Balance  Sheets and is expected to be
settled over the years 2002 through  2010. As of March 31, 2002 and December 31,
2001,  the  balance of this  receivable  from  Exelon was $1.8  billion and $1.9
billion, respectively.

         PECO paid  common  stock  dividends  of $85  million and $45 million to
Exelon for the three months ended March 31, 2002 and 2001, respectively.

         Effective  January 1, 2001,  PECO entered  into a PPA with  Generation.
Intercompany  power  purchases  pursuant to the PPA for the three  months  ended
March 31, 2002 and 2001 were $303 million and $244 million,  respectively. As of
March 31, 2002 and December 31, 2001, PECO's payable related to the PPA was $105
million and $90 million, respectively.

         PECO  receives  a  variety  of  corporate  support  services  from BSC,
including legal, human resources, financial and information technology services.
Such services,  provided at cost including applicable overhead,  were $7 million
and $2 million for the three months ended March 31, 2002 and 2001, respectively.
At March 31, 2002 and December 31, 2001,  PECO had a $31 million and $41 million
payable, respectively, to BSC.

         PECO received  services from Enterprises  during the three months ended
March 31, 2002 and 2001 for  deployment  of automated  meters and meter  reading
services  for $9 million  and $5  million,  respectively.  At March 31, 2002 and
December 31, 2001, PECO had a $6 million and $8 million  payable,  respectively,
to Enterprises.

         Interest  expense related to the  outstanding  payable to ComEd of $352
million as of March 31, 2001 was $5 million for the three months ended March 31,
2001. This payable was repaid in the second quarter of 2001.

         PECO  provides   energy  to  Generation  for   Generation's   own  use.
Intercompany  sales for the three  months  ended March 31, 2002 and 2001 were $2
million in each period.

                                       36
<PAGE>

Generation
         Generation had a short-term receivable of $59 million at March 31, 2002
and  December  31,  2001,  and a long-term  receivable  of $275 million and $291
million  at March 31,  2002 and  December  31,  2001,  respectively,  from ComEd
primarily  representing  ComEd's  legal  requirements  to remit  collections  of
nuclear  decommissioning  costs from customers to Generation  resulting from the
restructuring.  These receivables from ComEd were included in Current Assets and
Deferred Debits and Other Liabilities,  respectively,  on Generation's Condensed
Consolidated Balance Sheets.

         Effective January 1, 2001,  Generation entered into PPAs with ComEd and
PECO.  Intercompany  power sales pursuant to the PPAs for the three months ended
March 31, 2002 and March 31, 2001 were $835 million,  including  decommissioning
reveue of $3 million, and $852 million,  including decommissioning revenue of $3
million, respectively. At March 31, 2002 and December 31, 2001, there was a $271
million and $273 million receivable, respectively, for the PPAs as well as other
services provided which is included in Current Assets on Generation's  Condensed
Consolidated Balance Sheets.

         Generation  sells  power to Exelon  Energy.  Power  sales for the three
months  ended  March  31,  2002  and  2001  were $57  million  and $61  million,
respectively.  At March 31, 2002 and December 31, 2001,  there was a $19 million
and $15 million receivable, respectively.

         Generation  purchases power from AmerGen under PPAs as discussed in the
Exelon and Generation section of this note.  Additionally,  Generation purchases
power from PECO for  Generation's  own use,  buys back excess  power from Exelon
Energy and  purchases  transmission  and ancillary  services  from ComEd.  These
purchases, including AmerGen, for the three months ended March 31, 2002 and 2001
were $72 million and $18 million,  respectively.  At March 31, 2002 and December
31,  2001,  Generation  had  payables  for such  services  of $4 million and $26
million, respectively.

         Generation  receives a variety of corporate  support services from BSC,
including legal, human resources, financial and information technology services.
Such services,  provided at cost including applicable overhead, were $14 million
and $13 million for the three  months  ended March 31, 2002 and March 31,  2001,
respectively,  and were included in Operating and  Maintenance  (O&M) expense on
Generation's  Condensed  Consolidated  Statements  of Income  and  Comprehensive
Income.  At March 31, 2002 and December 31, 2001, there was an $8 million and an
$18  million  payable,  respectively,  to BSC for  services  provided  which  is
included in Current Liabilities on Generation's  Condensed  Consolidated Balance
Sheets.

         In order to facilitate  payment  processing,  ComEd  processes  certain
invoice  payments  on  behalf of  Generation.  Payables  at March  31,  2002 and
December  31,  2001 to ComEd for such  services  totaled  $119  million  and $21
million,  respectively, and were included in Current Liabilities on Generation's
Condensed Consolidated Balance Sheets.

         In relation to the  December  18,  2001  acquisition  of 49.9% of Sithe
Energies,  Inc.  (Sithe) common stock,  Generation had a $700 million payable to
Exelon, which was repaid in the second quarter of 2001. Interest expense related
to this payable for the three months ended March 31, 2001 was $15 million.


                                       37
<PAGE>


12.  NEW ACCOUNTING PRONOUNCEMENTS (Exelon, ComEd, PECO and Generation)
         In  June  2001,  the  FASB  issued  SFAS  No.  143,  "Asset  Retirement
Obligations"  (SFAS No.  143).  In August  2001,  the FASB  issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144).
In April 2002, the FASB issued SFAS No. 145, " Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13, and  Technical  Corrections"
(SFAS No. 145).

         SFAS  No.  143  provides   accounting   requirements   for   retirement
obligations  associated with tangible long-lived assets. Exelon expects to adopt
SFAS  No.  143 on  January  1,  2003.  Retirement  obligations  associated  with
long-lived  assets included within the scope of SFAS No. 143 are those for which
there is a legal  obligation to settle under  existing or enacted law,  statute,
written  or oral  contract  or by  legal  construction  under  the  doctrine  of
promissory estoppel. Adoption of SFAS No. 143 will change the accounting for the
decommissioning  of Exelon's nuclear generating  plants.  Currently,  Generation
records the obligation for decommissioning ratably over the lives of the plants.
The January 1, 2003  adoption of SFAS No. 143 will require a  cumulative  effect
adjustment   effective   the  date  of  adoption  to  adjust  plant  assets  and
decommissioning liabilities to the values they would have been had this standard
been employed from the in-service dates of the plants.

         The  effect  of this  cumulative  adjustment  will be to  increase  the
decommissioning  liability  to  reflect  a full  decommissioning  obligation  in
current year dollars.  Additionally, the standard will require the accrual of an
asset related to the full amount of the decommissioning  obligation,  which will
be amortized over the remaining lives of the plants.  The net difference between
the asset  recognized  and the liability  recorded upon adoption of SFAS No. 143
will be charged to  earnings  and  recognized  as a  cumulative  effect,  net of
expected  regulatory  recovery.  The  decommissioning  liability  to be recorded
represents an obligation for the future  decommissioning of the plants, and as a
result interest expense will be accrued on this liability until such time as the
obligation is satisfied.

         Exelon is in the  process of  evaluating  the impact of SFAS No. 143 on
its financial  statements,  and cannot determine the ultimate impact of adoption
at this time,  however  the  cumulative  effect  could be  material  to Exelon's
earnings.  Additionally,  although  over the life of the  plant the  charges  to
earnings for the  depreciation  of the asset and the  interest on the  liability
will be equal to the amounts currently  recognized as  decommissioning  expense,
the timing of those charges will change and in the near-term  period  subsequent
to adoption,  the  depreciation  of the asset and the interest on the  liability
could result in an increase in expense.

         Exelon,  ComEd, PECO and Generation  adopted SFAS No. 144 on January 1,
2002. SFAS No. 144 establishes  accounting and reporting  standards for both the
impairment  and disposal of  long-lived  assets.  SFAS No. 144 is effective  for
fiscal years  beginning after December 15, 2001 and its provisions are generally
applied prospectively.  The adoption of this statement had no effect on Exelon's
reported financial positions, results of operations or cash flows.




                                       38
<PAGE>

         SFAS No. 145  eliminates  SFAS No. 4  "Reporting  Gains and Losses from
Extinguishment  of Debt"  (SFAS No. 4) and thus  allows for only those  gains or
losses on the  extinguishment  of debt that meet the  criteria of  extraordinary
items to be  treated  as such in the  financial  statements.  SFAS No.  145 also
amends  Statement of Financial  Accounting  Standards  No. 13,  "Accounting  for
Leases",  (SFAS No. 13) to require  sale-leaseback  accounting for certain lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.  This  provisions of this statement  relating to the rescission of
SFAS No. 4 are  effective  for fiscal years  beginning  after May 15, 2002,  the
provisions  of this  statement  relating  to the  amendment  of SFAS No.  13 are
effective  for  transactions  occurring  after  May  15,  2002,  and  all  other
provisions of this Statement are effective for financial statements issued on or
after May 15, 2002.  Exelon is in the process of  evaluating  the impact of SFAS
No.  145 on its  financial  statements,  and does not  expect  the  impact to be
material.


13.  CHANGE IN ACCOUNTING ESTIMATE (Exelon and Generation)
         Effective April 1, 2001,  Generation  changed its accounting  estimates
related to the depreciation and decommissioning of certain generating  stations.
The  estimated  service  lives  were  extended  by 20 years  for  three  nuclear
stations,  by periods of up to 20 years for certain  fossil  stations  and by 50
years for a pumped  storage  station.  Effective  July 1,  2001,  the  estimated
service lives were extended by 20 years for the remainder of Exelon's  operating
nuclear  stations.   These  changes  were  based  on  engineering  and  economic
feasibility  studies  performed by Generation  considering,  among other things,
future capital and maintenance  expenditures at these plants. As a result of the
change,  net income for the three  months  ended  March 31, 2002  increased  $35
million ($20 million, net of income taxes).


14.  SUBSEQUENT EVENTS (Exelon and Generation)
         On April 25, 2002,  Generation completed the purchase of two TXU Energy
power plants  located in the Dallas and Fort Worth areas for $443  million.  The
agreement was first announced in December 2001. The purchase includes the 893 MW
Mountain Creek Steam  Electric  Station in Dallas and the 1,441 MW Handley Steam
Electric  Station in Fort Worth. The purchase was funded with available cash and
Exelon commercial paper.

         On April 1,  2002,  Exelon  Enterprises  completed  the sale of its 49%
interest in AT&T  Wireless  PCS of  Philadelphia,  LLC to a  subsidiary  of AT&T
Wireless  Services for $285 million in cash.  The after-tax gain is estimated at
approximately  $120 million with a resulting  $0.37 earnings per share (diluted)
gain, which will be reported as part of second quarter  earnings.  Proceeds from
the transaction will be used for Exelon's general corporate purposes.





                                       39
<PAGE>


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

EXELON CORPORATION

GENERAL

Exelon  Corporation  (Exelon),  through  its  subsidiaries,  operates  in  three
business segments:

     o    Energy Delivery, consisting of the retail electricity distribution and
          transmission  businesses of  Commonwealth  Edison  Company  (ComEd) in
          northern  Illinois  and PECO  Energy  Company  (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   Exelon   Generation   Company,   LLC's
          (Generation)   electric   generating   facilities,   energy  marketing
          operations and equity  interests in Sithe Energies,  Inc.  (Sithe) and
          AmerGen Energy Company, LLC (AmerGen).

     o    Enterprises,   consisting  of  Exelon   Enterprises   Company,   LLC's
          (Enterprises)    competitive   retail   energy   sales,   energy   and
          infrastructure services, communications and other investments weighted
          towards  the  communications,  energy  services  and  retail  services
          industries.

     See  Note 5 of the  Combined  Notes  to  Condensed  Consolidated  Financial
Statements for further segment information.


RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared To Three Months Ended March 31, 2001

Net Income and Earnings Per Share
         Exelon's  income before the cumulative  effect of changes in accounting
principles  decreased $149 million, or 39%, for the three months ended March 31,
2002.  Diluted  earnings per common share on the same basis  decreased $0.46 per
share, or 39%. The decrease in income before the cumulative effect of changes in
accounting principles reflects lower earnings in Energy Delivery and Generation,
primarily  related to a decrease  in retail  sales due to mild  winter  weather,
lower wholesale  energy prices,  increased  nuclear  refueling  outage costs and
employee  severance costs,  partially offset by the  discontinuation of goodwill
amortization  required by the  adoption of  Statement  of  Financial  Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142).

         Net income  decreased $391 million,  or 98%, for the three months ended
March 31, 2002.  Diluted  earnings per common share on the same basis  decreased
$1.21 per share,  or 98%.  Net income for the three  months ended March 31, 2002
includes  a $230  million  charge  for  the  cumulative  effect  of  changes  in
accounting principles,  reflecting goodwill impairment upon the adoption of SFAS
No. 142.  Net income for the three  months  ended March 31,  2001  includes  $12
million  of  income  for  the  cumulative  effect  of  adopting  SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging  Activities" (SFAS No. 133).




                                       40
<PAGE>

See ITEM 1.  Financial  Statements  - Note 2 -  Cumulative  Effect of Changes in
Accounting Principles.

         Exelon  evaluates its  performance on a business  segments  basis.  The
analysis below presents the operating  results for each of its business segments
for the three  months  ended March 31, 2002  compared to the three  months ended
March 31, 2001.

         Corporate  provides its business segments a variety of support services
including legal, human resources, financial and information technology services.
These costs are  allocated to the  business  segments.  Additionally,  Corporate
costs reflect costs for strategic  long-term  planning,  lobbying,  and interest
costs and income from various investment and financing activities.

<TABLE>
<CAPTION>
Income Before Cumulative Effect of Changes in Accounting Principles by Business Segment

                                                     Three Months Ended March 31,
                                                          2002              2001         Variance       % Change
-------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>              <C>         <C>
Energy Delivery                                            215               266              (51)        (19.2%)
Generation                                                  66               158              (92)        (58.2%)
Enterprises                                                (28)              (25)              (3)         12.0%
Corporate                                                  (15)              (12)              (3)         25.0%
----------------------------------------------------------------------------------------------------
Total                                                      238               387             (149)        (38.5%)
----------------------------------------------------------------------------------------------------
</TABLE>






                                       41
<PAGE>

Results of Operations - Energy Delivery Business Segment

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
-----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   2,335       $2,497       $ (162)      (6.5%)

OPERATING EXPENSES
     Fuel and Purchased Power                                         1,024        1,097          (73)      (6.7%)
     Operating and Maintenance                                          373          350           23        6.6%
     Depreciation and Amortization                                      247          268          (21)      (7.8%)
     Taxes Other Than Income                                            132          115           17       14.8%
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,776        1,830          (54)      (3.0%)
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        559          667         (108)     (16.2%)
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (221)        (246)          25      (10.2%)
     Distributions on Preferred Securities of Subsidiaries              (11)         (11)          --        0.0%
     Other, net                                                          14           47          (33)     (70.2%)
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (218)        (210)          (8)       3.8%
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              341          457         (116)     (25.4%)

INCOME TAXES                                                            126          191          (65)     (34.0%)
-------------------------------------------------------------------------------------------------------

NET INCOME                                                        $     215       $  266       $  (51)     (19.2%)
-------------------------------------------------------------------------------------------------------
</TABLE>

         Energy  Delivery's  gross  margin  (revenue  net of fuel and  purchased
power)  declined $89 million,  $51 million of which was  attributable  to milder
winter weather which reduced retail electric and gas volumes, and a reduction in
wholesale sales volumes.

         Higher  operating  and  maintenance  expense  reflects  an  increase in
uncollectible accounts and claims expenses, costs associated with the deployment
of automatic  meter reading  technology,  increased  pension and  postretirement
benefit  costs and  increased  corporate  allocations,  including  a portion  of
executive severance charges.

         Energy Delivery's $21 million decrease in depreciation and amortization
expense reflects $32 million for the  discontinuation  of goodwill  amortization
due to the adoption of SFAS No. 142 as of January 1, 2002,  partially  offset by
$9 million of higher competitive transition charge (CTC) amortization.

         Lower interest  expense  reflects  reductions in debt  outstanding  and
lower  interest  rates due to debt  refinancing.  The  reduction in Other - net,
primarily reflects lower intercompany  interest income reflecting lower interest
rates.




                                       42
<PAGE>

         Energy  Delivery's  effective  income  tax rate was 37.0% for the three
months ended March 31, 2002,  compared to 41.8% for the three months ended March
31, 2001. The decrease in the effective tax rate was primarily  attributable  to
the  discontinuation  of goodwill  amortization as of January 1, 2002, which was
not  deductible  for income tax purposes and tax  benefits  associated  with the
implementation  of state  tax  planning  strategies  and the  reduced  impact of
investment tax credit amortization.

Energy Delivery Operating Statistics and Revenue Detail

         Energy  Delivery's  electric sales statistics and revenue detail are as
follows:

<TABLE>
<CAPTION>
                                                              For the three months ended March 31,
Retail Deliveries - (in gigawatthours (GWh))                                2002             2001        % Change
--------------------------------------------------------------------------------------------------------------------
Bundled Deliveries (1)
<S>                                                                        <C>              <C>           <C>
Residential                                                                8,465            8,766         (3.4%)
Small Commercial & Industrial                                              7,207            6,876          4.8%
Large Commercial & Industrial                                              5,307            5,421         (2.1%)
Public Authorities & Electric Railroads                                    1,994            2,203         (9.5%)
-----------------------------------------------------------------------------------------------------
                                                                          22,973           23,266         (1.3%)
Unbundled Deliveries (2)
Alternative Energy Suppliers
Residential                                                                  792              527         50.3%
Small Commercial & Industrial -                                            1,100            1,354        (18.8%)
Large Commercial & Industrial -                                            1,489            2,352        (36.7%)
Public Authorities & Electric Railroads -                                    138               48        187.5%
-----------------------------------------------------------------------------------------------------
                                                                           3,519            4,281        (17.8%)
-----------------------------------------------------------------------------------------------------
PPO (ComEd Only)
Small Commercial & Industrial                                                763              823         (7.3%)
Large Commercial & Industrial                                              1,311            1,359         (3.5%)
Public Authorities & Electric Railroads                                      242              258         (6.2%)
-----------------------------------------------------------------------------------------------------
                                                                           2,316            2,440         (5.1%)
-----------------------------------------------------------------------------------------------------
Total Unbundled Deliveries                                                 5,835            6,721        (13.2%)
-----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   28,808           29,987         (3.9%)
-----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation  service from an  alternative  energy  supplier or ComEd's Power
     Purchase Option (PPO).
</FN>
</TABLE>





                                       43
<PAGE>

<TABLE>
<CAPTION>
                                                     For the three months ended March 31,
Electric Revenue (in millions)                                         2002         2001     Variance     % Change
--------------------------------------------------------------------------------------------------------------------
Bundled Revenues (1)
<S>                                                               <C>           <C>          <C>           <C>
Residential                                                       $     761     $    815     $    (54)     (6.6%)
Small Commercial & Industrial                                           580          520           60      11.5%
Large Commercial & Industrial                                           346          319           27       8.5%
Public Authorities & Electric Railroads                                 110          124          (14)    (11.3%)
-------------------------------------------------------------------------------------------------------
                                                                      1,797        1,778           19      10.7%
-------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
Alternative Energy Suppliers
Residential                                                              54           36           18      50.0%
Small Commercial & Industrial                                            17           54          (37)    (68.5%)
Large Commercial & Industrial                                            13           62          (49)    (79.0%)
Public Authorities & Electric Railroads                                   2            1            1     100.0%
-------------------------------------------------------------------------------------------------------
                                                                         86          153          (67)    (43.8%)
-------------------------------------------------------------------------------------------------------
PPO (ComEd Only)
Small Commercial & Industrial                                            43           37            6      16.2%
Large Commercial & Industrial                                            64           61            3       4.9%
Public Authorities & Electric Railroads                                  13           12            1       8.3%
-------------------------------------------------------------------------------------------------------
                                                                        120          110           10       9.1%
-------------------------------------------------------------------------------------------------------
    Total Unbundled Revenues                                            206          263          (57)    (21.7%)
-------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        2,003        2,041          (38)     (1.9%)
-------------------------------------------------------------------------------------------------------
    Wholesale and Miscellaneous Revenue (3)                             123          162          (39)     (2.4%)
-------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   2,126     $  2,203     $    (77)     (3.5%)
-------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation  service from an  alternative  energy  supplier or ComEd's Power
     Purchase  Option  (PPO).  Revenue from  customers  choosing an  alternative
     energy  supplier  includes a distribution  charge and a CTC.  Revenues from
     customers  choosing  ComEd's PPO includes an energy charge at market rates,
     transmission,  and  distribution  charges and a CTC.  Transmission  charges
     received from  alternative  energy  suppliers are included in wholesale and
     miscellaneous revenue.
(3)  Wholesale and  miscellaneous  revenues include sales to alternative  energy
     suppliers,   transmission  revenue,   sales  to  municipalities  and  other
     wholesale energy sales.
</FN>
</TABLE>

         The changes in electric  retail  revenues  for the three  months  ended
March 31, 2002, as compared to the same period in 2001 are  attributable  to the
following:

(in millions)                                                      Variance
-----------------------------------------------------------------------------
Rate Changes                                                     $      (1)
Customer Choice                                                         41
Weather                                                                (72)
Other Effects                                                           (6)
-----------------------------------------------------------------------------
Electric Retail Revenue                                          $     (38)
-----------------------------------------------------------------------------

o    Rate  Changes.  The  decrease  in  revenues  attributable  to rate  changes
     reflects the 5% ComEd  residential  rate  reduction,  effective  October 1,
     2001, required by the Illinois restructuring  legislation and a $60 million
     PECO rate  reduction  effective  January 1, 2001  offset by an  increase in
     PECO's gross  receipts tax rate of $13 million and the  expiration  of a 6%



                                       44
<PAGE>

     reduction in PECO's rates during the first  quarter of 2001.  The change in
     the gross receipts tax rate does not affect income.
o    Customer  Choice.  ComEd  non-residential  customers and all PECO customers
     have the choice to  purchase  energy  from  other  suppliers.  This  choice
     generally does not impact kWh  deliveries,  but affects  revenue  collected
     from customers related to energy supplied by Energy Delivery. The favorable
     customer choice effect is attributable to increased revenues of $80 million
     from  customers  in  Pennsylvania  selecting  or returning to PECO as their
     electric generation supplier, partially offset by a decrease in revenues of
     $39 million from customers in Illinois  electing to purchase energy from an
     Alternative  Retail  Electric  Supplier  (ARES)  or the  PPO,  under  which
     customers  can purchase  power from ComEd at a  market-based  rate.  Exelon
     continues to collect delivery charges from these customers.
o    Weather. The demand for electricity and gas services is impacted by weather
     conditions.  Very warm  weather in summer  months and very cold  weather in
     other  months is referred to as  "favorable  weather  conditions",  because
     these weather  conditions result in increased sales of electricity and gas.
     Conversely, mild weather reduces demand. The weather impact was unfavorable
     compared to the prior year as a result of warmer winter  weather in ComEd's
     and PECO's service territories.
o    Other Effects. Other items decreasing revenues were primarily related to an
     $11 million  settlement of CTCs by a large PECO customer in 2001  partially
     offset by a net $8 million  favorable  volume  variance other than weather,
     due to the  impact of a strong  housing  construction  market  in  Chicago,
     partially  offset by the impact of a slower economy on large commercial and
     industrial customers.

         The reduction in Wholesale and Miscellaneous  revenues in for the three
months ended March 31,  2002,  as compared to 2001,  reflects $28 million  lower
off-system sales due to the expiration of wholesale  contracts that were offered
by ComEd  from June  2000 to May 2001 to  support  the open  access  program  in
Illinois.

         Energy  Delivery's  gas sales  statistics  and  revenue  detail  are as
follows:

                                                 2002       2001       Variance
--------------------------------------------------------------------------------
Deliveries in million cubic feet (mmcf)        31,357     34,230        (2,873)
Revenue (in millions)                            $209       $295          $(86)
--------------------------------------------------------------------------------

         The changes in gas revenue for the  quarter  ended March 31,  2002,  as
compared to the same 2001 period, are as follows:

(in millions)                                           Variance
------------------------------------------------------------------
Rate Changes                                           $     (35)
Weather                                                      (30)
Volume                                                       (21)
------------------------------------------------------------------
Gas Revenue                                            $     (86)
------------------------------------------------------------------



                                       45
<PAGE>

o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment  of the  purchased  gas cost  recovery by the PUC  effective  in
     December  2001.  The average rate per million  cubic feet for all customers
     for the  quarter  ended  March 31,  2002 was 23%  lower  than the same 2001
     period.  PECO's gas rates are  subject to periodic  adjustments  by the PUC
     designed  to  recover  or refund  the  difference  between  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.
o    Weather.   The  unfavorable   weather  impact  is  attributable  to  warmer
     temperatures  during the  quarter  ended  March 31, 2002 as compared to the
     same 2001 period.  Heating  degree-days  decreased 17% in the quarter ended
     March 31, 2002 compared to the same 2001 period.
o    Volume.  Exclusive  of weather  impacts,  lower  delivery  volume  affected
     revenue by $21 million in the quarter  ended March 31, 2002 compared to the
     same 2001 period.  Total deliveries to retail customers decreased 8% in the
     quarter ended March 31, 2002 compared to the same 2001 period, primarily as
     a result of slower economic conditions in 2002 offset by increased customer
     growth.

Results of Operations - Generation Business Segment

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,975       $1,628       $  347       21.3%

OPERATING EXPENSES
     Fuel and Purchased Power                                         1,342          818          524       64.1%
     Operating and Maintenance                                          432          404           28        6.9%
     Depreciation and Amortization                                       63           92          (29)     (31.5%)
     Taxes Other Than Income                                             49           46            3        6.5%
-------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,886        1,360          526       38.7%
-------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                         89          268         (179)     (66.8%)
-------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (17)         (33)          16      (48.5%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net       23           26           (3)     (11.5%)
     Other, net                                                          16            4           12      300.0%
-------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                               22           (3)          25     (833.3%)
-------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                           111          265         (154)     (58.1%)

INCOME TAXES                                                             45          107          (62)     (57.9%)
-------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                 66          158          (92)     (58.2%)

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
-------------------------------------------------------------------------------------------------------
   PRINCIPLES                                                            13           12            1        8.3%

NET INCOME                                                        $      79       $  170          (91)     (53.5%)
-------------------------------------------------------------------------------------------------------
</TABLE>

         Generation's  operating  results  reflect lower margins  (revenues less
fuel and purchased  power) on wholesale  energy sales due to lower market prices
for energy,  a lower  supply of low cost nuclear  generation  and a reduction in
volumes sold to affiliates. Revenues for the first quarter of 2002 include $515




                                       46
<PAGE>

million related to the trading  activities,  which were initiated in April 2001.
Lower  volumes sold to retail  affiliates  attributable  to mild winter  weather
reduced  Generation's  gross  margins  by $7  million,  the  effect of which was
partially  offset by an increase in lower price wholesale  sales.  Additionally,
four additional  nuclear generating station refueling outages reduced the amount
of low cost nuclear  generation  available for sale.  Fuel and  purchased  power
expense  includes $514 million related to the trading  portfolio.  Operating and
maintenance expense increased due to the additional refueling outages, partially
offset by employee  reductions and other  non-outage  operating cost reductions.
The decline in depreciation  expense reflects extension of the estimated service
lives of generating stations commencing in the second quarter of 2001. Operating
results  for  the  three   months   ended  March  31,  2002   include   non-cash
mark-to-market  gains on  derivative  contracts  of $3  million.  SFAS No.  141,
"Business  Combinations"  (SFAS No.  141)  requires  that  unamortized  negative
goodwill  related to pre-July 1, 2001  purchases  be  recognized  as a change in
accounting  principle  concurrent with the adoption of SFAS No. 142. At December
31, 2001, AmerGen, an equity-method  investee of Generation,  had $43 million of
negative  goodwill,  net of  accumulated  amortization,  recorded on its balance
sheet.  Upon  AmerGen's  adoption  of SFAS No. 141 in January  2002,  Generation
recognized its proportionate share of income of $22 million ($13 million, net of
income taxes) as a cumulative effect of a change in accounting principle. Exelon
adopted SFAS No. 133 on January 1, 2001,  which resulted in after-tax  income of
$12 million that is reflected as a cumulative  effect of a change in  accounting
principle.  See ITEM 1.  Financial  Statements - Note 2 -  Cumulative  Effect of
Changes in Accounting Principles.

Generation Operating Statistics:

         For the three months ended March 31, 2002 and 2001,  Generation's sales
and the supply of these sales were as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                      -----------------------------
                                                                                             2002              2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            27,750            29,204
Exelon Energy                                                                               1,250             1,591
Market Sales                                                                               19,324            17,459
Trading Portfolio                                                                          14,239                --
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                      62,563            48,254
-----------------------------------------------------------------------------------------------------------------------



                                       47
<PAGE>

                                                                                       Three Months Ended March 31,
(in GWhs)                                                                                    2002              2001
-----------------------------------------------------------------------------------------------------------------------
Nuclear Units                                                                              28,752            31,206
Purchases - non-trading portfolio                                                          18,093            15,561
Purchases - trading portfolio                                                              14,239                --
Fossil and Hydro Units                                                                      1,479             1,487
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                      62,563            48,254
-----------------------------------------------------------------------------------------------------------------------

         Generation's  average  margin data for the three months ended March 31,
2002 and 2001 were as follows:
                                                                                      Three Months Ended March 31,
($/MWh)                                                                                      2002              2001
-----------------------------------------------------------------------------------------------------------------------
Average Realized Revenue
     Energy Delivery                                                                 $     29.98     $      29.11
     Exelon Energy                                                                         45.60            38.34
     Market Sales                                                                          28.15            39.69
     Trading Portfolio                                                                     36.17             n.a.
     Total Sales - including the trading portfolio                                         31.14             n.a.
     Total Sales - excluding the trading portfolio                                         29.63            33.24

 Average Supply Cost - including the trading portfolio                               $     21.15             n.a.
Average Supply Cost - excluding the trading portfolio                                      16.74            16.74

Average Margin - including the trading portfolio                                     $      9.99             n.a.
Average Margin - excluding the trading portfolio                                           12.89            16.50
-----------------------------------------------------------------------------------------------------------------------
n.a. - not applicable as trading activities were initiated in April 2001.
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 90.3% for the three months ended March 31, 2002  compared to 98.8% the
same period in 2001.  Generation's nuclear units' production costs for the three
months  ended March 31, 2002 were $14.26 per MWh  compared to $11.68 per MWh for
the same period in 2001. The lower capacity factor and increased unit production
costs reflect the  increased  number of planned  refueling  outages in the three
months ended March 31, 2002 as compared to the same period in 2001.




                                       48
<PAGE>

Results of Operations - Enterprises Business Segment

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>          <C>          <C>         <C>
OPERATING REVENUES                                                   $  490       $  667       $ (177)     (26.5%)

OPERATING EXPENSES
     Fuel and Purchased Power                                           204          361         (157)     (43.5%)
     Operating and Maintenance                                          301          323          (22)      (6.8%)
     Depreciation and Amortization                                       17           15            2       13.3%
     Taxes Other Than Income                                              2            4           (2)     (50.0%)
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        524          703         (179)     (25.5%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        (34)         (36)           2       (5.6%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                    (5)         (13)           8      (61.5%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net       (7)          (8)           1      (12.5%)
     Other, net                                                          (1)          17          (18)    (105.9%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              (13)          (4)          (9)     225.0%
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
   EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                             (47)         (40)          (7)      17.5%

INCOME TAXES                                                            (19)         (15)          (4)      26.7%
--------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE                                                 (28)         (25)          (3)      12.0%

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
   PRINCIPLE                                                           (243)          --         (243)       n.m.
--------------------------------------------------------------------------------------------------------

NET INCOME                                                           $ (271)      $  (25)      $ (246)     984.0%
--------------------------------------------------------------------------------------------------------
n.m. - not meaningful
</TABLE>


         Enterprises'  net loss  increased $3 million for the three months ended
March 31, 2002  compared to the same period in 2001,  excluding  the  cumulative
effect of a change in accounting principle.  The net loss increased $246 million
after  reflecting  the  cumulative  effect of a change in  accounting  principle
resulting from the adoption of SFAS No. 142, which no longer allows amortization
of goodwill but requires testing goodwill for impairment on an annual basis. The
impairment  booked  during  the  first  quarter,  as a  result  of  transitional
impairment testing, was $243 million net of income taxes and minority interest.

         Operating  revenues  decreased  $177 million for the three months ended
March 31, 2002,  compared to the same period in 2001.  The decrease in operating
revenues is attributable to lower gas sales of $108 million primarily  resulting
from lower gas prices,  reduced  retail  energy sales of $48 million from Exelon
Energy, Inc. (Exelon Energy) exiting the PJM interconnection,  LLC (PJM) market,
lower  revenues of $35 million from  InfraSource,  Inc.  (InfraSource)  from the
continued decline in the  telecommunications  industry and reduced  construction
services in that  industry  and reduced  construction  project  revenues of $ 29
million  at Exelon  Services,  Inc.  (Exelon  Services).  These  decreases  were
partially  offset by increases in revenue of $26 million from  operations in the




                                       49
<PAGE>

electric  segment  of  InfraSource  from  continued  strong  performance  of the
Independent  Power  Producer  market and higher  electric  sales of $14  million
resulting from higher electric prices in Illinois for Exelon Energy.

         Enterprises'  operating and other  expenses  decreased $188 million for
the three months ended March 31, 2002  compared to the same period in 2001.  The
decrease is primarily  attributable to lower gas costs of $110 million primarily
resulting  from lower gas  prices,  lower  power and  operating  expenses of $65
million  resulting  from reduced  operations  of retail energy sales from Exelon
Energy  exiting  the PJM  market,  and reduced  costs  relating to  construction
projects at Exelon Services of $18 million and a $10 million gain in 2001 on the
distribution  of a  communications  company  investment.  These  decreases  were
partially  offset by higher  electric  purchased  power costs in Illinois of $15
million.

         The  effective  income  tax rate was 40.4% for the three  months  ended
March 31, 2002, compared to 37.5% for the three months ended March 31, 2001. The
decrease  in  the  effective  tax  rate  was  primarily   attributable   to  the
discontinuation  of goodwill  amortization  as of January 1, 2002,  that was not
deductible for income tax purposes.

Corporate Costs
         Corporate  costs for the three  months  ended March 31, 2002  increased
over the same period in 2001 primarily due to $20 million of executive severance
costs, which were allocated to Exelon's business segments.

LIQUIDITY AND CAPITAL RESOURCES

         Exelon's  capital  resources  are  primarily   provided  by  internally
generated  cash flows from  operations  and, to the extent  necessary,  external
financing  including  the  issuance  of  commercial  paper.  Exelon's  access to
external  financing at  reasonable  terms is dependent on the credit  ratings of
Exelon and its subsidiaries and the general business condition of Exelon and the
utility industry.  Exelon's businesses are capital intensive.  Capital resources
are  used   primarily  to  fund   Exelon's   capital   requirements,   including
construction,  investments in new and existing ventures,  repayments of maturing
debt and  preferred  securities  of  subsidiaries  and  payment of common  stock
dividends.  Any potential future  acquisitions could require external financing,
including the issuance by Exelon of common stock.

Cash Flows from Operating Activities

         Cash flows  provided by operations for the three months ended March 31,
2002 were $833 million  compared to $797 million in the three months ended March
31,  2001.  Approximately  40% of 2002 cash flows  provided by  operations  were
provided by Energy  Delivery  and 60% was  provided by  Generation  in the first
quarter of 2002.  Enterprises'  cash flows from  operations  were  immaterial to
Exelon for the three months ended March 31, 2002.  Energy  Delivery's  cash flow
from operating activities primarily results from sales of electricity and gas to
a stable and diverse  base of retail  customers at fixed prices and are weighted
towards the third quarter.  Energy Delivery's future cash flows will depend upon
the  ability  to  achieve  cost  savings  in  operations,  and the impact of the
economy,  weather and customer choice on its revenues.  Generation's  cash flows
from operating  activities  primarily result from the sale of electric energy to
wholesale customers, including Energy




                                       50
<PAGE>

Delivery  and  Enterprises.   Generation's   future  cash  flow  from  operating
activities  will depend upon future  demand and market prices for energy and the
ability to continue to produce and supply power at competitive  costs.  Although
the  amounts  may vary from  period  to period as a result of the  uncertainties
inherent in business,  Exelon expects that Energy  Delivery and Generation  will
continue  to provide a reliable  and steady  source of  internal  cash flow from
operations for the foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in  investing  activities  for the three  months  ended
March 31, 2002 were $637 million,  compared to $517 million for the three months
ended March 31,  2001.  The  increase is  primarily  attributable  to  increased
capital  expenditures.  Capital  expenditures by business  segment for the three
months ended March 31, 2002 and 2001 are as follows:

                                         Three Months Ended March 31,
(in millions)                                   2002              2001
------------------------------------------------------------------------------
Energy Delivery                            $     244         $     291
Generation                                       288               118
Enterprises                                       17                31
Corporate and Other                               11                 7
------------------------------------------------------------------------------
Total Capital Expenditures                 $     560         $     447
------------------------------------------------------------------------------

         Energy   Delivery's   capital   expenditures   for  2002   reflect  the
continuation of efforts to further  improve the reliability of its  distribution
system in the Chicago  region.  Exelon  anticipates  that Energy  Delivery  will
obtain financing, when necessary,  through borrowings, the issuance of preferred
securities, or capital contributions from Exelon.

         Generation's  capital  expenditures  for 2002 are for  additions to and
upgrades of existing facilities  (including nuclear refueling outages),  nuclear
fuel and  increases in capacity at existing  plants.  Capital  expenditures  are
projected  to increase in 2002 as  compared to 2001 due to higher  nuclear  fuel
expenditures, growth and an increase in the number of planned refueling outages,
during which significant maintenance work is performed. Eleven nuclear refueling
outages,  including AmerGen,  are planned for 2002, compared to six during 2001.
Exelon has committed to provide AmerGen with capital contributions equivalent to
50% of the purchase price of any acquisitions AmerGen makes in 2002. In February
2002,  Generation entered into an agreement to loan AmerGen up to $75 million at
an interest rate of one-month  LIBOR plus 2.25%.  As of March 31, 2002,  AmerGen
had borrowed $46 million under this agreement. The loan is due November 1, 2002.
Exelon  anticipates that  Generation's  capital  expenditures  will be funded by
internally generated funds,  Generation borrowings or capital contributions from
Exelon.  Generation  closed the purchase of two natural-gas and oil-fired plants
from TXU Corp.  (TXU) on April 25, 2002.  The $443  million  purchase was funded
with available cash and Exelon  commercial  paper.  Exelon expects to redeem the
commercial paper utilizing Generation's internal cash flows.

         Enterprises'  capital expenditures for 2002 are primarily for additions
to or upgrades of  existing  facilities.  All of  Enterprises'  investments  are
expected to be funded by capital  contributions  or borrowings  from Exelon.  On
April 1, 2002, Exelon Enterprises closed on the sale of its 49% interest in AT&T




                                       51
<PAGE>

Wireless PCS of Philadelphia,  LLC to a subsidiary of AT&T Wireless Services for
$285 million in cash.  Proceeds from the  transaction  will be used for Exelon's
general corporate purposes.

Cash Flows from Financing Activities
         Cash flows  provided by  financing  activities  were $15 million in the
first  quarter  2002,  primarily  attributable  to debt  service and payments of
dividends on common stock.  Debt  financing  activities  during the three months
ended March 31, 2002 were as follows:

o    ComEd issued $400 million in First Mortgage  Bonds,  retired $89 million of
     transitional  trust notes and called $200 million in First  Mortgage  Bonds
     with available cash and
o    PECO  borrowed  an  additional  $58  million of  commercial  paper and made
     principal payments of $160 million on long -term debt with available cash.

Credit Issues
         Exelon meets its short-term  liquidity  requirements  primarily through
the issuance of commercial paper by Exelon,  ComEd and PECO. Exelon,  along with
ComEd,  PECO and  Generation,  entered into a $1.5 billion  unsecured  revolving
credit facility with a group of banks.  This credit facility is used principally
to support the commercial paper program of Exelon, ComEd and PECO.

         At March 31,  2002,  Exelon's  capital  structure  consisted  of 61% of
long-term debt, 35% common stock,  2% notes payable and 3% preferred  securities
of  subsidiaries.  Total  debt  included  $6.6  billion of  securitization  debt
constituting  obligations  of certain  consolidated  special  purpose  entities,
representing 28% of capitalization.

         At March 31, 2002, Exelon had outstanding $438 million of notes payable
consisting principally of commercial paper. For the three months ended March 31,
2002,  the  average  interest  rate on notes  payable was  approximately  2.08%.
Certain of the credit agreements to which Exelon, ComEd, PECO and Generation are
a party require each of them to maintain a debt to total capitalization ratio of
65% or less  (excluding  securitization  debt and for PECO, the receivable  from
parent recorded in PECO's shareholders'  equity). At March 31, 2002, the debt to
total capitalization ratios on that basis for Exelon, ComEd, PECO and Generation
were 48%, 46%, 39% and 26%, respectively.

         Exelon and its subsidiaries'  access to the capital markets,  including
the  commercial  paper market,  and their  financing  costs in those markets are
dependent  on their  respective  securities  ratings.  None of  Exelon's  or its
subsidiaries'  borrowings  are subject to default or prepayment as a result of a
downgrading  of securities  ratings  although such a downgrading  could increase
interest   charges  under  Exelon's  bank  credit   facility.   Exelon  and  its
subsidiaries  from  time to  time  enter  into  interest  rate  swap  and  other
derivatives that require the maintenance of investment grade ratings. Failure to
maintain  investment grade ratings would allow the counterparty to terminate the
derivative and settle the transaction on a net present value basis.

         Under the Public  Utility  Holding  Company Act of 1935 (PUHCA) and the
Federal Power Act,  Exelon,  ComEd,  PECO and  Generation can pay dividends only
from retained, undistributed or current earnings. However, the SEC order granted
permission  to Exelon and ComEd to pay up to $500  million in  dividends  out of




                                       52
<PAGE>

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 March 31, 2002, Exelon had retained earnings of
$1.1 billion,  which  includes  ComEd  retained  earnings of $268 million,  PECO
retained  earnings of $272  million  and  Generation  retained  earnings of $550
million.

Contractual Obligations and Commercial Commitments
         There were no material  changes from  December 31, 2001 as set forth in
the 10-K, other than in the normal course of business,  to Exelon's  contractual
obligations,  representing  cash  obligations  that  are  considered  to be firm
commitments,  and commercial commitments,  representing commitments triggered by
future  events,  during the three  months  ended  March 31,  2002 except for the
following:

o    ComEd  issued $400 million of First  Mortgage  Bonds due March 15, 2012 and
     called $200 million of bonds due February 1, 2022; and
o    Guarantees  increased $410 million  primarily related to an increase in the
     amount of surety  bonds  required  by  Enterprises'  and  PECO's  insurance
     policies.  Approximately  one-half  of these  surety  bonds  expire  in the
     remainder of 2002 and the other half expire in the two-year  period  ending
     December 2004.






                                       53
<PAGE>


COMMONWEALTH EDISON COMPANY

GENERAL

         ComEd operates in a single business segment,  Energy Delivery,  and its
operations  consist  of its retail  electricity  distribution  and  transmission
business in northern Illinois.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Significant Operating Trends - ComEd

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,315       $1,446       $ (131)      (9.1%)

OPERATING EXPENSES
     Purchased Power                                                    538          609          (71)     (11.7%)
     Operating and Maintenance                                          237          218           19        8.7%
     Depreciation and Amortization                                      135          167          (32)     (19.2%)
     Taxes Other Than Income                                             73           72            1        1.4%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        983        1,066          (83)      (7.8%)
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        332          380          (48)     (12.6%)

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                  (126)        (141)          15      (10.6%)
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of Subsidiary Trusts
       Holding Solely the Company's Subordinated Debt Securities         (7)          (7)          --        0.0%
     Other, net                                                          14           37          (23)     (62.2%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                             (119)        (111)          (8)       7.2%
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              213          269          (56)     (20.8%)

INCOME TAXES                                                             84          123          (39)     (31.7%)
--------------------------------------------------------------------------------------------------------

NET INCOME                                                              129          146          (17)     (11.6%)
Preferred and Preference Stock Dividends                                 --           --           --       --
--------------------------------------------------------------------------------------------------------

NET INCOME ON COMMON STOCK                                        $     129          $146      $  (17)     (11.6%)
--------------------------------------------------------------------------------------------------------
</TABLE>

Net Income
         Net income  decreased  $17  million,  or 12% for the three months ended
March 31,  2002.  Net income was  impacted by $48 million  decrease in operating
income offset in part by a lower effective income tax rate.



                                       54
<PAGE>

Operating Revenues
         ComEd's electric sales statistics are as follows:

<TABLE>
<CAPTION>
                                                              For the three months ended March 31,
Retail Deliveries - (in GWh)                                                2002             2001          % Change
-----------------------------------------------------------------------------------------------------------------------
Bundled Deliveries (1)
<S>                                                                        <C>              <C>             <C>
Residential                                                                6,409            6,307           1.6%
Small Commercial & Industrial                                              5,450            5,875          (7.2%)
Large Commercial & Industrial                                              1,956            2,890         (32.3%)
Public Authorities & Electric Railroads                                    1,801            2,010         (10.4%)
----------------------------------------------------------------------------------------------------
                                                                          15,616           17,082          (8.6%)
----------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
ARES
Small Commercial & Industrial                                              1,004              462         117.3%
Large Commercial & Industrial                                              1,386            1,163          19.2%
Public Authorities & Electric Railroads                                      138               43         220.9%
----------------------------------------------------------------------------------------------------
                                                                           2,528            1,668          51.6%
----------------------------------------------------------------------------------------------------
PPO
Small Commercial & Industrial                                                763              823          (7.3%)
Large Commercial & Industrial                                              1,311            1,359          (3.5%)
Public Authorities & Electric Railroads                                      242              258          (6.2%)
----------------------------------------------------------------------------------------------------
                                                                           2,316            2,440          (5.1%)
----------------------------------------------------------------------------------------------------
     Total Unbundled Deliveries                                            4,844            4,108          17.9%
----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                   20,460           21,190          (3.4%)
----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.

(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an ARES or the PPO.

</FN>
</TABLE>





                                       55
<PAGE>

<TABLE>
<CAPTION>
                                                     For the three months ended March 31,
Electric Revenue (in millions)                                         2002         2001     Variance      % Change
---------------------------------------------------------------------------------------------------------------------
Bundled Revenues (1)
<S>                                                               <C>           <C>          <C>           <C>
Residential                                                       $     518     $    534     $    (16)     (3.0%)
Small Commercial & Industrial                                           391          413          (22)     (5.3%)
Large Commercial & Industrial                                           102          136          (34)    (25.0%)
Public Authorities & Electric Railroads                                  92          106          (14)    (13.2%)
--------------------------------------------------------------------------------------------------------
                                                                      1,103        1,189          (86)     (7.2%)
--------------------------------------------------------------------------------------------------------
Unbundled Revenues (2)
ARES
Small Commercial & Industrial                                            12           13           (1)     (7.7%)
Large Commercial & Industrial                                            10           27          (17)    (63.0%)
Public Authorities & Electric Railroads                                   2            1            1     100.0%
--------------------------------------------------------------------------------------------------------
                                                                         24           41          (17)    (41.5%)
--------------------------------------------------------------------------------------------------------
PPO
Small Commercial & Industrial                                            43           37            6      16.2%
Large Commercial & Industrial                                            64           61            3       4.9%
Public Authorities & Electric Railroads                                  13           12            1       8.3%
--------------------------------------------------------------------------------------------------------
                                                                        120          110           10       9.1%
--------------------------------------------------------------------------------------------------------
Total Unbundled Revenues                                                144          151           (7)     (4.6%)
--------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                        1,247        1,340          (93)     (6.9%)
Wholesale and Miscellaneous Revenue (3)                                  68          106          (38)    (35.8%)
--------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $   1,315     $  1,446     $   (131)     (9.1%)
--------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under  tariffed  rates,  which  include the cost of energy and the delivery
     cost of the transmission and the distribution of the energy.
(2)  Revenue from customers choosing an ARES includes a distribution  charge and
     a CTC  charge.  Transmission  charges  received  from ARES are  included in
     wholesale and miscellaneous  revenue.  Revenues from customers choosing the
     PPO  includes  an  energy  charge  at  market  rates,   transmission,   and
     distribution charges and a CTC charge.
(3)  Wholesale and  miscellaneous  revenues include sales to ARES,  transmission
     revenue, sales to municipalities and other wholesale energy sales.
</FN>
</TABLE>

         The changes in electric  retail  revenues  for the three  months  ended
March 31,  2002,  as compared to the three  months  ended  March 31,  2001,  are
attributable to the following:

(in millions)                                            Variance
------------------------------------------------------------------------------
Weather                                                $      (53)
Rate Changes                                                  (27)
Customer Choice                                               (39)
Other Effects                                                  26
------------------------------------------------------------------------------
Electric Retail Revenue                                       (93)
------------------------------------------------------------------------------

o    Weather.  The weather  impact for the three months ended March 31, 2002 was
     unfavorable  compared to the three  months ended March 31, 2001 as a result
     of warmer winter weather in 2002.  Heating degree days decreased 13% in the
     three months ended March 31, 2002  compared to the three months ended March
     31, 2001.
o    Rate  Changes.  The decrease  attributable  to rate  changes  reflects a 5%
     residential  rate  reduction,  effective  October 1, 2001,  required by the
     Illinois restructuring legislation.





                                       56
<PAGE>

o    Customer  Choice.  ComEd  non-residential  customers  have  the  choice  to
     purchase energy from other suppliers. This choice generally does not impact
     the volume of  deliveries,  but affects  revenue  collected  from customers
     related to energy  supplied by ComEd.  The  decrease  in revenues  reflects
     customers in Illinois  electing to purchase energy from an ARES or the PPO.
     As of March 31, 2002,  approximately 21,200 retail customers had elected to
     purchase  energy from an ARES or the ComEd PPO. This represents an increase
     in delivered MWhs to such customers from  approximately 4.1 million for the
     three months ended March 31, 2001 to 4.8 million for the three months ended
     March 31, 2002, or from 19% to 24% of total quarterly retail deliveries.
o    Other Effects. A strong housing  construction market in Chicago contributed
     to residential and small commercial and industrial  customer volume growth,
     partially  offset by the  unfavorable  impact of a slower  economy on large
     commercial and industrial customers.

         The reduction in Wholesale revenue for the three months ended March 31,
2002 as compared to the three months ended March 31, 2001 was due primarily to a
$28 million  decrease in  off-system  sales due to the  expiration  of wholesale
contracts  that were  offered by ComEd from June 2000 to May 2001 to support the
open access program in Illinois.

Purchased Power Expense
         Purchased  power expense  decreased  $71 million,  or 12% for the three
months  ended March 31,  2002.  The  decrease  in  purchased  power  expense was
primarily  attributable  to a $20 million  decrease due to  unfavorable  weather
conditions, a $33 million decrease as a result of customers choosing to purchase
energy from an ARES,  and a $26 million  decrease due to the  expiration  of the
wholesale  contracts  offered by ComEd to  support  the open  access  program in
Illinois.

Operating and Maintenance Expense
         Operating and maintenance (O&M) expense  increased $19 million,  or 9%,
for the three  months  ended  March 31,  2002.  The  increase in O&M expense was
primarily  attributable  to a $5 million  increase in both bad debt  expense and
claims  expense  due  to  revised  estimates,   and  an  increase  in  Corporate
allocations  due  to  higher  executive  severance  and  increased  pension  and
post-retirement benefit costs.

Depreciation and Amortization Expense
         Depreciation and amortization  expense  decreased $32 million,  or 19%,
for the three months ended March 31, 2002. This decrease is primarily due to the
discontinuation  of  goodwill  amortization  effective  January 1, 2002 upon the
adoption of SFAS No. 142.

Taxes Other Than Income
         Taxes other than income remained consistent from period to period.

Interest Charges
         Interest  charges  consist of  interest  expense and  distributions  on
Company-Obligated  Mandatorily  Redeemable  Preferred  Securities  of Subsidiary
Trusts.  Interest  charges  decreased $15 million,  or 10%, for the three months
ended  March  31,  2002.   The  decrease  in  interest   expense  was  primarily
attributable  to the impact of lower  interest  rates for the three months ended




                                       57
<PAGE>

March 31, 2002 as compared to the three months  ended March 31, 2001,  the early
retirement of the $196 million of First  Mortgage  Bonds in November of 2001 and
the annual retirement of $340 million in Transitional Trust Notes.

Other Income and Deductions
         Other income and deductions,  excluding interest charges, decreased $23
million,  for the three months ended March 31, 2002.  The decrease was primarily
attributable to $5 million in intercompany  interest income relating to the $352
million  outstanding  receivable  from PECO at March 31, 2001, and a $15 million
reduction  in  intercompany   interest  income  from  Unicom   Investment  Inc.,
reflecting lower interest rates.

Income Taxes
         The  effective  income  tax rate was 39.4% for the three  months  ended
March 31, 2002, compared to 45.7% for the three months ended March 31, 2001. The
decrease  in  the  effective  tax  rate  was  primarily   attributable   to  the
discontinuation  of goodwill  amortization as of January 1, 2002,  which was not
deductible for income tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

         ComEd's  capital   resources  are  primarily   provided  by  internally
generated  cash flows from  operations  and, to the extent  necessary,  external
financing including the issuance of commercial paper. ComEd's access to external
financing at reasonable terms is dependent on its credit ratings and the general
business  condition  of ComEd and the  utility  industry.  ComEd's  business  is
capital intensive.  Capital resources are used primarily to fund ComEd's capital
requirements,  including  construction,  repayments  of maturing  debt,  and the
payment of common stock dividends.

Cash Flows from Operating Activities
         Cash flows  provided  by  operations  were $285  million  for the three
months ended March 31, 2002  compared to $492 million for the three months ended
March 31, 2001. The decrease in cash flows in 2002 was primarily attributable to
a $229  million  decrease  in  working  capital  as a result of the  paydown  of
intercompany payables to affiliates and other outstanding  liabilities.  ComEd's
future  cash flows will  depend  upon the  ability  to achieve  cost  savings in
operations,  and the impact of the economy,  weather, and customer choice on its
revenues.  Although  the  amounts  may vary from period to period as a result of
uncertainties  inherent in the business,  ComEd expects to continue to provide a
reliable  and  steady  source of  internal  cash flow  from  operations  for the
foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in investing activities were $182 million for the three
months ended March 31, 2002  compared to $189 million for the three months ended
March 31, 2001. The decrease in cash flows used in investing  activities in 2002
was primarily  attributable to the $52 million decrease in capital  expenditures
partially  offset  by a $48  million  paydown  of the $400  million  outstanding
receivable with PECO in the first quarter of 2001.
         ComEd estimated that it will spend  approximately $781 million in total
capital  expenditures  for 2002.  Approximately  two thirds of the budgeted 2002





                                       58
<PAGE>

expenditures  are for continuing  efforts to further  improve the reliability of
its  transmission  and  distribution  systems.  The  remaining  one third is for
capital additions to support new business and customer growth. ComEd anticipates
that it will obtain financing, when necessary,  through borrowings, the issuance
of preferred securities,  or capital contributions from Exelon. ComEd's proposed
capital  expenditures  and other  investments are subject to periodic review and
revision to reflect changes in economic conditions and other factors.

Cash Flows from Financing Activities
         Cash flows used in financing  activities were $44 million for the three
months  ended March 31, 2002 as  compared to $154  million for the three  months
ended March 31, 2001.  Cash flows used in financing  activities  were  primarily
attributable  to debt service and payments of dividends to Exelon.  ComEd's debt
financing  activities  for the three months ended March 31, 2002  reflected  the
issuance of $400 million in First Mortgage Bonds,  the retirement of $89 million
of  transitional  trust notes and the early  retirement of $200 million in First
Mortgage Bonds with  available  cash. For the three months ended March 31, 2001,
ComEd's debt  financing  activities  reflected the  retirement of $89 million of
transitional  trust notes.  ComEd paid a $118 million  dividend to Exelon during
the three months ended March 31, 2002 compared to a $63 million dividend for the
three months ended March 31, 2001.

Credit Issues
         ComEd meets its short-term liquidity requirements primarily through the
issuance  of  commercial  paper,  borrowings  under bank credit  facilities  and
borrowings from the Exelon  intercompany  money pool. ComEd,  along with Exelon,
PECO and  Generation  entered into a $1.5 billion  unsecured  364-day  revolving
credit  facility  on December  12, 2001 with a group of banks.  ComEd has a $300
million  sublimit  under the  credit  facility  and  expects  to use the  credit
facility principally to support its $300 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 March 31, 2002, ComEd's
debt to total  capitalization  ratio on that basis was 46%.  At March 31,  2002,
ComEd had no short-term borrowings.

         ComEd's access to the capital  markets,  including the commercial paper
market, and its financing costs in those markets are dependent on its securities
ratings.  None of ComEd's  borrowings  are subject to default or prepayment as a
result of a downgrading of securities  ratings although such a downgrading could
increase interest charges under certain bank credit facilities.  ComEd from time
to time enters into interest rate swaps and other  derivatives  that require the
maintenance of investment  grade ratings.  Failure to maintain  investment grade
ratings would allow the  counterparty to terminate the derivative and settle the
transaction on a net present value basis.

         At March 31, 2002, ComEd's capital  structure,  excluding the deduction
from shareholders' equity of the $906 million receivable from Exelon,  consisted
of 52% long-term  debt, 46% of common stock,  and 2% of preferred  securities of
subsidiaries.  Long-term debt included $2.2 billion of transitional  trust notes
constituting  obligations  of  certain  consolidated  special  purpose  entities
representing 17% of capitalization.



                                       59
<PAGE>

         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 March 31, 2002,  ComEd had retained  earnings of
$268 million.

Contractual Obligations and Commercial Commitments
         There were no material  changes from  December 31, 2001 as set forth in
the 10-K,  other than in the normal course of business,  to ComEd's  contractual
obligations,  representing  cash  obligations  that  are  considered  to be firm
commitments,  and commercial commitments,  representing commitments triggered by
future events,  during the three months ended March 31, 2002 except the issuance
of $400 million of First  Mortgage Bonds due March 15, 2012 and the call of $200
million of bonds due February 1, 2022.





                                       60
<PAGE>


PECO ENERGY COMPANY

GENERAL

         PECO operates in a single business  segment,  Energy Delivery,  and its
operations  consist  of its retail  electricity  distribution  and  transmission
business in southeastern  Pennsylvania and its natural gas distribution business
in the Pennsylvania counties surrounding the City of Philadelphia.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
-----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,020       $1,051       $  (31)      (3.0%)

OPERATING EXPENSES
     Fuel and Purchased Power                                           486          488           (2)      (0.4%)
     Operating and Maintenance                                          136          132            4        3.0%
     Depreciation and Amortization                                      112          101           11       10.9%
     Taxes Other Than Income                                             59           43           16       37.2%
--------------------------------------------------------------------------------------------------------
         Total Operating Expense                                        793          764           29        3.8%
--------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                        227          287          (60)     (20.9%)
--------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (95)        (110)          15       13.6%
     Distributions on Company-Obligated Mandatorily
       Redeemable Preferred Securities of a Partnership
       which holds Solely Subordinated Debentures of
       the Company                                                       (2)          (2)          --        0.0%
     Other, net                                                           1           15          (14)     (93.3%)
--------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                              (96)         (97)           1       (1.0%)
--------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES                                              131          190          (59)     (31.1%)

INCOME TAXES                                                             42           68          (26)     (38.2%)
--------------------------------------------------------------------------------------------------------

NET INCOME                                                               89          122          (33)     (27.1%)
Preferred Stock Dividends                                                (2)          (2)          --        0.0%
--------------------------------------------------------------------------------------------------------

NET INCOME ON COMMON STOCK                                        $      87       $  120       $  (33)     (27.5%)
--------------------------------------------------------------------------------------------------------
</TABLE>

         Net  income on  common  stock  decreased  $33  million,  or 28% for the
quarter  ended March 31, 2002 as compared to the same 2001 period.  The decrease
was a result of lower margins due to the unplanned return of certain  commercial
and  industrial   customers,   milder  weather,   increased   depreciation   and
amortization  expense  and  higher  gross  receipts  taxes  partially  offset by
favorable rate adjustments.




                                       61
<PAGE>

         PECO's electric sales statistics are as follows:

<TABLE>
<CAPTION>
                                                              For the three months ended March 31,
Deliveries - (in GWh)                                                       2002             2001        % Change
--------------------------------------------------------------------------------------------------------------------
Bundled Deliveries (1)
<S>                                                                        <C>              <C>           <C>
Residential                                                                2,056            2,459         (16.4%)
Small Commercial & Industrial                                              1,757            1,001          75.5%
Large Commercial & Industrial                                              3,351            2,531          32.4%
Public Authorities & Electric Railroads                                      193              193           0.0%
----------------------------------------------------------------------------------------------------
                                                                           7,357            6,184          19.0%
----------------------------------------------------------------------------------------------------
Unbundled Deliveries (2)
Residential                                                                  792              527          50.3%
Small Commercial & Industrial                                                 96              892         (89.2%)
Large Commercial & Industrial                                                103            1,189         (91.3%)
Public Authorities & Electric Railroads                                       --                5        (100.0%)
----------------------------------------------------------------------------------------------------
                                                                             991            2,613         (62.1%)
----------------------------------------------------------------------------------------------------
Total Retail Deliveries                                                    8,348            8,797          (5.1%)
----------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Unbundled   service  reflects   customers   electing  to  receive  electric
     generation service from an alternative energy supplier.
</FN>
</TABLE>







<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
Electric Revenue (in millions)                                         2002         2001     Variance      % Change
-----------------------------------------------------------------------------------------------------------------------
Bundled Revenue (1)
<S>                                                               <C>           <C>          <C>          <C>
Residential                                                       $     243     $    281     $    (38)    (13.5%)
Small Commercial & Industrial                                           189          107           82      76.6%
Large Commercial & Industrial                                           244          183           61      33.3%
Public Authorities & Electric Railroads                                  18           17            1       5.9%
--------------------------------------------------------------------------------------------------------
                                                                        694          588          106      27.2%
--------------------------------------------------------------------------------------------------------
Unbundled Revenue (2)
Residential                                                              54           36           18      50.0%
Small Commercial & Industrial                                             5           40          (35)     (8.8%)
Large Commercial & Industrial                                             3           35          (32)    (91.4%)
Public Authorities & Electric Railroads                                  --            1           (1)   (100.0%)
--------------------------------------------------------------------------------------------------------
                                                                         62          112          (50)    (44.6%)
--------------------------------------------------------------------------------------------------------
Total Electric Retail Revenues                                          756          700           56       8.0%
Wholesale and Miscellaneous Revenue (3)                                  55           56           (1)     (1.8%)
--------------------------------------------------------------------------------------------------------
Total Electric Revenue                                            $     811     $    756     $     55       7.3%
--------------------------------------------------------------------------------------------------------
<FN>
(1)  Bundled service  reflects  deliveries to customers  taking electric service
     under tariffed rates,  which include the cost of energy,  the delivery cost
     of the transmission and distribution of the energy and a CTC charge.
(2)  Revenue from  customers  receiving  generation  from an alternate  supplier
     includes a transmission and distribution charge and a CTC charge.
(3)  Wholesale and miscellaneous  revenues include sales,  transmission revenue,
     sales to municipalities and other wholesale energy sales.
</FN>
</TABLE>



                                       62
<PAGE>

         The changes in electric retail revenues for the quarter ended March 31,
2002, as compared to the same 2001 period, are as follows:

(in millions)                                                Variance
------------------------------------------------------------------------------
Customer Choice                                                 $80
Rate Changes                                                     26
Weather                                                         (19)
Other Effects                                                   (31)
------------------------------------------------------------------------------
Retail Revenue                                                  $56
------------------------------------------------------------------------------

o    Customer  Choice.  All PECO customers  have choice to purchase  energy from
     other suppliers. This choice generally does not impact kWh deliveries,  but
     reduces  revenue  collected from  customers  because they are not obtaining
     generation  supply  from PECO.  Customers  who are  served by an  alternate
     supplier continue to pay CTCs.
              As of March 31,  2002,  the  customer  load  served  by  alternate
     suppliers  was 1,010 MW or 13.1% as  compared  to 2,535 MW or 33.1% for the
     same period of the prior year.  For the quarter  ended March 31, 2002,  the
     percent  of MWh sold by PECO  increased  by 17.8% to 88.2% of total  retail
     deliveries as compared to 70.4% in 2001.  As of March 31, 2002,  the number
     of customers served by alternate suppliers was 357,789 or 23.4% as compared
     to March 31, 2001 of 509,521 or 33.46%. This increase in the customer load,
     the  percentage  of MWh served by PECO,  and the  decrease in the number of
     customers served by alternative suppliers primarily resulted from customers
     selecting or returning to PECO as their electric generation supplier.
o    Rate  Changes.  The  increase  in  revenues  attributable  to rate  changes
     primarily  reflects the  expiration  of a 6%  reduction in PECO's  electric
     rates  during the first  quarter of 2001 and a $13 million  increase in the
     gross  receipts  tax  effective  January 1,  2002.  The change in the gross
     receipts tax rate does not affect  income.  These  increases  are partially
     offset by a $60 million rate reduction in effect for 2001 and 2002.
              As permitted by the  Pennsylvania  Electric  Competition  Act, the
     Pennsylvania  Department of Revenue has  calculated a 2002 Revenue  Neutral
     Reconciliation  (RNR) adjustment to the gross receipts tax rate in order to
     neutralize the impact of electric  restructuring  on its tax revenues.  The
     2002 RNR  adjustment  increases  the gross  receipts  tax rate  which  will
     increase PECO's annual revenues and tax  obligations by  approximately  $50
     million per year. In January 2002,  the PUC approved the  adjustment to the
     gross receipts tax rate, which was implemented effective January 1, 2002.
o    Weather. The weather impact was unfavorable compared to the prior year as a
     result of warmer winter weather.  Heating degree-days decreased 17% for the
     quarter ending March 31, 2002 compared to the same 2001 period.




                                       63
<PAGE>

o    Other Effects. Other items affecting revenue during the quarter ended March
     31, 2002 include:

     o    Volume. Exclusive of weather impacts, lower delivery volume affected
          PECO's revenue by $17 million compared to the same 2001 period.
     o    Other.  An $11 million  settlement of CTCs by a large  customer in the
          first  quarter of 2001 and the  payment  of $7  million to  Generation
          related to nuclear  decommissioning  cost recovery  under an agreement
          effective  September 2001 which reduced PECO's revenue compared to the
          prior year.

         PECO's gas sales  statistics  for the  quarter  ended March 31, 2002 as
compared to the same 2001 period are as follows:

<TABLE>
<CAPTION>
                                                                                   2002         2001       Variance
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>          <C>           <C>
Deliveries in million cubic feet (mmcf)                                          31,357       34,230        (2,873)
Revenue (in millions)                                                              $209         $295          $(86)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         The changes in gas revenue for the  quarter  ended March 31,  2002,  as
compared to the same 2001 period, are as follows:

(in millions)                                                  Variance
-------------------------------------------------------------------------------
Rate Changes                                                  $     (35)
Weather                                                             (30)
Volume                                                              (21)
-------------------------------------------------------------------------------
Gas Revenue                                                   $     (86)
-------------------------------------------------------------------------------

o    Rate  Changes.  The  unfavorable  variance in rates is  attributable  to an
     adjustment  of the  purchased  gas cost  recovery by the PUC  effective  in
     December  2001.  The average rate per million  cubic feet for all customers
     for the  quarter  ended  March 31,  2002 was 23%  lower  than the same 2001
     period.  PECO's gas rates are  subject to periodic  adjustments  by the PUC
     designed  to  recover  or refund  the  difference  between  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.
o    Weather.   The  unfavorable   weather  impact  is  attributable  to  warmer
     temperatures  during the  quarter  ended  March 31, 2002 as compared to the
     same 2001 period.  Heating  degree-days  decreased 17% in the quarter ended
     March 31, 2002 compared to the same 2001 period.
o    Volume.  Exclusive  of weather  impacts,  lower  delivery  volume  affected
     revenue by $21 million in the quarter  ended March 31, 2002 compared to the
     same 2001 period.  Total deliveries to retail customers decreased 8% in the
     quarter ended March 31, 2002 compared to the same 2001 period, primarily as
     a result of slower economic conditions in 2002 offset by increased customer
     growth.




                                       64
<PAGE>

Fuel and Purchased Power Expense
         Fuel and  purchased  power expense for the quarter ended March 31, 2002
decreased $2 million as compared to the same 2001  period.  The decrease in fuel
and purchased power expense was primarily attributable to $35 million from lower
prices related to gas, $31 million as a result of unfavorable weather conditions
and $29 million primarily  attributable to lower delivery volume related to gas.
These  decreases  were  partially  offset  by  $77  million  from  customers  in
Pennsylvania  selecting  or  returning  to PECO  as  their  electric  generation
supplier and lower PJM ancillary charges of $9 million.

Operating and Maintenance Expense
         O&M expense for the quarter ended March 31, 2002  increased $4 million,
or 3%, as  compared  to the same 2001  period.  The  increase in O&M expense was
primarily  attributable  to $7 million  related to the  deployment  of automated
meters and $6 million  related to an increased  allocation of corporate  expense
partially  offset by $6 million of incremental  costs related to a storms in the
first quarter of 2001 and $4 million associated with the write-off of excess and
obsolete inventory during the first quarter of 2001.

Depreciation and Amortization Expense
         Depreciation and  amortization  expense for the quarter ended March 31,
2002  increased  $11 million,  or 11%, as compared to the same 2001 period.  The
increase was primarily attributable to $9 million of additional  amortization of
PECO's  CTC and an  increase  of $2  million  related  to  depreciation  expense
associated with additional plant in service. The additional  amortization of the
CTC is in accordance  with PECO's  original  settlement  under the  Pennsylvania
Competition Act.

Taxes Other Than Income
         Taxes other than income for the quarter ended March 31, 2002  increased
$16  million,  or 37%, as compared to the same 2001  period.  The  increase  was
primarily  attributable  to a $13 million  increase in the gross receipts tax on
electric sales effective January 1, 2002.

Interest Charges
         Interest  charges  consist of  interest  expense and  distributions  on
Company-Obligated  Mandatorily  Redeemable Preferred Securities of a Partnership
(COMRPS).  Interest charges  decreased $15 million,  or 14% in the quarter ended
March 31, 2002 as compared to the same 2001 period.  The decrease was  primarily
attributable  to lower  interest  expense on long-term  debt of $10 million as a
result of scheduled  principal  payments and lower  interest  rates and interest
expense related to a loan from an affiliate in 2001 of $5 million.

Other Income and Deductions
         Other income and deductions  excluding  interest charges  decreased $14
million, or 93% in the quarter ended March 31, 2002 as compared to the same 2001
period.  The decrease in other income and deductions was primarily  attributable
to a gain on the  settlement  of an  interest  rate swap of $6  million in 2001,
lower interest  income of $4 million and the favorable  settlement of a customer
contract of $3 million in 2001.




                                       65
<PAGE>

Income Taxes
         The  effective  tax rate was 32.0% for the quarter ended March 31, 2002
as compared to 35.8% for the same 2001 period. The decrease in the effective tax
rate  was  primarily   attributable   to  tax  benefits   associated   with  the
implementation  of state  tax  planning  strategies  and the  reduced  impact of
investment tax credit amortization.

Preferred Stock Dividends
         Preferred  stock  dividends  for the quarter  ended March 31, 2002 were
consistent as compared to the same 2001 period.


LIQUIDITY AND CAPITAL RESOURCES

         PECO's capital resources are primarily provided by internally generated
cash flows from  operations  and, to the extent  necessary,  external  financing
including the issuance of commercial paper.  PECO's access to external financing
at reasonable  terms is dependent on its credit ratings and the general business
condition  of  PECO  and  the  utility  industry.  PECO's  business  is  capital
intensive.   Capital  resources  are  used  primarily  to  fund  PECO's  capital
requirements, including construction,  repayments of maturing debt and preferred
securities and payment of common stock dividends to Exelon.

Cash Flows from Operating Activities
         Cash flows  provided by operations for the quarter ended March 31, 2002
were $100 million  compared to cash flows used in  operations of $45 million for
the  quarter  ended March 31,  2001.  The  increase in cash flows was  primarily
attributable  to an increase in working  capital of $118  million as a result of
the repayment of intercompany  receivables from affiliate and customer  accounts
receivable.  PECO's cash flow from operating  activities  primarily results from
sales of electricity and gas to a stable and diverse base of retail customers at
fixed  prices.  PECO's future cash flows will depend upon the ability to achieve
cost savings in operations,  and the impact of the economy, weather and customer
choice on its revenues. Although the amounts may vary from period to period as a
result of the uncertainties inherent in its business,  PECO expects that it will
continue  to provide a reliable  and steady  source of  internal  cash flow from
operations for the foreseeable future.

Cash Flows from Investing Activities
         Cash flows used in investing activities for the quarter ended March 31,
2002 were $65 million,  compared to $46 million for the quarter  ended March 31,
2001.  The increase in cash flows used in  investing  activities  was  primarily
attributable  to an  increase in capital  expenditures  and an increase in other
investing  activities.  PECO's projected capital  expenditures for 2002 are $279
million.

         Approximately  one  half  of the  budgeted  2002  expenditures  are for
capital  additions  to support  customer and load growth and the  remainder  for
additions to or upgrades of existing  facilities.  PECO anticipates that it will
obtain financing, when necessary,  through borrowings, the issuance of preferred
securities,  or capital  contributions  from  Exelon.  PECO's  proposed  capital





                                       66
<PAGE>

expenditures  and other  investments are subject to periodic review and revision
to reflect changes in economic conditions and other factors.

Cash Flows from Financing Activities
         Cash flows used in financing activities for the quarter ended March 31,
2002 were $36 million compared to cash flows provided by financing activities of
$99 million for the quarter  ended March 31, 2001.  Cash flows used in financing
activities are primarily  attributable  to debt service and payment of dividends
to Exelon.  The change in cash flows used in financing  activities  is primarily
attributable to a lower level of commercial paper borrowing in the first quarter
of 2002 of $115  million,  additional  debt service of $42  million,  additional
dividends  paid to Exelon of $40 million and  proceeds  from the  settlement  of
increase  rate swap  agreements  of $31 million in 2001.  These  changes in cash
flows used in  financing  activities  were  partially  offset by an  increase in
restricted cash of $47 million and payable to affiliate of $46 million.  For the
quarter  ended March 31,  2002,  PECO paid  Exelon $85  million in common  stock
dividends compared to $45 million for the quarter ended March 31, 2001.

Credit Issues
         At March 31, 2002, PECO had  outstanding  $159 million of notes payable
consisting  principally of commercial paper. Certain of the credit agreements to
which PECO is a party  requires PECO to maintain a debt to total  capitalization
ratio of 65% or less, excluding securitization debt and excluding the receivable
from parent recorded in PECO's shareholders' equity. At March 31, 2002, the debt
to total capitalization ratios on that basis for PECO was 39%.

         PECO's access to the capital  markets,  including the commercial  paper
market, and its financing costs in those markets are dependent on its securities
ratings.  None of PECO's  borrowings  are subject to default or  prepayment as a
result of a downgrading of securities  ratings although such a downgrading could
increase  interest charges under PECO's bank credit facility.  PECO from time to
time enters  into  interest  rate swap and other  derivatives  that  require the
maintenance of investment  grade ratings.  Failure to maintain  investment grade
ratings would allow the  counterparty to terminate the derivative and settle the
transaction on a net present value basis.

         At March 31, 2002,  PECO's capital  structure,  excluding the deduction
from shareholders' equity of the $1.8 billion receivable from Exelon,  consisted
of 26% common  equity,  3%  preferred  stock and COMRPS  (which  comprised 2% of
PECO's  total  capitalization  structure),  and  71%  long-term  debt  including
transition bonds issued by PECO Energy  Transition Trust (PETT).  Long-term debt
included $4.4 billion of transition bonds representing 52% of capitalization.

         Under PUHCA and the Federal Power Act, PECO can pay dividends only from
retained or current  earnings.  At March 31, 2002, PECO had retained earnings of
$272 million.



                                       67
<PAGE>


Contractual Obligations and Commercial Commitments
         There were no material  changes from  December 31, 2001 as set forth in
the 10-K,  other than in the normal  course of business,  to PECO's  contractual
obligations,  representing  cash  obligations  that  are  considered  to be firm
commitments,  and commercial commitments,  representing commitments triggered by
future  events,  during the three  months ended March 31, 2002 except for an $85
million  increase in the amount of surety  bonds  required  by PECO's  insurance
policies.  Approximately  one-fourth of the surety bonds expire in the remainder
of 2002  and the  other  three-fourths  expire  in the  two-year  period  ending
December 2004.

















                                       68
<PAGE>



EXELON GENERATION COMPANY, LLC

GENERAL

     The  operations of Generation  consist of electric  generating  facilities,
energy marketing operations and equity interests in Sithe and AmerGen.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

Significant Operating Trends - Generation
<TABLE>
<CAPTION>
                                                               Three Months Ended March 31,
                                                                       2002         2001     Variance      % Change
----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>             <C>          <C>          <C>
OPERATING REVENUES                                                $   1,975       $1,628       $  347       21.3%

OPERATING EXPENSES
     Fuel and Purchased Power                                         1,342          818          524       64.1%
     Operating and Maintenance                                          432          404           28        6.9%
     Depreciation and Decommissioning                                    63           92          (29)     (31.5%)
     Taxes Other Than Income                                             49           46            3        6.5%
---------------------------------------------------------------------------------------------------------
         Total Operating Expense                                      1,886        1,360          526       38.7%
---------------------------------------------------------------------------------------------------------

OPERATING INCOME                                                         89          268         (179)     (66.8)%
---------------------------------------------------------------------------------------------------------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                   (17)         (33)          16      (48.5%)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net       23           26           (3)     (11.5%)
     Other, net                                                          16            4           12      300.0%
---------------------------------------------------------------------------------------------------------
         Total Other Income and Deductions                               22           (3)          25     (833.3%)
---------------------------------------------------------------------------------------------------------

INCOME BEFORE INCOME TAXES AND CUMULATIVE
    EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES                          111          265         (154)     (58.1%)

INCOME TAXES                                                             45          107          (62)     (57.9%)
---------------------------------------------------------------------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
   ACCOUNTING PRINCIPLES                                                 66          158          (92)     (58.2%)

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
    PRINCIPLES, NET OF INCOME TAXES                                      13           12            1        8.3%
---------------------------------------------------------------------------------------------------------

NET INCOME                                                        $      79       $  170          (91)     (53.5%)
---------------------------------------------------------------------------------------------------------
</TABLE>

Net Income
         Generation's net income decreased by $91 million, or 54%, for the three
months ended March 31, 2002  compared to the same period in the prior year.  Net
income was  impacted by lower  margins on  wholesale  energy  sales due to lower
market  prices  for  energy,   lower  volumes  sold  to  affiliates   due  to  a
weather-driven reduction in Energy Delivery's demand and by higher operating and
maintenance  expense.  Operating and maintenance  expense  increased due to four
additional nuclear  generating  station refueling  outages,  partially offset by
employee reductions and other non-outage operating cost reductions. Depreciation
expense  declined  reflecting  an extension of the  estimated  service  lives of
certain generating stations.




                                       69
<PAGE>

Operating Revenues, Net of Fuel and Purchased Power
         Operating  revenues,  net of fuel and purchased power were $633 million
for the three months ended March 31, 2002  compared to $810 million for the same
period in the prior year. This represents a $177 million decrease,  or 22%. This
decrease resulted primarily from milder weather during the 2002 quarter relative
to the  prior  year,  which  decreased  Generation's  GWh  deliveries  to Exelon
Delivery by 5%.  These  volumes were then sold into the  wholesale  market where
prices were  approximately  29% lower than in the prior year. These factors were
slightly offset by a 3% increase in realized prices from Exelon Delivery and the
commencement  of trading  operations  in the second  quarter of the prior  year.
Revenues for the three months ended March 31, 2002  increased  primarily  due to
$515  million  related to the trading  portfolio,  which was  initiated in April
2001, offset by reduced sales volumes to retail  affiliates.  Fuel and purchased
power expense similarly  includes $514 million related to this trading activity.
Realized  trading margin was  approximately $1 million in the three month period
ended  March 31,  2002.  Non-cash  mark-to-market  gains were  approximately  $3
million on the trading and non-trading portfolios.


         For the three months ended March 31, 2002 and 2001,  Generation's sales
and the supply of these sales were as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31,
                                                                                      -----------------------------
                                                                                             2002              2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>               <C>
Energy Delivery                                                                            27,750            29,204
Exelon Energy                                                                               1,250             1,591
Market Sales                                                                               19,324            17,459
Trading Portfolio                                                                          14,239                --
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                      62,563            48,254
-----------------------------------------------------------------------------------------------------------------------


                                                                                       Three Months Ended March 31,
(in GWHs)                                                                                    2002              2001
-----------------------------------------------------------------------------------------------------------------------
Nuclear Units                                                                              28,752            31,206
Purchases - non-trading portfolio                                                          18,093            15,561
Purchases - trading portfolio                                                              14,239                --
Fossil and Hydro Units                                                                      1,479             1,487
-----------------------------------------------------------------------------------------------------------------------
Total                                                                                      62,563            48,254
-----------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       70
<PAGE>

         Generation's average margins on energy sales for the three months ended
March 31, 2002 and 2001 are as follows:
<TABLE>
<CAPTION>
                                                                                      Three Months Ended March 31,
($/MWh)                                                                                      2002              2001
-----------------------------------------------------------------------------------------------------------------------
Average Realized Revenue
<S>                                                                                  <C>             <C>
     Energy Delivery                                                                 $     29.98     $      29.11
     Exelon Energy                                                                         45.60            38.34
     Market Sales                                                                          28.15            39.69
     Trading Portfolio                                                                     36.17             n.a.
     Total Sales - including the trading portfolio                                         31.14             n.a.
     Total Sales - excluding the trading portfolio                                         29.63            33.24

 Average Supply Cost - including the trading portfolio                               $     21.15             n.a.
Average Supply Cost - excluding the trading portfolio                                      16.74            16.74

Average Margin - including the trading portfolio                                     $      9.99             n.a.
Average Margin - excluding the trading porfolio                                            12.89            16.50
-----------------------------------------------------------------------------------------------------------------------
n.a. - not applicable as trading activities were initiated in April 2001.
</TABLE>

         Generation's nuclear fleet, including AmerGen,  performed at a capacity
factor of 90.3% for the three months ended March 31, 2002  compared to 98.8% for
the  same  period  in  2001.  Generation's  nuclear  fleet's  production  costs,
including AmerGen, for the three months ended March 31, 2002 were $14.26 per MWh
compared  to  $11.68  per MWh for the same  period in 2001.  The lower  capacity
factor and higher unit production  costs reflect the increased number of planned
refueling  outages in the current period.  Generation's  average purchased power
costs for  wholesale  operations  were  $34.39 per MWh for the first  quarter of
2002,  compared to $38.17 per MWh for the same period in 2001.  The  decrease in
purchase  power costs  resulted  from the  decrease in  wholesale  power  market
prices.

Operating and Maintenance
         Operating and maintenance  expenses  increased $28 million,  or 7%, for
the three months  ended March 31, 2002  compared to the same period in the prior
year. This was primarily due to the additional  operating and maintenance  costs
of $62 million  arising from four planned nuclear plant outages during the three
months  ended March 31, 2002  compared to zero outages in the same period in the
prior year and allocated  corporate costs including executive  severance.  These
additional expenses were offset by other operating cost reductions realized from
Exelon's cost management  initiative and a $10 million reduction in Generation's
severance  accrual.  The  severance  reduction  represents  a reversal  of costs
previously charged to operating expense.

Depreciation and Decommissioning
         Depreciation and  decommissioning  expenses  decreased $29 million,  or
32%, for the three  months  ended March 31, 2002  compared to the same period in
the prior year due to a $35 million  reduction in  depreciation  expense arising
from the extension of the useful lives on certain  generation  facilities in the
second and third quarters of 2001,  partially offset by additional  depreciation
expense on capital  additions placed in service  subsequent to the first quarter
of 2001.



                                       71
<PAGE>

Taxes Other Than Income
         Taxes other than  income  increased  $3  million,  or 7%, for the three
months  ended March 31,  2002  compared to the same period in the prior year due
primarily to an increase in capital stock taxes of $2 million.

Interest Expense
         Interest  expense  decreased $16 million,  or 49%, for the three months
ended  March 31,  2002,  compared  to the same  period in the  prior  year.  The
decrease is primarily  due to $15 million of  affiliated  interest  expense paid
during the three month period ended March 31, 2001 which was not incurred during
2002 as the related borrowing had been repaid.

Equity in Earnings of Unconsolidated Affiliates
         Equity in earnings of unconsolidated  affiliates  decreased $3 million,
or 12%, for the three months ended March 31, 2002 compared to the same period in
the prior  year.  This  decrease  was due to a $5 million  reduction  in AmerGen
equity  earnings  arising from a planned  plant  outage  during the three months
ended  March 31,  2002  partially  offset by $2  million  of  additional  equity
earnings from Sithe.

Other, net
         Other,  net increased $12 million,  or 300%, for the three months ended
March  31,  2002  compared  to the same  period in the prior  year.  Other,  net
includes  an  increase  of $11  million of  investment  income  from the nuclear
decommissioning  trust funds for the three months ended March 31, 2002  compared
to the same period in the prior year.  The  nuclear  decommissioning  trust fund
results  consist  of  realized  gains and  losses  and  dividend  income  net of
investment expenses.

Income Taxes
         The effective income tax rate was substantially  unchanged at 40.5% for
the three months  ended March 31, 2002  compared to 40.4% for the same period in
the prior year.

Cumulative Effect of Changes in Accounting Principles
         On January 1, 2002,  Generation  adopted  SFAS No. 141  resulting  in a
benefit of $13 million, net of income taxes of $9 million.

         On  January 1, 2001,  Generation  adopted  SFAS No.  133,  as  amended,
resulting in a benefit of $12 million, net of income taxes of $7 million.

LIQUIDITY AND CAPITAL RESOURCES

         Generation's  capital  resources are  primarily  provided by internally
generated  cash flows from  operations  and, to the extent  necessary,  external
financings and  borrowings or capital  contributions  from Exelon.  Generation's
access to external  financing at reasonable  terms is dependent on  Generation's
credit ratings and general business  condition,  as well as the general business
conditions of the industry.  Generation's business is capital intensive. Capital
resources   are  used   primarily  to  fund  capital   requirements,   including
construction,  investments  in new and  existing  ventures,  and  repayments  of
maturing  debt.  Any  potential  future   acquisitions  could  require  external
financing or borrowings or capital contributions for Exelon.




                                       72
<PAGE>

Cash Flows from Operating Activities
         Cash flows  provided  by  operations  were $509  million  for the three
months ended March 31, 2002, compared to $362 million for the same period in the
prior year.  Generation's cash flows from operating  activities primarily result
from the sale of electric energy to wholesale customers,  including Generation's
affiliated  companies,  as well as settlements arising from Generation's trading
activities.  Generation's future cash flow from operating activities will depend
upon future  demand and market  prices for energy and the ability to continue to
produce and supply power at competitive costs.

Cash Flows from Investing Activities
         Cash flows used in investing activities were $379 million for the three
months ended March 31, 2002, compared to $139 million for the same period in the
prior year. Capital expenditures of $132 million,  investment in nuclear fuel of
$156  million and the funding of a $46 million  loan to AmerGen,  an  affiliate,
represented  the majority of the cash used in investing  activities in the three
month  period  ended March 31,  2002  compared  to capital  expenditures  of $40
million and  investment in nuclear fuel of $78 million in the same period in the
prior year.  Generation's capital expenditures are projected to be approximately
$1.1  billion  in  2002,  approximately  80% of which  is for  additions  to and
upgrades of existing  facilities  and nuclear  fuel and 20% is for  increases in
generating capacity and development. Eleven nuclear refueling outages, including
AmerGen,  are planned  for 2002,  compared to six during  2001.  Four  refueling
outages  occurred  during the three months  ended March 31, 2002  compared to no
outages in the same  period in the prior  year.  Generation's  proposed  capital
expenditures  and other  investments are subject to periodic review and revision
to reflect changes in economic conditions and other factors.

         In  addition  to  the  2002  capital   expenditures  of  $1.1  billion,
Generation  closed the purchase of two natural-gas and oil-fired plants from TXU
Corp.  (TXU) on April 25,  2002.  The $443  million  purchase  was  funded  with
available cash and borrowings from Exelon.

Cash Flows from Financing Activities
         Cash flows  provided by  financing  activities  were $1 million for the
three months ended March 31, 2002,  compared to cash used of $36 million for the
same  period  in  the  prior  year.  The  prior  year  amount   represented  net
distributions to Exelon which did not recur in the current period.

Credit Issues
         Generation  meets  its  short-term  liquidity   requirements  primarily
through  the  issuance  of  commercial  paper,   borrowings  under  bank  credit
facilities and borrowings from the Exelon  intercompany money pool.  Generation,
along with Exelon,  ComEd and PECO entered into a $1.5 billion unsecured 364-day
revolving  credit  facility  on December  12, 2001 with a group of banks.  As of
March 31,  2002,  no sublimit had been  established  for  Generation  under this
credit facility.  This credit facility requires Generation to maintain a debt to
total capitalization ratio of 65% or less. At March 31, 2002,  Generation's debt
to total capitalization ratio on that basis was 26%.

         Generation's  access to the capital  markets,  including the commercial
paper  market,  and its  financing  costs in those  markets are dependent on its




                                       73
<PAGE>

securities  ratings.  None of Generation's  borrowings are subject to default or
prepayment as a result of a downgrading  of securities  ratings  although such a
downgrading   could  increase   interest   charges  under  certain  bank  credit
facilities.

         From time to time  Generation  enters into interest rate swap and other
derivatives that require the maintenance of investment grade ratings. Failure to
maintain  investment grade ratings would allow the counterparty to terminate the
derivative and settle the transaction on a net present value basis.

         At March 31,  2002,  Generation's  capital  structure  consisted of 26%
long-term debt and 74% member's equity.

         Under  PUHCA  and the  Federal  Power  Act,  Generation  can  only  pay
dividends from undistributed or current earnings.  At March 31, 2002, Generation
had undistributed earnings of $550 million.

Contractual Obligations and Commercial Commitments
         There were no material  changes from  December 31, 2001 as set forth in
the  10-K,  other  than  in the  normal  course  of  business,  to  Generation's
contractual obligations, representing cash obligations that are considered to be
firm commitments, and commercial commitments, representing commitments triggered
by future events, during the three months ended March 31, 2002.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risk
Generation

         Exelon's  energy  contracts  are accounted for under SFAS No. 133. Most
non-trading contracts qualify for a normal purchases and normal sales exception.
Those that do not are recorded as assets or  liabilities on the balance sheet at
fair value.  Changes in the fair value of qualifying  cash-flow  hedge contracts
are recorded in accumulated other comprehensive income, and gains and losses are
recognized in earnings when the underlying  transaction matures.  Mark-to-market
gains and losses on other  derivative  contracts that do not meet hedge criteria
under SFAS No. 133 and the ineffective portion of hedge contracts are recognized
in earnings on a current basis. Amounts recognized in earnings related to energy
contracts  for the three  months  ended  March 31,  2002  include $48 million of
realized  gains from  cash-flow  hedge  contract  settlements  and $2 million in
non-cash mark-to market gains on other derivative contracts.




                                       74
<PAGE>

         Outlined  below is a summary  of the  changes  in fair  value for those
contracts  included as assets and liabilities in the Consolidated  Balance Sheet
for the three months ended March 31, 2002:

<TABLE>
<CAPTION>
(in millions)                                                                        Non-trading            Trading
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>               <C>
Fair value of contracts outstanding as of January 1, 2002                              $       78        $       14
    Change in fair value during the three months ended March 31, 2002:
        Contracts settled during period                                                       (44)               (4)
        Mark-to-market gain/(loss) on contracts entered into during the period                 11                (1)
        Mark to market gain/(loss) on other contracts                                         (83)                1
        Changes in fair value attributable to changes in valuation techniques and
          assumptions                                                                          --                --
------------------------------------------------------------------------------------------------------------------------
    Total change in fair value                                                               (116)               (4)
------------------------------------------------------------------------------------------------------------------------
Fair value of contracts outstanding at March 31, 2002                                  $      (38)       $       10
------------------------------------------------------------------------------------------------------------------------

         The total  change in fair value during the three months ended March 31,
2002 is reflected in the first quarter 2002 financial statements as follows:
                                                                                     Non-trading            Trading
------------------------------------------------------------------------------------------------------------------------
Mark-to-market gain/(loss) on non-qualifying hedge contracts or
    hedge ineffectiveness reflected in earnings                                        $        6        $       (4)
Mark-to-market gain/(loss) on cash-flow hedge contracts reflected in
    Other Comprehensive Income                                                               (122)               --
------------------------------------------------------------------------------------------------------------------------
Total change in fair value                                                             $     (116)       $       (4)
------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The majority of Exelon's  contracts are  non-exchange  traded contracts
valued using prices  provided by external  sources,  which  primarily  represent
price  quotations  available  through  brokers  or   over-the-counter,   on-line
exchanges.  Prices reflect the average of the bid-ask  midpoint  prices obtained
from all sources  that Exelon  believes  provide the most liquid  market for the
commodity.  The terms for which such price  information  is available  varies by
commodity,  by region and by  product.  The  remainder  of the assets  represent
contracts for which  external  valuations are not  available,  primarily  option
contracts.  These  contracts  are  valued  using the Black  model,  an  industry
standard  option  valuation  model,  and  other  valuation  techniques  and  are
discounted  using a risk-free  interest  rate.  The fair values in each category
reflect the level of forward prices and volatility  factors as of March 31, 2002
and may change as a result of future changes in these factors.



                                       75
<PAGE>

         Mark-to market gains and losses on qualifying cash-flow hedge contracts
are recorded in accumulated other comprehensive income, and will be reclassified
into  earnings  when the contract  settles.  Mark-to-market  gains and losses on
derivative  contracts that do not meet hedge criteria under SFAS No. 133 and the
ineffective  portion of hedge  contracts  have been  recognized in earnings on a
current basis. The maturities,  or expected  settlement dates, of the qualifying
cash flow hedge contracts  recorded in accumulated other  comprehensive  income,
and the other non-trading and trading  derivative  contracts and sources of fair
value as of March 31, 2002 are as follows:

<TABLE>
<CAPTION>
                                                                                    Maturities within
                                                                                                         Total Fair
(in millions)                                                  1 Year        2-3 Years      4-5 Years         Value
------------------------------------------------------------------------------------------------------------------------
Non-trading, qualifying cash flow hedge contracts(1):
<S>                                                         <C>              <C>             <C>          <C>
   Prices provided by other external sources                $      (7)       $     (38)      $     --     $     (45)
------------------------------------------------------------------------------------------------------------------------
  Total                                                     $      (7)       $     (38)      $     --     $     (45)
------------------------------------------------------------------------------------------------------------------------

Non-trading,other derivative contracts(2):
   Actively quoted prices                                           6               --             --             6
   Prices provided by other external sources                       18               --             (7)           11
   Prices based on model or other valuation methods                (1)              --             (9)          (10)
------------------------------------------------------------------------------------------------------------------------
  Total                                                     $      23        $      --       $    (16)    $       7
------------------------------------------------------------------------------------------------------------------------

Trading, other derivative contracts(3):
   Actively quoted prices                                   $      (1)       $      --       $     --     $      (1)
   Prices provided by other external sources                        6                1             --             7
   Prices based on model or other valuation methods                 3                1             --             4
------------------------------------------------------------------------------------------------------------------------
  Total                                                     $       8        $       2       $     --     $      10
------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Mark-to-market  gains and losses on  contracts  that  qualify as  cash-flow
     hedges are recorded in other comprehensive income.
(2)  Mark-to-market  gains and losses on other non-trading  derivative contracts
     that do not qualify as cash-flow hedges are recorded in earnings.
(3)  Mark-to-market  gains and  losses on  trading  contracts  are  recorded  in
     earnings.
</FN>
</TABLE>

Interest Rate Risk
ComEd

         ComEd has entered into fixed-to-floating  interest rate swaps to manage
interest rate exposure  associated  with three fixed rate debt  issuances in the
aggregate amount of $485 million.  At March 31, 2002, these interest rate swaps,
designated as fair value hedges,  had a fair market value exposure of $1 million
based on the present value  difference  between the contract and market rates at
March 31,  2002.  In February  2002,  ComEd  entered  into two forward  starting
interest rate swaps in the aggregate  amount of $175 million to lock in interest
rate  levels in  anticipation  of future  financing.  At March 31,  2002,  these
interest rate swaps,  designated as cash flow hedges, had a fair market value of
$5 million.

         The aggregate fair value exposure of the interest rate swaps that would
have resulted from a  hypothetical  50 basis point decrease in the spot yield at
March 31, 2002 is estimated to be $8 million. If the derivative  instruments had
been  terminated at March 31, 2002,  this  estimated  fair value  represents the
amount to be paid by ComEd to the counterparties.

         The aggregate fair value exposure of the interest rate swaps that would
have resulted from a  hypothetical  50 basis point increase in the spot yield at
March 31, 2002 is estimated to be $0 million. If the derivative  instruments had
been  terminated at March 31, 2002,  this  estimated  fair value  represents the
amount to be paid by ComEd to the counterparties.




                                       76
<PAGE>

         In connection with the issuance of $400 million of First Mortgage Bonds
in March of 2002,  ComEd  settled  forward  starting  interest rate swaps in the
aggregate  amount of $375 million  resulting  in a $9 million  loss  recorded in
other comprehensive  income,  which was deferred and is being amortized over the
expected remaining life of the related debt.

PECO

         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 March 31, 2002, these interest rate swaps
had a fair  market  value  exposure of $14  million  based on the present  value
difference between the contract and market rates at March 31, 2002.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point decrease
in the spot  yield at March 31,  2002 is  estimated  to be $17  million.  If the
derivative  instruments  had been  terminated at March 31, 2002,  this estimated
fair value represents the amount to be paid by PECO to the counterparties.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point increase
in the spot  yield at March 31,  2002 is  estimated  to be $12  million.  If the
derivative  instruments  had been  terminated at March 31, 2002,  this estimated
fair value represents the amount to be paid by PECO to the counterparties.







                                       77
<PAGE>



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On May 8, 2002,  a class  action  lawsuit was filed  against  Exelon on
behalf of purchasers of Exelon  securities  between April 24, 2001 and Spetember
27, 2001 (Class  Period).  The lawsuit was filed in the United  States  District
Court for the Northern  District of Illinois,  Eastern  Division.  The complaint
alleges  that Exelon  violated  Federal  securities  laws by issuing a series of
materially  false  and  misleading  statements  relating  to its  2001  earnings
expectations during the Class Period. Corbin A. McNeill, Jr., John Rowe and Ruth
Ann Gillis were also named as  defendants.  Exelon  believes that the lawsuit is
without merit and will vigoroursly contest this matter.

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

On April 23, 2002, Exelon held its 2002 Annual Meeting of Shareholders.

Proposal 1 was the election of five Class II directors to serve three-year terms
expiring in 2005. The following directors were elected:

                                            Votes For        Votes Withheld
--------------------------------------------------------------------------------
Edward A. Brennan                         258,188,435             4,087,852
Bruce DeMars                              258,425,840             3,850,447
Richard H. Glanton                        257,786,906             4,489,381
John W. Rowe                              258,478,505             3,797,782
Ronald Rubin                              258,098,129             4,178,158
--------------------------------------------------------------------------------

Proposal 2 was the  ratification  of  PricewaterhouseCoopers  LLP as independent
accountants for Exelon and its subsidiaries for 2002. The shareholders  approved
the proposal with 250,309,286  votes cast for,  9,667,089 votes cast against and
2,299,912 votes abstaining.

Proposal 3 was the approval of the Exelon  Corporation  Employee  Stock Purchase
Plan.  The  shareholders  approved  the Plan with  252,802,074  votes  cast for,
6,216,999 votes cast against, 3,257,214 votes abstaining, and no non-votes.

Proposal 4 was the approval of  amendments to the Exelon  Corporation  Long Term
Incentive Plan. The shareholders  approved the amendments with 210,099,740 votes
for, 47,805,508 votes against, 4,371,039 votes abstaining, and no non-votes.

Proposal 5 was a shareholder  proposal to recommend  investment in clean energy.
The shareholders  rejected the proposal with 14,767,776  votes for,  209,819,696
votes against, 9,376,947 votes abstaining, and 28,311,868 non-votes.


ITEM 5.  OTHER INFORMATION

Exelon

         As  previously  reported  in  Exelon's  Form 8-K dated  March 1,  2002,
Enterprises announced an agreement to sell its 49% interest in AT&T Wireless PCS
of Philadelphia,  LLC to a subsidiary of AT&T Wireless Services for $285 million
in cash. On April 1, 2002, the transaction closed.

ComEd
         As previously  reported in the 2001 Form 10-K,  in connection  with the
transfer of ComEd's nuclear generating  stations to Generation,  ComEd asked the
Illinois  Commerce  Commission  (ICC) to approve the transfer of the  associated




                                       78
<PAGE>

nuclear decommissioning trust funds. On August 17, 2000, the ICC issued an order
allowing  the  transfer.  The ICC's order was  appealed to, and affirmed by, the
Illinois Appellate Court.  Certain  intervenors asked the Illinois Supreme Court
to review the Appellate Court's opinion.  On April 3, 2002, the Illinois Supreme
Court denied the petition for leave to appeal.  This decision does not relate to
the other  appeal of the order  allowing  funds to be collected  from  customers
subsequent to the transfer to Generation or the appeal of the amount that may be
collected from customers.

         As  previously  reported in the 2001 Form 10-K,  on March 6, 2002,  the
participants in Alliance  Transmission Company, LLC (Alliance) and National Grid
submitted  a petition to the FERC for a  declaratory  order with regard to their
participation in the Midwest  Independent  Transmission  System  Operator,  Inc.
(MISO). On April 25, 2002, the FERC issued an order granting in part and denying
in part the  Alliance  companies'  request  for a  declaratory  order.  The FERC
ordered  the  Alliance  companies  to make a filing  within 30 days of the order
indicating which regional  transmission  organization  (RTO) each would join and
whether they would do so  individually or collectively as part of an independent
transmission  company.  The FERC did not rule on the  return of the $60  million
withdrawal fee paid collectively by ComEd, Ameren Corporation and Illinois Power
Company,  stating that this must be determined in conjunction with any return to
MISO by any of those  companies.  The Alliance  companies  and National Grid are
continuing   to   negotiate   with  both  MISO  and  PJM  with  respect  to  RTO
participation.

PECO
         As  previously  reported  in  the  2001  Form  10-K,  the  Pennsylvania
Electricity  Generation  Customer  Choice and  Competition  Act provides for the
imposition  and  collection  of  non-bypassable  CTCs on  customers'  bills as a
mechanism for utilities to recover their  allowed  stranded  costs.  In the 1998
settlement of its  restructuring  case, PECO agreed to negotiate with certain of
its large  customers the payment of their stranded  investment  obligations in a
single  lump sum. On January 11,  2002,  a complaint  was brought by a municipal
authority  requesting that the PUC require PECO to adopt specific procedures for
such  negotiations,  including  setting a specific  discount rate. The complaint
alleges that PECO is using an  inappropriate  discount rate in its  evaluations,
thus making the lump-sum payment of CTC financially unattractive to customers. A
procedural  schedule  for this  matter  has been set,  and it will be  litigated
through the fourth quarter of 2002.

Generation
         Generation is a 12.5%  stakeholder in Pebble Bed Modular  Reactor (Pty)
Ltd., which is a consortium of investors (including British Nuclear Fuels, ESKOM
Enterprises and the Industrial  Developmental  Corporation of South Africa) that
is studying the feasibility of building a demonstration  reactor in South Africa
and  commercializing  the Pebble Bed Modular Reactor (PBMR) design. On April 16,
2002, Generation announced that it would not be proceeding with the PBMR project
beyond the completion of the current feasibility study phase. Generation advised
PBMR (Pty) Ltd.  that for the time being  Generation  would  continue  to devote
technical  personnel  and executive  leadership  to the project.  As of June 30,
2002,Generation's support of the project will total approximately $20 million.




                                       79
<PAGE>

         In April 2002,  Generation  purchased  general and limited  partnership
interests in Louisiana Energy Services, L.P. (LES) totaling 6.75% from Graystone
Corporation and Le Paz Incorporated,  respectively.  LES was formed in the early
1990s,  by a consortium  of  companies,  to design,  build and operate a private
uranium enrichment facility.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)      Exhibits:

         10.1 - Exelon Agreement with Corbin A. McNeill, Jr. *
         99.1 - Managements  Discussion  and Analysis of Finacial  Condition and
                Results  of  Operations  and Index to  Financial  Statements  of
                Exelon  Generation  Company,  LLC,  filed by  Exelon  Generation
                Company,  LLC with the  Securities  and Exchange  Commission  on
                April  24,  2002 on  Registration  Statement  Form S-4 (File No.
                333-85496).

* Compensatory plan or arrangements in which directors or officers of the
applicable registrant participate and which are not available to all employees.

(b)      Reports on Form 8-K:

<TABLE>
<CAPTION>
                  Exelon filed  Current  Reports on Form 8-K during the three months ended March 31, 2002  regarding  the  following
         items:

         Date of Earliest
         Event Reported             Description of Item Reported
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>
         January 25, 2002           "ITEM 5. OTHER EVENTS" regarding Exelon's  restatement of third quarter earnings and reaffirming
                                    2001 earnings guidance.

         January 29, 2002           "ITEM 5. OTHER EVENTS"  regarding the  announcement  of Exelon's  consolidated  earnings for the
                                    year ended December 31, 2001 and "ITEM 9. REGULATION FD DISCLOSURE"  regarding highlights of the
                                    Exelon Fourth Quarter Earnings Conference Call.

         February 12, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and Co-CEO of Exelon at the UBS Warburg Energy and Utilities  Conference.  The exhibits  include
                                    the  slides  used and  copies  of the  materials  made  available  to  investors  attending  the
                                    conference.

         February 18, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and  Co-CEO  of  Exelon at the EEI  International  Financial  Conference,  London.  The  exhibit
                                    includes the slides used during the presentation.

         February 28, 2002          "ITEM 5. OTHER  EVENTS"  regarding  certain  financial  information  of Exelon  Corporation  and
                                    Subsidiary  Companies.  The exhibits  under "ITEM 7. FINANCIAL  STATEMENT AND EXHIBITS"  include
                                    the  Consent  of the  Independent  Public  Accountants,  Selected  Financial  Data,  Market  for
                                    Registrant's  Common  Equity  and  Related  Stockholder  Matters,  Management's  Discussion  and




                                       80
<PAGE>

                                    Analysis of  Financial  Condition  and  Results of  Operations,  and  Financial  Statements  and
                                    Supplementary Data.

         March 1, 2002              "ITEM 5. OTHER EVENTS"  regarding  issuance of a press release  announcing  the sale of Exelon's
                                    interest in a joint venture with AT&T Wireless.

         March 5, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  regarding a  presentation  by John W. Rowe,  President and
                                    Co-CEO of Exelon at the  Morgan  Stanley  Global  Electricity  & Energy  Conference  in New York
                                    City.  The  exhibits  include  the  slides  used  during the  presentation  and  materials  made
                                    available to investors attending the conference.
------------------------------------------------------------------------------------------------------------------------------------


                  ComEd filed Current Reports on Form 8-K during the three
months ended March 31, 2002 regarding the following items:

         Date of Earliest
         Event Reported             Description of Item Reported
------------------------------------------------------------------------------------------------------------------------------------
         January 29, 2002           "ITEM 5. OTHER EVENTS"  regarding the  announcement  of Exelon's  consolidated  earnings for the
                                    year ended December 31, 2001 and "ITEM 9. REGULATION FD DISCLOSURE"  regarding highlights of the
                                    Exelon Fourth Quarter Earnings Conference Call.

         February 12, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and Co-CEO of Exelon at the UBS Warburg Energy and Utilities  Conference.  The exhibits  include
                                    the  slides  used and  copies  of the  materials  made  available  to  investors  attending  the
                                    conference.

         February 18, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and  Co-CEO  of  Exelon at the EEI  International  Financial  Conference,  London.  The  exhibit
                                    includes the slides used during the presentation.

         March 5, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  regarding a  presentation  by John W. Rowe,  President and
                                    Co-CEO of Exelon at the  Morgan  Stanley  Global  Electricity  & Energy  Conference  in New York
                                    City.  The  exhibits  include  the  slides  used  during the  presentation  and  materials  made
                                    available to investors attending the conference.
------------------------------------------------------------------------------------------------------------------------------------

                  PECO filed Current Reports on Form 8-K during the three months
ended March 31, 2002 regarding the following items:


                                       81
<PAGE>

         Date of Earliest
         Event Reported             Description of Item Reported
------------------------------------------------------------------------------------------------------------------------------------
         January 29, 2002           "ITEM 5. OTHER EVENTS"  regarding the  announcement  of Exelon's  consolidated  earnings for the
                                    year ended December 31, 2001 and "ITEM 9. REGULATION FD DISCLOSURE"  regarding highlights of the
                                    Exelon Fourth Quarter Earnings Conference Call.

         February 12, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and Co-CEO of Exelon at the UBS Warburg Energy and Utilities  Conference.  The exhibits  include
                                    the  slides  used and  copies  of the  materials  made  available  to  investors  attending  the
                                    conference.

         February 18, 2002          "ITEM 9. REGULATION FD DISCLOSURE"  regarding a presentation by Corbin A. McNeill, Jr., Chairman
                                    and  Co-CEO  of  Exelon at the EEI  International  Financial  Conference,  London.  The  exhibit
                                    includes the slides used during the presentation.

         March 5, 2002              "ITEM 9.  REGULATION FD  DISCLOSURE"  regarding a  presentation  by John W. Rowe,  President and
                                    Co-CEO of Exelon at the  Morgan  Stanley  Global  Electricity  & Energy  Conference  in New York
                                    City.  The  exhibits  include  the  slides  used  during the  presentation  and  materials  made
                                    available to investors attending the conference.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                  Generation did not file any Current Reports on Form 8-K during
the three months ended March 31, 2002.





                                       82
<PAGE>

                                            SIGNATURES

         Pursuant to  requirements  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.

                              EXELON CORPORATION
                              EXELON GENERATION COMPANY, LLC
                              /s/ Ruth Ann M. Gillis
                              --------------------------------
                              RUTH ANN M. GILLIS
                              Senior Vice President and Chief Financial Officer
                              Exelon Corporation
                              (Chief Accounting Officer)


                              COMMONWEALTH EDISON COMPANY
                              /s/ Robert E. Berdelle
                              --------------------------------
                              ROBERT E. BERDELLE
                              Vice President and Chief Financial Officer
                              (Chief Accounting Officer)


                              PECO ENERGY COMPANY
                              /s/ Frank F. Frankowski
                              --------------------------------
                              FRANK F. FRANKOWSKI
                              Vice President and Chief Financial Officer
                              (Chief Accounting Officer)


Date:  May 10, 2002



                                       83