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

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the Quarterly Period Ended 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>
<S>                                                                                                                <C>
                                                                                                                   Page No.
  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
  ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                                                 63

  PART II.  OTHER INFORMATION                                                                                         66
  ITEM 1.   LEGAL PROCEEDINGS                                                                                         66
  ITEM 5.   OTHER INFORMATION                                                                                         67
  ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                                          68

SIGNATURES                                                                                                            71

</TABLE>

                                       2
<PAGE>


Filing Format
         This  combined   Form  10-Q  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
7 of Notes to Condensed  Consolidated  Financial Statements,  those discussed in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Outlook"  in Exelon  Corporation's  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 September 30,   Nine Months Ended September 30,
                                                                          2001             2000            2001          2000
                                                                          ----             ----            ----          ----
<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 (Losses) Earnings of Unconsolidated Affiliates, net            52              23              77            26
     Other, net                                                                2              23             103            52
                                                                      ----------       ----------      ----------   ----------
         Total Other Income and Deductions                                  (241)            (72)           (721)         (270)
                                                                      ----------       ----------      ----------   ----------

INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                    671             374           1,872           836
INCOME TAXES                                                                 268             141             767           316
                                                                      ----------       ----------      ----------   ----------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE                               403             233           1,105           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                                                                   403             232           1,117           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                          14              26            (110)           22
                                                                      ----------       ----------      ----------   ----------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                                       27              26             (83)           22
                                                                      ----------       ----------      ----------   ----------

TOTAL COMPREHENSIVE INCOME                                             $     430       $     258       $   1,034    $      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                  $     1.26       $     1.37      $     3.45   $     2.97
       Extraordinary Item                                                     --              --              --         (0.02)
       Cumulative Effect of a Change in Accounting Principle                  --              --             0.04         0.14
                                                                      ----------       ----------      ----------   ----------
       Net Income                                                     $     1.26       $     1.37      $     3.49   $     3.09
                                                                      ==========       ==========      ==========   ==========

   DILUTED:
       Income Before Extraordinary Item and Cumulative
          Effect of a Change in Accounting Principle                  $     1.25       $     1.35      $     3.42   $     2.95
       Extraordinary Item                                                     --              --              --         (0.02)
       Cumulative Effect of a Change in Accounting Principle                  --              --             0.04         0.14
                                                                      ----------       ----------      ----------   ----------
       Net Income                                                     $     1.25       $     1.35      $     3.46   $     3.07
                                                                      ==========       ==========      ==========   ==========

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


                                      See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                                                 5
<PAGE>


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

<TABLE>
<CAPTION>
                                                       September 30,    December 31,
                                                           2001             2000
                                                         -------          -------
ASSETS

CURRENT ASSETS
<S>                                                      <C>              <C>
     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                   3,002            3,109
     Investments                                           1,616            1,583
     Goodwill, net                                         5,509            5,186
     Other                                                   544              464
                                                         -------          -------
         Total Deferred Debits and Other Assets           17,199           17,477
                                                         -------          -------

TOTAL ASSETS                                             $35,680          $34,597
                                                         =======          =======
</TABLE>




                See Notes to Condensed Consolidated Financial Statements

                                           6
<PAGE>


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


<TABLE>
<CAPTION>
                                                                  September 30,      December 31,
                                                                      2001               2000
                                                                  -------------      ------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                <C>                <C>
     Notes Payable                                                 $    416           $  1,373
     Long-Term Debt Due within One Year                               1,188                908
     Accounts Payable                                                 1,052              1,193
     Accrued Expenses                                                 1,607                720
     Other                                                              454                457
                                                                   --------           --------

         Total Current Liabilities                                    4,717              4,651
                                                                   --------           --------

LONG-TERM DEBT                                                       13,385             12,958

DEFERRED CREDITS AND OTHER LIABILITIES
     Deferred Income Taxes                                            4,404              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                 9,134              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                                                1,022                332
     Accumulated Other Comprehensive Income (Loss)                     (130)                --
                                                                   --------           --------

         Total Shareholders' Equity                                   7,832              7,215
                                                                   --------           --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 35,680           $ 34,597
                                                                   ========           ========
</TABLE>




                     See Notes to Condensed Consolidated Financial Statements



                                                7
<PAGE>



                                EXELON CORPORATION AND SUBSIDIARY COMPANIES
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (Unaudited)
                                               (In Millions)
<TABLE>
<CAPTION>
                                                                                Nine Months Ended September 30,
                                                                               --------------------------------
                                                                                   2001              2000
                                                                                 -------           -------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                              <C>               <C>
     Net Income                                                                  $ 1,117           $   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                                                         (69)                8
       Deferred Energy Costs                                                          21                 6
       Equity in (Earnings) Losses of Unconsolidated Affiliates, net                 (77)              (26)
       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              539               (61)
       Other Current Assets                                                           27              (103)
                                                                                 -------           -------

Net Cash Flows provided by Operating Activities                                    2,987               597
                                                                                 -------           -------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Plant                                                          (1,380)             (435)
     Acquisitions - Enterprises, net of cash acquired                                (39)              (91)
     Other Investing Activities                                                     (164)              (67)
                                                                                 -------           -------

Net Cash Flows used in Investing Activities                                       (1,583)             (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
</TABLE>


                                                     8
<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 September 30,   Nine Months Ended 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
</TABLE>


                                                             9
<PAGE>



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



<TABLE>
<CAPTION>
                                                       September 30,     December 31,
                                                           2001             2000
                                                       -------------     ------------
ASSETS

CURRENT ASSETS
<S>                                                      <C>              <C>
     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
                                                         =======          =======

</TABLE>



             See Notes to Condensed Consolidated Financial Statements

                                        10
<PAGE>


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


<TABLE>
<CAPTION>
                                                                      September 30,       December 31,
                                                                          2001               2000
                                                                      -------------       ------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                    <C>                <C>
     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
                                                                       ========           ========
</TABLE>




                      See Notes to Condensed Consolidated Financial Statements

                                                11
<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
                                                                                    ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                               <C>               <C>
     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

</TABLE>



                                                     12
<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 September 30,    Nine Months Ended 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
</TABLE>


                                                               13
<PAGE>

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


<TABLE>
<CAPTION>
                                                       September 30,    December 31,
                                                           2001             2000
                                                         -------          -------
ASSETS

CURRENT ASSETS
<S>                                                      <C>              <C>
     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
                                                         =======          =======
</TABLE>




             See Notes to Condensed Consolidated Financial Statements


                                       14
<PAGE>



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


<TABLE>
<CAPTION>

                                                             September 30,       December 31,
                                                                 2001                2000
                                                               --------           --------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                            <C>                <C>
     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
                                                               ========           ========

</TABLE>


                  See Notes to Condensed Consolidated Financial Statements

                                            15
<PAGE>


                                PECO ENERGY COMPANY AND SUBSIDIARY COMPANIES
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (Unaudited)
                                               (In Millions)
<TABLE>
<CAPTION>
                                                                               Nine Months Ended September 30,
                                                                                   2001              2000
                                                                                 -------           -------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                              <C>               <C>
     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
</TABLE>



                                                    16
<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 2 - 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.  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.


                                       17
<PAGE>


         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 Ended    Nine Months Ended
                                                    September 30, 2000    September 30, 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 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.


                                       18
<PAGE>


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.


 3.  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:

                                                         ComEd          PECO
                                                         -----          ----
         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)

         (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)
                                                         =====        =======


                                       19
<PAGE>



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

                                                    ComEd                PECO
                                                    -----                ----

         Treasury Stock Received                   $1,307               $  --
         Return of Capital                             --               1,577
         Note (Payable)/Receivable -  Affiliates     (450)                 75
                                                   ------               -----
                                                    $ 857              $1,652
                                                   ======               =====

         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  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



                                       20
<PAGE>

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.


4.  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.


                                       21
<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.


5.  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>


6.  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
                               --------      ----------     -----------      ------------       ------------
Revenues:
<S>                           <C>            <C>            <C>              <C>                 <C>
    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>


                                       22


<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
                               --------      ----------     -----------      ------------       ------------
Revenues:
<S>                         <C>            <C>            <C>               <C>                  <C>
    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          $ 27,726       $  7,337       $   1,634         $  (1,017)           $ 35,680
   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.  Interest income for the three
     months ended  September 30, 2001 was $35 million as compared to $10 million
     in the  same  2000  period.  Interest  income  for the  nine  months  ended
     September  30,  2001 was $84 million as compared to $36 million in the same
     2000 period.
</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 3 -
Corporate Restructuring.


7.  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.


                                       23
<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.

                                       24
<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 3 - 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


                                       25
<PAGE>

on appeal.  The remaining  claims in the 1989 actions were settled or dismissed.
In 1998,  a jury  verdict  was  rendered  against  Cotter  in favor of 14 of the
plaintiffs in the 1991 cases, totaling  approximately $6 million in compensatory
and punitive  damages,  interest and medical  monitoring.  On appeal,  the Tenth
Circuit Court of Appeals  reversed the jury  verdict,  and remanded the case for
new trial.  These  plaintiffs'  cases were  consolidated  with the  remaining 26
plaintiffs'  cases,  which  had not  been  tried.  The  consolidated  trial  was
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



                                       26
<PAGE>

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  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


                                       27
<PAGE>

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.

         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.


                                       28
<PAGE>



8.  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>


                                       29
<PAGE>


9.  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 3 - 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



                                       30
<PAGE>

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.

         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.


10.  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 4 - 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



                                       31
<PAGE>

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%.


11.  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.


12.  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.


                                       32
<PAGE>

         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.

         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 3 -
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 3 -
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,



                                       33
<PAGE>

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.


13.  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).

         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


                                       34
<PAGE>

applied prospectively. Exelon is in the process of evaluating the impact of SFAS
No. 144 on its financial statements.


14.  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.


15.  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.








                                       35
<PAGE>


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

                             Expense Items as a Percentage of
                                 Total Operating Revenues
<TABLE>
<CAPTION>
                                                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 Compared To Three Months Ended  September
30, 2000

Net Income and Earnings Per Share
Exelon's net income  increased $170 million,  or 73%, for the three months ended
September  30, 2001,  excluding  the effect of an  extraordinary  item.  Diluted
earnings  per share on the same  basis  decreased  $0.10 per  share,  or 7%. Net
income inclusive of the extraordinary  item increased $171 million,  or 74%, for
the three months ended  September  30, 2001.  Diluted  earnings per share on the
same basis  decreased $0.10 per share, or 7%. 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


                                       37
<PAGE>

operations  and the portion of the variance that results from normal  operations
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.


                                       38
<PAGE>

         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
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.


                                       39
<PAGE>



         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
         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.

                                       40
<PAGE>

         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.


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.

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 Compared To Nine Months Ended September 30,
2000

Net Income and Earnings Per Share
Exelon's net income  increased $585 million,  or 113%, 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 $0.47 per share, or 16%. Net income, inclusive
of an  extraordinary  item and the  cumulative  effect of a change in accounting
principle,  increased $577 million, or 107%, for the nine months ended September
30,  2001.  Diluted  earnings  per share on the same basis  increased  $0.39 per
share,  or 13%.  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.


                                       44
<PAGE>


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  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.

Income Taxes
The effective  income tax rate was 41.0% 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  $2,987  million as  compared  to $597  million for the same 2000
period.  The increase was attributable to increased cash flow from operations of
$1,665 million and changes in working capital of $725 million.

         Cash flows  used in  investing  activities  for the nine  months  ended
September 30, 2001 were $1,583  million as compared to $593 million for the same
2000 period. The increase was attributable to additional capital expenditures of
$945 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



                                       45
<PAGE>

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 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                           Components of Variance
                                                      Ended 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



                                       52
<PAGE>

of $15 million from increased plant in service due to continued transmission and
distribution capital improvements.

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.


                                       53
<PAGE>


         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.

         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 12 - 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 revenues was attributable to higher


                                       56
<PAGE>

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.


                                       57
<PAGE>

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.

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.


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<PAGE>

         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 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 12 - 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.

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<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

EXELON

Exelon's  activities expose it to a variety of market risks primarily related to
the effects of changes in commodity  prices and interest rates.  These financial
exposures are monitored and managed by Exelon as an integral part of its overall
risk-management program.

         Exelon's  commodity-price  risk management strategy includes the use of
derivatives  to mitigate the  potential for  significant  earnings and cash flow
fluctuations caused by commodity-price volatility. Exelon utilizes contracts for
the forward purchase and sale of energy and energy-related commodities to manage
its  generation  and physical  delivery  obligations to its retail and wholesale
customers. Energy option contracts and energy and energy-related swap agreements
are used to mitigate the price risk associated with these forward contracts.

         Exelon's  interest-rate  risk management  strategy  includes the use of
derivative instruments to minimize significant,  unanticipated earnings and cash
flow fluctuations caused by interest-rate volatility.  Exelon uses a combination
of  fixed-rate  and  variable-rate  debt  to  reduce   interest-rate   exposure.
Interest-rate  swaps may be used to adjust  exposure  when  deemed  appropriate,
based on market  conditions.  These strategies are employed to minimize the cost
of capital.

         By using derivative financial instruments to hedge exposures to changes
in energy prices and interest  rates,  Exelon  exposes itself to credit risk and
market  risk.  Credit  risk is the risk of a  counterparty  failing  to  perform
according  to  contract  terms.  When the value of a contract is  positive,  the
counterparty  owes Exelon,  which creates  repayment  risk for Exelon.  When the
value of a derivative  contract is negative,  Exelon owes the counterparty  and,
therefore,  the  derivative  contract  does not create  repayment  risk.  Exelon
minimizes the credit (or repayment) risk by (1) entering into  transactions with
high-quality  counterparties,  (2)  limiting  the  amount  of  exposure  to each
counterparty, (3) monitoring the financial condition of its counterparties,  and
(4) seeking credit enhancements to improve counterparty credit quality.

         Market  risk is the effect on the value of  Exelon's  commitments  that
result  from a change in interest  rates or  commodity  prices.  The market risk
associated with interest-rate, energy and energy-related contracts is managed by
the  establishment  and monitoring of parameters that limit the types and degree
of market risk that may be undertaken.

         Exelon's   derivatives   activities  are  subject  to  the  management,
direction, and control of the corporate Risk Management Committee (RMC). The RMC
is chaired by Exelon's  chief risk  officer  and  includes  the chief  financial
officer,  general counsel,  treasurer,  vice president of corporate planning and
officers  from  each of the  business  units.  The RMC  reports  to the board of
directors on the scope of Exelon's derivative activities. The RMC (1) sets forth
risk  management  philosophy and objectives  through a corporate  policy and (2)
establishes procedures for control and valuation,  counterparty credit approval,
and the monitoring and reporting of derivative activity.


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<PAGE>

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging  Activities," (SFAS No. 133) to establish accounting and
reporting standards for derivatives.  The new standard requires  recognizing all
derivatives  as either assets or  liabilities on the balance sheet at their fair
value and specifies the accounting for changes in fair value  depending upon the
intended use of the derivative. 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
SFAS No. 133, as amended.

         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
after taxes) was reclassified from accumulated other  comprehensive  income into
earnings  as a result of  forecasted  financing  transactions  no  longer  being
probable.

PECO
Interest Rate Risk

         PECO has  entered  into  interest  rate swaps to manage  interest  rate
exposure associated with two classes of floating rate transition bonds issued to
securitize  stranded cost recovery.  At September 30, 2001,  these interest rate
swaps had a fair market value exposure of $23 million based on the present value
difference between the contract and market rates at September 30, 2001.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point decrease
in the spot yield at September  30, 2001 is estimated to be $29 million.  If the
derivative instruments had been terminated at September 30, 2001, this estimated
fair value represents the amount to be paid by PECO to the counterparties.

         The aggregate  fair value exposure of the  transition  bond  derivative
instruments that would have resulted from a hypothetical 50 basis point increase
in the spot yield at September  30, 2001 is estimated to be $18 million.  If the
derivative instruments had been terminated at September 30, 2001, this estimated



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<PAGE>

fair value represents the amount to be paid by PECO to the counterparties.

         In connection  with the refinancing of a portion of PETT's two variable
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.  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 net gains of $25 million
which were deferred and are being amortized over the expected remaining lives of
the related debt.













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<PAGE>



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As previously  reported in Exelon's Annual Report to the Securities and Exchange
Commission  on Form 10-K for the year ended  December 31, 2000 (2000 Form 10-K),
ComEd requested the ICC approve the continued recovery of decommissioning  costs
after the transfer of ComEd's  nuclear  generating  stations to  Generation.  On
December 20, 2000,  the ICC issued an order  limiting  ComEd's  recovery of such
costs to $73 million  annually  through  2006.  The ICC order is under appeal by
ComEd and others to the  Appellate  Court of  Illinois  for the Second  Judicial
District.  On October 25,  2001,  ComEd filed its brief in support of the appeal
and argued for an additional  recovery of $48 million annually to address errors
made in the ICC calculations of the decommissioning costs.

         As  previously  reported  in  Exelon's  2000  Form  10-K  and  Exelon's
Quarterly  Report on Form 10-Q for the  quarter  ended June 30,  2001 (June 2001
Form 10-Q), 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 and  seeking  damages of $50
million,  plus interest and  consequential  damages.  The parties have reached a
tentative settlement of the dispute,  subject to court approval, which calls for
Exelon to make a $14 million payment.

         As previously  reported in Exelon's 2000 Form 10-K,  and June 2001 Form
10-Q,  three of ComEd's  wholesale  municipal  customers  filed a complaint  and
request for refund with FERC alleging  that ComEd failed to properly  adjust its
rates,  as provided for under the terms of the electric  service  contracts with
the  municipal  customers and to track  certain  refunds made to ComEd's  retail
customers in the years 1992 through  1994.  In the third  quarter of 1998,  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.

         As  previously  reported in Exelon's  2000 Form 10-K and June 2001 Form
10-Q, 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.



                                       66
<PAGE>

          On  August  21,  2001,  Midwest  Generation,  LLC  (Midwest)  filed  a
complaint with the 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.

          In October 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 PJM 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.


ITEM 5.  OTHER INFORMATION

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.

         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.



                                       67
<PAGE>

         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.

         As  permitted  by  the  Pennsylvania   Electric  Competition  Act,  the
Pennsylvania  Department  of  Revenue  has  calculated  a 2002  Revenue  Neutral
Reconciliation  (RNR)  adjustment  to the  gross  receipt  tax  rate in order to
neutralize the impact of electric  restructuring  on its tax revenues.  The 2002
RNR  adjustment  increases the gross receipt tax rate from the statutory rate of
44 mils to 60 mils,  which  will  increase  PECO's  annual  tax  obligations  by
approximately  $50  million  per year.  On October  26 2001,  PECO made a tariff
filing with the Pennsylvania  Public Utility  Commission in order to obtain rate
relief from the increased  gross receipts tax  obligations  associated with this
2002 RNR adjustment.

          On  October  18,  2001,   Generation  completed  the  purchase  of  an
additional  3.755%  interest in Units 2 and 3 of Peach Bottom,  representing  84
MWs, from Atlantic City Electric Co., a subsidiary of Conectiv,  Inc. Total cash
paid for the additional  interest,  including  nuclear fuel, was $7 million.  As
part of this purchase,  nuclear  decommissioning  funds of $27 million were also
transferred to Generation. Generation is now a 50% owner of Peach Bottom.


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

         None.

(b)      Reports on Form 8-K:

         During the three months  ended  September  30,  2001,  Exelon filed the
              following Current Reports on Form 8-K:

         Date of earliest event  reported:
              July 24, 2001 reporting  information  under "ITEM 5. OTHER EVENTS"
              regarding  Exelon's  earnings  release  for the second  quarter of
              2001.

         Date of earliest event  reported:
              July 24, 2001 reporting  information  under "ITEM 5. OTHER EVENTS"
              regarding  the  testimony  of  Exelon   Corporation's  Co-CEO  and
              President  John W. Rowe before the U.S.  Senate Energy and Natural
              Resources Committee.

         Date of earliest event reported:
              August 15, 2001 reporting information under "ITEM 9. REGULATION FD
              DISCLOSURE"  regarding a presentation  to investors in Texas.  The
              exhibits  under  "ITEM  7.  FINANCIAL   STATEMENTS  AND  EXHIBITS"
              includes  the  slide  presentation  and  additional   information,
              talking points and ComEd and PECO electric sales statistics.


                                       68
<PAGE>


         Date of earliest event reported:
              August 27, 2001, as amended,  reporting information under "ITEM 5.
              OTHER  EVENTS"  regarding  a business  plan filed with the Federal
              Energy Regulatory  Commission  describing the creation of Alliance
              Transmission  Organization,   LLC.  The  exhibit  under  "ITEM  7.
              FINANCIAL  STATEMENTS  AND  EXHIBITS"  includes the press  release
              issued by the Alliance Companies on August 28, 2001.

         Date of earliest event reported:
              September  27,  2001  reporting  information  under "ITEM 5. OTHER
              EVENTS"  regarding  Exelon's lower earnings  outlook.  The exhibit
              under "ITEM 7.  FINANCIAL  STATEMENTS  AND EXHIBITS"  includes the
              press release concerning its earnings outlook.

         During the three  months  ended  September  30,  2001,  ComEd filed the
              following Current Reports on Form 8-K:

         Date of earliest event reported:
              July 24, 2001 reporting  information  under "ITEM 5. OTHER EVENTS"
              regarding  the  testimony  of  Exelon   Corporation's  Co-CEO  and
              President  John W. Rowe before the U.S.  Senate Energy and Natural
              Resources Committee.

         Date of earliest event reported:
              August 15, 2001 reporting information under "ITEM 9. REGULATION FD
              DISCLOSURE"  regarding a presentation  to investors in Texas.  The
              exhibits  under  "ITEM  7.  FINANCIAL   STATEMENTS  AND  EXHIBITS"
              includes  the  slide  presentation  and  additional   information,
              talking points and ComEd and PECO electric sales statistics.

         Date of earliest event reported:
              August 27, 2001, as amended,  reporting information under "ITEM 5.
              OTHER  EVENTS"  regarding  a business  plan filed with the Federal
              Energy Regulatory  Commission  describing the creation of Alliance
              Transmission  Organization,   LLC.  The  exhibit  under  "ITEM  7.
              FINANCIAL  STATEMENTS  AND  EXHIBITS"  includes the press  release
              issued by the Alliance Companies on August 28, 2001.

         Date of earliest event reported:
              September  27,  2001  reporting  information  under "ITEM 5. OTHER
              EVENTS"  regarding  Exelon's lower earnings  outlook.  The exhibit
              under "ITEM 7.  FINANCIAL  STATEMENTS  AND EXHIBITS"  includes the
              press release concerning its earnings outlook.


                                       69
<PAGE>


         During  the three  months  ended  September  30,  2001,  PECO filed the
following Current Reports on Form 8-K:

         Date of earliest event reported:
              August 15, 2001 reporting information under "ITEM 9. REGULATION FD
              DISCLOSURE"  regarding a presentation  to investors in Texas.  The
              exhibits  under  "ITEM  7.  FINANCIAL   STATEMENTS  AND  EXHIBITS"
              includes  the  slide  presentation  and  additional   information,
              talking points and ComEd and PECO electric sales statistics.

         Date of earliest event reported:
              September  27,  2001  reporting  information  under "ITEM 5. OTHER
              EVENTS"  regarding  Exelon's lower earnings  outlook.  The exhibit
              under "ITEM 7.  FINANCIAL  STATEMENTS  AND EXHIBITS"  includes the
              press release concerning its earnings outlook.











                                       70
<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:  November 14, 2001








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