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

                                   FORM 10-Q/A

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the Quarterly Period Ended September 30, 2001
                                       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) 394-4321

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
</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 [__]

     The number of shares outstanding of each registrant's common stock as of
November 2, 2001 was as follows:

     Exelon Corporation Common Stock, without par value              320,884,595
     Commonwealth Edison Company Common Stock,
         $12.50 par value                                            128,031,647
     PECO Energy Company Common Stock, without par value             170,478,507

                                       1
<PAGE>

                            TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                      Page No.
                                                                                                      --------
<S>                                                                                                       <C>
Explanatory Note                                                                                          3
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
                Notes to Condensed Consolidated Financial Statements                                     17

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                                                       36
                Exelon Corporation                                                                       36
                Commonwealth Edison Company                                                              47
                PECO Energy Company                                                                      55

SIGNATURES                                                                                               63
</TABLE>

                                       2

<PAGE>

Explanatory Note
         This amendment to Exelon Corporation's quarterly report on Form 10-Q
for the quarterly period ended September 30, 2001 reflects the restatement for
additional net realized and unrealized losses of Exelon Generation Company, LLC
(Generation) nuclear decommissioning trust funds that were incurred prior to
September 30, 2001 but not recorded. See Note 2. No attempt has been made in
this Form 10-Q/A to modify or update other disclosures as presented in the
original Form 10-Q except as required to reflect the effects of the restatement.

Filing Format
         This combined Form 10-Q/A is separately being filed by Exelon
Corporation, Commonwealth Edison Company and PECO Energy Company. Information
contained herein relating to any individual registrant has been filed by such
registrant on its own behalf. Each registrant makes no representation as to
information relating to the other registrants.

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
8 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 2000 Annual Report, and other
factors discussed in filings with the Securities and Exchange Commission by
Exelon Corporation, Commonwealth Edison Company and PECO Energy Company. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which apply only as of the date of this Report. Exelon Corporation, Commonwealth
Edison Company and PECO Energy Company undertake no obligation to publicly
release any revision to these 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>

EXELON CORPORATION
------------------

<TABLE>
<CAPTION>
                                             EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                             (Unaudited)
                                                (In Millions, except per share data)

                                                                                Three Months Ended            Nine Months Ended
                                                                                   September 30,                 September 30,
                                                                                ------------------            -----------------
                                                                                2001           2000          2001             2000
                                                                                ----           ----          ----             ----
                                                                             (Restated)                   (Restated)
                                                                            (See Note 2.)                (See Note 2.)
<S>                                                                           <C>            <C>            <C>            <C>
OPERATING REVENUES                                                            $  4,285       $  1,629       $ 11,759       $  4,366

OPERATING EXPENSES
     Fuel and Purchased Power                                                    1,731            576          4,271          1,515
     Operating and Maintenance                                                   1,101            457          3,293          1,304
     Depreciation and Amortization                                                 369             83          1,109            244
     Taxes Other Than Income                                                       172             67            493            197
                                                                              --------       --------       --------       --------
         Total Operating Expenses                                                3,373          1,183          9,166          3,260
                                                                              --------       --------       --------       --------

OPERATING INCOME                                                                   912            446          2,593          1,106
                                                                              --------       --------       --------       --------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                             (283)          (113)          (864)          (333)
     Distributions on Preferred Securities of Subsidiaries                         (12)            (5)           (37)           (15)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net                  52             23             77             26
     Other, net                                                                    (50)            23             51             52
                                                                              --------       --------       --------       --------
         Total Other Income and Deductions                                        (293)           (72)          (773)          (270)
                                                                              --------       --------       --------       --------

INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                          619            374          1,820            836
INCOME TAXES                                                                       243            141            742            316
                                                                              --------       --------       --------       --------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                     376            233          1,078            520
EXTRAORDINARY ITEM (net of income taxes of $0 and $2 for the
    three months and nine months ended September 30, 2000, respectively)            --             (1)            --             (4)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (net of income
    taxes of $8 and $16 for the nine months ended September 30, 2001
    and 2000, respectively)                                                         --             --             12             24
                                                                              --------       --------       --------       --------

NET INCOME                                                                         376            232          1,090            540
                                                                              --------       --------       --------       --------

OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
     SFAS 133 Transition Adjustment                                                 --             --             44             --
     Cash Flow Hedge Fair Value Adjustment                                          13             --            (17)            --
     Unrealized Gain (Loss) on Marketable Securities                               (30)            26           (154)            22
                                                                              --------       --------       --------       --------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                                            (17)            26           (127)            22
                                                                              --------       --------       --------       --------

TOTAL COMPREHENSIVE INCOME                                                    $    359       $    258       $    963       $    562
                                                                              ========       ========       ========       ========

AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic                                 321            170            320            175
                                                                              ========       ========       ========       ========
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted                               323            172            323            176
                                                                              ========       ========       ========       ========

EARNINGS PER AVERAGE COMMON SHARE:
   BASIC:
       Income Before Extraordinary Item and Cumulative
          Effect of a Change in Accounting Principle                          $   1.17       $   1.37       $   3.36       $   2.97
       Extraordinary Item                                                           --             --             --          (0.02)
       Cumulative Effect of a Change in Accounting Principle                        --             --           0.04           0.14
                                                                              --------       --------       --------       --------
       Net Income                                                             $   1.17       $   1.37       $   3.40       $   3.09
                                                                              ========       ========       ========       ========

   DILUTED:
       Income Before Extraordinary Item and Cumulative
          Effect of a Change in Accounting Principle                          $   1.16       $   1.35       $   3.33       $   2.95
       Extraordinary Item                                                           --             --             --          (0.02)
       Cumulative Effect of a Change in Accounting Principle                        --             --           0.04           0.14
                                                                              --------       --------       --------       --------
       Net Income                                                             $   1.16       $   1.35       $   3.37       $   3.07
                                                                              ========       ========       ========       ========

DIVIDENDS PER AVERAGE COMMON SHARE                                            $   0.42       $   0.25       $   1.40       $   0.75
                                                                              ========       ========       ========       ========

                                      See Notes to Condensed Consolidated Financial Statements


                                                                 5

</TABLE>

<PAGE>

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

                                                    September 30,
                                                         2001        December 31,
                                                      (Restated)        2000
                                                    (See Note 2.)
                                                    -------------    -----------
<S>                                                    <C>            <C>
ASSETS

CURRENT ASSETS
     Cash and Cash Equivalents                         $ 1,377        $   526
     Restricted Cash                                       221            314
     Accounts Receivable, net                            2,630          2,552
     Inventories, at average cost                          491            454
     Other                                                 494            338
                                                       -------        -------

         Total Current Assets                            5,213          4,184
                                                       -------        -------


PROPERTY, PLANT AND EQUIPMENT, NET                      13,268         12,936

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                   6,528          7,135
     Nuclear Decommissioning Trust Funds                 2,862          3,109
     Investments                                         1,616          1,583
     Goodwill, net                                       5,509          5,186
     Other                                                 544            464
                                                       -------        -------
         Total Deferred Debits and Other Assets         17,059         17,477
                                                       -------        -------

TOTAL ASSETS                                           $35,540        $34,597
                                                       =======        =======


            See Notes to Condensed Consolidated Financial Statements

                                       6

</TABLE>

<PAGE>

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


                                                              September 30,
                                                                  2001          December 31,
                                                               (Restated)           2000
                                                              (See Note 2.)
                                                              -------------     ------------
<S>                                                              <C>              <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Notes Payable                                               $    416         $  1,373
     Long-Term Debt Due within One Year                             1,188              908
     Accounts Payable                                               1,052            1,193
     Accrued Expenses                                               1,614              720
     Other                                                            454              457
                                                                 --------         --------

         Total Current Liabilities                                  4,724            4,651
                                                                 --------         --------

LONG-TERM DEBT                                                     13,385           12,958

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                          4,328            4,409
     Unamortized Investment Tax Credits                               316              330
     Nuclear Decommissioning Liability for Retired Plants           1,314            1,301
     Pension Obligation                                               537              567
     Non-Pension Postretirement Benefits Obligation                   882              819
     Spent Nuclear Fuel Obligation                                    838              810
     Other                                                            843              907
                                                                 --------         --------

         Total Deferred Credits and Other Liabilities               9,058            9,143
                                                                 --------         --------

PREFERRED SECURITIES OF SUBSIDIARIES                                  612              630

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                   6,943            6,890
     Deferred Compensation                                             (3)              (7)
     Retained Earnings                                                995              332
     Accumulated Other Comprehensive Income (Loss)                   (174)              --
                                                                 --------         --------

         Total Shareholders' Equity                                 7,761            7,215
                                                                 --------         --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 35,540         $ 34,597
                                                                 ========         ========


                   See Notes to Condensed Consolidated Financial Statements

                                              7
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                        EXELON CORPORATION AND SUBSIDIARY COMPANIES
                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (Unaudited)
                                                       (In Millions)
                                                                                          Nine Months Ended September 30,
                                                                                          -------------------------------
                                                                                               2001
                                                                                             (Restated)          2000
                                                                                             ----------          ----
<S>                                                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                                                $ 1,090         $   540
     Adjustments to Reconcile Net Income to Net Cash Flows
      Provided by Operating Activities:
       Depreciation and Amortization                                                             1,481             335
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)                 (12)            (24)
       Extraordinary Item (net of income taxes)                                                     --               4
       Provision for Uncollectible Accounts                                                         74              43
       Deferred Income Taxes                                                                      (101)              8
       Deferred Energy Costs                                                                        21               6
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                               (77)            (26)
       Net Investment Income and Realized Losses on Nuclear Decommissioning Trust Funds             34              --
       Other Operating Activities                                                                  (13)            (29)
     Changes in Working Capital:
       Accounts Receivable                                                                        (142)            (20)
       Repurchase of Accounts Receivable                                                            --             (50)
       Inventories                                                                                  41             (26)
       Accounts Payable, Accrued Expenses and Other Current Liabilities                            546             (61)
       Other Current Assets                                                                         27            (103)
                                                                                               -------         -------

Net Cash Flows provided by Operating Activities                                                  2,969             597
                                                                                               -------         -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                        (1,380)           (435)
     Acquisitions - Enterprises, net of cash acquired                                              (39)            (91)
     Other Investing Activities                                                                   (146)            (67)
                                                                                               -------         -------

Net Cash Flows used in Investing Activities                                                     (1,565)           (593)
                                                                                               -------         -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Issuance of Long-Term Debt                                                                  2,126           1,017
     Retirement of Long-Term Debt                                                               (1,433)           (545)
     Change in Short-Term Debt                                                                    (957)            118
     Dividends on Common Stock                                                                    (448)           (131)
     Change in Restricted Cash                                                                      93              62
     Proceeds from Stock Option Exercises                                                           52              17
     Redemption of Preferred Securities of Subsidiaries                                            (18)            (19)
     Other Financing Activities                                                                     32             (24)
     Common Stock Repurchase                                                                        --            (496)
                                                                                               -------         -------

Net Cash Flows used in Financing Activities                                                       (553)             (1)
                                                                                               -------         -------


INCREASE IN CASH AND CASH EQUIVALENTS                                                              851               3
                                                                                               -------         -------


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                   526              55
                                                                                               -------         -------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                     $ 1,377         $    58
                                                                                               =======         =======

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Regulatory Asset Fair Value Adjustment                                                    $   347              --
     Purchase Accounting Estimate Adjustments                                                  $    63              --


                                  See Notes to Condensed Consolidated Financial Statements

                                                             8
</TABLE>

<PAGE>

COMMONWEALTH EDISON COMPANY
---------------------------

<TABLE>
<CAPTION>
                              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                   (Unaudited)
                                                  (In Millions)

                                                               Three Months Ended            Nine Months Ended
                                                                 September 30,                 September 30,
                                                               ------------------            -----------------
                                                              2001            2000          2001           2000
                                                              ----            ----          ----           ----
<S>                                                         <C>            <C>           <C>            <C>
OPERATING REVENUES                                          $ 1,919   |    $ 2,093       $ 4,895    |   $ 5,367
                                                                      |                             |
OPERATING EXPENSES                                                    |                             |
     Fuel and Purchased Power                                   954   |        789         2,149    |     1,585
     Operating and Maintenance                                  265   |        573           731    |     1,559
     Depreciation and Amortization                              178   |        226           512    |       822
     Taxes Other Than Income                                     82   |        139           223    |       401
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
         Total Operating Expenses                             1,479   |      1,727         3,615    |     4,367
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
OPERATING INCOME                                                440   |        366         1,280    |     1,000
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
OTHER INCOME AND DEDUCTIONS                                           |                             |
     Interest Expense                                          (148)  |       (143)         (432)   |      (421)
     Distributions on Company-Obligated                               |                             |
       Mandatorily Redeemable Preferred Securities of                 |                             |
       Subsidiary Trusts Holding Solely the Company's                 |                             |
       Subordinated Debt Securities                              (7)  |         (7)          (22)   |       (22)
     Other, net                                                  34   |         67            93    |       248
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
         Total Other Income and Deductions                     (121)  |        (83)         (361)   |      (195)
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
INCOME BEFORE INCOME TAXES AND                                        |                             |
 EXTRAORDINARY ITEMS                                            319   |        283           919    |       805
INCOME TAXES                                                    141   |         86           412    |       221
                                                            -------   |    -------       -------    |   -------
INCOME BEFORE EXTRAORDINARY ITEMS                               178   |        197           507    |       584
EXTRAORDINARY ITEMS (net of income taxes of                           |                             |
    $2 for the nine months ended September 30, 2000)             --   |         --            --    |        (4)
                                                            -------   |    -------       -------    |   -------
                                                                      |                             |
NET INCOME                                                      178   |        197           507    |       580
     Preferred and Preference Stock Dividends                    --   |         (1)           --    |        (3)
                                                            -------   |    -------       -------    |   -------
NET INCOME ON COMMON STOCK                                  $   178   |    $   196       $   507    |   $   577
                                                            =======   |    =======       =======    |   =======
                                                                      |                             |
COMPREHENSIVE INCOME                                                  |                             |
     Net Income                                             $   178   |    $   197       $   507    |   $   580
     Other Comprehensive Income (net of income taxes):                |                             |
       Unrealized Gain (Loss) on Marketable Securities           (1)  |         (3)           (5)   |        (2)
                                                            -------   |    -------       -------    |   -------
TOTAL COMPREHENSIVE INCOME                                  $   177   |    $   194       $   502    |   $   578
                                                            =======   |    =======       =======    |   =======


                            See Notes to Condensed Consolidated Financial Statements

                                                       9
</TABLE>

<PAGE>

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

                                                    September 30,    December 31,
                                                         2001            2000
                                                    -------------    ------------
<S>                                                    <C>            <C>
ASSETS

CURRENT ASSETS
     Cash and Cash Equivalents                         $   435        $   141
     Restricted Cash                                        65             60
     Accounts Receivable, net                              999          1,204
     Receivables from Affiliates                           119            468
     Inventories, at average cost                           47            186
     Deferred Income Taxes                                  41             89
     Other                                                 192            202
                                                       -------        -------

         Total Current Assets                            1,898          2,350
                                                       -------        -------

PROPERTY, PLANT AND EQUIPMENT, NET                       7,196          7,657

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                     707          1,110
     Nuclear Decommissioning Trust Funds                    --          2,669
     Investments                                            94            152
     Goodwill, net                                       5,079          4,766
     Receivable from Affiliate                           1,316          1,316
     Other                                                 134            178
                                                       -------        -------

         Total Deferred Debits and Other Assets          7,330         10,191
                                                       -------        -------

TOTAL ASSETS                                           $16,424        $20,198
                                                       =======        =======


            See Notes to Condensed Consolidated Financial Statements

                                       10

</TABLE>

<PAGE>

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

                                                                  September 30,     December 31,
                                                                       2001             2000
                                                                  -------------     ------------
<S>                                                                  <C>              <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Long-Term Debt Due within One Year                              $    746         $    348
     Accounts Payable                                                     186              597
     Accrued Expenses                                                     558              449
     Payables to Affiliates                                               301               --
     Other                                                                143              329
                                                                     --------         --------

         Total Current Liabilities                                      1,934            1,723
                                                                     --------         --------

LONG-TERM DEBT                                                          6,246            6,882

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                              1,827            1,837
     Unamortized Investment Tax Credits                                    56               59
     Nuclear Decommissioning Liability for Retired Plants                  --            1,301
     Pension Obligation                                                   146              285
     Non-Pension Postretirement Benefits Obligation                       161              315
     Payables to Affiliates                                               324               --
     Spent Nuclear Fuel Obligation                                         --              810
     Other                                                                284              475
                                                                     --------         --------

         Total Deferred Credits and Other Liabilities                   2,798            5,082
                                                                     --------         --------

COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
 SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY THE COMPANY'S
 SUBORDINATED DEBT SECURITIES                                             328              328

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                                       2,047            2,678
     Preference Stock of Subsidiary                                         7                7
     Other Paid-in Capital                                              5,052            5,388
     Receivable from Parent                                            (1,062)              --
     Retained Earnings                                                    386              133
     Treasury Stock, at cost                                           (1,307)          (2,023)
     Accumulated Other Comprehensive Income (Loss)                         (5)              --
                                                                     --------         --------

         Total Shareholders' Equity                                     5,118            6,183
                                                                     --------         --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $ 16,424         $ 20,198
                                                                     ========         ========


                     See Notes to Condensed Consolidated Financial Statements

                                               11
</TABLE>


<PAGE>

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

                                                                                  Nine Months Ended September 30,
                                                                                  -------------------------------
                                                                                        2001            2000
                                                                                        ----            ----
<S>                                                                                    <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                                        $   507    |     $   580
     Adjustments to Reconcile Net Income to Net Cash Flows                                        |
        Provided by Operating Activities:                                                         |
       Depreciation and Amortization                                                       512    |         945
       Extraordinary Items (net of income taxes)                                            --    |           4
       Gain on Forward Share Arrangement                                                    --    |        (113)
       Provision for Uncollectible Accounts                                                 31    |          30
       Reversal of Provision for Revenue Refund                                            (15)   |          --
       Deferred Income Taxes                                                                26    |        (200)
       Midwest Independent System Operator Exit Fees                                       (36)   |          --
       Early Retirement and Separation Program                                              --    |          10
       Other Operating Activities                                                           36    |         157
     Changes in Working Capital:                                                                  |
       Accounts Receivable                                                                 (80)   |         (32)
       Inventories                                                                          25    |         (18)
       Accounts Payable, Accrued Expenses, and Other Current Liabilities                   338    |        (688)
       Change in Receivables and Payables to Affiliates, net                              (303)   |          --
       Other Current Assets                                                                  3    |          52
                                                                                       -------    |     -------
Net Cash Flows provided by Operating Activities                                          1,044    |         727
                                                                                       -------    |     -------
                                                                                                  |
CASH FLOWS FROM INVESTING ACTIVITIES                                                              |
     Investment in Plant                                                                  (616)   |      (1,123)
     Plant Removals, net                                                                   (15)   |          (7)
     Contributions to Nuclear Decommissioning Trust Funds                                   --    |         (40)
     Change in Receivables from Affiliates                                                 424    |          --
     Other Investments                                                                      --    |          51
     Other Investing Activities                                                             --    |           8
                                                                                       -------    |     -------
Net Cash Flows used in Investing Activities                                               (207)   |      (1,111)
                                                                                       -------    |     -------
                                                                                                  |
CASH FLOWS FROM FINANCING ACTIVITIES                                                              |
     Change in Short-Term Debt                                                              --    |         273
     Issuance of Long-Term Debt                                                             --    |         450
     Retirement of Long-Term Debt                                                         (260)   |        (754)
     Common Stock Repurchases                                                               --    |        (153)
     Retirement of Mandatorily Redeemable Preferred Stock                                   --    |         (70)
     Preferred Stock Redemptions                                                            --    |          (2)
     Change in Restricted Cash                                                              (5)   |         213
     Dividends on Common and Preferred Stock                                              (278)   |        (261)
     Nuclear Fuel Principal Payments                                                        --    |        (270)
     Common Stock Repurchase Arrangement                                                    --    |         (67)
                                                                                       -------    |     -------
Net Cash Flows used in Financing Activities                                               (543)   |        (641)
                                                                                       -------    |     -------
                                                                                                  |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                           294    |      (1,025)
                                                                                                  |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                           141    |       1,255
                                                                                       -------    |     -------
                                                                                                  |
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $   435    |     $   230
                                                                                       =======    |     =======
                                                                                                  |
                                                                                                  |
SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:                    |
       Net Assets Transferred as a Result of Restructuring, net of Note Payable        $ 1,307    |          --
       Contribution of Receivable from Parent                                          $ 1,062    |          --
       Purchase Accounting Estimate Adjustments                                        $    63    |          --
       Regulatory Asset Fair Value Adjustment                                          $   347    |          --
       Retirement of Treasury Shares                                                   $ 2,023    |          --
       Deferred Tax on Fossil Plant Sale                                                    --    |     $ 1,094
       Settlement of Common Share Repurchase Arrangement                                    --    |     $   993

                             See Notes to Condensed Consolidated Financial Statements

                                                        12

</TABLE>

<PAGE>

PECO ENERGY COMPANY
-------------------

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

                                                                               Three Months Ended            Nine Months Ended
                                                                                   September 30,               September 30,
                                                                               ------------------            -----------------
                                                                                2001          2000          2001          2000
                                                                                ----          ----          ----          ----
<S>                                                                           <C>           <C>           <C>           <C>
OPERATING REVENUES                                                            $ 1,051       $ 1,629       $ 3,008       $ 4,366

OPERATING EXPENSES
     Fuel and Purchased Power                                                     471           576         1,353         1,515
     Operating and Maintenance                                                    156           457           414         1,304
     Depreciation and Amortization                                                115            83           315           244
     Taxes Other Than Income                                                       51            67           135           197
                                                                              -------       -------       -------       -------

         Total Operating Expenses                                                 793         1,183         2,217         3,260
                                                                              -------       -------       -------       -------

OPERATING INCOME                                                                  258           446           791         1,106
                                                                              -------       -------       -------       -------

OTHER INCOME AND DEDUCTIONS
     Interest Expense                                                            (105)         (113)         (332)         (333)
     Distributions on Company-Obligated Mandatorily Redeemable Preferred
        Securities of a Partnership, which holds Solely
        Subordinated Debentures of the Company                                     (2)           (2)           (7)           (7)
     Equity in Earnings (Losses) of Unconsolidated Affiliates, net                 --            23            --            26
     Other, net                                                                    12            23            30            52
                                                                              -------       -------       -------       -------

         Total Other Income and Deductions                                        (95)          (69)         (309)         (262)
                                                                              -------       -------       -------       -------

INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                         163           377           482           844
INCOME TAXES                                                                       59           141           171           316
                                                                              -------       -------       -------       -------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                                    104           236           311           528
EXTRAORDINARY ITEM (net of income taxes of $0 and $2 for the three
     months and nine months ended, respectively)                                   --            (1)           --            (4)
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE  (net of income taxes of $16)                                        --            --            --            24
                                                                              -------       -------       -------       -------

NET INCOME                                                                        104           235           311           548
     Preferred Stock Dividends                                                     (2)           (3)           (7)           (8)
                                                                              -------       -------       -------       -------
NET INCOME ON COMMON STOCK                                                    $   102       $   232       $   304       $   540
                                                                              =======       =======       =======       =======

COMPREHENSIVE INCOME
     Net Income                                                               $   104       $   235       $   311       $   548
     Other Comprehensive Income (net of income tax):
        SFAS 133 Transition Adjustment                                             --            --            40            --
        Cash Flow Hedge Fair Value Adjustment                                     (10)           --           (20)           --
        Unrealized Gain (Loss) on Marketable Securities                            --            26            --            22
                                                                              -------       -------       -------       -------
         Total Other Comprehensive Income (Loss)                                  (10)           26            20            22
                                                                              -------       -------       -------       -------

TOTAL COMPREHENSIVE INCOME                                                    $    94       $   261       $   331       $   570
                                                                              =======       =======       =======       =======


                                    See Notes to Condensed Consolidated Financial Statements

                                                               13
</TABLE>

<PAGE>

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


                                                    September 30,   December 31,
                                                        2001            2000
                                                    -------------   ------------
ASSETS

CURRENT ASSETS
     Cash and Cash Equivalents                         $   100        $    49
     Restricted Cash                                       156            254
     Accounts Receivable, net                              348          1,024
     Inventories, at average cost                           87            257
     Receivables from Affiliates                             5             --
     Other                                                 114            195
                                                       -------        -------

         Total Current Assets                              810          1,779
                                                       -------        -------


PROPERTY, PLANT AND EQUIPMENT, NET                       3,999          5,158

DEFERRED DEBITS AND OTHER ASSETS
     Regulatory Assets                                   5,821          6,026
     Nuclear Decommissioning Trust Funds                    --            440
     Investments                                            25            847
     Goodwill, net                                          --            326
     Receivables from Affiliates                            41             --
     Other                                                  95            200
                                                       -------        -------

         Total Deferred Debits and Other Assets          5,982          7,839
                                                       -------        -------

TOTAL ASSETS                                           $10,791        $14,776
                                                       =======        =======

            See Notes to Condensed Consolidated Financial Statements

                                       14

<PAGE>

<TABLE>
<CAPTION>
                       PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                        (Unaudited)
                                       (In Millions)


                                                           September 30,     December 31,
                                                                2001             2000
                                                           -------------     ------------
<S>                                                          <C>              <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Notes Payable                                           $     --         $    163
     Payables to Affiliates                                       200            1,096
     Long-Term Debt Due within One Year                           435              553
     Accounts Payable                                              62              403
     Accrued Expenses                                             421              481
     Deferred Income Taxes                                         27               27
     Other                                                         20               95
                                                             --------         --------

         Total Current Liabilities                              1,165            2,818
                                                             --------         --------

LONG-TERM DEBT                                                  5,551            6,002

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                      2,951            2,532
     Unamortized Investment Tax Credits                            28              271
     Pension Obligation                                           112              281
     Non-Pension Postretirement Benefits Obligation               236              505
     Payables to Affiliates                                        25               --
     Other                                                        103              427
                                                             --------         --------

         Total Deferred Credits and Other Liabilities           3,455            4,016
                                                             --------         --------

COMPANY-OBLIGATED MANDATORILY REDEEMABLE
     PREFERRED SECURITIES OF A PARTNERSHIP,
     WHICH HOLDS SOLELY SUBORDINATED
     DEBENTURES OF THE COMPANY                                    128              128
MANDATORILY REDEEMABLE PREFERRED STOCK                             19               37

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
     Common Stock                                               1,968            1,442
     Receivable from Parent                                    (1,983)              --
     Preferred Stock                                              137              137
     Retained Earnings                                            332              197
     Accumulated Other Comprehensive Income (Loss)                 19               (1)
                                                             --------         --------

         Total Shareholders' Equity                               473            1,775
                                                             --------         --------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 10,791         $ 14,776
                                                             ========         ========


                 See Notes to Condensed Consolidated Financial Statements

                                            15
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                           PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (Unaudited)
                                                          (In Millions)
                                                                                                 Nine Months Ended September 30,
                                                                                                 -------------------------------
                                                                                                      2001            2000
                                                                                                      ----            ----
<S>                                                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                                                     $   311         $   548
     Adjustments to Reconcile Net Income to Net Cash Flows
        Provided by Operating Activities:
       Depreciation and Amortization                                                                    315             335
       Cumulative Effect of a Change in Accounting Principle (net of income taxes)                       --             (24)
       Extraordinary Item (net of income taxes)                                                          --               4
       Provision for Uncollectible Accounts                                                              37              43
       Deferred Income Taxes                                                                            (49)              8
       Deferred Energy Costs                                                                             14               6
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                                     --             (26)
       Other Operating Activities                                                                        14             (29)
     Changes in Working Capital:
       Accounts Receivable                                                                              (51)            (20)
       Repurchase of Accounts Receivable                                                                 --             (50)
       Inventories                                                                                      (21)            (26)
       Accounts Payable, Accrued Expenses and Other Current Liabilities                                  55             (61)
     Change in Receivables and Payables to Affiliates, net                                              129              --
       Other Current Assets                                                                             (35)           (103)
                                                                                                    -------         -------

Net Cash Flows provided by Operating Activities                                                         719             605
                                                                                                    -------         -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                                               (180)           (435)
     Exelon Infrastructure Services Acquisitions, net of cash acquired                                   --             (91)
     Other Investing Activities                                                                          26             (67)
                                                                                                    -------         -------

Net Cash Flows used in Investing Activities                                                            (154)           (593)
                                                                                                    -------         -------


CASH FLOWS FROM FINANCING ACTIVITIES
     Change in Short-Term Debt                                                                         (161)            118
     Change in Receivable and Payable to Affiliates, net                                                (16)             --
     Issuance of Long-Term Debt                                                                         805           1,017
     Retirement of Long-Term Debt                                                                    (1,167)           (545)
     Common Stock Repurchase                                                                             --            (496)
     Contribution from Parent                                                                           121              --
     Change in Restricted Cash                                                                           98              62
     Dividends on Preferred and Common Stock                                                           (176)           (139)
     Retirement of Mandatorily Redeemable Preferred Stock                                               (18)            (19)
     Proceeds from Exercise of Stock Options                                                             --              17
     Proceeds on Settlement of Interest Rate Swap Agreements                                             31              --
     Other Financing Activities                                                                          --             (24)
                                                                                                    -------         -------


Net Cash Flows used in Financing Activities                                                            (483)             (9)
                                                                                                    -------         -------


INCREASE IN CASH AND CASH EQUIVALENTS                                                                    82               3

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                         49              55

CASH TRANSFERRED IN RESTRUCTURING                                                                       (31)             --
                                                                                                    -------         -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                          $   100         $    58
                                                                                                    =======         =======

SUPPLEMENTAL CASH FLOW INFORMATION Noncash Investing and Financing Activities:
     Net Assets Transferred as a Result of Restructuring, net of Receivables from Affiliates        $ 1,577              --
     Contribution of Receivable from Parent                                                         $ 1,983              --

                                     See Notes to Condensed Consolidated Financial Statements

                                                               16
</TABLE>


<PAGE>

                   EXELON CORPORATION AND SUBSIDIARY COMPANIES
              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
                  PECO ENERGY COMPANY 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 and PECO)
The accompanying condensed consolidated financial statements as of September 30,
2001 and for the three and nine months then ended are unaudited, but include all
adjustments that Exelon Corporation (Exelon), Commonwealth Edison Company
(ComEd) and PECO Energy Company (PECO) consider necessary for a fair
presentation of such 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. Dividends on preferred stock of PECO for the three and nine months
ended September 30, 2000 have been reclassified on Exelon's Condensed
Consolidated Statements of Income and Comprehensive Income to distributions on
preferred securities of subsidiaries, resulting in a deduction before, rather
than after, net income. This reclassification reflects the current
organizational structure in which PECO is a subsidiary of Exelon. 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, 2000.

ComEd
         ComEd was the principal subsidiary of Unicom Corporation (Unicom) prior
to the merger with Exelon. See Note 3- Merger. The merger was accounted for
using the purchase method of accounting. The effects of the purchase method are
reflected on the financial statements of ComEd as of the merger date.
Accordingly, the financial statements presented for the period after the merger
reflect a new basis of accounting. ComEd's Condensed Consolidated Statements of
Income and Comprehensive Income and Condensed Consolidated Statements of Cash
Flows are separated by a bold black line to indicate the different basis of
accounting existing in each of the periods presented.


2.   RESTATEMENT (Exelon)
In January 2002, Exelon discovered that its September 30, 2001 financial
statements required a restatement for additional net realized and unrealized
losses on investments of Generation's nuclear decommissioning trust funds that
were incurred prior to September 30, 2001 but not recorded.

The following tables show the items that have been restated on the Condensed
Consolidated Statements of Income and Comprehensive Income for the three and
nine months ended September 30, 2001 and the Condensed Consolidated Balance
Sheets as of September 30, 2001:

                                       17

<PAGE>

Condensed Consolidated Statements of Income and Comprehensive Income
Three Months Ended September 30, 2001

<TABLE>
<CAPTION>
                                                       As Previously
                                                          Reported          Restatements        As Restated
                                                          --------          ------------        -----------
<S>                                                           <C>            <C>                  <C>
Other, net                                                      $2                ($52)               ($50)
Income Taxes                                                  $268                ($25)               $243
Net Income                                                    $403                ($27)               $376
Unrealized Gain (Loss) on Marketable Securities                $14                ($44)               ($30)
Total Comprehensive Income                                    $430                ($71)               $359
Basic Earnings Per Common Share                              $1.26              ($0.09)              $1.17
Diluted Earnings Per Common Share                            $1.25              ($0.09)              $1.16
</TABLE>

Condensed Consolidated Statements of Income and Comprehensive Income
Nine Months Ended September 30, 2001

<TABLE>
<CAPTION>
                                                       As Previously
                                                          Reported          Restatements         As Restated
                                                          --------          ------------         -----------
<S>                                                         <C>                <C>                  <C>
Other, net                                                    $103                ($52)                $51
Income Taxes                                                  $767                ($25)               $742
Net Income                                                  $1,117                ($27)             $1,090
Unrealized Gain (Loss) on Marketable Securities              ($110)               ($44)              ($154)
Total Comprehensive Income                                  $1,034                ($71)               $963
Basic Earnings Per Common Share Before
    Extraordinary Item and Cumulative Effect of
    Change in Accounting Principle                           $3.45              ($0.09)              $3.36
Basic Earnings Per Common Share                              $3.49              ($0.09)              $3.40
Diluted Earnings Per Common Share Before
    Extraordinary Item and Cumulative Effect of
    Change in Accounting Principle                           $3.42              ($0.09)              $3.33
Diluted Earnings Per Common Share                            $3.46              ($0.09)              $3.37
</TABLE>


Condensed Consolidated Balance Sheets at September 30, 2001

<TABLE>
<CAPTION>
                                                       As Previously
                                                          Reported          Restatements         As Restated
                                                          --------          ------------         -----------
<S>                                                      <C>                   <C>                 <C>
Nuclear Decommissioning Trust Funds                         $3,002               ($140)             $2,862
Total Assets                                               $35,680               ($140)            $35,540
Accrued Expenses                                            $1,607                  $7              $1,614
Deferred Income Taxes                                       $4,404                ($76)             $4,328
Retained Earnings                                           $1,022                ($27)               $995
Accumulated Other Comprehensive Income                       ($130)               ($44)              ($174)
</TABLE>

                                       18

<PAGE>

3.   MERGER (Exelon)
On October 20, 2000, Exelon became the parent corporation of ComEd and PECO as a
result of the completion of the transactions contemplated by an Agreement and
Plan of Exchange and Merger, as amended, among PECO, Unicom and Exelon. Pursuant
to the merger, Exelon became the owner of all of the common stock of PECO,
Unicom ceased to exist and Unicom's subsidiaries, including ComEd, became
subsidiaries of Exelon. The merger was accounted for using the purchase method
of accounting. Exelon's results of operations include Unicom's results of
operations since October 20, 2000.

         Selected unaudited pro forma combined results of operations of Exelon
for the three and nine months ended September 30, 2000, assuming the merger
occurred on January 1, 2000, are as follows:

<TABLE>
<CAPTION>
                                                           Three Months        Nine Months
                                                              Ended               Ended
                                                           September 30,       September 30,
                                                              2000                 2000
                                                           -------------       -------------
<S>                                                          <C>                  <C>
         Operating revenue                                   $3,845               $10,033
         Net income                                            $412                $1,035
         Net income per common share (basic)                  $1.29                 $3.24
         Net income per common share (diluted)                $1.27                 $3.20
</TABLE>

         Pro forma net income for the three months ended September 30, 2000
excludes extraordinary items of $7 million ($4 million, net of income taxes) and
merger-related costs of $45 million ($27 million, net of income taxes). These
non-recurring items total $31 million, net of income taxes, or $0.10 per share
on a basic and diluted basis.

         Pro forma net income for the nine months ended September 30, 2000
excludes merger-related costs of $90 million ($54 million, net of income taxes),
extraordinary charges of $18 million ($11 million, net of income taxes) and the
benefit of the cumulative effect of a change in accounting principle of $40
million ($24 million, net of income taxes). These non-recurring items total $41
million, net of income taxes, or $0.13 per share on a basic and diluted basis.

         The pro forma financial information presented above is not necessarily
indicative of the operating results of Exelon that would have occurred had the
merger been consummated as of the date indicated, nor is it necessarily
indicative of future operating results.

Merger-Related Costs (Exelon, ComEd and PECO)
         Exelon recorded certain costs in 2000 associated with the merger. The
costs associated with PECO were charged to expense. The costs associated with
Unicom were recorded as part of the application of purchase accounting and did
not affect results of operations. During the third quarter of 2001, Exelon
finalized its plans for consolidation of certain functions and recorded
adjustments to its estimated merger costs for the following: 1) an increase in
severance payments of $55 million as a result of the identification of
additional Unicom positions to be eliminated, 2) a $10 million reduction in the
estimated pension and post retirement welfare benefits reflecting revised
actuarial estimates related to Unicom employees, and 3) an increase in expected
severance payments of $31 million related to additional PECO employee positions
identified to be eliminated as a result of the merger. The

                                       19
<PAGE>

adjustments related to Unicom employees were recorded as an adjustment to the
purchase price allocation and did not affect results of operations. The
additional costs related to the PECO employees were charged to expense in the
third quarter of 2001. Including the effects of the third quarter 2001
adjustments, Exelon anticipates that a total of $297 million of employee costs
will be funded from its pension and postretirement benefit plans and $204
million of employee severance costs associated with Unicom will be funded from
general corporate funds.

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

         Employee severance reserve as of October 20, 2000              $ 149
         Additional employee severance reserve                             55
                                                                        -----
         Adjusted employee severance reserve                              204
         Payments to employees (October 2000-September 2001)              (51)
                                                                        -----
         Employee severance reserve as of September 30, 2001            $ 153
                                                                        =====

         Approximately 3,500 Unicom and PECO positions have been identified to
be eliminated as a result of the merger. Exelon has terminated 1,081 employees
as of September 30, 2001, of which 271 were terminated during the three months
ended September 30, 2001. The remaining 2,419 positions are expected to be
eliminated by the end of 2002.


4.   CORPORATE RESTRUCTURING (Exelon, ComEd and PECO)
During January 2001, Exelon undertook a corporate restructuring to separate its
generation and other competitive businesses from its regulated energy delivery
businesses at ComEd and PECO. As part of the restructuring, the
generation-related operations and assets and liabilities of ComEd were
transferred to Exelon Generation Company, LLC (Generation). Also as part of the
restructuring, the non-regulated operations and related assets and liabilities
of PECO, representing PECO's Generation and Enterprises business segments, were
transferred to Generation and Exelon Enterprises Company, LLC (Enterprises),
respectively. Additionally, certain operations and assets and liabilities of
ComEd and PECO were transferred to Exelon Business Services Company (BSC). As a
result, effective January 1, 2001, the operations of ComEd consist of its retail
electricity distribution and transmission business in northern Illinois and the
operations of PECO 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.

         The corporate restructuring had the following effect on the Condensed
Consolidated Balance Sheets of ComEd and PECO:

<TABLE>
<CAPTION>
                                                         ComEd               PECO
                                                         -----               ----
<S>                                                      <C>               <C>
         Decrease in Assets:
         -------------------
         Current Assets                                  ($376)            ($1,085)
         Property, Plant and Equipment, net               (782)             (1,212)
         Investments                                      (104)             (1,262)
         Other Noncurrent Assets                        (2,623)               (431)

                                       20
<PAGE>

         (Increase) Decrease in Liabilities:
         -----------------------------------
         Current Liabilities                                794               1,581
         Long-Term Debt                                      --                 205
         Deferred Income Taxes                                8                (451)
         Other Noncurrent Liabilities                     2,226               1,003
                                                         ------             -------
              Net Assets Transferred                      ($857)            ($1,652)
                                                         ======             =======
</TABLE>


         Consideration, based on the net book value of the net assets
transferred, was as follows:

<TABLE>
<CAPTION>
                                                              ComEd               PECO
                                                              -----               ----
<S>                                                          <C>                <C>
         Treasury Stock Received                             $1,307             $    --
         Return of Capital                                       --               1,577
         Note (Payable)/Receivable -  Affiliates               (450)                 75
                                                             ------             -------
                                                             $  857             $ 1,652
                                                             ======             =======
</TABLE>

         Selected unaudited pro forma results of operations of ComEd and PECO
for the three and nine months ended September 30, 2000, assuming the merger and
corporate restructuring occurred as of January 1, 2000, are presented as
follows:

                                 Three months ended      Nine months ended
                                 September 30, 2000      September 30, 2000
                                 ------------------      ------------------
                                 ComEd         PECO      ComEd        PECO
                                 -----         ----      -----        ----
         Operating revenues      $1,931        $877      $4,855      $2,496
         Operating income          $407        $264      $1,013        $866
         Net income                $207        $113        $550        $363

         The three months ended September 30, 2000 pro forma financial
information presented above for ComEd excludes merger-related costs of $32
million ($19 million, net of income taxes). PECO pro forma financial information
for the same period excludes merger-related costs of $7 million ($4 million, net
of income taxes) and an extraordinary charge of $2 million ($1 million, net of
income taxes).

         The nine months ended September 30, 2000 pro forma financial
information presented above for ComEd excludes merger-related costs of $49
million ($29 million, net of income taxes) and extraordinary charges of $6
million ($4 million, net of income taxes). PECO pro forma financial information
for the same period excludes merger-related costs of $17 million ($10 million,
net of income taxes) and extraordinary charges of $6 million ($4 million, net of
income taxes).

         In connection with the restructuring, ComEd and PECO assigned their
respective rights and obligations under various power purchase and fuel supply
agreements to Generation. Additionally, ComEd and PECO entered into power
purchase agreements (PPAs) with Generation.

         Under the PPA between ComEd and Generation, 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

                                       21

<PAGE>

of the nuclear generating plants formerly owned by ComEd and transferred to
Generation. Under the terms of ComEd's 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.

         Under the PPA between PECO and Generation, Generation has agreed to
supply all of PECO's load requirements through 2010. Prices for this energy will
be a function of the amount PECO is able to charge its Provider of Last Resort
customers. Under the terms of PECO's PPA, PECO is responsible for obtaining any
required transmission service. Subsequent to 2010, PECO will obtain all of its
supply from market sources, which could include Generation.


5.  CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (Exelon and PECO)
On January 1, 2001, Exelon recognized a non-cash gain of $12 million, net of
income taxes, in earnings and deferred a non-cash gain of $44 million, net of
income taxes, in accumulated other comprehensive income, a component of
shareholders' equity, to reflect the initial adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133), as amended. SFAS No. 133 must be applied to all
derivative instruments and requires that such instruments be recorded in 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.

         During the three and nine months ended September 30, 2001, Exelon
recognized net gains of $5 million ($3 million, net of income taxes) and $27
million ($16 million, net of income taxes), respectively, relating to
mark-to-market (MTM) adjustments of certain power purchase and sale contracts
pursuant to SFAS No. 133. MTM adjustments on power purchase contracts are
reported in fuel and purchased power and MTM adjustments on power sale contracts
are reported as operating revenues in the Condensed Consolidated Statements of
Income and Comprehensive Income. During the three and nine months ended
September 30, 2001, Exelon recognized net gains aggregating $4 million ($2
million, net of income taxes) and net losses aggregating $2 million ($1 million,
net of income taxes) on derivative instruments entered into for trading
purposes. Exelon commenced financial trading in the second quarter of 2001.
Gains and losses associated with financial trading are reported as other income
and deductions in the Condensed Consolidated Statements of Income and
Comprehensive Income. During the three and nine months ended September 30, 2001,
no amounts were reclassified from accumulated other comprehensive income into
earnings as a result of forecasted energy commodity transactions no longer being
probable. For the nine months ended September 30, 2001, $6 million ($4 million,
net of income taxes) was reclassified from accumulated other comprehensive
income into earnings as a result of forecasted financing transactions no longer
being probable.

                                       22

<PAGE>

         As of September 30, 2001, $48 million of deferred net gains on
derivative instruments accumulated in other comprehensive income are expected to
be reclassified to earnings during the next twelve months. 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.


6.  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):

<TABLE>
<CAPTION>
                                              Three Months Ended      Nine Months Ended
                                                 September 30,         September 30,
                                                 -------------         -------------
                                                2001       2000       2001       2000
                                                ----       ----       ----       ----
<S>                                             <C>        <C>        <C>        <C>
Average common shares outstanding                321        170        320        175
Assumed exercise of stock options                  2          2          3          1
                                                 ---        ---        ---        ---
Average diluted common shares outstanding        323        172        323        176
                                                 ===        ===        ===        ===
</TABLE>


7.  SEGMENT INFORMATION (Exelon)
Exelon operates in three business segments: Energy Delivery, Generation and
Enterprises. Energy Delivery consists of the operations of ComEd and PECO.
Exelon's segment information as of September 30, 2001 and December 31, 2000 and
for the three and nine months ended September 30, 2001 as compared to the same
periods in 2000 is as follows:

<TABLE>
<CAPTION>
                   Three Months Ended September 30, 2001 as compared to
                   ----------------------------------------------------
                           Three Months Ended September 30, 2000
                           -------------------------------------

                                                            Corporate and
                  Energy                                     Intersegment
                 Delivery     Generation     Enterprises     Eliminations    Consolidated
                 --------     ----------     -----------     ------------    ------------
<S>              <C>            <C>            <C>             <C>             <C>
Revenues:
     2001        $ 2,970        $ 2,291        $   529         $(1,505)        $ 4,285
     2000        $   877        $   927        $   283         $  (458)        $ 1,629

EBIT (a):
     2001        $   704        $   278        $   (44)        $    (7)        $   931
     2000        $   260        $   292        $   (55)        $   (15)        $   482
</TABLE>


                                       23

<PAGE>

<TABLE>
<CAPTION>
                         Nine Months Ended September 30, 2001 as compared to
                         ---------------------------------------------------
                                 Nine Months Ended September 30, 2000
                                 ------------------------------------

                                                                        Corporate and
                              Energy                                     Intersegment
                             Delivery     Generation     Enterprises     Eliminations   Consolidated
                             --------     ----------     -----------     ------------   ------------
<S>                          <C>            <C>            <C>             <C>             <C>
Revenues:
  2001                       $ 7,903        $ 5,537        $ 1,742         $(3,423)        $11,759
  2000                       $ 2,496        $ 2,087        $   801         $(1,018)        $ 4,366
EBIT (a):
  2001                       $ 2,091        $   697        $   (80)        $   (19)        $ 2,689
  2000                       $   856        $   401        $   (86)        $   (23)        $ 1,148


Total Assets:
  September 30, 2001
    (Restated)               $27,726        $ 7,197        $ 1,634         $(1,017)        $35,540
  December 31, 2000          $27,424        $ 5,734        $ 2,277         $  (838)        $34,597
<FN>
(a)  EBIT - consists of operating income, equity in earnings (losses) of
     unconsolidated affiliates, and other income and expenses recorded in other,
     net, with the exception of interest income. Net interest income and
     investment losses for the three months ended September 30, 2001 was a loss
     of $17 million, resulting from investment losses, as compared to income of
     $10 million in the same 2000 period. Interest income remained flat at $32
     million for the nine months ended September 30, 2001 and 2000.
</FN>
</TABLE>

         The operations of Exelon Energy Company (Exelon Energy), Exelon's
competitive retail generation supplier, for 2000 have been reclassified from
Generation to Enterprises to reflect the corporate restructuring. See Note 4-
Corporate Restructuring.


8.  COMMITMENTS AND CONTINGENCIES (Exelon, ComEd and PECO)
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, 2000.

Nuclear Insurance
         Exelon carries property damage, decontamination and premature
decommissioning insurance for each station loss resulting from damage to its
nuclear plants. In the event of an accident, insurance proceeds must first be
used for reactor stabilization and site decontamination. If the decision is made
to decommission the facility, a portion of the insurance proceeds will be
allocated to a fund, which Exelon is required by the Nuclear Regulatory
Commission (NRC) to maintain, to provide for decommissioning the facility.
Exelon is unable to predict the timing of the availability of insurance proceeds
to Exelon and the amount of such proceeds that would be available. Under the
terms of the various insurance agreements, Exelon could be assessed up to $65
million for losses incurred at any plant insured by the insurance companies.


                                       24
<PAGE>

         Additionally, through its subsidiaries, Exelon is a member of an
industry mutual insurance company that provides replacement power cost insurance
in the event of a major accidental outage at a nuclear station. The premium for
this coverage is subject to assessment for adverse loss experience. Exelon's
maximum share of any assessment is $18 million per year.

         The insurer has proposed to increase the maximum amount that Exelon
could be assessed for property damage insurance from up to $65 million to up to
$130 million and for replacement power cost insurance from $18 million to $36
million. In addition, the insurer proposes, in the event that one or more acts
of terrorism cause accidental property damage within a twelve month period from
the first accidental property damage under one or more policies for all
insureds, the maximum recovery for all such losses by all insureds be an
aggregate of $3.24 billion plus such additional amounts as the insurer may
recover for such losses from reinsurance, indemnity, and any other source,
applicable to such losses.

         Exelon is self-insured to the extent that any losses may exceed the
amount of insurance maintained. Such losses could have a material adverse effect
on Exelon's financial condition and results of operations.

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
September 30, 2001, Exelon had accrued $164 million for environmental
investigation and remediation costs, including $134 million for MGP
investigation and remediation that currently can be reasonably estimated.
Exelon, ComEd and PECO 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
         As of September 30, 2001, ComEd had accrued $111 million (discounted)
for environmental investigation and remediation costs. This reserve included
$105 million for MGP investigation and remediation, which currently can be
reasonably estimated.

     PECO
         As of September 30, 2001, PECO had accrued $38 million (undiscounted)
for environmental investigation and remediation costs, including $29 million for
MGP investigation and remediation, which currently can be reasonably estimated.

                                       25
<PAGE>

Energy Commitments
         As of September 30, 2001, Exelon had long-term commitments relating to
the net purchase and sale of energy, capacity and transmission rights from
unaffiliated utilities and others as expressed in the following tables:

                       Net              Net      Transmission
                     Energy          Purchased       Rights
                      Sales          Capacity      Purchases
                      -----          --------      ---------
         2001        $   267         $   137        $    36
         2002            460             871             35
         2003            371             917             32
         2004            228             923             25
         2005            128             437             25
         Thereafter      (90)          4,710             80
                     -------         -------        -------
         Total       $ 1,364         $ 7,995        $   233
                     =======         =======        =======

         See Note 4 - Corporate Restructuring, for information about ComEd's and
PECO's PPAs with Generation.

Litigation
         Midwest Generation, LLC Litigation. On August 21, 2001, Midwest
Generation, LLC (Midwest) filed a complaint with the Illinois Commerce
Commission (ICC) alleging that certain retail agreements under which ComEd
supplies power to loads at Midwest's generating facilities are unjust,
unreasonable and anti-competitive. Midwest is seeking an ICC order that ComEd
pay refunds of approximately $25 million paid under the agreements since 1999,
with interest. ComEd is contesting the complaint.

         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.

         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

                                       26

<PAGE>

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
completed on June 28, 2001. The jury returned a verdict against Cotter and
awarded $16 million in various damages. Cotter will appeal the verdict.

         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 the corporate restructuring, the responsibility to indemnify
Cotter for any liability related to these matters was transferred 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.

         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 seeks actual damages, punitive damages of
$100 million and statutory penalties. The complaint was served on ComEd and
Exelon on July 12, 2001. ComEd and Exelon are contesting the liability and
damages sought by the plaintiff.

         Cajun Electric Power Cooperative, Inc. On May 27, 1998, the United
States Department of Justice, on behalf of the Rural Utilities Service and the
Chapter 11 Trustee for the Cajun Electric Power Cooperative, Inc. (Cajun), filed
an action claiming breach of contract against PECO in the United States District
Court for the Middle District of Louisiana arising out of PECO's termination of
the contract to purchase Cajun's interest in the River Bend nuclear power plant.
This action seeks the full purchase price of the 30% interest in the River Bend
nuclear power plant, $50 million, plus interest and consequential damages. In
connection with the corporate restructuring, the responsibility for any
liability related to this matter was transferred to Generation. The parties have
reached a tentative settlement of the dispute, subject to court approval, which
calls for Exelon to make a $14 million payment.

         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

                                       27

<PAGE>

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. 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.

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

         Retail Rate Law. In 1996, several developers of non-utility generating
facilities filed litigation against various Illinois officials claiming that the
enforcement against those facilities of an amendment to Illinois law removing
the entitlement of those facilities to state-subsidized payments for electricity
sold to ComEd after March 15, 1996 violated their rights under the Federal and
state constitutions. The developers also filed suit against ComEd for a
declaratory judgement 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.

         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). Exelon is also
involved in the tax appeal for Unit No. 1 at Three Mile Island Nuclear Station
(Dauphin County) through AmerGen Energy Company, LLC (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.

         Other Tax Issues. The Illinois Department of Revenue had issued Notices
of Tax Liability to ComEd alleging deficiencies in Illinois invested capital tax
payments for the years 1988 through 1997. ComEd has received an order dated
October 9, 2001 from the Administrative Law Judge of the Illinois Department of
Revenue Administrative Hearings Division that each and all of the Notices of Tax
Liability for the years 1988 through 1997 are withdrawn and dismissed, that the
protests of the taxpayer are granted, and that the Notices of Tax Liability are
cancelled.

                                       28
<PAGE>

         Chicago Franchise. In March 1999, ComEd reached a settlement agreement
with the City of Chicago to end the arbitration proceeding between ComEd and
Chicago regarding the January 1, 1992 franchise agreement. As part of the
settlement agreement, ComEd and Chicago agreed to a revised combination of
ongoing work under the franchise agreement and new initiatives that will result
in defined transmission and distribution expenditures by ComEd to improve
electric services in Chicago. The settlement agreement 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 1999 and
2000 and has conditionally agreed to deposit $25 million at the end of the years
2001 and 2002, to help ensure an adequate and reliable electric supply for
Chicago.

           Power Team FERC Allegations. On October 3, 2001, FERC issued an order
to show cause alleging that both PECO and the Power Team, a division of
Generation, violated FERC standards of conduct and regulations claiming that
PECO had inappropriately provided Power Team information on planned maintenance
outages and deratings, enabling Power Team to profit by purchasing Firm
Transmission Rights (FTRs) that would be affected by such outages and deratings.
FERC also suggested that PECO may have operated its transmission system and
taken outages and deratings to benefit Power Team. The potential remedies FERC
could seek include re-evaluating Power Team's market-based authority, requiring
Power Team to disgorge the profits (alleged by FERC to be $2.4 million) from the
FTRs purchased, or requiring PECO to receive permission from the PJM
Interconnection LLC prior to initiating any outages or deratings. PECO and the
Power Team maintain that there were no inappropriate communications and are
contesting FERC's allegations. On October 26, 2001 Exelon, PECO, and Power Team
filed a response with FERC, denying that PECO manipulated its transmission
system to benefit Power Team or that PECO shared non-public information with
Power Team.

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

                                       29

<PAGE>

9.  PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS (ComEd and PECO)
ComEd
         As part of Exelon's corporate restructuring, approximately 5,500 ComEd
employees were transferred to Generation, BSC and Enterprises. As a result of
the transfer, ComEd's pension and non-pension postretirement benefits
obligations were reduced by $143 million and $172 million, respectively, as of
January 1, 2001.

PECO
         As part of Exelon's corporate restructuring, approximately 3,200 PECO
employees were transferred to Generation, BSC and Enterprises. As a result of
the transfer, PECO's pension and non-pension postretirement benefits obligations
were reduced by $96 million and $284 million, respectively, as of January 1,
2001.

ComEd's and PECO's plan assets and funded status of the plans as of December 31,
2000, after reflecting the effect of these transfers, are as follows:

<TABLE>
<CAPTION>
                                                               ComEd                            PECO
                                                     --------------------------      --------------------------
                                                                          Other                           Other
                                                      Pension    Postretirement       Pension    Postretirement
                                                     Benefits          Benefits      Benefits          Benefits
                                                     --------          --------      --------          --------
<S>                                                   <C>             <C>             <C>             <C>
Net Benefit Obligation at December 31, 2000           $ 2,220         $   539         $   998         $   410
                                                      =======         =======         =======         =======
Fair Value of Plan Assets at December 31, 2000        $ 1,987         $   352         $ 1,380         $   121
                                                      =======         =======         =======         =======

Funded Status at December 31, 2000                    $  (233)        $  (187)        $   382         $  (289)
Unrecognized net actuarial (gain) loss                     91              42            (441)             16
Unrecognized prior service cost                            --              --              35              --
Unrecognized net transition obligation (asset)
                                                           --              --              (9)             56
Miscellaneous adjustments                                  --               2              --              --
                                                      -------         -------         -------         -------
   Net amount recognized at December 31, 2000         $  (142)        $  (143)        $   (33)        $  (217)
                                                      =======         =======         =======         =======
Amounts recognized in the consolidated balance
   sheets consist of:
   Prepaid benefit cost                                                               $    70         $     2
   Accrued benefit cost                                                                  (103)           (219)
                                                                                      -------         -------
Net amount recognized at December 31, 2000                                            $   (33)        $  (217)
                                                                                      =======         =======
</TABLE>

                                       30

<PAGE>

10.  DECOMMISSIONING AND SPENT FUEL STORAGE (Exelon, ComEd and PECO)
The obligation for decommissioning Exelon's nuclear facilities and the related
trust fund assets were transferred from ComEd and PECO to Generation
concurrently with the transfer of the generating plants and the related NRC
operating licenses as of January 1, 2001. Additionally, obligations for spent
nuclear fuel disposal, and provisions for nuclear insurance were assumed by
Generation under terms and conditions commensurate with those previously borne
by ComEd and PECO.

ComEd
         ComEd has historically accounted for the current period's cost of
decommissioning by recording a charge to depreciation expense and a
corresponding liability in accumulated depreciation for its operating units and
a reduction to regulatory assets for retired units (in current year dollars) on
a straight-line basis over the NRC operating license life of the plants. As of
December 31, 2000, ComEd's cumulative liability of $2.1 billion was recorded as
a component of accumulated depreciation. Additionally, a $1.3 billion liability
representing the present value of the estimated cost of decommissioning nuclear
units previously retired was recorded as a long-term liability. These
liabilities, as well as investments in trust fund assets of $2.6 billion to fund
the costs of decommissioning, were transferred to Generation.

         In December 2000, the ICC issued an order, effective upon the transfer
of the nuclear plants to Generation, authorizing ComEd to recover $73 million
annually from customers during the first four years of the six-year term of the
PPA between ComEd and Generation. See Note 4- Corporate Restructuring. Up to $73
million annually can also be collected in 2005 and 2006, depending on the
portion of the output of the former ComEd nuclear stations that ComEd purchases
from Generation. Under the ICC order, subsequent to 2006, there would be no
further collection for decommissioning costs from customers. All amounts
collected from customers must be remitted to Generation for deposit into the
related trust funds. The ICC order also provides that any surplus trust funds
after ComEd's former nuclear stations are decommissioned must be refunded to
ComEd's customers. The ICC order has been appealed to the Illinois Appellate
Court by ComEd and other parties.

         The $73 million annual recovery of decommissioning costs authorized by
the ICC order represents a reduction from the $84 million annual recovery in
2000. Accordingly, in the first quarter of 2001, ComEd reduced its nuclear
decommissioning regulatory asset to $372 million, reflecting the expected
probable future recoveries from customers. The reduction in the regulatory asset
in the amount of $347 million was recorded as an adjustment to the merger
purchase price allocation and resulted in a corresponding increase in goodwill.
Effective January 1, 2001, ComEd recorded an obligation to Generation of
approximately $440 million representing ComEd's legal requirement to remit funds
to Generation for the remaining regulatory asset amount of $372 million upon
collection from customers, and for collections from customers prior to the
establishment of external decommissioning trust funds in 1989 to be remitted to
Generation for deposit into the decommissioning trusts through 2006. Unrealized
gains and losses on decommissioning trust funds (based on the market value of
the assets on the merger date, in accordance with purchase accounting) had
previously been recorded in accumulated depreciation or regulatory assets. As a
result of the transfer of the nuclear plants to Generation and the ICC order
limiting the regulated recoveries of decommissioning costs, net unrealized
losses of $47 million (net of income taxes) were reclassified to accumulated
other comprehensive income. Realized gains and losses on decommissioning trust
funds' assets are based on the adjusted cost basis of the trust fund assets and
are reflected in other income and deductions in Exelon's Condensed Consolidated
Statements of Income and Comprehensive Income.

                                       31

<PAGE>

         Additionally, as part of the corporate restructuring, ComEd's liability
to the U.S. Department of Energy (DOE) for payment of its one-time fee for spent
nuclear fuel disposal has been transferred to Generation. As of December 31,
2000, this liability, including accrued interest, was $810 million.

PECO
         As of December 31, 2000, PECO's Condensed Consolidated Balance Sheet
included an estimated liability for decommissioning its nuclear plants of $412
million as a component of accumulated depreciation. Investments in nuclear
decommissioning trust fund assets were $440 million. Both the liability and the
trust fund investments were transferred to Generation as of January 1, 2001.
Annual decommissioning cost recovery of $29 million, collected through regulated
rates, will continue, and all amounts collected will be remitted to Generation
to be deposited into the decommissioning trust funds.


11.  LONG-TERM DEBT (Exelon and PECO)
On March 1, 2001, PECO Energy Transition Trust (PETT), a Delaware business trust
and a wholly owned subsidiary of PECO, refinanced $805 million of floating rate
Series 1999-A Transition Bonds through the issuance by PETT of fixed-rate
transition bonds (Series 2001-A Transition Bonds). Approximately 72% of the
Class A-3 and 70% of the Class A-5 Series 1999-A Transition Bonds were redeemed.
The Series 2001-A Transition Bonds are non-callable, fixed-rate securities with
an interest rate of 6.52%. The Series 2001-A Transition Bonds have an expected
final payment date of September 1, 2010 and a termination date of December 31,
2010. The transition bonds are solely obligations of PETT, secured by intangible
transition property sold by PECO to PETT concurrently with the issuance of
transition bonds and certain other related collateral.

         In 1999, PECO entered into interest rate swaps relating to the Class
A-3 and Class A-5 Series 1999-A Transition Bonds in the aggregate notional
amount of $1.1 billion with an average interest rate of 6.65%. PECO also entered
into forward starting interest rate swaps relating to these two classes of
floating rate transition bonds in the aggregate notional amount of $1.1 billion
with an average interest rate of 6.01%. In connection with the refinancing of a
portion of the two floating rate series of transition bonds in the first quarter
of 2001, PECO settled $318 million of a forward starting interest rate swap
resulting in a $6 million gain which is reflected in other income and deductions
due to the transaction no longer being probable. See Note 5 - Cumulative Effect
of a Change in Accounting Principle. Also, in connection with the refinancing,
PECO settled a portion of the interest rate swaps and the remaining portion of
the forward starting interest rate swaps resulting in gains of $25 million,
which were deferred and are being amortized over the expected remaining lives of
the related debt.

          On May 8, 2001, Exelon issued $500 million of senior unsecured notes
with a maturity date of May 1, 2011 and an interest rate of 6.75%. On June 11,
2001, Generation issued $700 million of senior unsecured notes with a maturity
date of June 15, 2011 and an interest rate of 6.95%. The proceeds from these
financings were used to repay a $1.2 billion term loan.

         During 2001, Generation issued $121 million of Pollution Control
Revenue Refunding Bonds at an average variable commercial paper interest rate of
2.685% with maturities of 20 to 33 years. The proceeds from these offerings were
used to retire, through a capital contribution from Exelon to PECO, $121 million
of PECO pollution control notes with an average interest rate of 7.01%.

                                       32

<PAGE>

12.  SALE OF ACCOUNTS RECEIVABLE  (Exelon and PECO)
PECO is party to an agreement with a financial institution under which it can
sell or finance with limited recourse an undivided interest, adjusted daily, in
up to $225 million of designated accounts receivable until November 2005. As of
September 30, 2001, PECO had sold a $225 million interest in accounts
receivable, consisting of a $169 million interest in accounts receivable which
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 $56 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. 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 September 30,
2001, PECO met this requirement and was not required to make any cash deposits.


13.  RELATED-PARTY TRANSACTIONS (Exelon, ComEd and PECO)
Exelon
         In August 2001, Exelon recorded a $150 million note receivable from
Sithe Energies, Inc. (Sithe), an equity method investment of Generation. Sithe
used the proceeds from the note to repay subordinated debt. The note has a
maturity date of August 20, 2004 and an interest rate of the eurodollar rate,
plus 2.25%. For the three and nine month periods ended September 30, 2001,
Exelon recorded $1 million of interest income on the note.

ComEd
         At December 31, 2000, ComEd had a $400 million receivable from PECO,
which was repaid in the second quarter of 2001. The average interest rate on
this receivable for the period outstanding was 6.5%. Interest income on the
receivable from PECO was $8 million for the nine months ended September 30,
2001.

         ComEd had a note receivable from an affiliate of $1.3 billion at
September 30, 2001 and December 31, 2000, 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 $14 million and $49 million for the three months ended September
30, 2001 and 2000, respectively. Interest income earned on this note receivable
was $51 million and $138 million for the nine months ended September 30, 2001
and 2000, respectively.

         Effective January 1, 2001, Exelon contributed to ComEd a $1.0 billion
non-interest bearing receivable related to Exelon's agreement to fund future
income tax payments resulting from the collection by ComEd of instrument funding
charges. 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 2001 through 2008.

         At September 30, 2001, ComEd had a short-term payable of $60 million
and a long-term payable of $317 million to Generation resulting from the
restructuring, which were included in current liabilities and deferred credits
and other liabilities, respectively, on ComEd's Condensed Consolidated Balance
Sheets.

                                       33

<PAGE>

         ComEd paid common stock dividends to Exelon of $105 million and $253
million for the three and nine months ended September 30, 2001, respectively.

         In connection with the transfer of the generation assets in the
corporate restructuring, ComEd entered into a PPA with Generation. See Note 4 -
Corporate Restructuring. Intercompany power purchases pursuant to the PPA for
the three and nine months ended September 30, 2001 were $948 million and $2,141
million, respectively.

         Effective January 1, 2001, upon the corporate restructuring, ComEd
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 $33 million and $96
million, for the three and nine months ended September 30, 2001, respectively.

PECO
         At December 31, 2000, PECO had a $400 million payable to ComEd, which
was repaid in the second quarter of 2001. The average annual interest rate on
this payable for the period outstanding was 6.5%. Interest expense related to
this payable for the nine months ended September 30, 2001 was $8 million.

         Effective January 1, 2001, Exelon contributed to PECO a $2.0 billion
non-interest bearing receivable related to Exelon's agreement to fund future
income tax payments resulting from the collection of competitive transition
charges. 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 2001 through 2010.

            PECO paid common stock dividends to Exelon of $69 million and $169
million for the three and nine months ended September 30, 2001, respectively.

         In connection with the transfer of the generation assets in the
corporate restructuring, PECO entered into a PPA with Generation. See Note 4 -
Corporate Restructuring. Intercompany power purchases pursuant to the PPA for
the three and nine months ended September 30, 2001 were $364 million and $872
million, respectively.

         Effective January 1, 2001, upon the corporate restructuring, 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 $18 million and $56
million, for the three and nine months ended September 30, 2001, respectively.


14.  NEW ACCOUNTING PRONOUNCEMENTS (Exelon, ComEd and PECO)
During the third quarter of 2001, the Financial Accounting Standards Board
(FASB) issued Statements of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations" (SFAS No. 141), No. 142, "Goodwill and Other Intangible
Assets" (SFAS No. 142) and No. 143, "Asset Retirement Obligations" (SFAS No.
143).

                                       34

<PAGE>

         SFAS No. 141 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.

         SFAS No. 142 establishes new accounting and reporting standards for
goodwill and intangible assets. Exelon expects to adopt SFAS No. 142 as of
January 1, 2002. Under SFAS No. 142, effective January 1, 2002, goodwill
recorded by Exelon will no longer be subject to amortization. After January 1,
2002, goodwill will be subject to an assessment for impairment using a fair
value based test at least annually, or more frequently if events or
circumstances indicate that goodwill might be impaired. An impairment loss would
be reported as a reduction to goodwill and a charge to operating expense, except
at the transition date, when the loss would be reflected as a cumulative effect
of a change in accounting principle. As of September 30, 2001, Exelon's
Condensed Consolidated Balance Sheet reflected approximately $5.5 billion in
goodwill net of accumulated amortization, including $5.1 billion of net goodwill
related to the merger of Unicom and PECO recorded on ComEd's Condensed
Consolidated Balance Sheets, with the remainder related to Enterprises. Annual
amortization of goodwill related to the merger and to Enterprises of $128
million and $23 million, respectively, is expected to be discontinued upon
adoption of SFAS No. 142. Exelon is in the process of evaluating the overall
impact of SFAS No. 142 on its financial statements and is unable to determine
the overall impact, but the effect could be material.

         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. Upon adoption of SFAS No. 143, Exelon will use a
cumulative-effect approach to recognize transition amounts for any existing
liabilities, asset retirement costs and accumulated depreciation. Exelon is in
the process of evaluating the impact of SFAS No. 143 on its financial
statements.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS No. 144
establishes accounting and reporting standards for both the impairment and
disposal of long-lived assets. This statement is effective for fiscal years
beginning after December 15, 2001 and provisions of this statement are generally
applied prospectively. Exelon is in the process of evaluating the impact of SFAS
No. 144 on its financial statements.

15.  CHANGE IN ACCOUNTING ESTIMATE (Exelon)
Effective April 1, 2001, Exelon 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 Exelon considering, among other things, future capital and
maintenance expenditures at these plants. As a result of the change, net income
for the three and nine months ended September 30, 2001 increased $36 million
($21 million, net of income taxes) and $57 million ($34 million, net of income
taxes), respectively.

                                       35

<PAGE>

16.  SUBSEQUENT EVENT (Exelon, ComEd and PECO)
On October 30, 2001, PECO issued, through a private placement, $250 million of
its First and Refunding Mortgage Bonds with an interest rate of 5.95% and
maturity date of November 11, 2011. Proceeds from the first mortgage bonds were
used to repay $250 million aggregate principal amount of PECO's First and
Refunding Mortgage Bonds having an interest rate of 5.625% and a maturity date
of November 1, 2001.

On November 5, 2001, ComEd offered to purchase for cash $250 million of its
First Mortgage Bonds, with an interest rate of 9.875% and a maturity date of
June 15, 2020. The tender price is based on a fixed spread of 80 basis points
over the yield to maturity of the 6.5% U.S. Treasury Note due May 15, 2005. The
offer will expire on November 16, 2001, unless extended or earlier terminated.

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

EXELON CORPORATION
------------------

GENERAL

On October 20, 2000, Exelon Corporation (Exelon) became the parent corporation
of Commonwealth Edison Company (ComEd) and PECO Energy Company (PECO) as a
result of the completion of the merger. The merger was accounted for using the
purchase method of accounting.

         During January 2001, Exelon undertook a corporate restructuring to
separate its generation and other competitive businesses from its regulated
energy delivery businesses at ComEd and PECO. As part of the restructuring, the
generation-related operations and assets and liabilities of ComEd were
transferred to Exelon Generation Company, LLC (Generation). Also, as part of the
restructuring, the non-regulated operations and related assets and liabilities
of PECO, representing PECO's Generation and Enterprises business segments, were
transferred to Generation and Exelon Enterprises Company, LLC (Enterprises),
respectively. Additionally, certain operations and assets and liabilities of
ComEd and PECO were transferred to Exelon Business Services Company (BSC).

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

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

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

     o    Enterprises, consisting of competitive retail energy sales, energy and
          infrastructure services, communications and related investments. The
          operations of Exelon Energy for 2000 have been reclassified from
          Generation to Enterprises to reflect the effects of the corporate
          restructuring.


                                       36
<PAGE>

RESULTS OF OPERATIONS

The three and nine months ended September 30, 2000 represents the results of
PECO only and does not include the effects of the October 20, 2000 merger of
Unicom and PECO.

Significant Operating Trends

<TABLE>
<CAPTION>
                        Expense Items as a Percentage of
                            Total Operating Revenues

                                               Three Months          Nine Months
                                           Ended September 30,   Ended September 30,
                                           -------------------   -------------------
                                             2001       2000       2001       2000
                                             ----       ----       ----       ----

<S>                                           <C>        <C>        <C>        <C>
         Fuel and Purchased Power             40%        36%        36%        35%
         Operating and Maintenance            26%        28%        28%        30%
         Depreciation and Amortization         9%         5%        10%         6%
         Taxes Other Than Income               4%         4%         4%         4%
                                             ---        ---        ---        ---
         Total Operating Expenses             79%        73%        78%        75%
                                             ---        ---        ---        ---

         Operating Income                     21%        27%        22%        25%
                                             ===        ===        ===        ===
</TABLE>


Three Months Ended September 30, 2001 (As Restated) Compared To Three Months
Ended September 30, 2000

Net Income and Earnings Per Share
Exelon's net income increased $143 million, or 61%, for the three months ended
September 30, 2001, excluding the effect of an extraordinary item. Diluted
earnings per share on the same basis decreased $0.19 per share, or 14%. Net
income inclusive of the extraordinary item increased $144 million, or 62%, for
the three months ended September 30, 2001. Diluted earnings per share on the
same basis decreased $0.19 per share, or 14%. Earnings per share decreased while
net income increased as a result of the relative increase in the weighted
average shares of common stock outstanding as a result of the issuance of common
stock in connection with the merger, partially offset by the repurchase of
common stock with the proceeds from PECO's May 2000 stranded cost recovery
securitization as compared to the increase in net income.

Earnings Before Interest and Income Taxes
Exelon evaluates the performance of its business segments based on earnings
before interest and income taxes (EBIT). In addition to components of operating
income as shown on the consolidated statements of income, EBIT includes equity
in earnings (losses) of unconsolidated affiliates, and other income and expense
recorded in other, net, with the exception of interest income. Operating
revenues, operating expenses, depreciation and amortization and other income and
expenses for each business segment in the following analyses include
intercompany transactions, which are eliminated in the consolidated Exelon
financial statements. To provide a more meaningful analysis of results of
operations, the EBIT analyses by business segment below identify the portion of
the EBIT variance that is attributable to the addition of Unicom results of
operations and the portion of the variance that results from normal operations

                                       37

<PAGE>

attributable to changes in components of the underlying operations of Exelon.
The merger variance represents Unicom results for the three and nine months
ended September 30, 2000 on a pro forma basis as if the merger and corporate
restructuring occurred on January 1, 2000 as well as the effect of excluding
PECO merger-related costs from Exelon's 2000 operations.

         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 those weather
conditions result in increased sales of electricity and gas, particularly to
residential customers. Alternatively, mild weather generally reduces demand.

EBIT Contribution by Business Segment

<TABLE>
<CAPTION>
                                              Three Months                                   Components of Variance
                                           Ended September 30,                            -----------------------------
                                       -------------------------                             Merger            Normal
                                        2001              2000            Variance          Variance         Operations
                                        ----              ----            --------          --------         ----------
                                                                       (In millions)
<S>                                     <C>               <C>               <C>               <C>               <C>
Energy Delivery                         $ 704             $ 260             $ 444             $ 425             $  19
Generation                                278               292               (14)                8               (22)
Enterprises                               (44)              (55)               11               (12)               23
Corporate                                  (7)              (15)                8                17                (9)
                                        -----             -----             -----             -----             -----
Total                                   $ 931             $ 482             $ 449             $ 438             $  11
                                        =====             =====             =====             =====             =====
</TABLE>


Energy Delivery

<TABLE>
<CAPTION>
                                             Three Months                                     Components of Variance
                                         Ended September 30,                               ----------------------------
                                      --------------------------                             Merger            Normal
                                        2001              2000            Variance          Variance         Operations
                                        ----              ----            --------          --------         ----------
                                                                        (In millions)

<S>                                    <C>               <C>               <C>               <C>               <C>
Operating Revenue                      $2,970            $  877            $2,093            $1,931            $  162
Operating Expense and Other             1,973               571             1,402             1,328                74
Depreciation & Amortization               293                46               247               178                69
                                       ------            ------            ------            ------            ------
EBIT                                   $  704            $  260            $  444            $  425            $   19
                                       ======            ======            ======            ======            ======
</TABLE>

         Energy Delivery's EBIT increased $444 million for the three months
ended September 30, 2001, as compared to the same period in 2000. The merger
accounted for $425 million of the variance and normal operations added $19
million. The increase in EBIT from normal operations was primarily attributable
to higher margins on electric sales to retail customers and lower operating and
maintenance expenses, offset by increased regulatory asset amortization expense.
Operations and maintenance expense for the three months ended September 30, 2001
includes employee severance charges of $18 million.

         The $162 million growth in operating revenues was attributable to
increased electric revenues of $150 million and additional gas revenues of $12
million. Total kilowatthour (kWh) deliveries to retail customers increased 2.8%,
however, retail revenues increased 10.3% primarily due to a 7.9% increase in the

                                       38

<PAGE>

average rate per kWh. The average rate per kWh increased due to an increase in
customers selecting or returning to PECO as their electric suppliers and an
increase in deliveries to the residential sector, which has a higher than
average rate per kWh.


Generation

<TABLE>
<CAPTION>
                                              Three Months                                        Components of Variance
                                           Ended September 30,                                   ----------------------------
                                      ----------------------------                                Merger              Normal
                                         2001               2000             Variance            Variance          Operations
                                         ----               ----             --------            --------          ----------
                                                                             (In millions)
<S>                                    <C>                <C>                <C>                 <C>                <C>
Operating Revenue                      $ 2,291            $   927            $ 1,364             $ 1,140            $   224
Operating Expense and Other              1,956                608              1,348               1,105                243
Depreciation & Amortization                 57                 27                 30                  27                  3
                                       -------            -------            -------             -------            -------
EBIT                                   $   278            $   292            $   (14)            $     8            $   (22)
                                       =======            =======            =======             =======            =======
</TABLE>

         Generation's EBIT decreased $14 million for the three months ended
September 30, 2001 compared to the same period in 2000. The decrease in EBIT
reflects lower margins on energy sales offset by lower operation and maintenance
expenses. Volumes increased 7% reflecting increased sales to retail affiliates,
however, margins on sales decreased as a result of higher purchased power costs.
During the second and third quarters of 2001, Generation extended the estimated
service lives of its nuclear generating stations, which reduced depreciation and
decommissioning expense by $37 million in the three months ended September 30,
2001 compared to the prior year period. However, this reduction was offset by
increased decommissioning expense of $35 million in the three months ended
September 30, 2001 compared to the prior year period as a result of the
discontinuance of regulatory accounting practices for decommissioning related to
certain of the nuclear stations. In addition, EBIT reflects a $14 million
increase in reserves related to the settlement of litigation regarding the
proposed purchase of a minority interest in a generating facility. These
decreases in EBIT were partially offset by increased equity in the earnings of
AmerGen and Sithe of $20 million.

         For the three months ended September 30, 2001, Generation's sales were
54,342 gigawatthours (GWhs), of which:
         o    50% was supplied by Generation's nuclear units,
         o    41% from purchases,
         o    3% from fossil and hydro units and
         o    6% from Generation investments.

Approximately 60% of Generation's sales were to ComEd and PECO and the remaining
40% were in the wholesale market.

         During the twelve months ended September 30, 2001, Generation added
3,384 megawatts (MWs) of new capacity as follows:
         o    243 MWs through nuclear power plant uprates,
         o    84 MWs through the acquisition of an additional 3.75% of Peach
              Bottom Atomic Power Station (Peach Bottom),
         o    15 MWs through fossil power station uprates and

                                       39
<PAGE>

         o    3,042 MWs through additional power purchase agreements (PPAs).

Generation's nuclear fleet, including AmerGen, performed at a capacity factor of
93.2% for the three months ended September 30, 2001 compared to 94.0% in the
same 2000 period. Generation's nuclear units' production costs for the three
months ended September 30, 2001 were $12.52 per MWh compared to $13.91 per MWh
for the same period in 2000.


Enterprises

<TABLE>
<CAPTION>
                                             Three Months                                   Components of Variance
                                          Ended September 30,                             --------------------------
                                      --------------------------                           Merger            Normal
                                       2001               2000            Variance        Variance         Operations
                                       ----               ----            --------        --------         ----------
                                                                       (In millions)
<S>                                    <C>               <C>               <C>              <C>               <C>
Operating Revenue                      $ 529             $ 283             $ 246            $ 185             $  61
Operating Expense and Other              557               328               229              193                36
Depreciation & Amortization               16                10                 6                4                 2
                                       -----             -----             -----            -----             -----
EBIT                                   $ (44)            $ (55)            $  11            $ (12)            $  23
                                       =====             =====             =====            =====             =====
</TABLE>

         Enterprises' EBIT increased $11 million for the three months ended
September 30, 2001 compared to the same period in 2000. Normal operations
contributed $23 million of the variance, which was partially offset by a $12
million reduction attributable to the merger. The increase in EBIT from normal
operations primarily reflects $56 million of improved margins and reduced
operating expenses at Exelon Energy in Pennsylvania and lower net losses by
Exelon Communications' joint ventures of $4 million, partially offset by a $36
million writedown of an investment in a communications company and an $8 million
gain on the sale of a communications investment in 2000.

         Enterprises' revenues increased $246 million for the three months ended
September 30, 2001 compared to the same period in 2000. Normal operations
contributed $61 million and the merger added $185 million. Operating revenues
attributable to normal operations increased $95 million as a result of
acquisitions by Exelon Infrastructure Services, Exelon Energy and Exelon
Services. This increase was partially offset by lower revenues attributable to
reduced operations at Exelon Energy in Pennsylvania.

         Enterprises' operating expenses and other increased $229 million for
the three months ended September 30, 2001 compared to the same period in 2000.
Normal operations contributed $36 million and the merger added $193 million.
Operating expenses from normal operations included $93 million as a result of
acquisitions made by Exelon Infrastructure Services, Exelon Energy and Exelon
Services. Additionally, operating expenses and other increased by $36 million
from a write-down of an investment in a communications company and by $8 million
related to a gain on the sale of a communications investment in 2000, partially
offset by lower operating expenses attributable to reduced operations at Exelon
Energy in Pennsylvania.

         Enterprises' depreciation and amortization expense increased primarily
as a result of goodwill amortization related to acquisitions by Exelon
Infrastructure Services.

                                       40

<PAGE>

Other Components of Net Income

Interest Charges
Interest charges consist of interest expense and distributions on preferred
securities of subsidiaries. Interest charges increased $177 million, or 150%,
for the three months ended September 30, 2001. The increase was primarily
attributable to $157 million from the effects of the merger and $9 million
related to additional borrowings by Exelon.

Interest Income
Interest income is recorded in other, net on the Condensed Consolidated
Statements of Income and Comprehensive Income but is excluded from the
calculation of EBIT. Interest income decreased by $27 million from income of $10
million to a loss of $17 million due to net realized losses of $43 million on
the nuclear decommissioning trust funds, offset by increased income of $16
million, primarily from the investments of Unicom Investment, Inc. (Unicom
Investment).

Income Taxes
The effective income tax rate was 39.9% for the three months ended September 30,
2001 as compared to 37.7% in the same period in 2000. The increase in the
effective income tax rate was primarily attributable to goodwill amortization
associated with the merger, which is not deductible for tax purposes and a
higher effective state income tax rate due to operations in Illinois subsequent
to the merger.


Nine Months Ended September 30, 2001 As Restated Compared To Nine Months Ended
September 30, 2000

Net Income and Earnings Per Share
Exelon's net income increased $558 million, or 107%, for the nine months ended
September 30, 2001, excluding the effect of an extraordinary item and the
cumulative effect of a change in accounting principle. Diluted earnings per
share on the same basis increased $0.38 per share, or 13%. Net income, inclusive
of an extraordinary item and the cumulative effect of a change in accounting
principle, increased $550 million, or 102%, for the nine months ended September
30, 2001. Diluted earnings per share on the same basis increased $0.30 per
share, or 10%. Earnings per share increased less than net income because of an
increase in the weighted average shares of common stock outstanding as a result
of the issuance of common stock in connection with the merger, partially offset
by the repurchase of common stock with the proceeds from PECO's May 2000
stranded cost recovery securitization.

                                       41

<PAGE>

Earnings Before Interest and Income Taxes

EBIT Contribution by Business Segment

<TABLE>
<CAPTION>
                                              Nine Months                                      Components of Variance
                                          Ended September 30,                               ---------------------------
                                        -----------------------                              Merger           Normal
                                        2001              2000            Variance          Variance         Operations
                                        ----              ----            --------          --------         ----------
                                                                       (In millions)
<S>                                  <C>                <C>               <C>               <C>               <C>
Energy Delivery                       $ 2,091           $   856           $ 1,235           $ 1,101           $   134
Generation                                697               401               296                87               209
Enterprises                               (80)              (86)                6               (24)               30
Corporate                                 (19)              (23)                4                16               (12)
                                      -------           -------           -------           -------           -------
Total                                 $ 2,689           $ 1,148           $ 1,541           $ 1,180           $   361
                                      =======           =======           =======           =======           =======
</TABLE>

Energy Delivery

<TABLE>
<CAPTION>
                                              Nine Months                                      Components of Variance
                                          Ended September 30,                               ---------------------------
                                        ----------------------                               Merger           Normal
                                        2001              2000            Variance          Variance         Operations
                                        ----              ----            --------          --------         ----------
                                                                       (In millions)
<S>                                    <C>               <C>               <C>               <C>               <C>
Operating Revenue                      $7,903            $2,496            $5,407            $4,855            $  552
Operating Expense and Other             4,985             1,513             3,472             3,072               400
Depreciation & Amortization               827               127               700               682                18
                                       ------            ------            ------            ------            ------
EBIT                                   $2,091            $  856            $1,235            $1,101            $  134
                                       ======            ======            ======            ======            ======
</TABLE>

         Energy Delivery's EBIT increased $1,235 million in the nine months
ended September 30, 2001, as compared to the same period in 2000. The merger
accounted for $1,101 million of the variance and normal operations added $134
million. The increase in EBIT from normal operations reflects higher margins on
retail sales, lower operating and maintenance expenses, and lower regulatory
asset amortization, partially offset by higher depreciation expense.

         The $552 million growth in operating revenues was attributable to
increased electric revenues of $418 million and additional gas revenues of $134
million. Although total kWh deliveries to retail customers increased 1%, retail
revenues increased 6.8% primarily due to a 5.6% increase in the average rate per
kWh. The average rate per kWh increased due to an increase in customers
selecting or returning to PECO as their electric suppliers and an increase in
deliveries to the residential sector, which has a higher than average rate per
kWh. Revenues for the nine months ended September 30, 2001 include the favorable
effect of the reversal of a $15 million reserve for revenue refunds to ComEd's
municipal customers as the result of a Federal Energy Regulatory Commission
(FERC) ruling. The increase in gas revenues primarily relates to higher natural
gas prices.

                                       42

<PAGE>

Generation

<TABLE>
<CAPTION>
                                              Nine Months                                      Components of Variance
                                          Ended September 30,                              ----------------------------
                                        ------------------------                             Merger            Normal
                                         2001             2000            Variance          Variance         Operations
                                         ----             ----            --------          --------         ----------
                                                                       (In millions)
<S>                                    <C>               <C>               <C>               <C>               <C>
Operating Revenue                      $5,537            $2,087            $3,450            $2,616            $  834
Operating Expense and Other             4,616             1,596             3,020             2,452               568
Depreciation & Amortization               224                90               134                77                57
                                       ------            ------            ------            ------            ------
EBIT                                   $  697            $  401            $  296            $   87            $  209
                                       ======            ======            ======            ======            ======
</TABLE>

         Generation's EBIT increased $296 million for the nine months ended
September 30, 2001 compared to the same period in 2000. The merger accounted for
$87 million of the variance. The remaining $209 million increase resulted
primarily from higher margins on market and affiliate wholesale energy sales,
coupled with decreased operating costs at the nuclear plants, partially offset
by additional depreciation and amortization. During the first five months of
2001, Generation benefited from increases in wholesale market prices,
particularly in the Pennsylvania-New Jersey-Maryland control area (PJM) and
Mid-America Interconnected Network (MAIN) regions. The increase in wholesale
market prices was primarily driven by significant increases in fossil fuel
prices. The large concentration of nuclear generation in the Generation
portfolio allowed Exelon to capture the higher prices in the wholesale market
for sales to non-affiliates with minimal increase in fuel prices. Generation
also benefited from higher nuclear plant output due to increased capacity
factors during the nine months ended September 30, 2001. Lower operating costs
are attributable to reductions in the number of employees and fewer nuclear
outages in 2001 than in 2000, which offset the effect of increases in legal
reserves of $30 million. In addition, Generation's EBIT benefited from an
increase in equity in earnings of AmerGen and Sithe of $44 million in the nine
months ended September 30, 2001 compared to the prior year period. The increase
in depreciation and amortization expense primarily reflects an increase in
decommissioning expense of $105 million reflecting the discontinuance of
regulatory accounting practices for certain nuclear generating stations,
partially offset by a $57 million reduction in depreciation and decommissioning
expense attributable to the extension of estimated service lives of Generation's
generating plants.

         For the nine months ended September 30, 2001, Generation's sales were
151,118 GWhs, of which:
         o    55% was supplied by Generation's nuclear units,
         o    36% from purchases,
         o    3% from fossil and hydro units and
         o    6% from Generation investments.

Approximately 60% of Generation's sales were to ComEd and PECO and the remaining
40% were in the wholesale market. Less than 2% of Generation's volume
represented transactions entered into for trading purposes.

         Generation's nuclear fleet, including AmerGen, performed at a capacity
factor of 94.9% for the nine months ended September 30, 2001 compared to 94.7%
in the same 2000 period. Generation's nuclear units' production costs for the
nine months ended September 30, 2001 were $12.40 per MWh, compared to $13.82 per
MWh for the same period in 2000.

                                       43

<PAGE>

Enterprises

<TABLE>
<CAPTION>
                                                Nine Months                                           Components of Variance
                                            Ended September 30,                                   ----------------------------
                                         ------------------------                                  Merger             Normal
                                         2001                2000               Variance          Variance          Operations
                                         ----                ----               --------          --------          ----------
                                                                             (In millions)
<S>                                    <C>                 <C>                 <C>                <C>                 <C>
Operating Revenue                      $ 1,742             $   801             $   941            $   424             $   517
Operating Expense and Other              1,775                 860                 915                438                 477
Depreciation & Amortization                 47                  27                  20                 10                  10
                                       -------             -------             -------            -------             -------
EBIT                                   $   (80)            $   (86)            $     6            $   (24)            $    30
                                       =======             =======             =======            =======             =======
</TABLE>

         Enterprises' EBIT increased $6 million for the nine months ended
September 30, 2001 compared to the same period in 2000. Normal operations
contributed $30 million of the variance, which was partially offset by a $24
million reduction attributable to the merger. The increase in EBIT from normal
operations is primarily attributable to $24 million due to improved margins and
reduced operating expenses at Exelon Energy in Pennsylvania and an $8 million
increase from lower net losses by Exelon Communications' joint ventures. These
increases were partially offset by an $8 million net writedown of investments
and an $8 million gain on the sale of a communications investment in 2000.

         Enterprises' revenues increased $941 million for the nine months ended
September 30, 2001 compared to the same period in 2000. Normal operations
contributed $517 million and the merger added $424 million. Operating revenues
attributable to normal operations increased $540 million as a result of
acquisitions by Exelon Infrastructure Services, Exelon Energy and Exelon
Services. This increase was partially offset by lower revenues attributable to
reduced operations at Exelon Energy in Pennsylvania.

         Enterprises' operating expense and other increased $915 million for the
nine months ended September 30, 2001 compared to the same period in 2000. Normal
operations contributed $477 million and the merger added $438 million. Operating
expenses from normal operations included $515 million as a result of
acquisitions made by Exelon Infrastructure Services, Exelon Energy and Exelon
Services. Additionally, operating and other expenses increased by an $8 million
net writedown of investments and an $8 million gain on the sale of a
communications investment in 2000. These increases were partially offset by $28
million in gains on investments, $8 million from lower net losses by Exelon
Communications' joint ventures, and by reduced operations at Exelon Energy in
Pennsylvania.

         Enterprises' depreciation and amortization expense increased primarily
as a result of goodwill amortization related to acquisitions by Exelon
Infrastructure Services, Exelon Services, and Exelon Energy.


Other Components of Net Income

Interest Charges
Interest charges increased $553 million, or 159%, for the nine months ended
September 30, 2001. The increase was primarily attributable to $471 million from
the effects of the merger, $50 million related to

                                       44

<PAGE>

borrowings by Exelon and additional interest of $25 million as a result of the
issuance of transition bonds in May 2000 to securitize a portion of PECO's
stranded cost recovery.

Interest Income
Interest income is recorded in other, net on the Condensed Consolidated
Statements of Income and Comprehensive Income, but is excluded from the
calculation of EBIT. Interest income remained flat at $32 million, due to net
realized losses of $35 million on the nuclear decommissioning trust funds offset
by increased income of $35 million, primarily from the investments of Unicom
Investment.

Income Taxes
The effective income tax rate was 41% for the nine months ended September 30,
2001 as compared to 37.8% for the same period in 2000. The increase in the
effective income tax rate was primarily attributable to goodwill amortization
associated with the merger which is not deductible for tax purposes and a higher
effective state income tax rate due to operations in Illinois subsequent to the
merger.

Cumulative Effect of a Change in Accounting Principle
On January 1, 2001, Exelon adopted Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS No.
133), as amended, resulting in a benefit of $20 million ($12 million, net of
income taxes). On January 1, 2000, Exelon recorded a benefit of $40 million ($24
million, net of income taxes) representing the cumulative effect of a change in
accounting method for nuclear outage costs by PECO in conjunction with the
synchronization of accounting policies in connection with the merger.


LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by operations for the nine months ended September 30, 2001
were $2,969 million as compared to $597 million for the same 2000 period. The
increase was attributable to increased cash flow from operations of $1,647
million and changes in working capital of $725 million.

         Cash flows used in investing activities for the nine months ended
September 30, 2001 were $1,565 million as compared to $593 million for the same
2000 period. The increase was attributable to additional capital expenditures of
$927 million and lower Enterprises acquisitions and investments of $45 million.

         Cash flows used in financing activities were $553 million for the nine
months ended September 30, 2001 as compared to $1 million for the same 2000
period. The increase in cash flows used in financing activities was primarily
attributable to additional debt service of $361 million and additional payments
of dividends on common stock of $317 million. The common stock dividends of $448
million cover the period from October 20, 2000, the date of the merger, through
August 15, 2001.

         At September 30, 2001, Exelon's capital structure consisted of 62% of
long-term debt of Exelon and subsidiaries, 33% common stock, 2% notes payable
and 3% preferred securities of subsidiaries. Long-term debt included $7.0
billion of securitization debt constituting obligations of certain consolidated
special purpose entities, representing 30% of capitalization.

         At September 30, 2001, Exelon had outstanding $416 million of notes
payable consisting principally of commercial paper. For the nine months ended
September 30, 2001, the average interest rate

                                       45

<PAGE>

on notes payable was approximately 4.4%. Certain of the credit agreements to
which Exelon, ComEd and PECO 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 September 30, 2001, the debt to total capitalization ratios on that basis for
Exelon, ComEd and PECO were 49%, 46%, and 35%, respectively.

         On May 8, 2001, Exelon issued $500 million of unsecured senior notes
with a maturity date of May 1, 2011 and an interest rate of 6.75%. On June 11,
2001, Generation issued $700 million of unsecured senior notes with a maturity
date of June 15, 2011 and an interest rate of 6.95%. The proceeds from these
financings were used to repay a $1.2 billion term loan.

         During 2001, Generation issued $121 million of Pollution Control
Revenue Refunding Bonds at an average variable commercial paper interest rate of
2.685% with maturities of 20 to 33 years. The proceeds from these offerings were
used to retire $121 million of PECO pollution control notes with an average
interest rate of 7.01%.

         On October 30, 2001, PECO issued, through a private placement, $250
million of its First and Refunding Mortgage Bonds with an interest rate of 5.95%
and maturity date of November 11, 2011. Proceeds from the first mortgage bonds
were used to repay $250 million aggregate principal amount of PECO's First and
Refunding Mortgage Bonds, having an interest rate of 5.625% and a maturity date
of November 1, 2001.

         On November 5, 2001, ComEd offered to purchase for cash $250 million of
its First Mortgage Bonds, with an interest rate of 9.875% and a maturity date of
June 15, 2020. The tender price is based on a fixed spread of 80 basis points
over the yield to maturity of the 6.5% U.S. Treasury Note due May 15, 2005. The
offer will expire on November 16, 2001, unless extended or earlier terminated.

                                       46
<PAGE>

COMMONWEALTH EDISON COMPANY
---------------------------

GENERAL

On October 20, 2000, ComEd became a 99.9% owned subsidiary of Exelon as a result
of the transactions relating to the merger of PECO and ComEd's former parent,
Unicom. Effective January 1, 2001, Exelon undertook a restructuring to separate
its generation and other competitive businesses from its regulated energy
delivery business. See ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Exelon Corporation - General for
information about Exelon's corporate restructuring. As a result of the merger,
ComEd's consolidated financial information for the period after the merger has a
different cost basis than in previous periods. Material variances caused by the
different cost basis and restructuring have been disclosed where applicable. The
restructuring has had a significant impact on all components of ComEd's results
of operations. The estimated impact of the restructuring set forth herein
reflects the effects of removing the operations related to ComEd's nuclear
generating stations and obtaining energy and capacity from Generation under the
terms of the PPA for the three and nine months ended September 30, 2000.

                                       47

<PAGE>

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

Significant Operating Trends
<TABLE>
<CAPTION>
                                                      Three Months
                                                          Ended                          Components of Variance
                                                       September 30,          ------------------------------------------
                                                 ------------------------     Restructuring       Normal
                                                   2001            2000           Impact        Operations         Total
                                                   ----            ----           ------        ----------         -----
                                                                              (In millions)
<S>                                              <C>             <C>             <C>             <C>             <C>
Operating Revenues                               $ 1,919         $ 2,093         $  (162)        $   (12)        $  (174)

Fuel and Purchased Power                             954             789             189             (24)            165
Operating and Maintenance                            265             573            (292)            (16)           (308)
Depreciation and Amortization                        178             226             (80)             32             (48)
Taxes Other Than Income                               82             139             (25)            (32)            (57)
                                                 -------         -------         -------         -------         -------
     Total Operating Expenses                      1,479           1,727            (208)            (40)           (248)
                                                 -------         -------         -------         -------         -------

Operating Income                                     440             366              46              28              74
                                                 -------         -------         -------         -------         -------

Interest Expense                                    (148)           (143)             11             (16)             (5)
Distributions on Company-Obligated
     Mandatorily Redeemable
     Preferred Securities of Subsidiary
     Trusts Holding Solely the Company's
     Subordinated Debt Securities                     (7)             (7)             --              --              --
Other, Net                                            34              67              --             (33)            (33)
                                                 -------         -------         -------         -------         -------

Income Before Income Taxes and
    Extraordinary Items                              319             283              57             (21)             36

Income Taxes                                         141              86              27              28              55
                                                 -------         -------         -------         -------         -------
Net Income Before Extraordinary Items                178             197              30             (49)            (19)
Extraordinary Items (net of income taxes)             --              --              --              --              --
                                                 -------         -------         -------         -------         -------
Net Income                                           178             197              30             (49)            (19)
Preferred and Preference Stock Dividends              --              (1)             --               1               1
                                                 -------         -------         -------         -------         -------
Net Income on Common Stock                       $   178         $   196         $    30         $   (48)        $   (18)
                                                 =======         =======         =======         =======         =======
</TABLE>

Net Income
Net income decreased $68 million, or 28%, as compared to the same period in
2000, excluding the effects of restructuring and non-recurring merger costs. Net
income decreased $19 million, or 10%, after reflecting the $30 million
restructuring impact and $32 million of non-recurring merger costs ($19 million,
net of income taxes) incurred for the three months ended September 30, 2000.

                                       48

<PAGE>

Operating Revenues
Operating revenues decreased $12 million, or 1%, for the three months ended
September 30, 2001, compared to the same 2000 period, excluding the effects of
restructuring. Revenues from retail customers increased $100 million, before a
$25 million reduction due to a change in recording certain revenue taxes as
operating revenue and tax expense to collections recorded as liabilities
resulting from Illinois legislation. This increase in revenues from retail
customers was primarily attributable to favorable weather conditions and
continued growth in residential operating revenues due to a strong housing
market, partially offset by the negative effects of a slower economy on
non-residential customers. Non-residential customers continue to migrate to
alternative retail electric suppliers (ARES) or the power purchase option (PPO).
There was also a shift from the PPO to ARES due to the higher price of PPO
energy compared to the market price of ARES energy. The negative revenue impact
of these shifts in customer base was offset by the increase in revenues from the
higher PPO price of energy. Additionally, operating revenues were negatively
affected by a $97 million decrease in sales for resale due to the expiration of
wholesale contracts being offered by ComEd from June 2000 to May 2001 to support
the open access program in Illinois.

         Revenues from retail customers reflect a 3% increase in the total kWh
sales for the three months ended September 30, 2001 compared to the same 2000
period. Residential sales, which increased 18%, were partially offset by a 3%
decrease in non-residential sales. As of September 30, 2001, approximately
15,400 retail customers had elected to purchase energy from ARES or the PPO,
compared to approximately 7,900 customers as of September 30, 2000. Delivered
kWhs to such customers increased from approximately 4.2 billion to 5.1 billion,
or from 17% to 21% of total quarterly retail sales.

Fuel and Purchased Power Expense
Fuel and purchased power expense decreased $24 million, or 2%, compared to the
same 2000 period, excluding the effects of restructuring. The decrease in fuel
and purchased power expense was primarily attributable to a decrease in MWhs
purchased due to an increased number of customers purchasing energy from ARES,
partially offset by an increase in the weighted average on-peak/off-peak cost
per MWh.

Operating and Maintenance Expense
Operating and maintenance (O&M) expense decreased $16 million or 6% compared to
the same 2000 period, excluding the effects of restructuring. The decrease in
O&M expense is primarily attributable to non-recurring merger costs of $32
million in 2000, partially offset by higher administrative and general costs in
2001.

Depreciation and Amortization Expense
Depreciation and amortization expense increased $32 million, or 22%, compared to
the same 2000 period, excluding the effects of restructuring. The increase in
depreciation and amortization expense was attributable to goodwill amortization
of $32 million.

                                       49

<PAGE>

Taxes Other Than Income
Taxes other than income decreased $32 million, or 28%, compared to the same 2000
period, excluding the effects of restructuring. The decrease in taxes other than
income was primarily attributable to the effect of the change in municipal
utility taxes from operating revenue and tax expense to collections recorded as
liabilities resulting from Illinois legislation.

Interest Charges
Interest charges consist of interest expense and provisions for distributions on
Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trusts. Interest charges, excluding the effects of restructuring, increased $16
million, or 12%, compared to the same 2000 period. The increase was primarily
attributable to increased interest accrued on estimated tax liabilities and
interest on amounts due to affiliates.

Other Income and Deductions
Other income and deductions, excluding interest charges, decreased $33 million,
compared to the same 2000 period. The decrease was primarily attributable to
lower interest income in 2001 from an affiliate, Unicom Investment, Inc.,
reflecting the impact of declining interest rates and an $850 million reduction
in notes receivable in the fourth quarter of 2000.

Income Taxes
The effective income tax rate was 44.2% for the three months ended September 30,
2001, compared to 30.4% for the same 2000 period. The increase in the effective
tax rate was primarily attributable to goodwill amortization in 2001, which is
not deductible for tax purposes, and lower investment tax credit amortization
resulting from the application of purchase accounting in connection with the
merger.

                                       50

<PAGE>

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

Significant Operating Trends

<TABLE>
<CAPTION>
                                                      Nine Months
                                                         Ended                            Components of Variance
                                                     September 30,            -------------------------------------------
                                                 ----------------------       Restructuring       Normal
                                                   2001           2000            Impact        Operations          Total
                                                   ----           ----            ------        ----------          -----
                                                                              (In millions)

<S>                                              <C>             <C>             <C>             <C>             <C>
Operating Revenues                               $ 4,895         $ 5,367         $  (512)        $    40         $  (472)

Fuel and Purchased Power                           2,149           1,585             519              45             564
Operating and Maintenance                            731           1,559            (769)            (59)           (828)
Depreciation and Amortization                        512             822            (237)            (73)           (310)
Taxes Other Than Income                              223             401             (99)            (79)           (178)
                                                 -------         -------         -------         -------         -------
     Total Operating Expenses                      3,615           4,367            (586)           (166)           (752)
                                                 -------         -------         -------         -------         -------

Operating Income                                   1,280           1,000              74             206             280
                                                 -------         -------         -------         -------         -------

Interest Expense                                    (432)           (421)             31             (42)            (11)
Distributions on Company-Obligated
     Mandatorily Redeemable
     Preferred Securities of Subsidiary
     Trusts Holding Solely the Company's
     Subordinated Debt Securities                    (22)            (22)             --              --              --
Other, Net                                            93             248              --            (155)           (155)
                                                 -------         -------         -------         -------         -------

Income Before Income Taxes and
    Extraordinary Items                              919             805             105               9             114

Income Taxes                                         412             221              56             135             191
                                                 -------         -------         -------         -------         -------

Net Income Before Extraordinary Items                507             584              49            (126)            (77)
Extraordinary Items (net of income taxes)             --              (4)             --               4               4
                                                 -------         -------         -------         -------         -------
Net Income                                           507             580              49            (122)            (73)
Preferred and Preference Stock Dividends              --              (3)             --               3               3
                                                 -------         -------         -------         -------         -------
Net Income on Common Stock                       $   507         $   577         $    49         $  (119)        $   (70)
                                                 =======         =======         =======         =======         =======
</TABLE>


Net Income
Net income decreased $155 million, or 23%, as compared to the same period in
2000, excluding the effects of restructuring, an extraordinary item and
non-recurring merger costs. Net income decreased $73 million, or 13%, after
reflecting the effects of the $49 million restructuring impact, the $4 million
extraordinary item, and $49 million of non-recurring merger costs ($29 million,
net of income taxes) incurred for the nine months ended September 30, 2000.

                                       51

<PAGE>

Operating Revenues
Operating revenues increased $40 million, or 1%, for the nine months ended
September 30, 2001 compared to the same period in 2000, excluding the effects of
restructuring. Revenues from retail customers increased $106 million, before a
$69 million reduction due to a change in recording certain revenue taxes as
operating revenue and tax expense to collections recorded as liabilities
resulting from Illinois legislation. The increase in revenues from retail
customers was primarily attributable to favorable weather conditions and
continued growth in residential operating revenues due to a strong housing
market, partially offset by the negative effects of a slower economy on
non-residential customers. Non-residential customers continue to migrate to ARES
or the PPO. During the third quarter, there was also a shift from the PPO to
ARES due to the higher price of PPO energy compared to the market price of ARES
energy. The negative revenue impact of these shifts in customer base was
partially offset by the increase in revenues from the higher PPO price of
energy. Additionally, operating revenues reflect a $70 million decrease in sales
for resale due to the expiration of wholesale contracts being offered by ComEd
from June 2000 to May 2001 to support the open access program in Illinois,
partially offset by a $47 million increase in transmission service revenues and
the reversal of a $15 million reserve for revenue refunds to ComEd's municipal
customers as the result of a favorable FERC ruling.

         Revenues from retail customers reflect a consistent amount of total kWh
sales for the nine months ended September 30, 2001 as compared to the same 2000
period. Residential sales, which increased 10%, were offset by a 2% decrease in
non-residential sales. As of September 30, 2001, approximately 15,400 retail
customers had elected to purchase energy from ARES or the PPO, compared to
approximately 7,900 customers as of September 30, 2000. Delivered kWhs to such
customers increased from approximately 10.0 billion to 13.7 billion, or from 15%
to 21% of total year-to-date retail sales.

Fuel and Purchased Power Expense
Fuel and purchased power expense for the nine months ended September 30, 2001
increased $45 million, or 2%, compared to the same period in 2000, excluding the
effects of restructuring. The increase in fuel and purchased power expense was
primarily attributable to increases in the weighted average on-peak/off-peak
cost per MWh, partially offset by a decrease in MWhs purchased.

Operating and Maintenance Expense
O&M expense for the nine months ended September 30, 2001 decreased $59 million,
or 7%, compared to the same period in 2000, excluding the effects of
restructuring. The decrease in O&M expense is primarily related to non-recurring
merger costs of $49 million in 2000, a decrease in customer credit and billing
costs due to process improvements, and a decrease in storm restoration and
service reliability costs, partially offset by higher administrative and general
costs.

Depreciation and Amortization Expense
Depreciation and amortization expense decreased $73 million, or 12%, compared to
the same period in 2000, excluding the effects of restructuring. Regulatory
asset amortization decreased $185 million as a result of the recognition of
additional amortization in the first quarter of 2000 associated with the
settlement of the common stock forward purchase arrangement , partially offset
by goodwill amortization of $97 million, and an increase in depreciation expense
of $15 million from increased plant in service due to continued transmission and
distribution capital improvements.

                                       52

<PAGE>

Taxes Other Than Income
Taxes other than income decreased $79 million, or 26%, from the same period in
2000, excluding the effects of restructuring. The decrease in taxes other than
income was primarily attributable to the effect of the change in municipal
utility taxes from operating revenue and tax expense to collections recorded as
liabilities resulting from Illinois legislation.

Interest Charges
Interest charges increased $42 million, or 10%, compared to the same period in
2000, excluding the effects of restructuring. The increase was primarily due to
increased interest accrued on estimated tax liabilities and interest due on
amounts due to affiliates.

Other Income and Deductions
Other income and deductions, excluding interest charges, decreased $155 million,
compared to the same period in 2000. The decrease was primarily attributable to
the $113 million gain on the forward share repurchase arrangement recognized
during the first quarter of 2000 and an $87 million reduction in interest income
in 2001 from an affiliate, Unicom Investment, Inc., reflecting the impact of
declining interest rates and an $850 million reduction in notes receivable in
the fourth quarter of 2000, partially offset by the $38 million loss on the sale
of Cotter Corporation, a ComEd subsidiary, recognized during the first quarter
of 2000.

Income Taxes
The effective income tax rate was 44.8% for the nine months ended September 30,
2001, compared to 27.5% for the same period in 2000. The increase in the
effective tax rate was primarily attributable to the effects of the gain on the
forward share repurchase arrangement recorded in the first quarter of 2000,
which was not recognized for tax purposes, goodwill amortization in 2001, which
is not deductible for tax purposes, and lower investment tax credit amortization
resulting from the application of purchase accounting in connection with the
merger.

Extraordinary Items
Extraordinary charges aggregating $6 million ($4 million, net of income taxes)
were incurred for the nine months ended September 30, 2000, and consisted of
prepayment premiums and the write-off of unamortized deferred financing costs
associated with the early retirement of debt.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by operations were $1,044 million for the nine months ended
September 30, 2001 compared to $727 million for the same nine months in 2000.
The increase in cash flows was primarily attributable to a $669 million increase
in working capital due to a decrease in income tax payments from the first
quarter of 2000, which included tax payments related to the 1999 gain on the
sale of fossil plants, partially offset by $352 million in lower cash flows from
changes in operating activities other than working capital following the
transfer of assets to Generation.

         Cash flows used in investing activities were $207 million for the nine
months ended September 30, 2001 compared to $1,111 million for the same nine
months in 2000. The decrease in cash flows used in investing activities in 2001
was attributable to a $507 million decrease in plant investment primarily as a
result of the transfer of assets to Generation and a $424 million increase in
proceeds from affiliates.

                                       53

<PAGE>

         Cash flows used in financing activities were $543 million for the nine
months ended September 30, 2001 compared to $641 million for the same nine
months in 2000. The decrease in cash flows used in financing activities in 2001
was primarily attributable to $70 million of mandatorily redeemable preferred
stock retirements and $270 million in nuclear fuel principal payments in 2000
partially offset by a $229 million increase in debt service in 2001.

         Effective January 1, 2001, Exelon contributed to ComEd a $1.0 billion
non-interest bearing receivable for the purpose of funding future income tax
payments resulting from the collection of instrument funding charges. See ITEM
1. Financial Statements - Note 13 - Related-Party Transactions.

         At September 30, 2001, ComEd's capital structure, excluding the
deduction from shareholders' equity of the $1.0 billion receivable from Exelon,
consisted of 52% long-term debt, 46% of common stock, and 2% of preferred
securities of subsidiaries. Long-term debt included $2.4 billion of transitional
trust notes constituting obligations of certain consolidated special purpose
entities representing 18% of capitalization.

         ComEd meets its short-term liquidity requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities. ComEd,
along with Exelon and PECO, entered into a $1.25 billion unsecured revolving
credit facility with a group of banks. ComEd has a $200 million sublimit under
this 364-day credit facility and expects to use the credit facility principally
to support its $200 million commercial paper program. The credit facility
requires ComEd to maintain a debt to total capitalization ratio of 65% or less
(excluding transitional trust notes). At September 30, 2001, ComEd's debt to
total capitalization ratio on that basis was 46%. At September 30, 2001, ComEd
had no short-term borrowings.

         On November 5, 2001, ComEd offered to purchase for cash $250 million of
its First Mortgage Bonds, with an interest rate of 9.875% and a maturity date of
June 15, 2020. The tender price is based on a fixed spread of 80 basis points
over the yield to maturity of the 6.5% U.S. Treasury Note due May 15, 2005. The
offer will expire on November 16, 2001, unless extended or earlier terminated.

                                       54

<PAGE>

PECO ENERGY COMPANY
-------------------

GENERAL

On October 20, 2000, PECO became a wholly owned subsidiary of Exelon as a result
of the transactions relating to the merger of PECO and Unicom. Effective January
1, 2001, Exelon undertook a restructuring to separate its generation and other
competitive businesses from its regulated energy delivery business. See ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Exelon Corporation - General for information about Exelon's
corporate restructuring. The restructuring has had a significant impact on all
components of PECO's results of operations. As part of the restructuring, the
non-regulated operations and related assets and liabilities previously included
in PECO's Generation and Enterprises business segments were transferred to
separate subsidiaries of Exelon. As a result, effective January 1, 2001, 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.


                                       55
<PAGE>

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

Significant Operating Trends
<TABLE>
<CAPTION>
                                                         Three Months
                                                            Ended                            Components of Variance
                                                        September 30,            -----------------------------------------
                                                   ------------------------      Restructuring       Normal
                                                     2001            2000          Impact         Operations         Total
                                                     ----            ----          ------         ----------         -----
                                                                                (In millions)

<S>                                                <C>             <C>             <C>             <C>             <C>
Operating Revenues                                 $ 1,051         $ 1,629         $  (752)        $   174         $  (578)

Fuel and Purchased Power                               471             576            (180)             75            (105)
Operating and Maintenance                              156             457            (324)             23            (301)
Depreciation and Amortization                          115              83             (37)             69              32
Taxes Other Than Income                                 51              67             (22)              6             (16)
                                                   -------         -------         -------         -------         -------
Total Operating Expenses                               793           1,183            (563)            173            (390)
                                                   -------         -------         -------         -------         -------

Operating Income                                       258             446            (189)              1            (188)
                                                   -------         -------         -------         -------         -------

Interest Expense                                      (105)           (113)             12              (4)              8
Distributions on Company-Obligated
      Mandatorily Redeemable
     Preferred Securities of a Partnership,
     which holds Solely Subordinated
     Debentures of the Company                          (2)             (2)             --              --              --
Equity in Earnings (Losses) of
     Unconsolidated Affiliates, Net                     --              23             (23)             --             (23)
Other, Net                                              12              23             (14)              3             (11)
                                                   -------         -------         -------         -------         -------

Income Before Income Taxes and
     Extraordinary Item                                163             377            (214)             --            (214)

Income Taxes                                            59             141             (87)              5             (82)
                                                   -------         -------         -------         -------         -------

Net Income Before Extraordinary Item                   104             236            (127)             (5)           (132)
Extraordinary Item (net of income taxes)                --              (1)             --               1               1
                                                   -------         -------         -------         -------         -------
Net Income                                             104             235            (127)             (4)           (131)
Preferred Stock Dividends                               (2)             (3)             --               1               1
                                                   -------         -------         -------         -------         -------
Net Income on Common Stock                         $   102         $   232         $  (127)        $    (3)        $  (130)
                                                   =======         =======         =======         =======         =======
</TABLE>


Net Income
Net income decreased $4 million, or 4%, for the three months ended September 30,
2001, excluding the effects of the restructuring, as compared to the same 2000
period.

Operating Revenues
Operating revenues for the three months ended September 30, 2001 increased $174
million, or 20%, as compared to the same 2000 period, excluding the effects of
the restructuring. The increase in operating

                                       56

<PAGE>

revenues was attributable to higher electric revenues of $162 million and
additional gas revenues of $12 million. The increase in electric revenues was
primarily attributable to $142 million from customers in Pennsylvania selecting
or returning to PECO as their electric generation supplier and rate adjustments,
$25 million attributable to higher delivery volume and $18 million as a result
of favorable weather conditions, partially offset by $22 million related to the
payment of nuclear decommissioning cost recovery to Generation under an
agreement effective September 2001. Total kWh sales to retail customers
increased 2% compared to the same 2000 period. Small commercial and industrial
sales increased 7% and residential sales increased 6%. These increases were
partially offset by a decrease in large commercial and industrial sales of 2%.
The increase in regulated gas revenues was primarily attributable to $32 million
related to higher natural gas prices, partially offset by a decrease of $10
million attributable to lower delivery volume.

Fuel and Purchased Power Expense
Fuel and purchased power expense for the three months ended September 30, 2001
increased $75 million, or 19%, as compared to the same 2000 period, excluding
the effects of the restructuring. The increase in fuel and purchased power
expense was primarily attributable to $95 million from customers in Pennsylvania
selecting or returning to PECO as their electric generation supplier, $26
million from increased prices related to gas and $11 million as a result of
favorable weather conditions. These increases are partially offset by lower PJM
ancillary charges of $55 million and a decrease of $8 million attributable to
lower delivery volume related to gas.

Operating and Maintenance Expense
O&M expense for the three months ended September 30, 2001 increased $23 million,
or 17%, as compared to the same 2000 period, excluding the effects of the
restructuring. The increase in O&M expense was primarily attributable to $18
million of additional employee severance costs associated with the merger and $6
million of incremental costs related to a storm in the third quarter of 2001.

Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended September 30,
2001 increased $69 million, or 150%, as compared to the same 2000 period,
excluding the effects of the restructuring. The increase was attributable to $60
million of additional amortization of PECO's CTC and a $9 million increase in
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 Electricity Generation Customer Choice and Competition Act
(Pennsylvania Competition Act).

Taxes Other Than Income
Taxes other than income for the three months ended September 30, 2001 increased
$6 million, or 13%, as compared to the same 2000 period, excluding the effects
of the restructuring. The increase was primarily attributable to $3 million of
additional gross receipts tax associated with higher retail electric revenue.

Interest Charges
Interest charges consist of interest expense and distributions on
Company-Obligated Mandatorily Redeemable Preferred Securities of a Partnership
(COMRPS). Interest charges for the three months ended September 30, 2001
increased $4 million, or 4%, as compared to the same 2000 period, excluding the
effects of the restructuring.

                                       57

<PAGE>

Equity in Earnings (Losses) of Unconsolidated Affiliates
As part of the corporate restructuring, PECO's unconsolidated affiliates were
transferred to Generation and Enterprises.

Other Income and Deductions
Other income and deductions excluding interest charges and equity in earnings
(losses) of unconsolidated affiliates for the three months ended September 30,
2001 increased by $3 million, as compared to the same 2000 period, excluding the
effects of the restructuring. The increase is primarily attributable to
additional interest income of $6 million in the third quarter of 2001.

Income Taxes
The effective income tax rate was 36.2% for the three months ended September 30,
2001 as compared to 37.4% for the same 2000 period. The decrease in the
effective income tax rate was primarily attributable to tax benefits associated
with the implementation of state tax planning strategies.

Preferred Stock Dividends
Preferred stock dividends for the three months ended September 30, 2001 were
consistent with the same 2000 period.

                                       58

<PAGE>

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

Significant Operating Trends

<TABLE>
<CAPTION>
                                                            Nine Months
                                                               Ended                          Components of Variance
                                                            September 30,          ------------------------------------------
                                                        ---------------------      Restructuring      Normal
                                                        2001           2000           Impact        Operations          Total
                                                        ----           ----           ------        ----------          -----
                                                                                   (In millions)

<S>                                                   <C>             <C>             <C>             <C>             <C>
Operating Revenues                                    $ 3,008         $ 4,366         $(1,870)        $   512         $(1,358)

Fuel and Purchased Power                                1,353           1,515            (513)            351            (162)
Operating and Maintenance                                 414           1,304            (923)             33            (890)
Depreciation and Amortization                             315             244            (117)            188              71
Taxes Other Than Income                                   135             197             (60)             (2)            (62)
                                                      -------         -------         -------         -------         -------
Total Operating Expenses                                2,217           3,260          (1,613)            570          (1,043)
                                                      -------         -------         -------         -------         -------

Operating Income                                          791           1,106            (257)            (58)           (315)
                                                      -------         -------         -------         -------         -------

Interest Expense                                         (332)           (333)             41             (40)              1
Distributions on Company-Obligated
     Mandatorily Redeemable
     Preferred Securities of a Partnership,
     which holds Solely Subordinated
     Debentures of the Company                             (7)             (7)             --              --              --
Equity in Earnings (Losses) of
     Unconsolidated Affiliates, Net                        --              26             (26)             --             (26)
Other, Net                                                 30              52             (34)             12             (22)
                                                      -------         -------         -------         -------         -------

Income Before Income Taxes, Extraordinary Item
     and Cumulative Effect of a Change of
     Accounting Principle                                 482             844            (276)            (86)           (362)

Income Taxes                                              171             316            (107)            (38)           (145)
                                                      -------         -------         -------         -------         -------

Net Income Before Extraordinary Item and
     Cumulative Effect of a Change of
     Accounting Principle                                 311             528            (169)            (48)           (217)
Extraordinary Item (net of income taxes)                   --              (4)              4              --               4
Cumulative Effect of a Change
     of Accounting Principle                               --              24             (24)             --             (24)
                                                      -------         -------         -------         -------         -------
Net Income                                                311             548            (189)            (48)           (237)
Preferred Stock Dividends                                  (7)             (8)             --               1               1
                                                      -------         -------         -------         -------         -------
Net Income on Common Stock                            $   304         $   540         $  (189)        $   (47)        $  (236)
                                                      =======         =======         =======         =======         =======
</TABLE>


Net Income
Net income decreased $48 million, or 13%, for the nine months ended September
30, 2001, excluding the effects of the restructuring, as compared to the same
2000 period.

                                       59

<PAGE>

Operating Revenues
Operating revenues for the nine months ended September 30, 2001 increased $512
million, or 21%, as compared to the same 2000 period, excluding the effects of
the restructuring. The increase in operating revenues was attributable to higher
electric revenues of $378 million and additional gas revenues of $134 million.
The increase in electric revenues was primarily attributable to $350 million
from customers in Pennsylvania selecting or returning to PECO as their electric
generation supplier and rate adjustments, $27 million attributable to higher
delivery volume, $17 million as a result of favorable weather conditions, and an
$11 million settlement of competitive transition charges by a large customer.
These increases were partially offset by $22 million related to the payment of
nuclear decommissioning cost recovery to Generation under an agreement effective
September 2001. Total kWh sales to retail customers increased by 1% compared to
the same 2000 period. Residential sales and small commercial and industrial
sales, which both increased 4%, were partially offset by a decrease in large
commercial and industrial sales of 2%. The increase in regulated gas revenues
was primarily attributable to increases of $153 million related to higher
natural gas prices and $11 million as a result of favorable weather conditions,
partially offset by $13 million attributable to lower delivery volume and $7
million related to the elimination of the gross receipts tax on gas sales
effective July 1, 2000.

Fuel and Purchased Power Expense
Fuel and purchased power expense for the nine months ended September 30, 2001
increased $351 million, or 35%, as compared to the same 2000 period, excluding
the effects of the restructuring. The increase in fuel and purchased power
expense was primarily attributable to $230 million from customers in
Pennsylvania selecting or returning to PECO as their electric generation
supplier, $128 million from increased prices related to gas and $18 million as a
result of favorable weather conditions. These increases were partially offset by
lower PJM ancillary charges of $32 million and $10 million attributable to lower
delivery volume related to gas.

Operating and Maintenance Expense
O&M expense for the nine months ended September 30, 2001 increased $33 million,
or 9%, as compared to the same 2000 period, excluding the effects of the
restructuring. The increase in O&M expense was primarily attributable to $18
million of additional employee severance costs associated with the merger, $12
million of incremental costs related to two storms in 2001 and $5 million
associated with the write-off of excess and obsolete inventory.

Depreciation and Amortization Expense
Depreciation and amortization expense for the nine months ended September 30,
2001 increased $188 million, or 148%, as compared to the same 2000 period,
excluding the effects of the restructuring. The increase was primarily
attributable to $162 million of additional amortization of PECO's CTC and a $26
million increase in 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 nine months ended September 30, 2001 decreased
$2 million, or 1%, as compared to the same 2000 period, excluding the effects of
the restructuring. The decrease was primarily attributable to the elimination of
the gross receipts tax on gas sales effective July 1, 2000.

                                       60
<PAGE>

Interest Charges
Interest charges for the nine months ended September 30, 2001 increased $40
million, or 14%, as compared to the same 2000 period, excluding the effects of
the restructuring. The increase was primarily attributable to interest of $25
million on the additional transition bonds issued in May 2000 to securitize a
portion of PECO's stranded cost recovery and interest expense related to a loan
from an affiliate in 2001 of $8 million.

Equity in Earnings (Losses) of Unconsolidated Affiliates
As part of the corporate restructuring, PECO's unconsolidated affiliates were
transferred to Generation and Enterprises.

Other Income and Deductions
Other income and deductions excluding interest charges and equity in earnings
(losses) of unconsolidated affiliates for the nine months ended September 30,
2001 increased by $12 million as compared to the same 2000 period, excluding the
effects of the restructuring. The increase was primarily attributable to
intercompany interest income of $10 million in the third quarter of 2001, a gain
on the settlement of an interest rate swap of $6 million and the favorable
settlement of a customer contract of $3 million.

Income Taxes
The effective tax rate was 35.5% for the nine months ended September 30, 2001 as
compared to 37.4% for the same 2000 period. The decrease in the effective tax
rate was primarily attributable to tax benefits associated with the
implementation of state tax planning strategies.

Cumulative Effect of a Change in Accounting Principle
On January 1, 2000, PECO recorded a benefit of $40 million ($24 million, net of
income taxes) representing the cumulative effect of a change in accounting
method for nuclear outage costs in conjunction with the synchronization of
accounting policies in connection with the merger.

Preferred Stock Dividends
Preferred stock dividends for the nine months ended September 30, 2001 were
consistent with the same 2000 period.


LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by operations were $719 million for the nine months ended
September 30, 2001 as compared to $605 million in the same 2000 period. The
increase was attributable to an increase in working capital of $337 million
partially offset by less cash generated by operations of $223 million.

         Cash flows used in investing activities were $154 million for the nine
months ended September 30, 2001 as compared to $593 million in the same 2000
period. The decrease was attributable to lower capital expenditures of $255
million, a decrease in other investing activities of $93 million and the
acquisition of four infrastructure services businesses in 2000 of $91 million.

         Cash flows used in financing activities were $483 million for the nine
months ended September 30, 2001 as compared to $9 million for the same period in
2000. The increase in cash flows used in financing activities was primarily
attributable to short-term debt repayments of $161 million as compared

                                       61

<PAGE>

to borrowings of $118 million in the same 2000 period and debt service including
refinancings of $121 million. Cash flows from financing activities in 2001
includes $241 million of debt service. Cash flows from financing activities in
2000 include $144 million of debt service partially offset by net proceeds of
$120 million from the securitization of $1 billion of stranded cost recovery in
May 2000 and the use of related proceeds. These decreases were partially offset
by $31 million of proceeds from the settlement of interest rate swaps.

         Effective January 1, 2001, Exelon contributed to PECO a $2.0 billion
non-interest bearing receivable for the purpose of funding future income tax
payments resulting from the collection of intangible transition charges. See
ITEM 1. Financial Statements - Note 13 - Related-Party Transactions.

         At September 30, 2001, PECO's capital structure, excluding the
deduction from shareholders' equity of the $2.0 billion receivable from Exelon,
consisted of 27% common equity, 3% preferred stock and COMRPS (which comprised
1% of PECO's total capitalization structure), and 70% long-term debt including
transition bonds issued by PECO Energy Transition Trust (PETT). Long-term debt
included $4.6 billion of transition bonds representing 53% of capitalization.

         PECO meets its short-term liquidity requirements primarily through the
issuance of commercial paper and borrowings under bank credit facilities. PECO,
along with Exelon and ComEd, entered into a $1.25 billion unsecured revolving
credit facility with a group of banks. PECO has an $300 million sublimit under
this 364-day credit facility and expects to use the credit facility principally
to support its $300 million commercial paper program. This credit facility
requires PECO to maintain a debt to total capitalization ratio of 65% or less
(excluding transition bonds and the receivable from parent recorded in PECO's
shareholders' equity). As a result of the corporate restructuring, at September
30, 2001, PECO's debt to total capitalization ratio on that basis was 35%. At
September 30, 2001, PECO had no short-term borrowings.

         During 2001, PECO retired $121 million of its pollution control notes
with proceeds from a capital contribution from Exelon.

          On October 30, 2001, PECO issued, through a private placement, $250
million of its First and Refunding Mortgage Bonds with an interest rate of 5.95%
and maturity date of November 11, 2011. Proceeds from the first mortgage bonds
were used to repay $250 million aggregate principal amount of PECO's First and
Refunding Mortgage Bonds, having an interest rate of 5.625% and a maturity date
of November 1, 2001.

                                       62

<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
                              /s/ Jean H. Gibson
                              --------------------------
                              JEAN H. GIBSON
                              Vice President and
                              Controller
                              (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/ Thomas P. Hill, Jr.
                              --------------------------
                              THOMAS P. HILL, JR.
                              Vice President and
                              Chief Financial Officer
                              (Chief Accounting Officer)

Date:  January 31, 2002



                                       63